Question # 1

Economists tend to judge a model based upon

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the realty of its assumptions

The accuracy of its predications

Its simplicity

Its complexity

A vertical demand curve for a particular good implies that consumers are.

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Sensitive to changes in the price of that good

Not sensitive to changes in the price of that good.

Irrational

Not interested in that good

Consumers and firms are known as price takers only it

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No market exists to determine the equilibrium price

they can set the market price

They cannot effect the market price

Excess demand exists

As the price of a good increases, the change in the quantity demanded can be shown by

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Shifting the demand curve leftward

Shifting the demand curve rightward

Moving down along the same demand curve

Moving up long the same demand curve

To determine the total demand for all consumers sum the quantity each consumer demands.

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At a given price

At all prices and then sum this amount across all consumers

Both a and b will generate the same total demand

None of the above

A competitive equilibrium is described by

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A price only

A quantity only

The excess supply minus the exceess demand.

A price and a quantity

If the price of orange juice rises 10% and as a result the quantity demanded falls by 8% the price elastic of demand for orange juice is.

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-1.25

Inelastic

Both a and b

Neither A nor B above

If the price of automobile were to decrease substantially the demand curve for automobiles would most likely.

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shift rightward

Shift left eard

Remain unchanged

Become steeper

When two goods are substitutes a shock that raises the price of one good causes the price of the other goods to.

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Remain unchanged

Decrease

Increase

Change in an unpredictable manner

A Horizontal demand curve for a good could arise because consumers.

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Are irrational

Are not sensitive to price changes

View this good as identical to another good

Have no equivalent substitutes for this good

The percentage change in the quantity demanded in response to a percentage change in the price is known as the.

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slope of the demand curve

Excess demand

Price elasticity of demand

All of the above

The purpose of making assumptions in economic model building is to.

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Force the model to yield the correct answer

Minimize the amount of work an economist must do

simplify the model while keeping important details.

Express the relationship mathematically.

If the price of automobiles were to decrease substantially the demand curve for public transpiration would most likely.

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shift rightward

Shift leftward

Remain unchanged

Remain unchanged while quantity demanded would change

Most Microeconomic models assume that decision makers wish to.

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Make themselves as well off as possible

Act selfishly

Not cooperate with others

None of the above

The expression increase in quantity supplied is illustrated graphically as a.

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Leftward shift in the supply curve

Rightward shift in the supply curve

Movement up long the supply curve

Movement down along the supply curve

A specific tax on sellers will

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shift the demand curve to the right

Shift the demand curve the left

Shift the supply curve to the right

Shift the supply curve to the left

Equilibrium is defined as a situation in which.

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Neither buyers nor sellers want to change their behavior

No government regulations exist

Demand curves are perfectly horizontal

suppliers will supply and amount that buyers wish to buy

If the demand curve for a good is horizontal and the price is positive then a leftward shift of the supply curve results in.

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a price of zero

An increase in price

A decrease in price

No change in price

If the price of automobiles were to increase substantially the demand curve for gasoline would most likely

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Shift leftward

Shift right ward

Become flatter

Become steeper

An increases in the demand curve for orange juice would be illustrated as a.

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Leftward shift of the demand curve

Right ward shift of the demand curve

Movement up along the demand curve

Movement down along the demand curve

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