A horizontal demand curve shows that demand for a good is _____.
a. perfectly inelastic
b. moderately inelastic
c. unit-elastic
d. moderately elastic
e. perfectly elastic
QUESTION 2Indifference curves have which of the following properties?
a. Higher indifference curves represent greater total satisfaction.
b. Indifference curves are negatively sloped.
c. Indifference curves are convex from the origin.
d. All of the above.
QUESTION 3The greater the elasticity of supply of a resource the greater is its economic rent.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 4An economic survey observed that a 20 percent cut in the price of a certain line of women's clothing, almost doubled the quantity demanded of the clothing. This led economists to conclude that the demand for this line of clothing is _____.
a. highly elastic
b. highly inelastic
c. unit-elastic
d. perfectly elastic
e. perfectly inelastic
QUESTION 5A consumer's indifference curve shows:
a. all the commodity bundles a consumer can afford.
b. only commodity bundles that maximize utility.
c. the equilibrium commodity bundles.
d. various combinations of goods that yield the same level of total utility to this consumer.
QUESTION 6Economic rent is the sum of actual earning and transfer earning.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 7If the demand for corn is elastic, then:
a. there are not many substitutes for the consumption of corn.
b. the price elasticity of demand for corn is less than -1.
c. a decrease in price will reduce total revenue for corn producers.
d. an increase in price will increase total revenue for corn producers.
e. consumers will continue buying the same quantity even if price increases.
QUESTION 8The idea that when we own something we value it more than other people do is called:
a. self control
b. anchoring
c. compartmentalizing
d. the endowment effect
QUESTION 9Consider a perfectly competitive firm that can raise its output by 2 units by hiring an additional unit of capital. If the cost of hiring this additional unit of capital is 4 and the market price of the good is 1, the firm will certainly hire this unit of capital. Hint: MRP = MP X MR
a. True
b. False
Indicate whether the statement is true or false
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