AP Economics test unit 2

the demand curve for a normal good slopes down for which of the following reasons? 1. an increase in the price of the good induces consumers to purchase substitute products 2. an increase in the price of the good reduces consumers purchasing power 3. an increase in the price of the good increases consumers' utility from consuming that good.

1 and 2 only

the following chart shows the total utility that Juan receives from consuming various amounts of chocolate candy bars each day. A his marginal utility from the first candy bar is greater than his marginal utility from the second candy bar B his marginal utility from the fourth bar is greater than his marginal utility from the third bar C his marginal utility increases at a constant rate D he first experiences diminishing mating utility with the consumption of the fifth candy bar E his greatest marginal utility comes from his consumption of the fourth candy bar

A his marginal utility from the first candy bar is greater than his marginal utility from the second candy bar

a rise in the price of corn, a substitute good for potatoes will, A increase demand for potatoes B Increase the demand for corn C decrease the demand for potatoes D decrease the demand for corn E decrease the price of potatoes

A increase demand for potatoes

which of the following events will cause the demand curve for hamburgers to shift to the right? A increase in the price of pizza, a substitute for burgers B increase in the price of French fries, a compliment C increase in price of burgers D decrease in the price of burgers E decrease in the cost of producing hamburgers

A increase in the price of pizza, a substitute for burgers

according to the graph above, which of the following will occur if a legal price ceiling is imposed at price X A shortages will occur B surpluses will occur C demand will increase D Q1 will be purchased E supply will decrease

A shortages will occur

In a competitive equilibrium, consumer surplus is the area of A UVZ B WYZ C RVUT D XVZY E OYZS

B WYZ

assume that the demand for apples is downward sloping, if the price of apples falls from .80 per pound to 6.65 per pound, which of the the following will occur? A a smaller quantity of apples will be demanded B a larger quantity of apples will be demanded C demand for apples will decrease D demand for apples will increase E supply of apples will decrease

B a larger quantity of apples will be demanded

when Annie antiques put their inventory on sale they noticed that their total revenue went up. From this information we can accurately conclude that Annie is facing: A inelastic demand B elastic demand C unit elastic demand D selling a normal good E selling an inferior good

B elastic demand

the supply curve for automobiles will shift to the left in response to: A increase in the efficiency of robot technology B increase in wages in the automobile industry C decrease in the number of consumers purchasing automobiles D decrease in the interest rate for automobiles loans E decrease in consumer income

B increase in wages in the automobile industry

If there is an increase in demand for a good, what will most likely happen to the price and quantity of the good exchanged? A) No change No change B) Increase Increase C) Decrease Increase D) Increase decrease E) decrease. decrease

B) increase increase

An increase in the price of gasoline will cause the demand curve for tires to shift in which direction? A) to the left, because gasoline and tires are substitutes B) to the left, because gasoline and tires are compliments C) to the right, bc gasoline and tires are substitutes D) to the right, bc gasoline and tires are compliments E) to the right, bc an increase in the price of gas makes consumer poorer and thus not willing to pay as much for tires

B) to the left, because gasoline and tires are compliments

if a price floor is set at X, the quantity demanded will A increase from OR to OS B increase from OR to OT C decrease from Os to OR D decrease from Ot to OR E not change

C decrease from Os to OR

If the cost of producing cars increases, the price, equilibrium quantity and consumer surplus will most likely change in which of the following ways A Increase Increase Increase B increase increase decrease C increase decrease decrease D decrease increase decrease E decrease decrease decrease

C increase decrease decrease

which of the following is true in the elastic range of a firm's demand curve? A) the firm should expand output to increase economic profit B) an increase in price will also lead to an increase in total cost C) a decrease in price will likely lead to an increase in total revenue D marginal revenue is negative E the firm is maximizing total revenue

C) a decrease in price will likely lead to an increase in total revenue

which of the following will not change the demand for oranges? A) a change in consumers incomes B) a change in the price of grapefruits, a substitute for oranges C) a change in the price of oranges D) a change in consumers' taste for oranges E) an expectation that the price of oranges will increase in the future.

