Macroeconomics Modules 5-9 Test

melanie has a license to be a gadget seller. the table above shows how many gadgets she can supply, and how many gadgets her consumers will buy, at a variety of prices. if the government sets a quota limit at 15 gadgets per year, the quita rent melanie receives on each gadget is equal to:

$0

(table 5-1) if Barbara is only able to purchase 20 bags of chocolate-covered peanut, the maximum price she is willing and able to pay for each bag is ____

$0.70

(table 8-6) a government institutes a price control and as a result too few resources are allocated for the production of a good. the price control in this market is equal to:

$10

(table 7-1) the equilibrium price and quantity in this market are respectively:

$10 and 30 units

(table 7-1) a surplus of the good will occur at a price of _____

$15

(figure 9-1) the government imposes a quota limiting sales of clams to 1,000 pounds. according to the figure, the quita rent per pound in this case is:

$2.50

(table 8-7) excess supply would exist in this market if a price floor equal to _____ was imposed in this market

$20

(figure 9-4) the local government limits the number of hotel rooms rented each night ti 150. the resulting quita rent per room is equal to:

$30

(figure 9-2) if the government imposes a quota limiting sales of shrimp to 500 pounds, the quota rent per pound is:

$5

(figure 7-5) the figure shows the weekend rental market for DVDs in Collegetown. the equilibrium price for DVD rentals is _____ and the equilibrium quantity is ____

$5; 50

(figure 7-7) what is the equilibrium price in this wheat market?

$6

(figure 7-7) a price of ____ will result in a ______

$8; surplus

(table 5-1) if George, Barbara, and Dan are the only three buyers in the market, and the price of a bag of chocolate-covered peanuts is $0.80, the total market demand is ______ bags per month

105

(table 5-1) if the price of chocolate-covered peanuts is $0.60 the quantity demanded by George is ___ bags per month

25

(table 8-2) if the government imposes a price ceiling of $1 per can of soda, the quantity of soda demanded will be:

8 units

(figure 5-1) if fish is a substitute good for coconuts and the price of fish increases, then the movement that would take place in the model could be:

A to C

(figure 5-1) if there is an overall increase in taste and preference for coconuts, then the movement that would take place in model could be:

A to C

a market is composed of three individuals, Nicholas, Benjamin, and Alexander. their individual demand schedules are given below and are as followed:

Price Quantity Demanded 1 37 2 30 3 25

an increase in supply of a good is caused by:

a decrease in prices of goods that are substitutes in production

a price floor or price ceiling is an example of:

a price control

The minimum wage, which sets a lower limit on the wages that workers can earn, is often above the equilibrium price. The minimum wage is an example of:

a price floor

an effective price ceiling will lead to:

a resulting excess demand or a shortage

an ambiguous change in price and a decrease in quantity are most likely caused by:

a shift to the left in supply and a shift to the left in demand

Consider two competing motorcycle manufacturers, Harley-Davidson and Honda. If Harley-Davidson raises the price of its motorcycles, we can expect:

a shift to the right in the demand curve for Hondas and higher prices for Hondas

which of the following will result in an increased price of milk?

a shift to the right of the demand curve for milk

(figure 8-6) in the market shown in the figure, a price ceiling of P3 causes:

a shortage equal to the distance DE

(table 8-2) if the government imposes a price ceiling of $0.50 per can of soda, there will be:

a shortage of 3 units

(figure 7-8) a temporary price of $4 in this market would result in:

a shortage of 4,000 bushels

an effective price floor would result in:

a surplus of the good

a decrease in supply of a good is caused by:

an increase in prices of goods that are substitutes in production

a decrease in the price of a good will result in:

an increase in quantity demanded

Frank's Beans is a competitive producer of butter beans. if the price of kidney beans increases, a substitute good, Frank expects to see...

an increase in the demand for butter beans

Given that pizza is a normal good, if students' incomes at your college increase substantially, there would be:

an increase in the demand for pizza

the demand curve for running shoes, normal goods, has shifted to the right. what would have caused it?

an increase in the income of buyers of running shoes

in the market for beef tacos, a normal good, you observe that the equilibrium price and quantity have increases. this can only be caused by:

an increase in the incomes of people who eat tacos

an increase in supply of a good is caused by:

an increase in the number of sellers

which of the following would result in a movement along the demand curve?

an increase in the number of suppliers

the law of demand is illustrated when:

an increase in the purchases of personal computers results from lower prices

an increase in supply, with no changes in demand, will lead to ____ in equilibrium quantity and _____ in equilibrium price

an increase; a decrease

an increase in demand, with no change in supply, will lead to ____ in equilibrium quantity and ______ in equilibrium price

an increase; an increase

a price ceiling on a good often results in:

black market or underground transactions of the good

which of the following factors cause a movement along the demanded curve for good X?

