Tlt.E SCI{.

f,O|" OF }D;EJ[$

MEAP Quiz-l
July 2015

Name: M2DF'L Duration : 15 minutes

Roll No: Marks : 15 marks

Note: Each question carries one mark. For each wrong answer 0.5 marks shall be deducted
and for each answer with more than one response or mutilated response there will be a
deduction of 1.5 marks. Hence answer carefully in pen not in pencil.

It is an open booko open source examination with no discussion among yourselves.

L. AII of the following statements are correct except:

'flre d*"^td arr\\fe

a) The demand curve illustrates a relationship.
b) The demand curve will have a different shape for different goods. .Ct Y do,-:t*--"d b
c) The demand curve can shift its position over time. ."r-d -t', dn* >i7hb.
@ The demand curve slopes downward and to the left.
2. Supply

a) lndicates the total quantities produced.

b)
c]
Exhibits an inverse relationship between price and quantity.
Refers to how much will be sold at the existing market price.
ry d4'n?hor'
@ 'r
a relationship between the price and quantity offered for sale?

3. Which of the following will not change supply?

a) An increase in the wage paid to workers

br) An advance in technology
c)
c') A change in the price of another product the seller could produce
A change in the price of the product being sold
@

A cl.eye lr*l/re- Tice '[ fre f*4*"9 '* s"tJ ,"r' Ll ^Ee
eh--,ye- ,.-p?lj , b,-L -tb "-ltl e^tj. s*pti'd 1
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 4. "ln 1979, the demand for gasoline fell as the price rose." What is wrong with this statement?

a) Nothing, it is correct.
C\rye- h fn.t
a,.[
4l,n.?u4 ilrdL,y'rye^h
b) Itviolatesthelawof demand. 4 rno\rftt)b *tmy llu o(*n*-d e. nlla, b&
n6{i sc.'lffi 1A* {errl*^a co*tsrva- t

@ lf prices rise within one time period, quih-tity

the oJdriX'Ieo'will tatL nol oil.na.
d) It implies that gasoline is an inferior good.

5. Which of these statements is correct?

a) An inferior good is any product of tow quality. ry d{t$Ut"" '

@ fne demand for inferior goods drops as income rises.

c) Neutral goods are those goods that offer no additional utility to the consumer.
d) None ofthese.

6. Assuming competitive markets with typical demand and supply curves, which of the following
statements is correct?
?

Ft
fo
tl An increase in demand with no change in supply will resutt in a decline in sales.
@ On increase in demand with no change in supply will result in an increase in sales.
c) An increase in supply with no change in demand will result in a decline in sales.
d) An increase in supply with no change in demand wilt result in an increase in price.
e) An increase in supply with a decrease in demand will result in an increase in price.

7. lf the total expenditure (i.e., total revenue) remains the same even after a change in price,
elasticity of demand is .GfuS
eryn& A,*" = Gkf r),n,*e. = Pq .

a) Greater than unity

b) Less than unity
c) Equal to zero
@ Equal to unity
e) Equal to infinity.

8. lt can be said that the substitution-effect is the increase in the demand for a good induced by

a) A change in the absolute level of all prices

b) A change in tastes due to advertising for a substitute commodity
c) A change in real income due to a fall in the price of one item in the consume/s budget
d) The discovery of new substitutes for the given good

@ A change in relative prices of goods.

, ,',hnn o- i^ 'fa.- 7ri'e- 't -'' t ryed'^cel
w -{e$nl+\" \otl '1-"4
Page2or4
+r,a A*u,A $tr .rnatr*o
eA,
..lr'.- $o 5a4g <ne
c,alf .',l, s,.'bsdiJ-tlas '
9. Price elasticity c : rir o nd refers to:

BJ J4i',*rt,b,-"
@ Buyer r, ,rsiveness to price changes.
b) The slc I
, lhe demand curve.
c) Which r' ,r demand curve shifts when incorlrr clranr,res.
d) How P ri .: rlotermined in tlre marl<et.

lf demand is pl'r
:0. *nA, t-"'h e n 4\1&'f,
g la efr. oA*r*
a) lrn,rill decrease.
yce- -V, TR 4\
Qtrantir
'
@Total r(' 'urill increase.
c) Tota I r"t ',viil decrease.
d) The firrr,

LL. The price of : i( is redrrcecl ii"om 100 to 9C

-i I
l.t
t
I ''-l
I
, ds a resrrlt, the quantity demanded
. t,
increases frc, ',i i,j 'ri-iits. Frcr.lt ilris \^/e cafl ci,rtir,-i i.ii'
.. r

y. clwlnge"-in d.a Q,- Qo- 4tl

The inr tra Uz- F
(1,-tr )( -=-4G

*Yo " 6r
b) Thc ri' r
,I
Change- inf r,
c) The rl ' ,r )' r?e > .+g (\., l. +3
x l,-' f -6\ obs,.l*l'a
d) Th.: ,r.-[t e,

hq .A*nnanA nl^th.. '

L2. For compleri',' be

al Tera
y.ch.erye- in 'vry
b) ln irt'
f

c) P0:,r '

@\rr;.r
e) Noit'.

13. When thc ii,i ^Y3

a) Nnr,
b) Ll; F; =
@ tnrer
d) Gil- '

g) N' ' '''

gcsrne- "r+ is see;, +At Aun
JooAs.
in +hL in '.,,wll *b ,lh*
c-e-vre tr-tr)T/
*-tc
/.
c.-,n i nc-\racsg ,

S'u.Pr ^ ,J**
.*^.eL lhL
is ne7^={i ve'
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 t;iill"^t; The ruling Party
The government of Taxasia
is proposing a new tax on tnt o:."::^tt::1;l
tax. However, it
:::i:::T;'ff;;;';;";"' ' "r does niii'
-^-+.,.lnoc
partv
"l,::'l'
tt'' p'odu'ers wi' :-"::li: :::1':,rr', I irrtrr this argument and is
;ffi:::il:T#il-,,
bgllevgs flle usl rErrrJ outrvci,;rr rrre r.;L,rrr,:rr. rhe opposition ,,,].tn':,
Lrl icrc': Liic government to -L^^^^ irc r,,i,, i GiveO this background,
lt*nting a massive countcr attacir
(15) b;scJ uir rlre f ollowing diagram'
:

answdf questions (14) & .d '

{

Fricef unit

F1
ps

P?
$

.* ..
" -1,"t*

n11 tj.r-l a r-r ti t:y/ti rn,e

UL L{r-}

Figu re: Market for Tobaccos

L4.consumer's surplus after

the tax is equal to:

C.ms,-rnsr S'"'7[
os *$b"'1 4(
a) PrG H Ps
m
PrG
@w
c) PoH\v

'd) Po\vG

e) PoHtl

15. The effect of this tax in

the cliagranl is a:

$ ,.'a*hb5hu t'ss
a) Net gairr equal to G i-1 I
ffffi
-@
b) Net gain equal to Pr G H I P2

@rtret
loss equal to G H t ' e r..["L bs"

d) Net loss equal to Pt G H I P2

e) Neither a gain nor a loss

XXX
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