KOLEJ TEKNOLOGI ALPHA PRINCIPLES OF ECONOMICS (ECO1033)

KOLEJ TEKNOLOGI ALPHA PRINCIPLES OF ECONOMICS SEMESTER 1 2011/2012

QUIZ 1

NAME MATRIC IC NO. HP NO.

: __________________________________________ : __________________________________________ : __________________________________________ : __________________________________________

INSTRUCTIONS TO STUDENTS: 1) ANSWER ALL QUESTIONS. 2) PLEASE CIRCLE THE CORRECT ANSWER.

1. The fact that human wants cannot be fully satisfied with available resources is called the problem of:

KOLEJ TEKNOLOGI ALPHA PRINCIPLES OF ECONOMICS (ECO1033)

a. Scarcity. b. Choices. c. Opportunity cost. d. None of above. 1. All of the following can be considered a student's costs of going to college, except: a. Textbooks. b. Tuition and fees. c. Room and board (that costs her about the same as she was paying before entering college). d. The student's time, which can no longer be devoted to earning a salary. 1. Given the decreasing opportunity cost, the Production Possibilities Frontier is: a. Convex. b. Concave. c. Linear. d. Vertical linear. 1. Which of the following is true regarding the Production Possibilities Frontier Model of the economy? a. Any point along the PPF represents an efficient level of production. b. Any point in the area below the PPF represents a combination of production that is not feasible. c. The opportunity cost of producing one more unit of one of the goods represented in the PPF remains the same at any point along the PPF. d. Increases in the resources available for production will cause the PPF to shift towards the origin. 1. Economic growth in the economy can be portrayed in the Production Possibilities Frontier model as a: a. Movement up and to the left along the PPF. b. Shift of the PPF away from the origin. c. Movement down and to the right along the PPF. d. Shift of the PPF towards the origin.

1. Microeconomics is the study of: a. How governments can get the economy out of a recession.

KOLEJ TEKNOLOGI ALPHA PRINCIPLES OF ECONOMICS (ECO1033)

b. Economy-wide phenomena, including inflation, unemployment, and economic growth. c. How households and firms make decisions and how they interact in markets. d. How governments can reduce inflation. 1. Which of the following is an example of a normative statement? a. Higher interest rates will cause people to borrow and invest less. b. The government should increase spending during recessions, so that the economy recovers quickly. c. When the price of a good increases, consumers respond by reducing the quantity that they want to purchase of the good. d. Over the past 50 years, the number of women that participate in the labor force has increased dramatically. 1. Factors of production are: a. The coefficients in a production function. b. The characteristics of a market that determine how much is produced. c. The inputs used to produce goods and services. d. The outputs from a production function. 1. An increase in demand means that: a. When the price drops consumers are willing to purchase greater quantities of the good. b. Consumers are willing to purchase greater quantities of the good at any given price. c. When the price rises, consumers are willing to purchase greater quantities of the good. d. Consumers make the price drop by buying greater quantities of the good. 1. If the demand for coffee decreases as income decreases, coffee is: a. A normal good. b. A substitute good. c. A complementary good. d. An inferior good.

1. If good B is a substitute for good A, and the price of good B increases: a. The quantity demanded of good A will decrease. b. The demand for good A will increase.

KOLEJ TEKNOLOGI ALPHA PRINCIPLES OF ECONOMICS (ECO1033)

c. The price of good A will tend to decrease. d. The quantity demanded of good B will increase. 1. Movement along the demand curve for high rise apartments will be cause by a change in: a. Price of the single-storey link houses. b. Consumers income. c. Consumers taste and preference. d. Price of the high rise apartments. 1. When the price of a good increases:

a. The quantity supplied of the good will increase. b. The quantity supplied of the good will decrease. c. The supply curve of the good will shift to the right. d. The supply curve of the good will shift to the left. 1. All of the following are held to be constant when the supply curve for a product is drawn,
except: a. The price of the product. b. The state of the technology. c. The number of the producers. d. The price of inputs used to make the product.

