ECO/365T: Principles Of Microeconomics

Which is of the following statements is correct? Multiple Choice If demand increases, then price will decrease. If demand decreases, then price will decrease. If price increases, then demand will decrease. If price decreases, then demand will decrease.

If demand decreases, then price will decrease.

What combination of changes would most likely decrease the equilibrium price? Multiple Choice supply decreases and demand increases demand increases and supply increases demand decreases and supply decreases supply increases and demand decreases

Supply increases and demand decreases

The graph below shows the market for pineapples. Instructions: Enter your answers as a whole number. a. What are the initial equilibrium price and quantity in the pineapple market? a) P = $ per pound b) Q = tons of pineapples Now suppose an increase in tropical cuisine made with pineapples shifts the demand curve for pineapple as shown in the graph below. b. Which of the following price and quantity combinations best describes the new equilibrium in the market for pineapples? c) multiple choice question P = $2.50 per pound and Q = 25 tons P = $2.00 per pound and Q = 22 tons P = $2.25 per pound and Q = 22 tons P = $2.00 per pound and Q = 20 tons

a) P=$ (2) per pound b) Q= (20) tons of pineapples c) P= $2.50 per pound and Q=25 tons

The demand and supply schedules for sunscreen at a small beach are shown below. Market for Sunscreen Price (dollars per bottle)Quantity of Sunscreen Demanded (bottles)Quantity of Sunscreen Supplied (bottles) $35 1,000 8,500 30 2,000 7,000 25 3,000 5,500 20 4,000 4,000 15 5,000 2,500 10 6,000 1,000 Instructions: Enter your answers as a whole number. a. If the price is $15 per bottle, how many bottles of sunscreen are demanded and supplied? a) Qd = bottles b) Qs = bottles c) In this case, there would be (Click to select) upward no downward pressure on the price. b. What is the equilibrium price and quantity in the market for sunscreen? d) P = $ e) Q = bottles

a) Qd= 5000 bottles b) Qs= 2500 bottles c) upward d) p=$ 20 e) Q= 4000 bottles

Use the figure below to answer the following question. The equilibrium point in the market is the point at which the S and D curves intersect. A decreasing line labeled D intersects an increasing line from the origin, labeled S, forming 1 triangle each, along both the vertical and horizontal axes. The point of intersection connects to both the axes with two dotted straight lines dividing both the triangles in half. In the triangle along the vertical axis, the top region is labeled, a and the bottom region is labeled b. In the triangle along the horizontal axis, the left region is labeled, c and the right region is labeled, d. At equilibrium, the producer surplus would be represented by the area Multiple Choice b. a. a + b. b + c + d.

b

Use the figure below to answer the following question. The horizontal axis lists labels (from left to right) as Q1 and Q2 and the vertical axis from bottom to top lists labels as P1 and P2. A decreasing line is labeled upper D and intersects an increasing line labeled S, forming a triangle along the vertical axis. H133 If actual production and consumption occur at Q1 and the price is P2, deadweight loss equals area Multiple Choice b + d. b. d.

d

A television station reports that the price of coffee has increased but the quantity traded in the market has decreased. This situation would be caused by a(n) Multiple Choice increase in demand. increase in supply. decrease in demand. decrease in supply.

decrease in supply

Which of the following goods is both nonrival and nonexcludable? multiple choicea tuna in the oceana soccer match in a stadiumthe light from a lighthouse at a harbor entrancea hot dog at a hot dog stand

the light from a lighthouse at a harbor entrance

A negative externality or additional social cost occurs when Multiple Choice firms fail to achieve allocative efficiency. firms fail to achieve productive efficiency. the price of the good exceeds the marginal cost of producing it. the total cost of producing a good exceeds the costs borne by the producer.

the total cost of producing a good exceeds the costs borne by the producer.

Charlie is willing to pay $10 for a T-shirt that is priced at $9. If Charlie buys the T-shirt, then his consumer surplus is Multiple Choice $19. $0.90. $90. $1.

$1

Use the following graph for the milk market to answer the question below. The horizontal axis labeled millions of gallons of milk per week ranges from 0 through 35. The vertical axis labeled price (per gallon) ranges from 0 through 2.0 (dollars). A downward sloping line from point (20, 2.0) through point (35, 1.0) intersects an upward sloping line from point (27, 1.0) through point (30, 2.0). The point of intersection is (28, 1.5). All the data points connects with dotted lines to both the axes. In this market, the equilibrium price is ____ and equilibrium quantity is ___

$1.50 per gallon; 28 million gallons.

Use the table below to answer the following question. Units Maximum Willingness Market Price Minimum to Pay Acceptable Price 1 $14 $8 $2 2 12 8 4 3 10 8 6 4 8 8 8 5 6 8 14 What is the value of economic surplus in the table above?

$24

a. Which of the following situations exhibits a positive externality? multiple choice 1 Alan purchases a new watch as a gift for his father. Sean spends the afternoon cleaning his garage. Richard renovates a dilapidated historic home in the center of town. b. When there is a positive externality associated with the market multiple choice 2 too little is produced. too much is produced. the socially optimal amount is produced. c. Governments may stimulate the economy to move toward the socially optimal output by multiple choice 3 taxing the product. subsidizing the product. implementing a price ceiling

1) Richard renovates a dilapidated historic home in the center town 2) too little is produced 3) subsidizing the product

Use the following table to answer the question below. Price per Unit QuantityDemanded Quantity Supplied per Year per Year $5 2,000 0 10 1,800 300 15 1,600 600 20 1,400 900 25 1,200 1,200 30 1,000 1,500 There will be a shortage whenever the price is Multiple Choice higher than $25. higher than $30. lower than $25. equals $25.

lower than $25

Allocative efficiency occurs only at that output where Multiple Choice marginal benefit exceeds marginal cost by the greatest amount. consumer surplus exceeds producer surplus by the greatest amount. the combined amounts of consumer surplus and producer surplus are maximized. the areas of consumer and producer surplus are equal.

the combined amounts of consumer surplus and producer surplus are maximized.