Fundamentals of Economics
First Assignment on 15th of April
Student name:…………………………………………………………………
One point for each correct answer
Problem: Assume a demand and supply for pizza
Price Quantity Quantity Supplied
(Lebanese Demanded (*10Kg) (*10Kg)
pounds)
40 0 20
36 2 18
34 4 16
32 6 14
30 8 12
28 10 10
26 12 8
24 14 6
22 16 4
20 18 2
18 20 0
1- Specify the equilibrium price and equilibrium quantity for
pizza.
Answer =………….
.
2- At price of lbP.24, is there an excess demand (shortage) or
excess supply (surplus)?
Answer = …………….
1- Economics is the study of how
(a) scarce resources are used to satisfy unlimited wants.
(b) we choose to use unlimited resources.
(c) limitless resources are used to satisfy scarce wants.
(d) society has no choices.
Answer = …….
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Fundamentals of Economics
2- An increase in the price of chocolate is likely to cause in the
quantity of chocolate demanded. However, an increase in income
is likely to cause in the demand for most goods.
(a) a decrease; a decrease
(b) an increase; a decrease
(c) an increase; an increase;
(d) a decrease; an increase
Answer= ………
3- Law of supply: The relationship between price and quantity
supplied: As price rises, quantity supplied . As price falls,
quantity supplied .
(a) positive; increase; decrease
(b) negative; decreases; increases
(c) negative; decrease; decrease
(d) positive; increase; increase
Answer………..
4- The demand curve diagram has
(a) “price” on the vertical axis, “quantity demanded per time period”
on the horizontal axis, and an upward sloping demand curve.
(b) “price” on the horizontal axis, “quantity demanded per time
period” on the vertical axis, and an upward sloping demand
curve.
(c) “price” on the vertical axis, “quantity demanded per time period”
on the horizontal axis, and a downward sloping demand curve.
(d) “price” on the horizontal axis, “quantity demanded per time
period” on the vertical axis, and a downward sloping demand
curve.
Answer………..
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Fundamentals of Economics
5- Good A and Good B are substitutes for one another. An increase
in the price of A will
(a) increase the demand for B.
(b) reduce the quantity demanded of B.
(c) increase the quantity demanded of B.
(d) reduce the demand for B.
Answer=……….
6- If the economy’s income rises by 20% then, ceteris paribus,
we would predict
(a) a decrease in demand for a normal good.
(b) an increase in quantity demanded for a normal good.
(c) an increase in quantity demanded for an inferior good.
(d) a decrease in demand for an inferior good.
Answer= ………..
7- The opportunity cost of Choice X can be defined as
(a) the cheapest alternative to Choice X.
(b) the most highly valued alternative to Choice X.
(c) the price paid to obtain X.
(d) the most highly priced alternative to Choice X.
Answer= ……
8- … …….are essential to maintain life.
a) wants
b) goods
c) services
d) needs
Answer= ………
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Fundamentals of Economics
9- Which one of the following events is not considered as related to
microeconomics.
a) unemployment increases this month
b) a drug company invents and begins to market a new medicine
c) a teacher in the sector of education, negotiates for higher pay
and better health
insurance
d) the price of oil increases
Answer=………
10- The ceteris paribus assumption is used to
(a) make economic theory more realistic.
(b) make economic analysis more realistic.
(c) avoid the fallacy of composition.
(d) focus the analysis on the effect of a single factor.
Answer= ……..
11- As a student at Beirut Arab University, I am a ...
a) consumer of a service.
b) trader.
c) user of resources to make capital goods.
d) producer.
Answer= …….
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Fundamentals of Economics
12- 54 units of a good are bought when the price is £6 per unit. 30
units of the same good are bought when the price is £8 per unit.
Using the mid-point method, what is the price elasticity of demand?
a) -0.5
b) -12.0
c) -2.4
d) -2.0
Answer= ……..
13- If the price of product A declines, the demand curve for the
complementary product B will:
a) shift to the left.
b) decrease.
c) shift to the right.
d) remain unchanged.
Answer= ……
14- ……. … describes the usefulness of a product or the amount of
satisfaction that an individual receives from consuming a product.
a) Utility
b) Substitution effect
c) Determinant
d) Market size
15- The equilibrium price and quantity in this market will be:
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Fundamentals of Economics
a) $1.00 and 200.
b) $1.60 and 130.
c) $.50 and 130.
d) $1.60 and 290.
Answer= …….
To be continued To be continued To be continued
16- The following data give the production possibilities of an economy that produces
two types of goods, Machines (horizontal axis) and Food (vertical axis).
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Fundamentals of Economics
Production
Possibilities Machines Food
A 0 105
B 10 100
C 20 90
D 30 75
E 40 55
F 50 30
G 60 0
1- Graph the production possibility frontier.
2- Explain why Point D is efficient,
………………………………………………………………………………………
…… …………………………………………………………………………………
3- Suppose a Point H (30 machines and 45 units of food) Is it an efficient point?
Why?
………………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………………………...
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