PPSC Economics Topic 6 Economics Models

Question # 1

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

slope of the demand curve A
Excess demand B
Price elasticity of demand C
All of the above D

Question # 2

Suppose the demand curve for a good shifts rightward, causing the equilibrium price to increase this increase in the price of the good results in.

A rightward shift of the supply curve A
An increase in quantity supplied B
A leftward shift of the supply curve C
A leftward movement along the supply curve D

Question # 3

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

Force the model to yield the correct answer A
Minimize the amount of work an economist must do B
simplify the model while keeping important details. C
Express the relationship mathematically. D

Question # 4

Consumers and firms are known as price takers only it

No market exists to determine the equilibrium price A
they can set the market price B
They cannot effect the market price C
Excess demand exists D

Question # 5

Holding all other factors constant consumers demand more of a good the

Higher its price A
Lower its price B
Steeper the downward slope of the demand curve C
Steeper the upward slope of the demand curve D

Question # 6

Economists tend to judge a model based upon

the realty of its assumptions A
The accuracy of its predications B
Its simplicity C
Its complexity D

Question # 7

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

Leftward shift in the supply curve A
Rightward shift in the supply curve B
Movement up long the supply curve C
Movement down along the supply curve D

Question # 8

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

Sensitive to changes in the price of that good A
Not sensitive to changes in the price of that good. B
Irrational C
Not interested in that good D

Question # 9

A vertical demand curve results in.

No change in quantity when the supply curve shifts. A
No change in price when the supply curve shifts B
No change in the supply curve being possible C
No change in quantity when the demand curve shifts. D

Question # 10

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

Leftward shift of the demand curve A
Right ward shift of the demand curve B
Movement up along the demand curve C
Movement down along the demand curve D

Question # 11

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

a price of zero A
An increase in price B
A decrease in price C
No change in price D

Question # 12

A specific tax on sellers will

shift the demand curve to the right A
Shift the demand curve the left B
Shift the supply curve to the right C
Shift the supply curve to the left D

Question # 13

Equilibrium is defined as a situation in which.

Neither buyers nor sellers want to change their behavior A
No government regulations exist B
Demand curves are perfectly horizontal C
suppliers will supply and amount that buyers wish to buy D

Question # 14

In the labor market if the government imposes a minimum wage that is below the equilibrium wage then.

Workers who wish to work at the minimum wage will have a difficult time finding jobs. A
Firms will hire fewer workers than without the minimum wage law. B
Some workers may lose their jobs as a result C
Nothing will happen to the wage rate or employment D

Question # 15

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

Shifting the demand curve leftward A
Shifting the demand curve rightward B
Moving down along the same demand curve C
Moving up long the same demand curve D

Question # 16

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

At a given price A
At all prices and then sum this amount across all consumers B
Both a and b will generate the same total demand C
None of the above D

Question # 17

A competitive equilibrium is described by

A price only A
A quantity only B
The excess supply minus the exceess demand. C
A price and a quantity D

Question # 18

It is appropriate to use the supply and demand model if in a market.

Everyone is a price taker with full information about the price and quantity of the good. A
Firms sell identical products B
Costs of trading are low C
All of the above D

Question # 19

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

Are irrational A
Are not sensitive to price changes B
View this good as identical to another good C
Have no equivalent substitutes for this good D

Question # 20

For a given positively sloped supply curve the price increase to consumers resulting from a specific tax imposed on sellers will be.

Greater the more price elastic demand is A
Greater the less price elastic demand is B
Equal to the entire tax when demand is perfectly elastic C
Equal to half of the tax whenever demand is unit elastic D

Sr.#	Question	Answer
1	In the labor market if the government imposes a minimum wage that is below the equilibrium wage then.	A. Workers who wish to work at the minimum wage will have a difficult time finding jobs. B. Firms will hire fewer workers than without the minimum wage law. C. Some workers may lose their jobs as a result D. Nothing will happen to the wage rate or employment
2	If government regulations prohibit the production of a particular good the demand curve for that good will most likely.	A. Shift leftward B. Shift rightward C. Remain unchanged D. Disappear
3	Suppose the demand curve for a good shifts rightward, causing the equilibrium price to increase this increase in the price of the good results in.	A. A rightward shift of the supply curve B. An increase in quantity supplied C. A leftward shift of the supply curve D. A leftward movement along the supply curve
4	The expression increase in quantity supplied is illustrated graphically as a.	A. Leftward shift in the supply curve B. Rightward shift in the supply curve C. Movement up long the supply curve D. Movement down along the supply curve
5	If the demand curve for a good is horizontal and the price is positive then a leftward shift of the supply curve results in.	A. a price of zero B. An increase in price C. A decrease in price D. No change in price
6	To determine the total demand for all consumers sum the quantity each consumer demands.	A. At a given price B. At all prices and then sum this amount across all consumers C. Both a and b will generate the same total demand D. None of the above
7	A Horizontal demand curve for a good could arise because consumers.	A. Are irrational B. Are not sensitive to price changes C. View this good as identical to another good D. Have no equivalent substitutes for this good
8	Holding all other factors constant consumers demand more of a good the	A. Higher its price B. Lower its price C. Steeper the downward slope of the demand curve D. Steeper the upward slope of the demand curve
9	An increases in the demand curve for orange juice would be illustrated as a.	A. Leftward shift of the demand curve B. Right ward shift of the demand curve C. Movement up along the demand curve D. Movement down along the demand curve
10	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.	A. -1.25 B. Inelastic C. Both a and b D. Neither A nor B above

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