Palgrave Macmillan: Companion website

"The amount consumers are willing and able to purchase at a given price."
This is a definition of which of the following?
1. Derived demand
2. Notional demand
3. Conspicuous demand
4. Effective demand
In a free market, which of the following determines the price of bicycles?
1. The interaction of the demand for, and supply of, bicycles
2. The demand for bycicles
3. The supply of bicycles
4. The costs of production
Which of the following is always negative?
1. Cross elasticity of demand
2. The substitution effect
3. The income effect
4. Income elasticity of demand
In Figure 1, which point is the final equilibrium if the price of a substitute good increases but at the same time there is an increase in the cost of supplies?
Start at Point E
1. Point A
2. Point B
3. Point C
4. Point D
5. Point E
6. Point F
7. Point G
8. Point H
9. Point I
In Figure 1, which point is the final equilibrium if the good is an inferior good and if income tax is increased?
Start at Point E
1. Point A
2. Point B
3. Point C
4. Point D
5. Point E
6. Point F
7. Point G
8. Point H
9. Point I
In Figure 1, which point is the final equilibrium if the reliability and comfort of a close complementary good increases?
Start at Point E
1. Point A
2. Point B
3. Point C
4. Point D
5. Point E
6. Point F
7. Point G
8. Point H
9. Point I
In Figure 1, which point is the final equilibrium if the cost of production falls but at the same time there is a safety scare regarding the good?
Start at Point E
1. Point A
2. Point B
3. Point C
4. Point D
5. Point E
6. Point F
7. Point G
8. Point H
9. Point I
If a products price increases from £10 to £12 and the quantity of it demanded falls 10,000 units to 9000 units, which of the following statements is not true?
1. It has a price elasticity demand of (-)0.5
2. It is inelastic
3. A 20% increase in price has led to a 10% reduction in quantity demanded
4. Demand is relatively responsive to a change in rpice, in percentage terms
Which of the following could explain an increase in the price elasticity of demand of a product?
1. An increase in consumer expenditure
2. A reduction in the number and/or closeness of substitutes
3. A reduction in the necessity of the product
4. An increase in the addictiveness of the product
The price of Good A increases from £5 to £10, causing a reduction in the quantity demanded of Good B from 100,000 units to 80,000 units. What is the cross elasticity of demand of these two products?
1. (-)0.2
2. 20%
3. (-)5
4. 5
If income increases by 5% and the quantity demanded of a product increases by 1% which of the following statements is not true?
1. It is a normal good
2. It has an income elasticity of demand of 5
3. It has an income elasticity of demand of 0.2
4. There is a positive correlation between income and quantity demanded
Producer surplus shows which two of the following?
1. Operating profit
2. Producer welfare
3. Consumer satisfaction
4. Expenditure
It takes one month to transport a cargo valued at £50,000 and the annual rate of interest is 2%. What is the inventory cost in this case?
1. £1000
2. £208333
3. £83.33
4. £500
If the Marshallian demand curve shows the relationship between price and quantity demanded holding income constant, which of the folllowing does the Hicksian demand curve show?
1. The relationship between price and quantity demanded holding purchasing-power constant
2. The relationship between income and quantity demanded holding purchasing-power constant
3. The relationship between price and quantity demanded holding utility constant
4. The relationship between price and quantity demanded holding expenditure constant
If a good has a price elasticity of demand that is less than -1, the producer should implement which of the following strategies to increase revenue(ceteris paribus)?
1. Keep price constant
2. Increase price marginally
3. Reduce price substantially
4. Reduce prive marginally