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Assignment 01 (Economics)

This document contains an economics assignment completed by Mohammed Ali. It includes 16 multiple choice questions testing concepts related to demand and supply, elasticity, consumer and producer surplus, and costs of production. Mohammed scored full points on the assignment, correctly answering all questions. The final bonus question asked about economies of scale based on total cost data points for a firm, which Mohammed answered as exhibiting economies of scale because average total cost is falling as output rises.

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Iqtidar Khan
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© © All Rights Reserved
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Download as DOCX, PDF, TXT or read online on Scribd
67 views

Assignment 01 (Economics)

This document contains an economics assignment completed by Mohammed Ali. It includes 16 multiple choice questions testing concepts related to demand and supply, elasticity, consumer and producer surplus, and costs of production. Mohammed scored full points on the assignment, correctly answering all questions. The final bonus question asked about economies of scale based on total cost data points for a firm, which Mohammed answered as exhibiting economies of scale because average total cost is falling as output rises.

Uploaded by

Iqtidar Khan
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Name: Mohammed Ali Sec: 01 Roll No: 172019 Date: 15/12/2017

Assignment-1 (Economics for Business-EMBA)


Total Points: 16

Instruction: There are 16 questions, Answer all the Questions, each question has one point.
No additional sheet is allowed for this quiz. For rough work use the back side of the question
paper. Choose the best answer. 16th question is bonus question.

1. A right ward shift in the supply curve assuming no change in demand curve will
a. Increase the price and decrease the quantity demanded.
b. Decrease the price and increase the quantity demanded.
c. Price and quantity will be the same
d. None of the above

2. Suppose the market for apples can be described by the graph below

a. If Abdul is willing to pay as much as $9 for an apple, how much surplus would he
receive if he pays the market price for an Apple? ____3_______.
b. What is the total surplus (combined consumer and producer surplus) in the
market?__=0.5*(11-4)*200=700___________.

3. Within the Demand and Supply Model, a tax collected from buyers of a good shifts the
a. Demand curve upward by the size of the tax amount.
b. Demand curve downward by the size of the tax amount.
c. Supply curve downward by the size of the tax amount.
d. Supply curve upward by the size of the tax amount.

4. To say that a price ceiling is binding is to say that the price ceiling
a. Results in a surplus
b. Is set above the equilibrium price
c. Causes quantity demanded to exceed quantity supplied
d. None of the above

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Name: Mohammed Ali Sec: 01 Roll No: 172019 Date: 15/12/2017

5. The government wants to reduce the consumption of electricity by 5%. The price
elasticity of demand for electricity is 00.4. The government should 12.5%

6. Yesterday, the price of envelopes was $3 a box, and John was willing to buy 10 boxes.
Today, the price has gone up to $3.75 a box, and John is now willing to buy 8 boxes. Is
John's demand for envelopes elastic or inelastic? What is John's elasticity of demand?
inelastic; 5.2

7. Joes demand for spring water can be represented as p = 20 Q (where p is measured


in $/gallon and Q is measured in gallons). He recently discovered a spring where water
can be obtained free of charge. His consumer surplus from this water is $200.

8. Suppose the market supply curve is P = 5 + Q. At a price of 10, producer surplus equals
12.50.

9. Suppose there are two goods, x and y. A consumption bundle A yields the same amount
of total utility as consumption bundle B, then

a. A and B must have the same amount of x and y


b. A is on a higher indifference curve than B
c. B is on a higher indifference curve than A
d. A and B are on the same indifference curve

10. If goods A and B are substitutes, a decrease in the price of good B will
a. increase the demand for good A
b. increase the quantity demanded of good B
c. decrease the demand for good A
d. both b and c

11. Goods with many close substitutes tend to have


a. more elastic demands
b. less elastic demands
c. elasticity of demand is equal to one
d. Income elasticity is negative.

12. A tax imposed on a market with an inelastic demand and an elastic supply will cause
a. Sellers to pay the majority of the tax.
b. Buyers to pay the majority of the tax
c. The tax burden to be equally divided between buyers and sellers

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Name: Mohammed Ali Sec: 01 Roll No: 172019 Date: 15/12/2017

d. The tax burden to be divided, but it is difficult to say who will share more.
13. If a market produces a level of output that exceeds the competitive equilibrium output,
then
a. Social welfare will be higher.
b. Producer surplus will be higher.
c. Cost to the sellers will be higher than the value to the buyers
d. Cost to the sellers will be lower than the value to buyers
e. All of the above.
14. You are given market data that says when the price of pizza is $4, the quantity
demanded of pizza is 60 slices and the quantity demanded of cheese bread is 100
pieces. When the price of pizza is $2, the quantity demanded of pizza is 80 slices and the
quantity demanded of cheese bread is 70 pieces.
a. Can the Price-Elasticity of Demand be calculated for either good? __yes____
b. If so, calculate the Price Elasticity of Demand ___-0.67________

15. An economy has only two goods, bread and wine, both of which have positive economic
value. The baskets (5 bread + 2 wine) and (3 bread + 6 wine) lie on indifference curve J,
and the basket (6 bread+ 4 wine) lies on indifference curve K. Which of the following
cannot also lie on indifference curve K?
a. 2 bread and 5 wine
b. 1 bread and 9 wine
c. 0 bread and 15 wine
d. 8 bread and 1 wine
e. 15 bread and 0 wine
16. In the long run Firm A incurs total costs of $1,200 when output is 30 units and $1,400
when output is 40 units. Firm A exhibits
a. diseconomies of scale because total cost is rising as output rises
b. diseconomies of scale because average total cost is rising as output rises
c. economies of scale because total cost is rising as output rises
d. economies of scale because average total cost is falling as output rises

------------------End of Question paper-----------------------------

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