Ap Micro unit 2 mcqs
If the supply of fish increases, there will be
a decrease in the price of fish
Assume that the original supply and demand curves of a commodity are S and D, respectively. Also assume that the government imposes an excise tax (per unit tax) of t dollars on the commodity, which shifts the supply curve to S1.
P1GIP2
The diagram above shows the demand curve for a good. If the price increases from P1 to P2, and quantity consumed decreases from Q2 to Q1 , consumer surplus decreases by the area
P1P2BC
In the diagram above, if there is a price ceiling set at P1, consumer surplus will be represented by the area
P3ACP1
The following questions are based on the diagram below, which shows the effect of a unit tax placed on a good. What is the price paid by consumers and the net price received by producers after the tax is paid?
Paid by consumers - $10.45 Received by producers - $9.45
Assume a 10 percent increase in price increased the market quantity supplied by 20 percent. Which of the following is true?
The value of the price elasticity of supply is 2.
The cross-price elasticity of demand between good X and good Z measures the percentage change in the quantity demanded of good X in response to a percentage change in
the price of good Z
For consumers, assume that fish sticks and tacos are substitutes. Which of the following graphs illustrates the effect on the taco market if the price of fish sticks increases?
the two XX's
If the value of the price elasticity of supply is 3, which of the following is true?
A 10 percent decrease in price will decrease the quantity supplied by 30 percent.
Assume that demand for bottled water is relatively price elastic. An increase in supply of bottled water will result in which of the following?
A decrease in price, leading to an increase in total revenue
Which of the following statements about the price elasticity of demand is true?
As more close substitutes become available, demand tends to be more price elastic.
The graph above shows the market for good X The letters in the graph denote the enclosed areas If the government imposes an excise tax of t dollars on each unit of good X, which of the following represents the consumer surplus, producer surplus, and deadweight loss after the imposition of the tax?
Consumer Surplus: A Producer Surplus: G Deadweight Loss: D+E
Suppose the government sets a price floor at $9 in the market. The resulting consumer surplus, producer surplus, and deadweight loss will be which of the following?
Consumer surplus - A Producer surplus - B+C+D deadweight loss - E+F
After the government imposed a $0.20 per gallon tax on gasoline, the price of a gallon of gasoline increased from $1.00 to $1.15. Which of the following statements is true?
Consumers bear most, but not all, of the tax burden.
If the market demand for a good is inelastic and the supply is elastic, which of the following is true when there is an increase in sales tax?
Consumers will bear most of the burden of the tax.
Assume that a 2 percent increase in the price of bologna causes a 5 percent decrease in the demand for cheese. What is the cross-price elasticity of demand between the two goods, and how are these goods related?
Cross-price elasticity of demand equals −2.5, and these goods are complements.
The demand curves X and Y are shown in the graph above. Which of the following offers the most accurate comparison of the price elasticities of demand curves X and Y at a price of $4?
Demand Curve X - Relatively inelastic Demand Curve Y - Perfectly elastic
The supply curve for automobiles will shift to the left in response to
an increse in wages in the automobile industry
If the increase in the price of one good decreases the demand for another, then the two goods are
complementary goods
The difference between the price a consumer would be willing to pay for a cone of ice cream and the actual market price that she pays gives a measure of her
consumer surplus
Following a prolonged power outage, the price of flashlights normally increases significantly. If cities had passed laws prohibiting price increases for flashlights, during power outages such laws would most likely
create a shortage of flashlights
Assume that people like onions on their hamburgers. If the supply of hamburgers decreases, the demand for onions will most likely
decrease because hamburgers and onions are complements
In the short run, a decrease in production costs of a product will shift
only the supply curve to the right
To determine whether two goods are complements, one would calculate the
price elasticity of supply
If a 10 percent increase in the price of a good leads to a 25 percent decrease in the quantity demanded of the good, demand is
relatively elastic
A change in which of the following will cause a change in the supply of personal computers (PC's) in the short run?
technology
In a perfectly competitive market, a change in which of the following could cause a shift in the supply curve?
technology
If the minimum wage for teenagers increased to a rate higher than their market equilibrium wage, what would be the effect on their wage and employment?
wage - increase employment - decrease
Consumer surplus exists because of the
willingness of some consumers to pay a price higher than the market price for some units of a good
The following questions are based on the diagram below, which shows the effect of a unit tax placed on a good. According to the diagram, what is the dollar amount of the unit tax?
$1
Assume that the government imposes a $4per-unit tax on sellers of a good in the market described by the graph above. What are the price paid by buyers, the after-tax price received by sellers, and the deadweight loss?
$8, $4, $200
If the price elasticity of supply for pickles is 2 and the price of pickles increases by 10 percent, then the quantity supplied of pickles will increase by
20%
Question 46 / Your Response The cross-price elasticity of demand between goods J and K is −3. A 20 percent decrease in the price of good K will result in a
60 percent increase in the quantity demanded of good J
Which of the following will cause the demand for a normal good to increase?
A decrease in the price of a complementary good
Which of the following will shift the supply curve for apples to the right?
A decrease in the rental price for apple harvesting equipment
Which of the following would shift the short-run supply curve for strawberries?
A strike by all farmworkers
Which of the following is most likely to occur when a competitive market adjusts from one equilibrium to another?
