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ECS2601 Macroeconomics University of South Africa

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University of South Africa

ECS2601 Macroeconomics University of South Africa

Huge MCQ Question Bank
Chapter 2
(1) Elasticity measures:
[1] the slope of a demand curve.
[2] the inverse of the slope of a demand curve.
[3] the percentage change in one variable in response to a 1% increase in another variable.
[4] sensitivity of price to a change in quantity
(2) The price elasticity of demand for a demand curve that has a zero slope is
[1] zero.
[2] one.
[3] negative but approaches zero as consumption increases.
[4] infinite.
OCT/NOV 2014
(3) A vertical demand curve is:
[1] completely inelastic.
[2] infinitely elastic.
[3] highly (but not infinitely) elastic.
[4] highly (but not completely) inelastic.
(4) Along any downward-sloping straight-line demand curve:
[1] both the price elasticity and slope vary.
[2] the price elasticity varies, but the slope is constant.
[3] the slope varies, but the price elasticity is constant.
[4] both the price elasticity and slope are constant.
OCT/NOV 2013 EXAM
(5) If two goods are substitutes, the cross-price elasticity of demand must be:
[1] negative.
[2] positive.
[3] zero.
[4] infinite.
MAY/JUNE 2015 EXAM (COMPLIMENTS = NEGATIVE)
MAY/JUNE 2014 EXAM (COMPLIMENTS = NEGATIVE)
OCT/NOV 2013 EXAM
____________
(6) When the government controls the price of a product, causing the market price to be below the
free market equilibrium price:
[1] some consumers gain from the price controls and other consumers lose.
[2] all producers gain from the price controls.
[3] both producers and consumers gain.
[4] all consumers are better off.
MAY/JUNE 2015 EXAM
MAY/JUNE 2014 EXAM
(7) What happens if price falls below the market clearing price?
[1] Demand shifts out.
[2] Supply shifts in.
[3] Quantity demanded decreases, quantity supplied increases, and price falls.
[4] Quantity demanded increases, quantity supplied decreases, and price rises.
(8) Other things being equal, the increase in rents that occurs after rent controls are abolished is
smaller when:
[1] the own price elasticity of demand for rental homes is price inelastic.
[2] the own price elasticity of demand for rental homes is price elastic.
[3] the own price elasticity of demand for rental homes has unitary price elasticity.
[4] rented homes and owned homes are complements.
[5] rented homes and owned homes are substitutes.
OCT/NOV 2014
Answers:
1=3
2=4
3=1
4=2
5=2
6=1
7=4
8=2
Chapter 3
(1) Which of the following is NOT an assumption regarding people’s preferences in the theory of
consumer behaviour?
[1] Preferences are complete.
[2] Preferences are transitive.
[3] Consumers prefer more of a good to less.
[4] All of the above are basic assumptions about consumer preferences
(2) The assumption of transitive preferences implies that indifference curves must:
[1] not cross one another.
[2] have a positive slope.
[3] be L-shaped.
[4] be convex to the origin.
[5] all of the above.
OCT/NOV 2014
(3) Suppose that a market basket of two goods is changed by adding more of one of the goods and
subtracting one unit of the other, the consumer will:
[1] rank the market basket more highly after the change.
[2] more likely prefer a different market basket.
[3] rank the market basket as being just as desirable as before.
[4] be unable to decide whether the first market basket is preferred to the second or vice versa. [5]
have indifference curves that cross.
MAY/JUNE 2013 EXAM
(4) A consumer prefers market basket A to market basket B, and prefers market basket B to market
basket C. Therefore, A is preferred to C. The assumption that leads to this conclusion is:
[1] transitivity.
[2] completeness.
[3] all goods are good.
[4] diminishing MRS.
[5] rationality.
OCT/NOV 2013 EXAM
(5) The slope of an indifference curve reveals:
[1] that preferences are complete.
[2] the marginal rate of substitution of one good for another good.
[3] the ratio of market prices.
[4] that preferences are transitive.
[5] none of the above

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ECS2601 Macroeconomics University of South Africa

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