KIIT University 2008 micro-economics - exam paper

d. None of the above.

23. A price set beneath an established equilibrium is known as a ______________.

24. A price set above an established equilibrium is known as a ______________.

25. Demand is inelastic if:
a. A 20% change in price leads to a 20% change in demand.
b. A 20% change in price leads to a 30% change in demand.
c. A 20% change in price leads to a 10% change in demand
d. A 20% change in price leads to no change in demand.

26. Demand is perfectly inelastic if:
a. A 20% change in price leads to a 20% change in demand.
b. A 20% change in price leads to a 30% change in demand.
c. A 20% change in price leads to a 10% change in demand
d. A 20% change in price leads to no change in demand.

27. Supply is perfectly inelastic if:
a. the supply curve is horizontal
b. the supply curve is vertical
c. an increase in demand raises equilibrium price, but keeps equilibrium volume unchanged.
d. b and c
e. All of the above.

28. A rise in good's price from $5 to $7 causes volume demanded for that good to decline from 5000 to 3000 units. This means the value of the price elasticity of demand is:
a. (-)1.5
b. (-)0.5
c. (-)1.0
d. (-)2.0
e. None of the above.

29. An example of a product that exhibits an inelastic demand would be:
a. Medicine
b. Gasoline
c. Lock and key
d. All of the above.
e. None of the above.

30. An increase in the price of an item from $400 to $800 leads to a rise in the item's volume supplied from 200,000 to 300,000 units. The value of the price elasticity of supply is therefore:
a. 0.5
b. 0.7
c. 0.6
d. 1.0
e. 0.8

31. A situation in which a percentage increase in all inputs causes a larger percentage increase in output is known as _____________returns to scale.

32. A situation in which a percentage increase in all inputs causes a equal percentage increase in output is known as _____________returns to scale.

33. A business maximizes productive efficiency by:
a. using the fewest resources
b. using the most resources.
c. producing the most output
d. producing the output level with the least possible cost

Earning:   Approval pending.