Multiple choice question and 3 short answered question. The work is to be 1 page with three to five sources, with in-text citations and a reference page. Section Multiple choice questions (15 marks
1.The economic behavior of individual decision makers and the determination of price and output in specific markets are both studied in a) microeconomics
2. All economic questions arise from b) scarcity
3. Because the resources are scarce, we must give up some of one good in order to acquire more of another. This is the concept of : a) opportunity costs
4. The demand curve for video players shifts to the right. This could be caused by: b) an increase in the price of DVDs
5. The demand curve for motor vehicles will shift to the right if: c) advertising expenditure on motor vehicles increases.
6. If the price of coffee increases which of the following is most likely to happen? d) an increase in the demand for substitutes such as tea
7. Which of the following would shift the supply curve for a product to the right? d) an improvement in the technology for producing the good
8. Assuming fruit juice and soft drinks are substitutes, a decrease in the price of fruit juice, other things being equal, results in b) a leftward shift in the demand curve for soft drink
9. Which of the following is not a determinant of supply: b) income
10. The equilibrium price is d) the price where quantity demanded equal quantity supplied
11. If the demand for a product is inelastic, a 2.0 percent increase in the price of product will: d) decrease the quantity demanded by less than 2.0 percent
12. Suppose that the price of a product increases from $5.00 to $5.50 and as result the quantity supplied increases from 162 to 192. Based upon this information we would conclude that the supply for this product in this price range is: c) elastic
13. If demand for a commodity is price elastic, then the price elasticity of demand is: b) greater than 1 and the producer should lower the price to increase the revenue
14. If an increase in train fares in Sydney raises total revenue of the operators, this is evidence that demand is: b) price inelastic
15. For which of the following is demand most likely to be price inelastic? c) veal
Question 1a) Everyone expects the price of a mobile phone to fall next month
b) The price of a call made from a mobile phone falls
c) The price of a call made from a land-line phone increases Explain the effect of each event on the demand for mobile phones. Use graphs to show the effects of each event. Does any event (or events) illustrate the law of demand? Explain.
a) If everyone expects the price of a particular mobile phone to fall next month then no one will be willing to buy the mobile phone this month.
b) Using a mobile phone becomes less expensive.
c) If using landlines becomes more expensive then the demand for its substitutes, namely the mobile phone will increase.
Question 2 (30 marks) Show the effects of each of the following changes on the equilibrium price and quantity of cars in Australia. The use of the graph (s) is essential a. An increase in average household income b. A steep rise in petrol price c. An increase in the price of cars
3. a) Draw a diagram to show the change in the coffee market that has resulted in higher prices for coffee.
b) Draw a diagram to show the change in the tea market that has resulted in higher prices for tea.
c) Explain the non-price determinants involved in the change in each market.
d) Why would the writer suggest coffee drinkers might be thinking of switching to tea.