Micro Econ

Table: Equilibrium Adjustment) Refer to the table. The equilibrium price is: A) $2. B) $4. C) $6. D) $8.

C) $6.

Figure: A Supply Curve Refer to the figure. Producer surplus at a price of $40 is: A) $200. B) $100. C) $400. D) $600.

B) $100.

A good is considered normal if demand for it ______ when income ______. A) increases; increases B) decreases; increases C) stays the same; decreases D) increases; decreases

A) increases; increases

A decrease in the cost of inputs will shift the supply curve down and to the right. A) True B) False

A) True

An increase in a per unit production subsidy ______ supply. A) increases B) decreases C) does not change D) changes in an indeterminate direction

A) increases

Figure: Equilibrium Figure: Equilibrium) Refer to the figure. The equilibrium quantity (in units) is: A) 8. B) 10. C) 16. D) 12.

C) 16.

able: Equilibrium Adjustment) Refer to the table. If the price in the free market is $8, then a: A) surplus of 25 units would exist, and price would tend to fall. B) surplus of 25 units would exist, and price would tend to rise. C) shortage of 25 units would exist, and price would tend to rise. D) shortage of 25 units would exist, and price would tend to fall.

A) surplus of 25 units would exist, and price would tend to fall.

An increase in demand causes a: A) temporary shortage at the old equilibrium price and a higher new equilibrium price and quantity. B) permanent shortage, leaving the equilibrium price and quantity unchanged. C) temporary surplus at the old equilibrium price and a lower equilibrium price and quantity. D) temporary shortage at the old equilibrium price, a higher new equilibrium price, and a lower new equilibrium quantity.

A) temporary shortage at the old equilibrium price and a higher new equilibrium price and quantity.

free market achieves an equilibrium price and quantity due to: A) the combined actions of buyers and sellers. B) increased competition among sellers. C) government regulations placed on market participants. D) buyers' ability to affect market outcomes.

A) the combined actions of buyers and sellers.

Figure: Bananas Refer to the figure. If the price of bananas in the diagram is $6 a pound, what is the total producer surplus?A)$80,000 B) $120,000 C) $160,000 D) $240,000

A)$80,000

(Figure: Basic Supply and Demand) In the diagram, the market price is stable only at a price of: A) $2. B) $3. C) $4. D) $50.

B) $3.

Figure: Demand Curve Refer to the figure. What is the maximum price per book that buyers are willing to pay for 2,500 books? A) $60 B) $45 C) $30 D) $15

B) $45

Figure: Demand and Supply) Refer to the figure. At the equilibrium quantity, total surplus is: A) $960. B) $480. C) $320. D) $240

B) $480.

Figure: Earned Consumer Surplus Refer to the figure. The market price of the product is $20 per unit. Calculate the dollar amount of consumer surplus being earned in this market. A) $120,000 B) $60,000 C) $100,000 D) $80,000

B) $60,000

Figure: Demand, Supply Shifts) In the figure, the initial demand curve is D1 and the initial supply curve is S1. If this depicts the equilibrium in the market for computer printers, what will happen when the price of computers increases? A) There is not enough information to determine what will happen. B) D1 will shift to D2. C) D1 will shift to D3. D) S1 will shift to S3.

B) D1 will shift to D2.

decrease in demand refers to: A) a rightward shift of the demand curve. B) a leftward shift of the demand curve. C) an upward movement along the demand curve. D) a downward movement along the demand curve

B) a leftward shift of the demand curve.

An increase in a per unit production tax ______ supply. A) increases B) decreases C) does not change D) changes in an indeterminate direction

B) decreases

A farmer can grow soy or sorghum. If the price of soy increases, the opportunity cost of growing sorghum ______, shifting the supply curve of sorghum ______. A) decreases; up and to the left B) increases; up and to the left C) decreases; down and to the right D) increases; down and to the right

B) increases; up and to the left

The Arab Oil Embargo of 1973, the Iranian Revolution of 1979, and the Gulf War of 1991 all affected oil prices by: A) increasing the demand for oil. B) reducing the supply of oil. C) reducing the demand for oil. D) increasing the supply of oil.

