AP Economics test - 10/7

Which of the following is true in the elastic range of a firms demand curve?

A decrease in price will likely lead to an increase in total revenue

The supply curve for automobiles will shift to the left in response to...?

An increase in wages in the automobile industry

Which of the following statements about price control is true?

Price ceilings and price floors result in a misallocation of resources

If the cost of producing automobiles increases, the price, equilibrium quantity and consumer surplus will most likely change in which of the following ways?

Price increases, quantity decreases, and consumer surplus decreases

A utility maximizing consumer would allocate his or her income in such a way as to...?

Allocate each additional dollar of income to the product that gives the highest marginal utility per dollar

What is producer surplus?

Amount the seller is paid less the cost of production

Which of the following events will cause the demand curve for hamburgers to shift to the right?

An increase in the price of pizza, a substitute for hamburgers

The demand curve for a normal good slopes down for which of the following reasons (1. An increase in the price of the good induces consumers to purchase subsitute products 2. An increase in price of the good reduces consumers' purchasing power 3. An increase in the price of the goood increases consumers' utility of consuming that good.)?

An increase in the price of the good induces consumers to purchase subsitute products

If an excise tax is imposed on a product, consumer surplus and producer surplus for this good will most likely change in which of the following ways?

Consumer surplus will decrease and producer surplus will decrease

A good is classified as inferior if the demand for it increases when...?

Consumers income decreases

When Anne's Antiques put their inventory on sale, they noticed that their total revenue when up. From this information we can accurately conclude that Anne is facing...?

Elastic demand

If supply and demand both increase, we can correctly conclude that (1. Equilibrium price will rise 2. Equilibrium price is indeterminate 3. Equilibrium quantity will rise 4. Equilibrium quantity is indeterminate)?

Equilibrium price is indeterminate, and equilibrium quantity will rise

During the 1990's, the price of VCR's fell by about 30 percent, and quantity sold decreased by the same amount. The demand for VCR's must...?

Have shifted to the left

Which of the following statements about Juan's marginal utility is correct?

His marginal utility is greater from his first candy bar than his marginal utility from his second candy bar

Which of the following situations best illustrates the law of demand (A. As real incomes of United States citizens have decreased over the past year. The demand for housing has also decreased B. Recent decreases in the price of imported wine have lead to an increase in the consumption of domestic wine C. In the past several months, the prices of compact disc players has decreased. The quantity of compact disc players sold has increased D. The increase in price of quality health foods has increased the revenues of firms producing these goods E. As the demand for computers has increased, the number of workers in the computer industry has increased)?

In the past several months, the prices of compact disc players has decreased. The quantity of compact disc players sold has increased

A rise in the price of corn, a substitute good for potatoes, will...?

Increase the demand for potatoes

Which of the following will occur if a legal price floor is placed on a good below its free market equilibrium?

The equilibrium price will ration the good

Assume that popcorn and movie attendance are complements and that salty concession grows corn suitable for popping. Mr. Concession will most likely sell a greater quantity of popping corn at a higher price if which of the following occurs?

The release of three summer movies sets records for movie theater attendance

An increase in the price of gasoline will cause the demand curve for tires to shift in which direction?

To the left because gasoline and tires are complements

A country can consume beyond its present production possibilities curve when it...?

Trades with other countries, thus taking advantage of different opportunity costs

Assume that the demand for apples is down ward sloping. If the price of apples falls from $.80 per pound to $.65 per pound, which of the following will occur?

A larger quantity of apples will be demanded

Which of the following will not shift the demand curve for oranges?

A change in the price of oranges

If hot dogs are an inferior good, an increase in income will result in...?

A decrease in the demand for hot dogs

Suppose that a consumer purchases two goods, X and Y, and that the marginal utility of X is MUx, the total utility of X is TUx, the marginal utility of Y is MUy, the total utility of Y is TUy. If the prices of X and Y are Px and Py, respectively, which of the following defines consumer equilibrium?

MUx/Px=MUy/Py

The diagram above shows a economy's current production possibilities curve for capital goods and consumer goods. If society chooses point B over point A, society is choosing....?

More future consumption in exchange for less current consumption

The graph above shows the supply and demand curves for gasoline. Which of the following will occur if the government establishes a price ceiling of $1.20 per gallon?

Neither a surplus nor a shortage

If there is an increase in demand for a good, what will most likely happen to the price and quantity of the good exchanged?

Price will increase and quantity will increase

The substitution effect causes a consumer to buy less of a product when the price increases because the...?

Product is now more expensive compared to similar products

Based on the information in the table shown above, which of the product(s) is/are inferior?

Products B and D only

Which of the following will occur if a legal price ceiling is imposed?

Shortages will occur

In a perfectly competitive market which off the following shits in the supply and demand curves will definitely cause both of the equilibrium price and quantity to decrease?

Supply curve is no shift and the demand curve is a shift to the left

During a football game, it starts to rain and the temperature drops. The senior class, which runs the concession stand and is studying economics, raises the price of coffee from 50 cents to 75 cents a cup. They sell more quantity than ever before. Which answer explains this?

The demand for coffee increased

Which of the following must be true if the revenues of wheat farmers increase when the price of wheat increases?

The demand for wheat is price inelastic