IVY SOFTWARE MBA PREPWORKS FUNDAMENTALS

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IVY SOFTWARE MBA PREPWORKS FUNDAMENTALS

OF ECONOMICS EXAM NEWEST 2024 -2025 ACTUAL

EXAM COMPLETE 250 QUESTIONS AND CORRECT

DETAILED ANSWERS (VERIFIED ANSWERS)

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A measure of the relationship between a percentage change in the market price of a product and a consequential percentage change in the quantity supplied of a product.

• comparative-static analysis
• price elasticity of supply
• market supply
• law of supply - ANSWER- b. price elasticity of supply

The coefficient of supply elasticity is:

• positive
• negative - ANSWER- a. positive;

confirms the law of supply

the quantity that sellers are willing to sell = quantity that buyers are willing to buy. When combining market demand curve and market supply curves, is the point on the graph where the curves intersect.

• comparative-static analysis
• market equilibrium point 1 / 4

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• income elasticity
• cross price elasticity - ANSWER- b. market equilibrium point

Compares two market equilibrium (static) points, one equilibrium point before and the other after a change in an independent variable other than the price of the good being analyzed.

• cross price elasticity
• income elasticity
• comparative-static analysis
• market equilibrium point - ANSWER- c. comparative-static analysis

True/False: For all comparative-static problems, perform the following

three steps when an independent variable does change:

• Determine whether the demand curve or the supply curve will be

affected.

• Determine the direction in which the affected curve will shift.

(demand curves shift north-east or the south-west and supply curves shift south-east or the north-west)

• Compare the equilibrium price and equilibrium quantity before and

after the change. Price and quantity may increase, decrease, remain unchanged, or be ambiguous because all three (an increase, a decrease, or no change) options are possible. - ANSWER- True

True/False: The effect of a price increase of a substitute good (an

independent variable): the demand curve shifts north-east; the

equilibrium price increases and the quantity demanded in the market increases. - ANSWER- True 2 / 4

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True/False: The effect of a price increase of a substitute good (an

independent variable): the demand curve shifts south-west; the

equilibrium price decreases and the quantity demanded in the market decreases. - ANSWER- False; shifts north-east; the equilibrium price increases and the quantity demanded in the market increases.

True/False: The effect of a price increase of a complement good (an

independent variable): the demand curve shifts south-west; the

equilibrium price decreases and the quantity demanded in the market decreases. - ANSWER- True

True/False: The effect of a price increase of a complement good (an

independent variable): the demand curve shifts north-east; the

equilibrium price increases and the quantity demanded in the market increases. - ANSWER- False; shifts south-west; the equilibrium price decreases and the quantity demanded in the market decreases.

True/False: The effect of a decrease in income in the economy of a

normal good (independent variable): the demand curve shifts to the

north-east; the equilibrium price increases and the quantity demanded in the market increases. - ANSWER- False; curve shifts to the south-west; the equilibrium price decreases and the quantity demanded in the market decreases.

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True/False: The effect of a decrease in income in the economy of a

normal good (independent variable): the demand curve shifts to the

south-west; the equilibrium price decreases and the quantity demanded in the market decreases. - ANSWER- True

True/False: The effect of a decrease in income in the economy of an

inferior good (independent variable): the demand curve shifts to the

north-east; the equilibrium price increases and the quantity demanded in the market increases. - ANSWER- True

True/False: The effect of a decrease in income in the economy of an

inferior good (independent variable): the demand curve shifts to the

south-west; the equilibrium price decreases and the quantity demanded in the market decreases. - ANSWER- False; curve shifts to the north-east; the equilibrium price increases and the quantity demanded in the market increases.

True/False: An economic boom can create a relative shortage of workers

in the labor market, which causes the price of labor to increase. As the price of labor increases, the market supply curve shifts to the north-west.It is more expensive to produce a good. The equilibrium price increases and the quantity demanded decreases. - ANSWER- True

True/False: An economic boom can create a relative shortage of workers

in the labor market, which causes the price of labor to increase. As the price of labor increases, the market supply curve shifts to the south-east.It is more expensive to produce a good. The equilibrium price increases and the quantity demanded decreases. - ANSWER- False;

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