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.
2			Which of the following would lead to an INCREASE in the demand for golf balls?
			A)	An 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
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.
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
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.
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)	all of the above.
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.

Use the following demand and supply functions to answer the next three questions.

Demand: Q_d = 600 - 30P   Supply: Q_s = -300 + 120P

8			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
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
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

Use the following general linear demand relation to answer the next four questions:

where P is the price of good X, M is income and P_R is the price of a related good, R.

11			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
12			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.
13			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.
14			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 = 135.
			E)	P = $15 and Q = 235.
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

Use the following general linear supply function to answer the next two questions:

Q_s = 60 + 8P - 4P_I + 20F

16			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
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
18			Consumer surplus…
			A)	is always positive.
			B)	for a particular unit of consumption is computed by taking the difference between quantity demand and quantity supplied.
			C)	for all units consumed is the area below demand and below market price over all the units consumed.
			D)	added to producer surplus provides a measure of the net gain to society from the production and consumption of the good.
			E)	all of the above

Use the following figure showing demand and supply in the market to answer the next two questions:

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19			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.
20			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.