4. An increase in the price of ground beef will

04 Jun 4. An increase in the price of ground beef will

Question
University of Waterloo, ECON 101 Quiz #2

Quiz #2 (Lec 004)
1. The demand for a good or service is determined by

a. Those who buy the good or service.

b. The government.

c. The producers who create the good or service.

d. Those who supply the raw materials used in the production of the good or service.

2. Which of the following is not held constant in defining the demand schedule?

a. income

b. prices of related goods

c. preferences

d. price of the good itself

e. number of consumers

3. The price of good A rises, and the demand curve for good B shifts leftward. We can conclude that

a. A and B are complements.

b. B is a normal good.

c. B is an inferior good.

d. A and B are substitutes.

e. A and B are complements in production.

4. An increase in the price of ground beef will

a. Increase the demand for chicken, a substitute for beef.

b. Increase the demand for hamburger buns, a complement for beef.

c. Increase the quantity demanded of ground beef.

d. Decrease the quantity demanded of ground beef.

e. Both A and D.

5. Which one of the following events shifts the demand curve for grape jelly to the right?

a. an increase in income if grape jelly is a normal good

b. a decrease in the price of strawberry preserves, a substitute for grape jelly

c. a decrease in the price of grape jelly

d. a decrease in the population

e. an increase in the price of peanut butter, a complement of grape jelly

6. If a large percentage drop in the price level causes a small percentage increase in the quantity demanded,

a. demand is inelastic.

b. demand is elastic.

c. demand is unit elastic.

d. the price elasticity of demand is close to infinity

7. In one hour, Sue can produce 50 caps or 10 jackets and Tessa can produce 70 caps or 7 jackets. Sue’s opportunity cost of producing a cap is ________ jackets and Tessa’s opportunity cost of producing a cap is ________ jackets. ________ has a comparative advantage in producing caps. If Sue and Tessa each specialize in producing the good in which they have a comparative advantage and trade 1 jacket for 7 caps, ________.

a. 0.2; 0.10; Sue; both Sue and Tessa gain

b. 0.2; 0.10; Sue; Tessa gains but Sue loses

c. 0.2; 0.10; Tessa; both Sue and Tessa gain

d. 5.0; 10.0; Tessa; Sue loses but Tessa gains

e. 5.0; 10.0; Sue; both Sue and Tessa gain

8. The price elasticity of demand is a units-free measure of the responsiveness of the ________ when all other influences on buying plans remain the same.

a. quantity demanded to a change in the price of a substitute or complement

b. quantity demanded to a change in income

c. quantity demanded of a good to a change in its price

d. price to a change in quantity demanded

e. none of the above

9. The demand curve shifts downward to the right because

a. an increase in income leads to increased consumption

b. of the law of supply

c. of the law of demand

d. of comparative advantage

e. as income rises, the quantity demanded decreases

10. At price P3 in the figure,

a. This market is in equilibrium

b. There is a shortage in the amount Q5 – Q1

c. Equilibrium quantity is Q5

d. There is a surplus in the amount of Q5 – Q1

e. There is a tendency for the price to rise