Econ 302 Practice Exam 1

Murphy used to consume 100 units of X and 50 units of Y when the price of X was $2 and the price of Y was $4. If the price of X rose to $3 and the price of Y rose to $8, how much would Murphy's income have to rise so that he could still afford his original bundle?

$300

Murphy used to consume 100 units of X and 50 units of Y when the price of X was $2 and the price of Y was $4. If the price of X rose to $4 and the price of Y rose to $9, how much would Murphy's income have to rise so that he could still afford his original bundle?

$450

The Chuzzlewits have an income of $m per week. Let x be food and let y be all other goods. Let px be the price of food and py be the price of other goods. They can use food stamps to buy food at a price of px(1 - s) for up to x* units of food per week. If they buy more food than x*, they have to pay the full price px for additional units. Their weekly income is greater than px(1 - s)x*. The maximum amount of food that they can buy per week is

(m/px) + sx*.

Suppose that the demand for artichokes (Qa) is given as: Qa = 200 - 4P Use the information in Scenario 4.2. What is the price elasticity of demand if the price of artichokes is $10?

-0.25

Jiaxiu used to consume 8 hot dogs and 4 hamburgers a day. Now she consumes 12 hot dogs and 2 hamburgers daily in order to maintain the same level of wellbeing as before. The MRS for hot dogs with hamburgers is:

-0.5

The price of coffee is always equal to one-half the price of tea. When we plot the budget line for coffee and tea, coffee is plotted on the horizontal axis. What is the slope of this budget line?

-1/2

The demand for erasers (Q) is given as follows: Q = 240 - 4Pe + 2I + Pb + A where Pe is the price of erasers I is the level of income Pb is the price of another good A is the level of advertising Suppose that Q = 240, Pe = 10, Pb = 10, and A = 2. Given the information in Scenario 4.3, what is the price elasticity of demand?

-1/6

Suppose we assume the supply and demand for good X are the following: Qd = 125 - 2Px Qs = 0.5Px What is the change in quantity demanded when demand decreased by 50 units? (enter a negative sign in the case that Q decrease)

-10

Suppose we assume the supply and demand for good X are the following: Qd = 125 - 2Px Qs = 0.5Px What is the change in quantity demanded when demand decreased by 75 units? (enter a negative sign in the case that Q decrease)

-15

In order to maintain the same level of wellbeing, Jack must be given 2 oranges for every apple that is taken away from him. Jack's marginal rate of substitution for apple with oranges is:

-2

Suppose a consumer buy books and DVDs. The price of a book is $10, the price of a DVD is $20 and the consumer's income is $400. If books are measured on the vertical axis and DVDs are measured on the horizontal axis, then the slope of the budget line is

-2

Eliza used to consume 5 cookies and 6 cupcakes a day. Now she consumes 6 cookies and 3 cupcakes daily in order to maintain the same level of happiness as before. The MRS for cookies with cupcakes is:

-3

Suppose we assume the supply and demand for good X are the following: Qd = 125 - 2Px Qs = 0.5Px What is the change in quantity demanded when demand change decreased by 200 units? (enter a negative sign in the case that Q decrease)

-40

Suppose we assume the supply and demand for good X are the following: Qd = 125 - 2Px Qs = 0.5Px What is the change in quantity demanded when demand decreased by 25 units? (enter a negative sign in the case that Q decrease)

-5

A consumer has $100 per day to spend on product A, which has a unit price of $7, and product B, which has a unit price of $15. What is the slope of the budget line if good A is on the horizontal axis and good B is on the vertical axis?

-7/15

Clara spends her entire budget and consumes 5 units of x and 13 units of y. The price of x is twice the price of y. Her income doubles and the price of y doubles, but the price of x stays the same. If she continues to buy 13 units of y, what is the largest number of units of x that she can afford?

10

Maria spends her entire budget and consumes 5 units of x and 6 units of y. The price of x is twice the price of y. Her income doubles and the price of y doubles, but the price of x stays the same. If she continues to buy 6 units of y, what is the largest number of units of x that she can afford?