An increase in demand will cause the equilibrium price, equilibrium quantity, and producer surplus to increase.
Which of the following will decrease the demand for beef?
An increase in the price of potatoes, if potatoes and beef are complementary goods
Moving from left to right along a downward- sloping linear demand curve, price elasticity varies in which of the following ways?
First elastic, then unit elastic, and finally inelastic
Assume that the original supply and demand curves of a commodity are S and D, respectively. Also assume that the government imposes an excise tax (per unit tax) of t dollars on the commodity, which shifts the supply curve to S1.
GKI
If a 10percent increase in the price of good X results in a 20percent decrease in the quantity of good Y demanded, which of the following is true?
Good X and good Y are complementary goods, and the cross-price elasticity is −2.
The demand curve for a normal good slopes down for which of the following reasons? I - An increase in the price of the good induces consumers to purchase substitute products. II - An increase in the price of the goods reduces consumers' purchasing power. III - An increase in the price of the good increases consumers' utility from consuming that good.
I and II only
Which of the following situations best illustrates the law of demand?
In the past several months, as the price of compact disc players has decreased, the quantity of compact disc players sold has increased
Which of the following changes in the demand for and the supply of a good will necessarily result in an increase in both the equilibrium price and quantity of the good in a market?
Increase , No change
Which of the following is true of the cross-price elasticity of demand?
It is greater than zero for two goods that are substitutes.
If the government eliminates an effective minimum wage in a competitive labor market, which of the following is true?
Minimum wage workers will experience a decrease in hourly pay.
The graphs above show Mary's demand for hamburgers and Mark's demand for hamburgers. Suppose Mary and Mark are the only two consumers in the market. Which of the following is a point on the market demand curve for hamburgers?
Price - $4 Quantity - 7
If an unusually cold summer destroyed a large portion of the bee population, the equilibrium price and quantity of honey produced by bees will most likely change in which of the following ways?
Price - Increase Quantity - Decrease
A decrease in raw material prices will change the equilibrium price and quantity in a market in which of the following ways?
Price - demand Quantity - increase
If a hurricane reduced the crab population, the price of crabs and quantity sold would change in which of the following ways?
Price - increase Quantity - Decrease
Assume that the government increases the unit excise tax on gasoline suppliers and also that people commute longer distances to work as more houses are built in city suburbs. As a result, the equilibrium price and quantity of gasoline will most likely change in which of the following ways?
Price - increase Quantity - indeterminate
What will happen to the price and quantity of footballs as a result of an increase in the price of leather used to make footballs?
Price will increase, and quantity will decrease.
Assume that more corn is used to produce ethanol. Simultaneously, more effective control of pests and weeds occurs in farming. Which of the following will definitely occur in the corn market?
Quantity of corn will increase
Assume that the price of orange juice increases by 40 percent following a crop failure. If the quantity demanded falls by 10 percent, which of the following is true?
The absolute value of the price elasticity of demand for orange juice is 0.25.
Assume that the original supply and demand curves of a commodity are S and D, respectively. Also assume that the government imposes an excise tax (per unit tax) of t dollars on the commodity, which shifts the supply curve to S1.
The consumers and the producers each bear a part of it.
Suppose hot dogs and hamburgers are substitutes in consumption. If the supply of hot dogs decreases, which of the following will happen in the market for hamburgers?
The demand curve for hamburgers will shift to the right.
In relation to tacos, the cross-price elasticity of demand for Good Xis negative. What would be the result if the price of tacos increases?
The demand for Good Xwill decrease because it is a complement to tacos.
If a severe drought destroys a significant portion of the peanut crop and peanut farmers' revenues increase, which of the following is true over the observed range of prices?
The demand for peanuts must be unit price inelastic.
The graph above shows the supply and demand curves for artichokes. The surgeon general announces that eating an artichoke a day dramatically reduces one's likelihood of developing cancer. Simultaneously an infestation of the artichoke weevil severely damages the crop. Which of the following will definitely occur as a result?
The price of artichokes will increase.
Which of the following describes how a market will respond when the scarcity of a good increases?
The price of the good will increase.
The price elasticity of demand for a product is 0.5. If the price of the product increases by 20 percent, which of the following will occur?
The quantity demanded of the good will decrease by 10%.
Assume that the government imposes a binding price ceiling on a market for an inferior good. Which of the following is most likely to occur in the market if consumers' incomes increase?
The shortage in the market will decrease.
Assume that the market demand for a good is perfectly inelastic, the market supply for the good is perfectly elastic, and the market is in equilibrium. If there is a decrease in the price of a key input used in the production of the good, which of the following will occur?
There will be no change in the producer surplus.
The following questions refer to the graph below. The market is currently in equilibrium In a competition equilibrium consumer surplus is the area of
WYZ
In the figure above, at which of the given points is demand most elastic?
Z
Based on the graph above, the consumer surplus at the market equilibrium price and quantity is shown by which area?
ZMN
The graph above shows the market demand for good X. A movement from point A to point B would most likely be caused by
a decrease in production costs for good X
All of the following cause a rightward shift in the demand schedule for a normal good EXCEPT
a decrease in the price of the good
Assume that consumers consider popcorn and pretzels to be substitutes. A significant decrease in the supply of popcorn will affect the pretzel market by
increasing the demand for pretzels and therefore the price of pretzels