1. A shift to either the left or right of a supply curve is called: a. A change in quantity demanded. b. A change in supply. c. A change in demand. d. A change in quantity supplied.
1. A new technology that helps firms reduce production costs will cause a:

a. Movement down and to the left along the supply curve. b. Movement up and to the right along the supply curve.
c. Shift to the right of the supply curve. d. Shift to the left of the supply curve. 1. If the price in a market happens to be below equilibrium, there will be a ________ in the market, and the price will tend to ________.

KOLEJ TEKNOLOGI ALPHA PRINCIPLES OF ECONOMICS (ECO1033)

a. Surplus, Drop. b. Surplus, Rise. c. Shortage, Drop. d. Shortage, Rise. 1. If the price in a market happens to be above equilibrium, there will be a ________ in the market, and the price will tend to ________. a. Surplus, Drop. b. Surplus, Rise. c. Shortage, Drop. d. Shortage, Rise. 1. Suppose the price of corn syrup increases. Given that corn syrup is a major ingredient in the production of soft drinks, how will this affect the equilibrium price and quantity in the soda market? a. The equilibrium price will increase and the equilibrium quantity will decrease. b. The equilibrium price will decrease and the equilibrium quantity will increase. c. Both the equilibrium quantity and price will increase. d. Both the equilibrium quantity and price will decrease. 1. When college students leave town for the semester break, the demand for meals at the local restaurants declines. This results in: a. A decrease in equilibrium price and an increase in quantity. b. An increase in equilibrium price and quantity. c. A decrease in equilibrium price and quantity. d. An increase in equilibrium price, and a decrease in quantity. 1. If a price floor is in place and it is binding, the market will: a. Remain in equilibrium, unaffected by the price floor. b. Experience a shortage. c. Experience a surplus. d. Adjust its equilibrium point toward the price floor.

1. If a price ceiling is in place and it is binding, the market will: a. Remain in equilibrium, unaffected by the price floor. b. Experience a shortage.

KOLEJ TEKNOLOGI ALPHA PRINCIPLES OF ECONOMICS (ECO1033)

c. Experience a surplus. d. Adjust its equilibrium point toward the price floor. 1. Black markets are associated with: a. Minimum price and resulting product surpluses. b. Minimum price and resulting product shortages. c. Maximum price and resulting product surpluses. d. Maximum price and resulting product shortages.

1. If a tax is imposed on buyers of a good, the ________ curve of the good will shift ________ by the amount of the tax. a. Demand, Upward. b. Demand, Downward. c. Supply, Upward. d. Supply, Downward. 1. If a tax is imposed on sellers of a good, the ________ curve of the good will shift ________ by the amount of the tax. a. Demand, Upward. b. Demand, Downward. c. Supply, Upward. d. Supply, Downward. 1. Subsidies given to vegetable farmers will result in: a. A shift in the supply curve of vegetables. b. A shift in the demand curve for vegetables. c. A movement along the supply curve of vegetables. d. A movement along the demand curve of vegetables. 1. Consumer surplus is the: a. Difference between what the consumer is willing to pay and what the consumer has to pay. b. Surplus of goods the consumer has after consuming all he/she needs from them. c. Excess number of goods consumers purchase over and above what they really need. d. Excess number of units firms produce over and above what consumers want to purchase.

KOLEJ TEKNOLOGI ALPHA PRINCIPLES OF ECONOMICS (ECO1033)

1. The consumer surplus can be expressed graphically as the area: a. Above the supply curve and below the price. b. Above the supply curve and below the demand curve. c. Below the supply curve and above the horizontal axis. d. Below the demand curve and above the price of the good. 1. The producer surplus can be expressed graphically as the area:

a. Above the supply curve and below the price. b. Above the supply curve and below the demand curve. c. Below the supply curve and above the horizontal axis. d. Below the demand curve and above the price of the good. 1. The producer surplus represents the: a. Production in a market over and above what consumers wish to purchase. b. Difference between the price of the good and the cost to the seller. c. Left over of raw materials and other inputs that firms have after producing the good. d. Left over of the good that remains unsold after the holiday season.

GOOD LUCK