Microeconomics Answers

1) What is market equilibrium ? With the aid of a diagram, explain how changes in the market conditions will affect the market equilibrium. [ 12 marks ]

2) Using supply and demand analysis explain the effect on the equilibrium price and quantity of lamb meat in country X when there is a introduction of sales tax on all meat sold. [ 7 marks ]

3.a. Define elasticity of supply and find the price from the given statement: If Es of a good is 2 and a firm supplies 200 units at price of Rs 8 per unit, then at what price will the firm supply 250 units.

3.b. Calculate the elasticity of supply if a 15 %increase in the price of soya bean oil increases its supply from 300 to 345 units.

1. In a market-oriented economy, no government

1. Can exist.
2. Agency or guiding intelligence oversees responses and interconnections resulting from a change in price.
3. Is ever necessary.
4. All of the above.
5. Potatoes.

1. How would increased U.S. public debt affect equilibrium price and quantity for capital in U.S. financial markets?

1. The supply of financial capital would decrease.
2. Interest rates would rise.
3. The amount of financial investment would decrease.
4. All of the above.
5. None of the above.

2. Firms that issue credit cards:

1. Must charge higher interest rates to cover losses created by those who do not repay loans.
2. Must charge higher interest rates to satisfy the price ceiling imposed by the government.
3. Must charge higher interest rates to satisfy the price floor imposed by the government.
4. Must charge lower rates to cover losses created by those who do not repay loans.
5. All of the above. 

3. The market system is:

1. An efficient mechanism for information.
2. Rarely used in the real world.
3. The only system used in the real world.
4. All of the above.
5. None of the above.

QUESTION 19

A typical credit card interest rate ranges from:

1. Zero to infinity.
2. Zero to infinity and beyond.
3. 12% to 18% per year.
4. 12% to 18% per month.
5. Alabama to New York.

QUESTION 20

The interest rate:

1. Is unrelated to future events.
2. Measures the price in financial markets.
3. Is the sole determinant of the future of our economy.
4. Is too high when there is a shortage of loans available.
5. Is too low when there is a surplus of loans available. 

QUESTION 21

Evidence exists that Social Security:

1. Is perfect.
2. Has never benefitted anybody.
3. Has tended to decrease the amount of financial capital saved by workers.
4. Has tended to increase the amount of financial capital saved by workers.
5. Has tended to decrease the amount saved by shoppers with coupons.

QUESTION 22

When consumers have greater confidence that they will be able to repay in the future:

1. The demand for financial capital increases.
2. The demand for financial capital decreases.
3. The demand for financial capital remains unchanged.
4. All of the above.
5. None of the above.

QUESTION 13

Government policies:

1. Change the relative desirability of working versus not working..
2. Affect the labor supply.
3. May involve unemployment benefits or maternity leave.
4. May involve child care benefits or welfare policy.
5. All of the above. 

QUESTION 14

Many economists believe that the trend toward greater wage inequality across the U.S. economy:

1. Is fiction.
2. Does not really exist.
3. Is caused by improvements in technology.
4. Will eliminate discrimination.
5. Will eliminate poverty.

QUESTION 15

Rules that prevent people from earning income:

1. Can never succeed.
2. Have no unintended consequences.
3. Have no unforeseen consequences.
4. Are not politically popular.
5. Are very popular with politicians.

QUESTION 16

Only about 1% of U.S. workers are paid minimum wage.

1. The rest are paid less.
2. A small minority is paid higher wages.
3. The vast majority has its wages determined by the market.
4. It has no impact on our society.
5. It is the primary factor influencing our economy.

  QUESTION 9

Increased levels of productivity within the workforce will cause:

1. Shortages.
2. Surpluses.
3. An increase in the demand for labor.
4. A decrease in the demand for labor.
5. A decrease in the supply of labor.

QUESTION 10

Complying with government regulations:

1. Will definitely increase the demand for labor.
2. Will definitely decrease the demand for labor.
3. Will not affect the demand for labor.
4. Could increase or decrease the demand for labor.
5. Is tasty.

QUESTION 11

The supply curve shows the tradeoff between:

1. Supplying labor and pursuing leisure activities.
2. Supplying labor and working.
3. Demanding labor and working.
4. Demanding labor and pursuing leisure activities.
5. A tractor.

QUESTION 12

Why is there a lower supply of Ph.D. mathematicians than of high school math teachers?

1. Because teaching college-level math is more fun.
2. Because teaching high school math is more fun.
3. Because more required education causes lower supply.
4. Because more required education causes higher supply.
5. Because more required education causes lower demand.

QUESTION 6

This is a common way to measure the quantity of labor.

1. The number of potatoes pealed.
2. The number of hours worked.
3. The wage rate.
4. The minimum wage.
5. All of the above.

QUESTION 7

As the salary for nurses increases:

1. The number of nurses demanded will fall.
2. The number of nurses hired will decline.
3. Some nurses will be laid off.
4. The quantity of nurses supplied will increase.
5. All of the above.

QUESTION 8

This shows the amount of labor employers wish to hire at any given salary or wage rate.

1. The demand curve for labor.
2. The supply curve for labor.
3. The equilibrium wage.
4. The minimum wage.
5. The equilibrium quantity.

QUESTION 9

Increased levels of productivity within the workforce will cause:

1. Shortages.
2. Surpluses.
3. An increase in the demand for labor.
4. A decrease in the demand for labor.
5. A decrease in the supply of labor.

QUESTION 1

As the baby boomer population grows older:

1. They may require hospitalization, long-term, or at-home nursing care.
2. They will not require hospitalization.
3. They will all receive long-term nursing care.
4. They will all receive at-home nursing care.
5. All of the above. 

QUESTION 2

Registered nursing jobs are expected to:

1. Decrease in the near future.
2. Increase in the near future.
3. Push down nursing wages in the near future.
4. All of the above.
5. None of the above.

QUESTION 3

Our study of demand and supply will help us to analyze what might happen:

1. Only in the labor market for nursing.
2. Only in the labor market for other healthcare professionals.
3. In the labor market for nursing and other healthcare professionals.
4. Only in the market for auto mechanics.
5. Only in the market for morons.

QUESTION 4

These apply to any market, even for markets for things that we may not think of as goods and services.

1. The theory of minimum wage.
2. The theory of price ceilings.
3. The theory of price floors.
4. The theories of demand and supply.
5. All of the above.