B) reducing the supply of oil.

Figure: Chicken Legs In the diagram, the current demand curve for chicken legs is represented by D1. If the price of chicken thighs, a substitute for chicken legs, decreases, the demand curve for chicken legs will: A) shift to D2. B) shift to D3. C) remain at D1. D) shift to D2 and then back to D1.

B) shift to D3.

A demand curve indicates that: A) the quantity demanded of a good is higher when its price is higher. B) the quantity demanded of a good is higher when its price is lower. C) the demand for a good is higher when its price is lower D) the demand for a good is higher when its price is higher

B) the quantity demanded of a good is higher when its price is lower.

A decrease in expected future supply of a good will lead to: A) a change in the demand for the good, but not until the supply actually goes down. B) a change in the price of the good, but not until the supply actually goes down. C) a change in the demand for the good even before the supply actually decreases. D) no change in the demand for the good.

C) a change in the demand for the good even before the supply actually decreases.

After a hurricane in Florida destroys half of the orange crop, economists predict: A) an increase in both orange prices and orange sales. B) a decrease in both orange prices and orange sales. C) an increase in orange prices and a decrease in orange sales. D) a decrease in orange prices and an increase in orange sales.

C) an increase in orange prices and a decrease in orange sales.

Which of the following factors would cause the change in the figure? A) an increase in the price of a complement good B) a decrease in peoples' willingness to pay for the good C) an increase in the price of a substitute good D)an increase in income for an inferior good

C) an increase in the price of a substitute good

In the figure, the demand curve shifted from D0 to D1. To describe this movement, we would say that: A) demand increased, which caused an increase in supply. B) quantity demanded increased, which caused an increase in supply. C) demand increased, which caused an increase in quantity supplied. D) quantity demanded increased, which caused an increase in quantity supplied.

C) demand increased, which caused an increase in quantity supplied.

A change in which factor would shift the supply curve? A) the price of the good being sold B) the demand for the product C) production technology D) the willingness of consumers to pay

C) production technology

Table: Equilibrium Adjustment) Refer to the table. If the price in the free market is $2, then a: A) surplus of 50 units would exist, and price would fall. B)surplus of 50 units would exist, and price would rise. C) shortage of 50 units would exist, and price would rise. D) shortage of 50 units would exist, and price would fall.

C) shortage of 50 units would exist, and price would rise.

A decrease in the opportunity cost of steel production will: A) increase the price of steel. B) make suppliers more likely to produce steel, thus shifting the supply curve up and to the left. C)make suppliers more likely to produce steel, thus shifting the supply curve down and to the right. D) entice producers to produce more substitute goods.

C)make suppliers more likely to produce steel, thus shifting the supply curve down and to the right.

Figure: Lobster Market In the figure, a $10 tax is imposed on the market for lobsters. What is the market price that lobster producers would need to receive to induce them to produce 5,000 bushels of lobster per day? A) $10 B) $40 C) $50 D) $60

D) $60

Figure: Bananas (Figure: Bananas) Refer to the figure. If the price of bananas is $10 a pound, which number is closest to the number of pounds that suppliers will supply? A) 5 B) 50 C) 60,000 D) 80,000

D) 80,000

(Figure: Demand, Supply Shifts) In the figure, the initial demand curve is D1 and the initial supply curve is S1. Resource prices in this market increase; at the same time, the consumer population declines as migration causes an outflow of population to other regions. What happens to the supply curve and/or demand curve? A) S1 shifts to S2 but then shifts back to S1. D1 remains at D1. B) S1 shifts to S3 and D1 shifts to D2. C) S1 shifts to S2 and D1 shifts to D3. D) S1 shifts to S2 and D1 shifts to D2.

D) S1 shifts to S2 and D1 shifts to D2.

Figure: Demand, Supply Shifts Figure: Demand, Supply Shifts) In the figure, the initial demand curve is D1 and the initial supply curve is S1. Resource prices in this market increase; at the same time, the consumer population declines as migration causes an outflow of population to other regions. What happens to the supply curve and/or demand curve? A) S1 shifts to S2 but then shifts back to S1. D1 remains at D1. B) S1 shifts to S3 and D1 shifts to D2. C) S1 shifts to S2 and D1 shifts to D3. D) S1 shifts to S2 and D1 shifts to D2.