change in the price of good X

when the price of gasoline goes down the demand for tires goes up, this means tires and gasoline are:

complements

an increase in demand for gasoline today caused by concerns that gas prices will be higher tomorrow is most likely attributable to which of the following?

consumer expectations

the law of demand implies:

consumers will only buy more at lower prices

if goods A and Z are complements, an increase in the price of good Z will:

decrease the demand for good A

a negative relationship between quantity demand and price is called the law of:

demand

Suppose oranges and clementines are considered to be substitutes. Holding everything else constant, if the price of oranges increases, then the demand for _____ will _____.

demand for clementines will increase

what would happen in the market for canned pinto beans if your income increases?

demand increases if pinto beans are a normal good

over the past several years, consumer tastes for tattoos have increased. this means that the ______ for tattoos has ______.

demand; increased

if tortilla chips are normal good, what happens to equilibrium price and quantity when there is an increase in income?

equilibrium price increases and equilibrium quantity increases

an increase in the price of wheat, an important ingredient in the production of bread, combined with an increase in the number of people consuming bread, will result in which of the following changes in the bread market?

equilibrium price will increase, but equilibrium quantity may decrease, increase, or stay the same

(table 7-1) if the current price of good Z is $15, there will be:

excess supply of 25 units

The market for gasoline is in equilibrium. you have heard that the price of crude oil is falling because of new oil discoveries. you are also aware that the number of car and truck drivers is steadily rising. knowing this, you predict that the price of gasoline will _____ and the quantity of gasoline bought and sold will ______

fall if the supply increase is larger than the demand increase; fall

a decrease in the price of eggs will result in a(n):

greater quantity of eggs demanded

to be binding, a price floor must be set at a price:

higher than the equilibrium price

which of the following is a likely outcome of price controls and quota limits?

illegal activity as people invent ways to get around the market constraint

a technological advance in the production of automobiles will:

increase the supply of automobiles

Economists know that a particular good can be classified as an inferior good if a(n) _______ in buyers income causes a(n) _______

increase; decrease in demand

Over the past few years, the technology associated with producing flat-panel televisions has improved. This has led to ________ in ________ flat-panel televisions.

increase; the supply of

a price floor in the market for wheat:

increases the price paid by consumers.

black markets may develop with price controls because:

individuals can profit by illegal exchanges

after graduation from college, you will receive a substantial increase in your income for a new job. if you decide that you will purchase more T-bone steak and less hamburger, then for you hamburger would be considered a(n):

inferior good

a binding price ceiling is designed to:

keep prices low

the horizontal summation of individual demand curves for a particular product, holding the price constant, is referred to as:

market demand

a price floor is a _____ set ______ the equilibrium price

maximum price; above

(figure 8-6) in the market shown in the figure, a price ceiling of P1 causes:

no change to the market

according to economists, equilibrium exists when:

no individual has an incentive to change his or her behavior.

the typical supply curve illustrates that:

other things equal, the quantity supplied for a good is positively related to the price of a good.

when a market is in equilibrium,

people have exploited all opportunities to make themselves better off.

(figure 8-2) in the graph, an effective price ceiling would be the price indicated at ____ and a ____ would exist as the difference between ______

point d; shortage; points i and h

(figure 8-14) suppose the government believes the producers of blue jeans are not profitable and the government wants to make sure blue jean producers are profitable. this type of price control is called a _____ and the price would be set equal to _____

price floor; $100

the market equilibrium is found at the:

price where quantity demanded equals quantity supplied

when the government removes a binding price floor:

quantity demanded will increase and quantity supplied will decrease.

if the price of good X increases, you would expect the:

quantity of good X supplied to increase

a quota is essentially a:

quantity restriction

(scenario 8-1) this figure represents a competitive market for apartments. if a government price ceiling at $600 is now imposed on this market, then an inefficiency will result in the form of a:

shortage of 0.8 million apartments

if the supply and demand curves intersect at a price of $47, then any price above that would result in a(n):

surplus

(scenario 8-2) the figure represents a competitive market for butter. if a government price floor at $1.10 is now imposed on this market, then an inefficiency will result in the form of a:

surplus of 1.5 million pounds of butter

(scenario 8-2) the figure represents a competitive market for butter. if a government price floor at $1.40 is now imposed on this market, then an inefficiency will result in the form of a:

surplus of 6.0 million pounds of butter

the demand for meals at a local Applebee's will fall if:

the Olive Garden offers a 10% discount coupon in the local newspaper

quota limits cause:

the demand price to be greater than the supply price.

the quota rent refers to:

the difference between the demand price and the supply price at the quota limit

a persistent shortage may occur if:

the government imposes a price ceiling.

the difference between the demand price and the supply price at the quota limit is:

the quota rent

Milk is an important ingredient in the production of ice cream. If the price of milk increases, then one would expect, holding all other things constant:

the supply curve for ice cream to shift left

in the local market for coffee, what would happen if Joyce's Java and Everyday Joe's coffee shops go out of business?

the supply curve shift to the left