Question

1.) “The most popular justification for the interventionist state is to create or ensure fainess and justice in the distribution of income.... Income is not distributed. In a free society, income is earned.” Which of the following economic perspective does the quotation above best represent?

a.) positive analysis

b.)conservative

c.) radical

2.) According to Adam Smith’s theory of capitalism, which one of the following is not included :

a.) Competition between capitalists would ensure that firms would remain small..

b.)Competition tends to be undermined by the capitalists dominating their markets.

c.) Sellers provide specific types and quantities of goods they want consumers to buy in a self-regulating economic system.

d.)Competition forces self-interested business owners to serve the public interest.

3.) A good example of a government imposed-price ceiling is:

a.)minimum wage.

b)rent control where supply equals demand .

c)rent controls where quantity demanded is less than quantity supplied.

d.)rent control with a shortage.

4.) If price increases by 50% and quantity demanded decreases by 100%, then the price elasticity of demand will equal _____.

a.)none of these is correct.
b.)2.0

c.) 0.5

d.)-2.0

5.) If the United States experiences an recession in which prices of goods and services go down faster than incomes, budget lines for U.S. consumers will:

a.)shift outward.

b.)shift inward.

c.)pivot inward.

   

Answer 1

Answer 1 - correct option is A

Reason - the above statement given in the question best represent to position analysis

Answer 2- correct option is D

Reason - competition forces self interest business owners to serve the public interest bis not included in theory of capitalism

Answer 3 - option B is the correct answer

Reason- price elasticity = % change in quantity demanded /% change in price

= 100%/50%

=2

Answer 4 - correct option is A

Reason - since the price is going faster than income therefore consumer budget will increase resulting in outward shift budget line