D) S1 shifts to S2 and D1 shifts to D2.

A change in price is reflected by a movement along the same demand curve while a change in demand refers to a shift of the entire demand curve. True False

True

A change in quantity supplied is reflected by a movement along the same supply curve while a change in supply refers to a shift in the entire supply curve. True False

True

A decrease in the supply of milk will lead to a decrease in the QUANTITY DEMANDED of milk. True False

True

A decrease in demand for a good will lead to a decrease in the price of the good, but an increase in the quantity supplied. True False

False

Advances in technology such as personal computers and cellular telecommunications are indicated in the supply graph by a movement along the supply curve. True False

False

Advertising, fads, and fashion are examples of influences on demand that are generally referred to as altering expectations about products True False

False

An increase in demand causes an increase in quantity supplied, which causes a decrease in price. True False

False

An increase in quantity demanded is a shift in the entire demand curve. True False

False

A market surplus can be defined as a situation in which the quantity demanded in a market is less than the quantity supplied, at the given price. True False

True

An increase in quantity demanded is a movement along a fixed demand curve caused by a shift in the supply curve. True False

True

An increase in supply causes a temporary surplus at the old equilibrium price. True False

True

(Table: Equilibrium Adjustment) Refer to the table. If the price in the free market is $8, then a: A) surplus of 25 units would exist, and price would tend to fall. B) surplus of 25 units would exist, and price would tend to rise. C) shortage of 25 units would exist, and price would tend to rise. D) shortage of 25 units would exist, and price would tend to fall.

A) surplus of 25 units would exist, and price would tend to fall.

Figure: Demand n the diagram, for a market price of $4 total consumer surplus equals: A) $30. B) $60. C) $100. D) $75.

A) $30.

Figure: Consumer Surplus 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

Figure: Earned Producer Surplus Refer to the figure. Calculate the total dollar amount of producer surplus earned in this market at a price of $100. A) $5,000 B) $10,000 C) $100 D) $200

A) $5,000

(Figure: Bananas) Refer to the figure. If the price of bananas is $2 a pound, how many pounds of bananas will suppliers supply? A) 0 B) 1 C) 10 D) 10,000

A) 0

Figure: Good X (Figure: Good X) From the figure, the maximum price that consumers are willing to pay for _____ units of Good X is _____ per unit. A) 36; $4 B) 11; $4 C) 36; $12 D) 26; $4

A) 36; $4

Figure: Equilibrium) Refer to the figure. The equilibrium price (in $) is: A) 8. B) 10 C) 16. D) 12.

A) 8.

Figure: Demand Curve Which statement is TRUE regarding the figure? A) At a price of $6 per unit, consumers are willing and able to buy 10 units. B) The maximum price demanders are willing to pay for 15 units is $6 per unit. C) The higher the price, the greater the quantity demanded. D) At a price of $3.75 per unit, consumers are indifferent between buying 10 and 15 units.

A) At a price of $6 per unit, consumers are willing and able to buy 10 units.

Figure: Demand Shift Which of the following could explain the figure? A) Consumer income increases in the market for a normal good. B) Consumer income falls in the market for a normal good. C) Consumer income rises in the market for an inferior good. D) Consumer income remains the same and the price of the good falls.

A) Consumer income increases in the market for a normal good.

Figure A: Supply Right Shift Figure B: Supply Left Shift Refer to the two figures. Which statement is TRUE? A) Figure A depicts the expectation that the future price will decrease. B) Figure A depicts an increase in taxes. C) Figure B depicts falling input prices. D) Figure B depicts technological innovations.

A) Figure A depicts the expectation that the future price will decrease.

(Figure: Demand, Supply Shifts) In the figure, the initial demand curve is D1 and the initial supply curve is S1. Suppose this depicts the market for corn. How does the market change when flooding in Iowa destroys a significant amount of the corn crop. A) S1 will shift to S2. B) D1 will shift to D2. C) S1 will shift to S3. D) There will be no change in supply or demand in the market for corn.

