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1 | |
If the price of a complement increases, all else equal, |
| | A) | quantity demanded will increase. |
| | B) | quantity supplied will increase. |
| | C) | demand will increase. |
| | D) | demand will decrease. |
| | E) | supply will decrease. |
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2 | |
Which of the following would lead to an INCREASE in the demand for golf balls? |
| | A) | A decrease in the price of golf balls. |
| | B) | An increase in the price of golf clubs. |
| | C) | A decrease in the cost of producing golf balls. |
| | D) | An increase in average household income when golf balls are a normal good. |
| | E) | none of the above |
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3 | |
If input prices increase, all else equal, |
| | A) | quantity supplied will decrease. |
| | B) | supply will increase. |
| | C) | supply will decrease. |
| | D) | demand will decrease. |
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4 | |
Which of the following would decrease the supply of wheat? |
| | A) | A decrease in the price of pesticides. |
| | B) | An increase in the demand for wheat. |
| | C) | A rise in the price of wheat. |
| | D) | An increase in the price of corn. |
| | E) | none of the above |
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5 | |
When Sonoma Vineyards increases the price of its Chardonnay from $15 per bottle to $20 per bottle, the result is a decrease in... |
| | A) | the quantity of this wine demanded. |
| | B) | the quantity of this wine supplied. |
| | C) | the demand for this wine. |
| | D) | the supply of this wine. |
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6 | |
Which of the following will cause a change in quantity supplied? |
| | A) | Technological change. |
| | B) | A change in input prices. |
| | C) | A change in the market price of the good. |
| | D) | A change in the number of firms in the market. |
| | E) | both b and c |
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7 | |
In which of the following cases will the effect on equilibrium output be indeterminate (i.e., depend on the magnitudes of the shifts in supply and demand)? |
| | A) | Demand decreases and supply decreases. |
| | B) | Demand remains constant and supply increases. |
| | C) | Demand decreases and supply increases. |
| | D) | Demand increases and supply increases. |
| | E) | none of the above. |
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8 | |
Use the following demand and supply functions to answer the next three questions.
| Demand: | Qd = 600 − 30P | | Supply: | Qs = −300 + 120P |
Equilibrium price and output are |
| | A) | P = $2 and Q = 540. |
| | B) | P = $10 and Q = 300. |
| | C) | P = $6 and Q = 420. |
| | D) | P = $3.33 and Q = 500. |
| | E) | none of the above |
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9 | |
If the price is currently $8, there is a |
| | A) | surplus of 360 units. |
| | B) | shortage of 360 units. |
| | C) | surplus of 300 units. |
| | D) | shortage of 660 units. |
| | E) | none of the above |
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10 | |
If the price is currently $4, there is a |
| | A) | shortage of 300 units. |
| | B) | shortage of 480 units. |
| | C) | surplus of 180 units. |
| | D) | shortage of 180 units. |
| | E) | none of the above |
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11 | |
Use the following generalized linear demand relation to answer the question:
Qd = 100 − 5P + 0.004M − 5PR
where P is the price of good X, M is income and PR is the price of a related good, R.
What is the demand function when M = $40,000 and PR = $20? |
| | A) | Qd = 360 − 5P |
| | B) | Qd = 160 − 5P |
| | C) | Qd = 260 − 5P |
| | D) | Qd = 160 − 100P |
| | E) | none of the above |
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12 | |
Use the following generalized linear demand relation to answer the question: From the demand function it is apparent that related good R is |
| | A) | a complement for good X. |
| | B) | a substitute for good X. |
| | C) | a normal good. |
| | D) | an inferior good. |
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13 | |
Use the following generalized linear demand relation to answer the question: From the demand function it is apparent that good X is |
| | A) | a complement good. |
| | B) | a substitute good. |
| | C) | a normal good. |
| | D) | an inferior good. |
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14 | |
Use the following generalized linear demand relation to answer the question: If M = $40,000 and PR = $20 and the supply function is Qs = 85 + 10P, market price and output are, respectively, |
| | A) | P = $15 and Q = 85. |
| | B) | P = $5 and Q = 185. |
| | C) | P = $10 and Q = 185. |
| | D) | P = $5 and Q = |
| | E) | P = $15 and Q = 235. |
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15 | |
If a supply curve goes through the point P = $15 and Qs = 400, then |
| | A) | $15 is the highest price that will induce firms to supply 400 units. |
| | B) | $15 is the lowest price that will induce firms to supply 400 units. |
| | C) | at a price higher than $15 there will be a surplus. |
| | D) | at a price lower than $15 there will be a shortage. |
| | E) | both a and d |
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16 | |
Use the following generalized linear supply function to answer the next two questions:
Qs = 60 + 8P − 4PI + 20F
where Qs is the quanitity supplied of the good, P is the price of the good, PI is the price of an input, and F is the number of firms producing the good. when PI = $20 and F = 60, the INVERSE supply function is |
| | A) | P = 132.5 + 0.125Qs. |
| | B) | P = −147.5 + 0.125Qs. |
| | C) | P = 147.5 + 8Qs. |
| | D) | P = 260 + 8Qs. |
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17 | |
Again suppose PI = $20 and F = 60, what is the lowest price that will induce firms to supply 1,500 units of output? |
| | A) | $335 |
| | B) | $40 |
| | C) | $320 |
| | D) | $60 |
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18 | |
Use the following figure showing demand and supply in the market to answer the next two questions:
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A ceiling price of $15 would cause... |
| | A) | a surplus of 800. |
| | B) | a shortage of 800. |
| | C) | a surplus of 600. |
| | D) | a shortage of 600. |
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19 | |
A floor price of $30 would cause... |
| | A) | a surplus of 150. |
| | B) | a shortage of 150. |
| | C) | a surplus of 400. |
| | D) | a shortage of 400. |
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20 | |
Jason owns and operates a bakery. Every Sunday he bakes a batch of fresh doughnuts, and every Sunday he sells all the doughnuts and has to turn some customers away. Which of the following statements is correct? |
| | A) | At the current price, quantity demanded exceeds quantity supplied. |
| | B) | If Jason lowered the price of doughnuts, the shortage would increase. |
| | C) | The current price is higher than the equilibrium price. |
| | D) | both a and b |
| | E) | all of the above |
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