Microeconomics Multiple Choice Questions and Answers

11. Choose the false statement:

1. in general, the demand for necessity goods is less elastic than demand for luxury goods
2. if the price and the producers income are directly proportional, the demand is elastic
3. after a long period of time since the change in the price of the good A, supply becomes more elastic
4. for a company whose production process involves making two goods, one main and the other secondary, if the price of the main good increases, - caeteris paribus - the supply onthe secondary goods market will increase (and vice versa)

12. For a rational consumer who has to choose between two goods in the context of budget constraints, the price change of one of the goods, caeteris paribus, will determine:

1. a parallel shift of the budget line to the left
2. a change in the slope of the budget line
3. no change in the budget line
4. a parallel shift of budget line to the right

13. If the coefficient of income elasticity of demand is higher than 1 and the revenue increases, the share of expenditures for commodity X in total expenditure:

1. will increase
2. will decrease
3. will remain constant
4. can not be determined

14. If the demand curve for product A moves to the right, and the price of product B decreases, it can be concluded that

1. A and B are substitute goods
2. A and B are complementary goods
3. A is an inferior good, and B is a superior good
4. Both goods A and B are inferior

15. If the demand for agricultural products is inelastic:

1. as the prices decrease, the revenues earned by producers increase
2. as the prices decrease, the revenues earned by producers decrease
3. rising prices do not lead to differentiation in producers incomes
4. the percentage decrease in prices is lower than the percentage increase in demand

16. On the market with perfect competition

1. the firm is a price-taker, meaning, it takes over the market price
2. the firm is a price-maker, meaning, it determines the market price
3. the companies’ products are differentiated
4. input barriers are minimal, and exit barriers are maximal

17. Suppose the price of a good decreases by 10% and the quantity demanded for a certain period of time increases by 15%. In these conditions:

1. the revenues earned by producers decrease
2. the revenues earned by producers increase
3. the revenues are not influenced in any way
4. the companys expenses rise

18. Suppose the supply for product A is perfectly elastic. If the demand for this product increases:

1. the equilibrium price and quantity will increase
2. the equilibrium price and quantity will decrease
3. the equilibrium quantity will increase but the price will not change
4. the equilibrium price will increase but the quantity will not change

19. The following data is given for a company: material costs 89 mil; working capital 45 mil; indirect salaries 10 mil; fixed costs 90 mil.; variable costs 52 mil. Calculate fixed material costs and depreciation:

1. 60 and 64
2. 70 and 56
3. 80 and 44
4. 89 and 45

20. The indifference curve means:

1. equal consumption of two goods
2. equal utility from the consumption of two combinations of goods
3. equal consumer income
4. equal prices of the goods consumed