A) S1 will shift to S2.

An increase in supply and a decrease in demand occur in a market. What happens to the equilibrium price and quantity? A) The equilibrium price decreases; the change in the equilibrium quantity is uncertain. B) The equilibrium price decreases; the equilibrium quantity increases. C) The equilibrium price increases; the change in the equilibrium quantity is uncertain. D) The equilibrium price increases; the equilibrium quantity decreases.

A) The equilibrium price decreases; the change in the equilibrium quantity is uncertain.

(Figure: Chocolate) If the price in the diagram is $5, what will happen? A) The price will increase because of a shortage. B) The price will decrease because of a shortage. C) The price will increase because of a surplus. D) The price will decrease because of a surplus.

A) The price will increase because of a shortage.

Figure: Demand Shift Refer to the figure. Which factor would cause the change in the figure? A) a decrease in the price of a complement good B) a decrease in the price of the product C) a decrease in the price of a substitute good D) an increase in taxes

A) a decrease in the price of a complement good

A(n) ______ causes the equilibrium price to ______ and equilibrium quantity to ______. A) decrease in supply; rise; fall B) decrease in demand; fall; rise C) increase in supply; rise; rise D) increase in demand; rise; fall

A) decrease in supply; rise; fall

A decrease in income causes demand for a normal good to ________, and an increase in income causes demand for an inferior good to ________. A) decrease; decrease B) increase; increase C) decrease; increase D) increase; decrease

A) decrease; decrease

A decrease in production costs at any given quantity ______ supply. A) increases B) decreases C) does not change D) may increase or decrease

A) increases

Table: Equilibrium Price, Quantity Table: Equilibrium Price, Quantity) Refer to the table. If the price in the market was $12, there would be a: A) shortage of 10 units. B) shortage of 45 units. C) surplus of 10 units. D) surplus of 35 units.

A) shortage of 10 units.

A government subsidy to producers causes the: A) supply of the product to increase. B) supply of the product to decrease. C) supply curve to change slope. D) supply curve to shift up and to the left

A) supply of the product to increase.

able: Equilibrium Price, Quantity Refer to the table. If the demand curve for the product shifted to the right such that 10 more units of the good are demanded at every price, what is the new equilibrium price? A) $12 B) $14 C) $16 D) $18

C) $16

Figure: Chocolate) What is the equilibrium price per pound in the diagram? A) $4 B) $6 C) $8 D) $10

C) $8

Refer to the figure. When the demand curve shifts from D0 to D1, the equilibrium price rises to: A) $9 and the equilibrium quantity rises to 120. B) $9 and the equilibrium quantity rises to 160. C) $8 and the equilibrium quantity rises to 140. D) $8 and the equilibrium quantity rises to 160.

C) $8 and the equilibrium quantity rises to 140.

Refer to the figure. What is the maximum amount that buyers are willing and able to pay at a price of $45 per book? A) 300 books B) 450 books C) 100 books D) 0 books

C) 100 books

Figure: Good X (Figure: Good X) From the figure, which statement is TRUE? A) At a price of $12 per unit, consumers are willing and able to purchase between 11 and 26 units of Good X. B) 36 units of Good X can be purchased by spending a total of $4. C) At a price of $6 per unit, consumers are willing and able to purchase 26 units of Good X. D) At a price of $4 per unit, consumers are willing and able to purchase 11 units of Good X.

C) At a price of $6 per unit, consumers are willing and able to purchase 26 units of Good X.

Figure: Demand and Supply Figure: Demand and Supply) Refer to the figure. Which statement is TRUE? A) The gains from trade are maximized at 20 units of output. B) At 16 units of output, there are unexploited gains from trade. C) Buyers are willing to pay $20 for the 16th unit of output and it costs sellers $60 to produce that unit. D) A free market is likely to produce less than 12 units of output.

