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Module 2 Quiz

This document contains a 12 question multiple choice quiz about microeconomics concepts like price elasticity, price floors, price ceilings, supply and demand curves, and excise taxes. The questions cover how these economic concepts affect equilibrium price and quantity in a market.

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Rinconada Benori Reynalyn
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© © All Rights Reserved
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49 views

Module 2 Quiz

This document contains a 12 question multiple choice quiz about microeconomics concepts like price elasticity, price floors, price ceilings, supply and demand curves, and excise taxes. The questions cover how these economic concepts affect equilibrium price and quantity in a market.

Uploaded by

Rinconada Benori Reynalyn
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Module 2 Quiz – 5 Points Each

1. Question 1
The price of a product changes from $8 to $9, and as a result, the quantity of the product demanded
falls from 20 to 15. What do you know about the price elasticity of this good?

None of the other options are correct.


For the prices and quantities given in the question, this product could be either elastic or
inelastic.
This is an example of an elastic good.
This is an example of an inelastic good.

2. Question 2
Which of the following is an effect/are effects of the imposition of a price ceiling? Select all that
apply.

Equilibrium price is lower than that set by free-market equilibrium


Supply exceeds demand creating surplus
Demand exceeds supply creating shortage
Equilibrium price is higher than that set by free-market equilibrium

3. Question 3
The price of good X increases by 50%, and the consumption of good X decreases by 25%. What is
the price elasticity of demand of X?

0.25
0.5
0.75
2.0

4. Question 4
Which of the following figures is an accurate depiction of a price floor P_1 set by the government?

5. Question 5
Imposition of an excise tax on a good has what effect on the supply curve of a good?

Supply curve does not move


Supply curve shifts to the right
Supply curve shifts to the left

6. Question 6
Assuming upward sloping supply curve and downward sloping demand curve, imposition of an
excise tax has which of the following effects on the equilibrium quantity of a good?

Depends on the amount of tax imposed


Quantity remains the same
Quantity increases
Quantity decreases

7. Question 7
A price floor is a government mandated minimum price in a market, and a price ceiling is a
government mandated maximum price in a market.

True
False

8. Question 8
Assuming upward sloping supply curve and downward sloping demand curve, imposition of an
excise tax has which of the following effects on the equilibrium price of a good?

Equilibrium price that producers retain falls


Equilibrium price for consumers is unchanged
There is no effect on equilibrium price.
Equilibrium price for consumers falls
Equilibrium price that producers retain rises

9. Question 9
The price of potatoes is $5 and the equilibrium quantity is 250. Now, the government imposes an
excise tax of $1.50 on potatoes. The quantity demanded at the new equilibrium is 200. The tax
revenue for the government as a result of this tax is $300.

True
False
Cannot be determined

10. Question 10
Which of the following factors crucially determines the magnitude of incidence of an excise tax on
the consumers?

Slope of demand curve


Number of buyers in the market
Magnitude of excise tax
Free market equilibrium price
11. Question 11
Absolute value of elasticity along a linear demand curve decreases from left to right.

True
False

12. Question 12
The equilibrium price of laptops is $200. The government imposes an excise tax of $50 on the
production of laptops. Assuming demand is downward sloping and supply is upward sloping, which
of the following statements is true?

The demand for laptops will decrease due to higher production costs of laptops.
Producers will produce more laptops to make up for the fall in revenue shifting the supply curve
downwards.
Incidence of tax will be seen both on the consumers as well as the producers.
The new price consumers will have to pay for laptops is $250.

Note: Submit your answers on or before 12:00 noon of July 23, 2020 through my e-mail,
[email protected]. God bless you all.

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