1. Endogenous variables are contained within a model and directly affect the model.

a) true

b) false

2. An increase in the quantity of capital causes the production possibilities curve to move outward from the origin. a) true

b) false

3. An increase in the quantity of labour causes the production possibilities curve to move outward from the origin. a) true

b) false

4. A drop in the price of Asics running shoes will cause consumers to purchase more Adidas running shoes.(Asics shoes will no longer have as much appeal). a) true

b) false

5. If consumer tastes shift away from commodity B and in favour of other commodities, we would expect the equilibrium price and equilibrium quantity of commodity B to rise.

a) true

b) false

6. The demand curve for Pepsi Cola will probably shift to the right if the price of Coke rises.

a) true

b) false

7. If the price of good X falls from 6 dollars to 5 dollars and total revenue falls from 60 dollars to 55 dollars, the demand for good X must be inelastic a) true

b) false

8. If the price of good X increases from 5 dollars to 6 dollars and there is no decrease in the quantity purchased, the demand for good X is perfectly inelastic. a) true

b) false

9. If the price of good X drops from 6 dollars to 5 dollars and consumer expenditure on this commodity remains the same, the demand for good X is unit elastic.

a) true

b) false

10. Since diminishing marginal utility is the basis for demand, one would expect an inverse relationship between price and quantity demanded. a) true

b) false