1			What is the elasticity of Marshall’s short-run supply curve?
			A)	It is perfectly elastic.
			B)	It is elastic.
			C)	It is inelastic.
			D)	It is perfectly inelastic.
2			A local transit authority has just applied to its regulatory board for a fare increase on its rail-transit system, arguing that the increase is needed to cover rising costs. A citizens’ committee is opposed to the proposed increase, arguing that the company could increase its revenue by decreasing fares. Which of the statements below is correct?
			A)	The company thinks that the demand is inelastic, whereas the committee thinks it is elastic.
			B)	The company thinks that the demand is elastic, whereas the committee thinks it is inelastic.
			C)	Both the company and the committee think that elasticity is unitary.
			D)	It is possible that both the company and the committee are correct.
3			Graphically, what is the effect of imposing an excise tax on a product?
			A)	It will shift both supply and demand curves for the product to the left.
			B)	It will shift the supply curve for the product to the left.
			C)	It will shift the supply curve for the product to the right.
			D)	It will shift both supply and demand curves for the product to the right.
			E)	It will shift the supply curve for the product to the left and the demand curve to the right.
4			What is the likely effect of government reducing the supply of illegal drugs?
			A)	The total amount spent on drugs will decrease.
			B)	The total amount spent on drugs will increase.
			C)	The quantity of drugs consumed will remain unchanged.
			D)	The demand for drugs will fall.
			E)	The demand for drugs will increase.

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5			What is the income elasticity of product K?
			A)	1.5
			B)	15
			C)	Approximately 14
			D)	Approximately 1.4
			E)	Approximately 0.7

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6			What is the income elasticity of product L?
			A)	Approximately 12
			B)	Approximately 1.2
			C)	Greater than the income elasticity of product K
			D)	Approximately 0.8
			E)	8

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7			Which of the following is correct about product M?
			A)	It has an income elasticity of approximately 6.7.
			B)	It has an income elasticity of approximately 0.2.
			C)	It has an income elasticity of approximately 0.6.
			D)	It is a normal good.c
			E)	It is an inferior good.