10

Suppose we assume the supply and demand for good X are the following: Qd = 50 - 2Px Qs = 0.5Px What would be the equilibrium quantity in this market?

10

If she spends all of her income on uglifruits and breadfruits, Maria can just afford 11 uglifruits and 4 breadfruits per day. She could also use her entire budget to buy 3 uglifruits and 8 breadfruits per day. The price of uglifruits is 6 pesos each. How much is Maria's income per day?

114 pesos

If you spent your entire income, you could afford either 3 units of x and 9 units of y or 9 units of x and 3 units of y. If you spent your entire income on x, how many units of x could you buy?

12

Will spends his entire income on 8 sacks of acorns and 8 crates of butternuts. The price of acorns is 9 dollars per sack and his income is 88 dollars. He can just afford a commodity bundle with A sacks of acorns and B crates of butternuts that satisfies the budget equation

18A + 4B = 176

If you spent your entire income, you could afford either 6 units of x and 13 units of y or 13 units of x and 6 units of y. If you spent your entire income on x, how many units of x could you buy?

19

According to the graph, the total effect of an increase in the price of X from $1 to $2 is equal to:

25

If she spends her entire budget, Heidi can afford 39 peaches and 12 pears. She can also just afford 24 peaches and 17 pears. The price of peaches is 9 cents. What is the price of pears in cents?

27 cents

This weekend, Martha has time to read 40 pages of economics and 30 pages of sociology. Alternatively, she could read 10 pages of economics and 90 pages of sociology. Which of these equations describes all combinations of pages of economics, E, and sociology, S, that she could read over the weekend?

2E + S = 110

Harold lives on Doritos and seafood salads. The price of Doritos is 1 dollar per bag and the price of seafood salads is 2 dollars each. Harold allows himself to spend no more than 11 dollars a day on food. He also restricts his consumption to 6,500 calories per day. There are 1,500 calories in a bag of Doritos and 500 calories in a seafood salad. If he spends his entire money budget each day and consumes no more calories than his calorie limit, he can consume up to

3 bags of Doritos per day but no more.

Suppose a consumer's MRS is given by the formula MRSPT = T/P, where P stands for the number of pieces of pizza and T stands for the number of tacos. Starting at 12 tacos and 4 pizzas, the consumer must receive

3 tacos to compensate them for the loss of one piece of pizza

Quincy lives on pretzels and seafood salads. The price of pretzels is 1 dollar per bag and the price of seafood salads is 2 dollars each. Quincy allows himself to spend no more than 14 dollars a day on food. He also restricts his consumption to 3,400 calories per day. There are 600 calories in a bag of pretzels and 200 calories in a seafood salad. If he spends his entire money budget each day and consumes no more calories than his calorie limit, he can consume up to

4 bags of pretzels per day but no more.

Suppose a consumer buy books and DVDs. The price of a book is $10, the price of a DVD is $20 and the consumer's income is $400. If books are measured on the vertical axis and DVDs are measured on the horizontal axis, then the budget line intersects the vertical axis at

40

Lars consumes only potatoes and herring. When the price of potatoes was 9 crowns per sack and the price of herring was 5 crowns per crock, he spent his entire income to buy 5 sacks of potatoes and 10 crocks of herring per month. Now the government subsidizes potatoes. Market prices haven't changed, but consumers get a subsidy of 5 crowns for every sack of potatoes consumed. To pay for this subsidy, the government introduced an income tax. Lars pays an income tax of 20 crowns per month. If s is the number of sacks of potatoes and c is the number of crocks of herring, what is Lars's new budget equation?

