Quiz 1 — Markets & Elasticity

// Subject demo: microeconomics — a supply/demand figure, an elasticity
// computation from a table, an essay with rubric. Also demonstrates custom
// page furniture (footer:).

#import "/quizforge/lib.typ": *

#let sd-fig = {
  let w = 5.6cm
  let h = 4cm
  align(center, box(width: w + 1.9cm, height: h + 1cm, inset: (left: 1.3cm, bottom: 0.7cm, top: 0.3cm, right: 0.6cm), {
    place(bottom + left, line(length: w, stroke: 0.6pt))
    place(bottom + left, line(angle: -90deg, length: h, stroke: 0.6pt))
    place(bottom + center, dy: 0.5cm, text(size: 9pt, [quantity $Q$]))
    place(left + horizon, dx: -1.25cm, text(size: 9pt, [price $P$]))
    // supply: rising
    place(bottom + left, line(start: (0.4cm, -0.4cm), end: (w - 0.3cm, -h + 0.3cm), stroke: 1pt))
    place(bottom + left, dx: w - 0.35cm, dy: -h + 0.15cm, text(size: 9pt, [$S$]))
    // demand: falling, plus shifted D'
    place(bottom + left, line(start: (0.4cm, -h + 0.3cm), end: (w - 0.9cm, -0.35cm), stroke: 1pt))
    place(bottom + left, dx: w - 0.7cm, dy: -0.15cm, text(size: 9pt, [$D$]))
    place(bottom + left, line(start: (1.2cm, -h + 0.3cm), end: (w - 0.2cm, -0.5cm), stroke: (thickness: 1pt, dash: "dashed")))
    place(bottom + left, dx: w - 0.05cm, dy: -0.55cm, text(size: 9pt, [$D'$]))
  }))
}

#show: quiz.with(
  id: "ec101-demo",
  course: "EC 101: Principles of Microeconomics",
  title: "Quiz 1 — Markets & Elasticity",
  duration: "30 minutes",
  sets: ("A", "B"),
  footer: info => align(
    center,
    text(size: 9pt, fill: gray, [EC 101 · Set #info.at("set") · #info.total marks · answers on this paper only]),
  ),
)

= Multiple Choice

+ #m(2) The market below starts at the intersection of $S$ and $D$; demand
  then shifts outward to $D'$ (dashed).
  #sd-fig
  In the new equilibrium, compared with the old one:
  - ✓ Price rises and quantity rises
  - Price falls and quantity rises
  - Price rises and quantity falls
  - Both are unchanged

+ #m(2) A good's price rises from ₹10 to ₹12 and quantity demanded falls from
  100 to 80 units.
  #align(center, table(
    columns: 3, align: center, stroke: 0.6pt, inset: 5pt,
    [], [*Before*], [*After*],
    [Price], [₹10], [₹12],
    [Quantity], [100], [80],
  ))
  Using percentage changes from the initial point, demand here is:
  - ✓ Unit elastic ($|epsilon| = 1$)
  - Inelastic ($|epsilon| < 1$)
  - Elastic ($|epsilon| > 1$)
  - Perfectly inelastic ($epsilon = 0$)
  #explain[$epsilon = (-20%) \/ (+20%) = -1$.]

+ #m(2) You skip a concert ticket worth ₹500 (which you value at ₹800) to work
  a shift paying ₹600. The opportunity cost of working is:
  - ✓ ₹300 of net enjoyment forgone (₹800 value − ₹500 price)
  - ₹500
  - ₹800
  - ₹600

= Fill in the Blanks

+ #m(1) GDP deflator $=$ (nominal GDP $\/$ real GDP) $times$
  #blank(width: 1.5cm)[100].

= Essay

+ #m(3) "A binding minimum wage always reduces total employment." Discuss in
  at most one page, referencing both the competitive model and one situation
  where the claim can fail.
  #answer(8cm, rubric: [+1 competitive model: wage floor above equilibrium
    → surplus of labor; +1 monopsony (or search friction) counter-case;
    +1 clarity and a stated conclusion.])[
    In the competitive model a binding floor raises wages above equilibrium
    and reduces employment along the demand curve. Under monopsony, however,
    employers face an upward-sloping labor supply and restrict hiring; a
    moderate minimum wage can *increase* employment toward the competitive
    level. Empirical work (e.g. Card–Krueger) suggests small effects near
    current levels.]