Question

1. What does the emergence of large developing economies mean for the existing developed world?

A          More income for people living in developed economies.

B          An inefficient market, caused by political instability.

C          Disruption of historical competitive advantages.

D          Ongoing prosperity with no challenges for developed economies.

E          None of the above.

2. If a good is normal, then the demand curve for that good must be

A          downward sloping.

B          upward sloping.

C          perfectly elastic.

D          completely inelastic.

E          none of the above.

3. If the quantity demanded were less than the quantity supplied at a particular price, the equilibrium price would be achieved by

A          a decrease in supply as firms reacted to the surplus by producing less.

B          the drawing down of inventories until firms raised the price.

C          an increase in demand.

D          a decrease in the price, which would decrease the quantity supplied and increase the

quantity demanded.

E          a decrease in demand which would induce firms to cut back production.

Answer 1

Q1 Answer is C.
Emergence of developing world will give competition in every aspect to the developed world. So developed world will lose historical advantage of no competition from developing countries.
Q2 Answer is A. Downward sloping.
Normal goods have downward sloping demand curve because more of normal good could only be produced if there is less price of the good.
Q3 Answer is D.
Decrease in price will increase the quantity demanded and decrease the quantity supplied. Simultaneously both will reach at point where quantity demanded equals quantity supplied and equilibrium price will set.

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