Week 4

Question 1

True or False: The demand for tyres should be more inelastic than the demand for Michelin brand tyres.

Answer 1

True

Question 2

In general, a flatter demand curve is more likely to be

compared to a steeper demand curve

Answer 2

price elastic

Question 3

Suppose the equilibrium price for apartments is £500 per month and the government imposes rent controls of £250. Which of the following is likely to occur as a result of the rent controls?

Answer 3

There will be a shortage of housing

Question 4

Two goods are said to be substitutes if their cross price elasticity is

Answer 4

+

Question 5

Along any straight line demand curve:

Answer 5

The price elasticity varies, but the slope remains the same

Question 6

T or F A minimum wage for 17 year olds, set under the market equilibrium wage in the labour market for 17 year olds is an example of a ‘binding price floor’.

Answer 6

F

Question 7

T or F: The minimum wage helps all teenagers because they receive higher wages than they would otherwise.

Answer 7

F

Question 8

T or F: If medicine is a necessity, the burden of a tax on medicine will probably fall more heavily on the buyers of medicine.

Answer 8

T

Question 9

T or F: A 10 per cent increase in the minimum wage is more likely to raise unemployment among teenage workers than among mid-career professional workers

Answer 9

T

Question 10

Two goods are said to be complements if their cross price elasticity is

Answer 10

-

Question 11

What does the region of mutual advantage represent in an edge worth box diagram?

Answer 11

It is the area where all the Pareto preferred points are located. This means that all points here make at least one person better off without making anyone else worse off.