Econ Quiz 2

Refer to the figure. Calculate the dollar amount of consumer surplus being earned in this market when the price is $30 and there are 300 units consumed. A)$4,500 B)$9,000 C)$18,000 D)$450

A)$4,500

Why does supply slope up? A)At higher prices, suppliers can profitably produce using more expensive techniques and inputs. B)The cost of producing a given good is the same, no matter how many are produced. C)Producers charge the maximum price that they can get. D)If supply did not slope up, it would not intersect with demand.

A)At higher prices, suppliers can profitably produce using more expensive techniques and inputs.

In free markets, surpluses lead to: A)lower prices. B)higher prices. C)stable prices. D)unexploited gains from trade.

A)lower prices.

The law of demand states that: A)the lower the price, the greater the quantity demanded. B)the higher the price, the higher the quantity demanded. C)the demand curve is upward sloping. D)an increase in income increases the quantity demanded.

A)the lower the price, the greater the quantity demanded.

In the market for fertilizer, an: A)increase in the wage rate will increase the demand for fertilizer. B)advance in technology will increase the supply of fertilizer. C)increase in the wage rate will increase the supply of fertilizer. D)increase in the cost of equipment will increase the supply of fertilizer.

B)advance in technology will increase the supply of fertilizer.

If market demand decreases: A)equilibrium price and quantity will both increase. B)equilibrium price and quantity will both decrease. C)equilibrium price will increase but equilibrium quantity will decrease. D)equilibrium price will decrease but equilibrium quantity will increase.

B)equilibrium price and quantity will both decrease.

The key condition for equilibrium to occur in a market is: A)the demand curve equals the supply curve. B)quantity demanded equals quantity supplied. C)price equals quantity. D)demand for one good equals demand for all other goods.

B)quantity demanded equals quantity supplied.

Total producer surplus equals: A)the supply curve. B)the area above the supply curve and beneath the market price. C)the area beneath the supply curve and above the demand curve. D)the market price.

B)the area above the supply curve and beneath the market price.

Which variable is NOT a demand shifter? A)price of complements B)price of substitutes C)price of raw materials D)tastes and preferences

C)price of raw materials

The demand curve shows the relationship between: A)demand and supply. B)quantity demanded and quantity supplied. C)price and quantity supplied. D)price and quantity demanded.

D)price and quantity demanded.