Micro Econ Final Practice Set 1

Suppose Phil and Miss Kay are the only consumers in the market. If the price is $6, then the market quantity demanded is

12 units

If these are the only four buyers in the market, then the market quantity demanded at a price of $1 is

31 units

Refer to Figure 6-6. Which of the following statements is correct?

A price floor set at $11 would result in a surplus

A binding price ceiling may not help all consumers, but it does not hurt any consumers.

FALSE

A garage sale transaction cannot be considered a market transaction because a person's family garage is not a formal arrangement to conduct transactions.

FALSE

Refer to Figure 4-30. In this market for iPhones, the technology improves while all other factors remain constant. Which curve(s) shift(s) and in which direction?

Supply shifts to the right

Refer to Figure 7-31. If the market equilibrium price rises from $25 to $35, how much is the producer surplus for the producers entering the market after the price increase?

The producer surplus for the producers entering the market after the price increase is

Refer to Figure 4-15. Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for beach towels?

a decrease in the price of cotton

Which of the following would cause the supply curve to shift from Supply B to Supply A in the market for beer?

an expectation by firms that the price of beer will increase in the very near future

A movement downward and to the left along a supply curve is called a(n)

decrease in quantity supplied

Refer to Figure 5-8. An increase in price from $15 to $20 would

decrease total revenue by $500.

A tax on the buyers of sofas

decreases the size of the sofa market

Pizza is a normal good if the demand...

for pizza rises when income rises

When policymakers are considering a particular action, they can use consumer surplus as a(n)

measure of the benefits to buyers as the buyers perceive them -- potentially flawed measure of the benefits to buyers if the buyers are not rational

Externalities are...

side effects passed on to a party other than the buyers and sellers in the market

When a binding price floor is imposed on a market to benefit sellers,

some sellers benefit, and some sellers are harmed.

Last month, sellers of good Y took in $100 in total revenue on sales of 50 units of good Y. This month sellers of good Y raised their price and took in $120 in total revenue on sales of 40 units of good Y. At the same time, the price of good X stayed the same, but sales of good X increased from 20 units to 40 units. We can conclude that goods X and Y are

substitutes, and have a cross-price elasticity of 1.67.

Suppose roses are currently selling for $40 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a

surplus to exist and the market price of roses to decrease

Suppose buyers, rather than sellers, were required to pay this tax (in the same amount per unit as shown in the graph). Relative to the tax on sellers, the tax on buyers would result in

the same amount of tax revenue for the government

If buyers and sellers in a certain market are price takers, then individually

they have no influence on market price