Unit 2 MCQ Review / Revision

cross-price elasticity: Price elasticity (absolute value)= 0.75 Cross-price elasticity with respect to good X= 0.8 Cross-price elasticity with respect to good Y=2 Cross-price elasticity with respect to good Z=−2.5 Income elasticity=−0.5 Which of the following would result in the greatest rightward shift of the demand curve for good J

A 10% increase in the price of good Y

Consider the market for arugula, a normal good. Which of the following changes would result in an increase in both the equilibrium price and the equilibrium quantity of arugula?

A decrease in the price of radicchio, a substitute

The tables below show the domestic demand and domestic supply for two small countries participating in a large global market with a world price of coffee equal to $3. Country A Price Quantity Demanded Quantity Supplied 2 40 0 3 30 10 4 20 20 5 10 30 6 0 40 Country B Price Quantity Demanded Quantity Supplied 0 20 0 1 15 5 2 10 10 3 5 15 4 0 20 Which of the following would be true given the price in the world market is $3

Country A would import 20 units of coffee, and Country B would export 10.

Which of the following correctly describes the income effect associated with the law of demand?

If the price of a normal good decreases, the purchasing power of a consumer's income increases and therefore consumers will be willing and able to purchase more of the good.

In which of the following cases would government intervention in a market result in an increase in the quantity sold?

Providing producers of a product with a per unit subsidy

A change in which of the following causes a movement along a given demand curve for a normal good?

The price of the good

Which of the following will initially result from an increase in the market demand for a good?

There will be a temporary shortage at the original equilibrium price.