SET-1

1. Which of the following statements is true about a downward-sloping demand curve that is a straight line?

The slope and the elasticity are the same at all points.

The slope remains the same, but elasticity rises as you move down the demand curve.

The slope remains the same, but elasticity falls as you move down the demand curve.

The slope and the elasticity fall as you move down the demand curve

2. The best example of positive externality is:

roller coaster rides.

pollution. 

alcoholic beverages. 

education.

3. Suppose that college tuition is higher this year than last and that more students are enrolled in college this year than last year.  Based on this information, we can best conclude that:

despite the increase in price, quantity demanded rose due to some other factors changing.
the demand for a college education is positively sloped.
the law of demand is invalid.
this situation has nothing to do with the law of demand.

4. Suppose foreign shrimp prices drop by 32 percent and importers gain a 90 percent market share.  From this information, what would economists strongly suspect about this industry?

The large sales of foreigners indicate they are better strategic business bargainers than Americans are.

Foreign sellers probably are colluding on price to maximize profits.

Americans have a comparative advantage in shrimping.

Foreigners have a comparative advantage in shrimping.