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# BASICS OF DEMAND AND SUPPLY- CSEET MCQ

1. If supply for product A is perfectly elastic, the demand for this product increases:

A. the equilibrium price and quantity will increase;

B. the equilibrium price and quantity will decrease;

C. the equilibrium quantity will increase but the price will not change;

D. the equilibrium price will increase but the quantity will not change.

2. Suppose 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:

A. will increase;

B. will decrease;

C. will remain constant;

D. can not be determined.

3. If the demand for agricultural products is inelastic:

A. as the prices decrease, the revenues earned by producers increase;

B. as the prices decrease, the revenues earned by producers decrease;

C. rising prices do not lead to differentiation in producers' incomes;

D. the percentage decrease in prices is lower than the percentage increase in demand.

4. 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:

A. a parallel shift of the budget line to the left;

B. a change in the slope of the budget line;

C. no change in the budget line;

D. a parallel shift of budget line to the right.

5. The price of the product A was reduced from 100 to 90 Rs and, as a result, the quantity demanded has increased from 70 to 75 units. The demand is:

A. inelastic;

B. elastic;

C. unit elastic;

D. can not be determined from the given information.

6. Find the false statement:

A. in general, the demand for necessity goods is less elastic than demand for luxury goods;

B. if the price and the producers` income are directly proportional, the demand is elastic;

C. after a long period of time since the change in the price of the good A, supply becomes more elastic;

B. 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 on

the secondary good`s market will increase (and vice versa).

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

A. A and B are substitute goods;

B. A and B are complementary goods;

C. A is an inferior good, and B is a superior good;

D. Both goods A and B are inferior.

8. 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:

A. the revenues earned by producers decrease;

B. the revenues earned by producers increase;

C. the revenues are not influenced in any way;

D. the company's expenses rise.

9. If a price increase of 50% results in an increase in the quantity supplied of an economic good from 10 to 20 pieces, calculate the coefficient of price elasticity of supply.

A. Â¼.

B. Â½;

C. 1;

D. 2.

10. The total utility coincides with the marginal utility:

A. for the first unit consumed;

B. only for the irrational consumer;

C. at the level of the last unit consumed;

D. at the saturation point.

11. The indifference curve means:

A. equal consumption of two goods;

B. equal utility from the consumption of two combinations of goods;

C. equal consumer income;

D. equal prices of the goods consumed.

12. The points located at the intersection of the budget line with the coordinate axes mean:

A. the consumer does not spend all his income;

B. the consumer spends all his income for only one good;

C. the consumer spends absolutely nothing;

D. these are points impossible to reach by the consumer.

13.Which of the following statements are false?

A. information, the entrepreneur's ability, technical progress are neo-factors of production;

B. according to the stages of the circular flow of the company's capital, it takes three forms: money, capital goods and commodity;

C. fixed capital depreciation is only due to physical deterioration;

D.the factors of production are resources attracted and used in economic activity.

14. Which of the following aspects distinguish fixed capital from working capital:

a. the number of cycles of production they participate in;

b. the location of the production activity;

c. the period of time after which they are replaced;

d. the way they transmit their value to the new product.

A (a,d)

B (c,d)

C (a,c,d)

D (b,c,d)

15.Fixed cost includes:

a. expenditures for the salaries of the administrative staff;

b. expenditure for depreciation of fixed capital;

c. energy costs for manufacturing;

d. expenditure for general lighting.

A. (a,b,c)

B. (a,b,d)

C. (a,c,d)

D. (b,c,d)

16. When production volume is zero:

a. the fixed cost is 0;

b. the variable cost is 0;

c. the fixed cost is higher than the variable cost;

d. the variable cost is higher than the fixed cost.

A (a,b,c)

B (b,c,d)

C (b,c)

D (a,d)

17.Which of the following statements is false:

A. perfect competition involves many sellers of standardized products;

B. monopolistic competition involves many sellers of homogeneous products;

C. the oligopoly involves several producers of standardized or differentiated products;

D. monopoly involves a single product for which there are no close substitutes.

18.On the market with perfect competition:

A. the firm is a "price-taker," meaning, it takes over the market price;

B. the firm is a "price-maker", meaning, it determines the market price;

C. the companiesâ€™ products are differentiated;

D. input barriers are minimal, and exit barriers are maximal.

19. Which of the following conditions indicate that a good is produced under perfect competition:

A. producers` profits are high;

B. producers` profits are small;

C. total supply is inelastic;

D. individual demand is perfectly elastic.

20. Which of the following statements about monopoly is true:

A. there are several companies producing a specific product;

B. there is only one producing company, but the product has close substitutes;

C. there are no competitors on the relevant market;

D. input barriers are low.

21.There are differences between monopolistic and perfect competition regarding:

A. market entry;

B. the number of sellers and buyers;

C. the market power of competitors;

D. homogeneity of products.

22. Which of the following can be considered as the basic features of public goods:

A. are state-owned;

B. are characterized by non-excludability and non-rivalry;

C. are characterized by excludability and rivalry;

D. may be positive or negative.

23. Which of the following solutions are not part of the ways of internalizing externalities:

A. the imposition of fines on the producer of negative externalities;

B. the introduction of taxes and duties that bring private costs to the level of social costs;

C. closure of companies producing positive or negative externalities;

D. the association of the negative externality manufacturer with the receptor of such an effect.

24. Normally, the natural economy is characterized by:

A. price formation through complex mechanisms;

B. perfect competition;

C. the preponderance of product exchange;

D. the satisfaction of the individual and community needs of its own production.

25. Which of the following features define human needs:

A. are not concurrent;

B. do not disappear momentarily if they are satisfied;

C. are unlimited in capacity;

D. are unlimited in number.