C) change in price of oranges

which of the following situations best illustrates the law of demand? A) as real incomes of US citizens have decreased over the year, the demand for housing has also decreased B) recent decreases in the price of imported wine have led to an increase in the consumption of domestic wine C) in the past several months, as the price of compact disc players had decreased, the quantity of compact disc players sold has increased D) the increase int eh price of quality health foods had increased the revenue of firms producing these goods E) as the demand for computers had increased, the number of workers in the computer industry had increased

C) in the past several months, as the price of compact disc players had decreased, the quantity of compact disc players sold has increased

producer surplus is: A crease under the supply curve to the left of the amount sold B areas under the supply curve to the right of the amount sold C amount the seller is paid plus the cost of production D amount the seller is paid less the cost of production E cost to sellers of participating in a market

D amount the seller is paid less the cost of production

which of the following will occur if a legal price floor is placed on a good below its free market equilibrium A surplus B shortage C underground markets will develop D equilibrium price will ration the good E quantity sold will increase

D equilibrium price will ration the good

Which of the following must be true if the revenues of wheat farmers increase when the price of wheat increases? A. The supply of wheat is price elastic B. The supply of wheat is income elastic C. The supply of wheat is income in elastic D. The demand for wheat is income inelastic

D. The demand for wheat is income inelastic

During the 1990s, the price of VCRs fell by 30 percent, and quantity sold decreased by the same amount, the demand for vcrs must. A be inelastic B elastic C unit elastic D have shifted right E have shifted left

E have shifted left

The graph above shows the supply and demand curves for gas. Which of the following will occur if the government establishes a price ceiling of 1.20. A a shortage of 900 million gallons B a shortage of 200 million gallons C a shortage of 100 million gallons D a surplus of 100 million gallons E neither a surplus nor a shortage

E neither a surplus nor a shortage

which of the following statements about price controls is true? A price ceiling causes a shortage if the ceiling price is above equilibrium price B price floor causes a surplus if the price floors is below equilibrium price C price ceiling causes an increase in demand if the ceiling price is set below the equilibrium price D a price ceiling causes a decrease in demand if the price floor is set above the equilibrium price E price ceilings and price floors result in a misallocation of resources

E price ceilings and price floors result in a misallocation of resources

based on the info in the table which product is inferior? A product A only B product B only C product D only D product A and C only E product B and D only

E product B and D only

the total amount of tax paid to the government in the graph would be the area

E.) ADGFC

a utility maximizing consumer would allocate his or her income in such a way as to:

allocate each additional dollar of income to the product that gives the highest marginal utility per dollar

Suppose that a consumer purchases two goods X and Y and that the marginal utility of X is MUx, the total utility of X is TUx, the marginal utility of Y is MUy, and the total utility of Y is TUy. If the prices of X and Y are Px and Py, respectively, which of the following expressions defines consumer equilibrium? a) TUx = Tuy b) Mux = MUy c)Tux/Px = TUy/Py d) MUx/Px = MUy/Py (MUx)(Px) + (MUy)(Py) = 1

d) MUx/Px = MUy/Py

Assume that popcorn and movie attendance are complements and that Salty Concession grows corn suitable for popping. Mr. Concession will most likely sell a greater quantity of popping corn at a higher price if which of the following occurs? a) The wages of farm workers and movie theater employees increase. b) A technological improvement results in less expensive and more efficient harvesting of corn. c) The introduction of new fat-free potato chips provides new competition in the snack-food market. d) The release of three summer movies sets records for movie attendance. e) New government regulations force movie theaters to hire more security guards at each theater.

d) The release of three summer movies sets records for movie attendance

if an excise tax is imported on a product, consumer surplus and producer surplus for this good will most likely change in which of the following ways?

decrease decrease

In a perfectly competitive market, which of the following shifts in the supply and demand curves will definitely cause both the equilibrium price and quantity to decrease? a) Supply curve shifts to the left; demand curve shifts to the right b) Supply curve shifts to the left; demand curve has no shift c) Supply curve shifts to the right; demand curve shifts to the right d) Supply curve has no shift; demand curve shifts to the right e) Supply curve has no shift; demand curve shifts to the left

e) Supply curve has no shift; demand curve shifts to the left

if supply and demand both increase we can correctly conclude that: 1.) equilibrium price will rise 2.) equilibrium price is indeterminate 3.) equilibrium quantity will rise 4.) equilibrium quantity is indeterminate

two and four only