 |
| 1 | |
A simultaneous decrease in demand and supply will unambiguously |
| | A) | raise the equilibrium price. |
| | B) | lower the equilibrium price. |
| | C) | lower the equilibrium quantity. |
| | D) | raise the equilibrium quantity. |
|
|
|
| 2 | |
An excise tax placed on the producer of an item will |
| | A) | shift the supply curve to the left. |
| | B) | shift the supply curve to the right. |
| | C) | make the supply curve steeper by rotating counterclockwise. |
| | D) | make the supply curve flatter by rotating clockwise. |
|
|
|
| 3 | |
When government imposes a price floor below the market price, the result will be that |
| | A) | surpluses occur. |
| | B) | shortages become a problem. |
| | C) | supply and demand will shift up to the new equilibrium. |
| | D) | A price floor set below the equilibrium price will have no effect on the market equilibrium. |
|
|
|
| 4 | |
In a competitive market, the market demand is Qd = 48 - 5P and the market supply is Qs = 7P. A price ceiling of $5 will result in a shortage of |
| | A) | 36 units. |
| | B) | 24 units. |
| | C) | 16 units. |
| | D) | None of the responses are correct. |
|
|
|
| 5 | |
The law of demand indicates that as the price of a good decreases, the quantity |
| | A) | buyers desire increases. |
| | B) | buyers desire decreases. |
| | C) | producers offer to the market decreases. |
| | D) | producers offer to the market increases. |
|
|
|
| 6 | |
When an economist refers to a product as a "normal good," it implies that |
| | A) | when incomes rise, demand for that product will fall. |
| | B) | when incomes decline, demand for that product will fall. |
| | C) | there are many good substitutes for the product. |
| | D) | the product is of poor quality. |
|
|
|
| 7 | |
Substitute goods are ones in which an increase in the |
| | A) | price of one good leads to an increase in the demand for the other good. |
| | B) | price of one good leads to a decrease in the demand for the other good. |
| | C) | income of consumers leads to an increase in the demand of both goods. |
| | D) | income of consumers leads to a decrease in the demand of both goods. |
|
|
|
| 8 | |
Graphically, a report indicating the health benefits from consuming 5 ounces of whole grains per day reduces the chances of cancer by 50 percent will cause the demand curve for whole grains to |
| | A) | shift rightward. |
| | B) | shift leftward. |
| | C) | become flatter. |
| | D) | become steeper. |
|
|
|
| 9 | |
Consumer surplus is the difference between the |
| | A) | market price and the minimum price required to induce production. |
| | B) | market price and the maximum willingness to pay of consumers. |
| | C) | quantity demanded and the quantity supplied at the market price. |
| | D) | full economic price and the minimum price required to induce production. |
|
|
|
| 10 | |
Suppose the demand for good X is given by Qdx= 23 - 7Px + 2Py + M. The price of good X is $6, the price of good Y is $9, and income is $120. Given these prices and income, how much of good X will be purchased? |
| | A) | 96. |
| | B) | 119. |
| | C) | 146. |
| | D) | None of the responses are correct. |
|
|
|
| 11 | |
If the government decreased the restrictions on allowable pollution emission levels, then the supply curve for a chemical manufacturer that emits some air pollutants will |
| | A) | become flatter. |
| | B) | become steeper. |
| | C) | shift to the right. |
| | D) | shift to the left. |
|
|
|
| 12 | |
Which of the following is most likely to shift the supply curve for electricity to the right? |
| | A) | Consumers becoming more energy conscious. |
| | B) | An increase in income. |
| | C) | A decrease in the price of coal, an input to producing electricity. |
| | D) | An decrease in the price of natural gas, a substitute source of energy. |
|
|
|
| 13 | |
If an increase in the price of hot tea decreases the demand for honey, this indicates that |
| | A) | the two goods are substitutes. |
| | B) | the two goods are complements. |
| | C) | hot tea is an inferior good. |
| | D) | honey is an inferior good. |
|
|
|
| 14 | |
Producer surplus is measured as the area |
| | A) | below the demand curve and above the market price. |
| | B) | above the demand curve and below the market price. |
| | C) | above the supply curve and below the market price. |
| | D) | below the supply curve and above the market price. |
|
|
|
| 15 | |
Holding all else constant, as additional firms enter an industry |
| | A) | more output is available at each given price. |
| | B) | less output is available at each given price. |
| | C) | the same output is available at each given price. |
| | D) | Unable to tell. |
|
|
.