C) Buyers are willing to pay $20 for the 16th unit of output and it costs sellers $60 to produce that unit

An increase in demand and a decrease in supply occur in a market. What happens to the equilibrium price and quantity? A) The equilibrium price decreases; the change in the equilibrium quantity is uncertain. B) The equilibrium price decreases; the equilibrium quantity increases. C) The equilibrium price increases; the change in the equilibrium quantity is uncertain D) The equilibrium price increases; the equilibrium quantity decreases.

C) The equilibrium price increases; the change in the equilibrium quantity is uncertain

A firm produces volleyballs and soccer balls. What happens to the supply of soccer balls if the market price of volleyballs increases? A) The opportunity cost of producing soccer balls rises, so the supply curve of soccer balls increases. B) The opportunity cost of producing soccer balls falls, so the supply curve of soccer balls decreases. C) The opportunity cost of producing soccer balls rises, so the supply curve of soccer balls decreases. D) The opportunity cost of producing soccer balls falls, so the supply curve of soccer balls increases.

C) The opportunity cost of producing soccer balls rises, so the supply curve of soccer balls decreases.

Figure: Demand, Supply Shifts) In the figure, the initial demand curve is D1 and the initial supply curve is S1. If technological innovations lower the costs of production, what will happen? A) D1 will shift to D3 and equilibrium price and equilibrium quantity will increase. B) S1 will shift to S2 and equilibrium price will increase but equilibrium quantity will decrease. C) D1 will shift to D2 and equilibrium price and equilibrium quantity will decrease. D) S1 will shift to S3 and equilibrium price will decrease but equilibrium quantity will increase.

D) S1 will shift to S3 and equilibrium price will decrease but equilibrium quantity will increase.

Figure: Basic Supply and Demand (Figure: Basic Supply and Demand) In the diagram, which of the following statements is TRUE? A) The equilibrium price is $3, and the equilibrium quantity is 60 units. B) The equilibrium price is $4, and the equilibrium quantity is 60 units. C) The equilibrium price is $2, and the equilibrium quantity is 40 units. D) The equilibrium price is $3, and the equilibrium quantity is 50 units.

D) The equilibrium price is $3, and the equilibrium quantity is 50 units.

Figure: Basic Supply and Demand Figure: Basic Supply and Demand) In the diagram, which of the following statements is TRUE? A) When the price is $3, the quantity demanded exceeds the quantity supplied by 60 units. B) When the price is $2, the quantity demanded exceeds the quantity supplied by 40 units. C) When the price is $4, the quantity demanded is less than the quantity supplied by 40 units. D) When the price is $2, there is a tendency for the price to rise in the future.

D) When the price is $2, there is a tendency for the price to rise in the future.

A decrease in the price of one substitute good causes: A) an upward movement along the demand curve for the other substitute good. B) a downward movement along the demand curve for the other substitute good. C) a rightward shift in the demand curve for the other substitute good. D) a leftward shift in the demand curve for the other substitute good.

D) a leftward shift in the demand curve for the other substitute good.

An early frost in the vineyards of Napa Valley would cause a(n): A) increase in the demand for wine, increasing price. B) increase in the supply of wine, decreasing price. C) decrease in the demand for wine, decreasing price. D) decrease in the supply of wine, increasing price.

D) decrease in the supply of wine, increasing price.

A farmer can grow either apples or oranges. An increase in the price of apples ______ the opportunity cost of growing oranges so that the supply curve of oranges shifts ______. A) decreases; down and to the right B) increases; down and to the right C) decreases; up and to the left D) increases; up and to the left

D) increases; up and to the left

A demand curve shows the relationship between: A) quantity demanded and quantity supplied, which are positively related. B) quantity demanded and quantity supplied, which are negatively related. C)price and quantity demanded, which are positively related. D) price and quantity demanded, which are negatively related.

D) price and quantity demanded, which are negatively related.

A decrease in supply raises the price of a good, but it also decreases the quantity demanded, which lowers the price of a good. The net effect on price is ambiguous. True False

False

A higher opportunity cost of producing a good increases the supply of that good. True False

False

A market shortage can be defined as a situation in which the quantity supplied in a market is greater than the quantity demanded, at the given price. True False

False