4s + 5c = 75

According to the graph, the income effect of a decrease in the price of X from $2 to $1 is equal to:

5

The demand for erasers (Q) is given as follows: Q = 240 - 4Pe + 2I + Pb + A where Pe is the price of erasers I is the level of income Pb is the price of another good A is the level of advertising Suppose that Q = 240, Pe = 10, Pb = 10, and A = 2. The point price elasticity of demand is -1/2. The price of the product increases from $1.00 to $1.10. Given the information in Scenario 4.3, the quantity demanded will decrease by approximately:

5 percent

Georgina thrives on two goods: pears and bananas. The cost of pears is 30 pesos each and the cost of bananas is 15 pesos each. If her income is 180 pesos, how many pears can she buy if she spends all of her income on pears?

6

Your budget constraint for the two goods A and B is 8A + 4B = I, where I is your income. You are currently consuming more than 18 units of B. In order to get 3 more units of A, how many units of B would you have to give up?

6

Sue views hot dogs and hot dog buns as perfect complements in her consumption, and the corners of her indifference curves follow the 45-degree line. Suppose the price of hot dogs is $5 per package (8 hot dogs), the price of buns is $3 per package (8 hot dog buns), and Sue's budget is $48 per month. What is her optimal choice under this scenario?

6 packages of hot dogs and 6 packages of buns

Isabella thrives on two goods: lemons and tangerines. The cost of lemons is 40 guineas each and the cost of tangerines is 20 guineas each. If her income is 320 guineas, how many lemons can she buy if she spends all of her income on lemons?

8

The price of bread is $1.50 per pound and the price of butter is $3 per pound. Steve has an income of $30, with which he buys 4 pounds of bread. How many pounds of butter does he buy, assuming he buys nothing else?

8

Mikey is very picky and insists that his mom make his breakfast with equal parts of cereal and apple juice any other combination and it ends up on the floor. Cereal costs 4 cents per tablespoon and apple juice costs 6 cents per tablespoon. If Mikey's mom budgets $8 per month for Mikey's breakfast, how much cereal and juice does she buy?

80 tablespoons each of cereal and juice

If she spends her entire budget, Betsy can afford 74 peaches and 9 pineapples. She can also just afford 14 peaches and 21 pineapples. The price of peaches is 17 cents. What is the price of pineapples in cents?

85 cents

While traveling abroad, Tammy spent all of the money in her purse to buy 5 plates of spaghetti and 6 oysters. Spaghetti costs 8 units of the local currency per plate and she had 82 units of currency in her purse. If s denotes the number of plates of spaghetti and o denotes the number of oysters purchased, the set of commodity bundles that she could just afford with the money in her purse is described by the equation

8s + 7o = 82.

Harry thrives on two goods, paperback novels and bananas. The cost of paperback novels is 4 dollars each and the cost of bananas is 3 dollars per bunch. If Harry spent all of his income on bananas, he could afford 12 bunches of bananas per week. How many paperback novels could he buy if he spent all of his income on paperback novels?

9

Your budget constraint for the two goods A and B is 12A + 4B = I, where I is your income. You are currently consuming more than 27 units of B. In order to get 3 more units of A, how many units of B would you have to give up?

9

Refer to Figure 4.2. The marginal rate of substitution for economics books with CDs is highest at point

A

Two products are perfect substitutes if

A consumer is willing to swap one for another at a fixed rate

From 1970 to 2010, the real price of a college education increased, and total enrollment increased. Which of the following could have caused this increase in price and enrollment?

A shift to the left in the supply curve for college education and a shift to the right in the demand curve for college education.

Which of the following would cause an unambiguous decrease in the real price of DVD players?

A shift to the right in the supply curve for DVD players and a shift to the left in the demand curve for DVD players.

From 1970 to 2010, the real price of eggs decreased. Which of the following would cause an unambiguous decrease in the real price of eggs?

A shift to the right in the supply curve for eggs and a shift to the left in the demand curve for eggs

Good A is a Giffen good. If the price of good A were to suddenly double, the income effect would cause the purchases of good A to increase by

Any of the above are possible.

Refer to Figure 4.3. Which diagram most likely represents the indifference map for a good and a "bad"?

B

Refer to Figure5.1. Which graph represents an increase in the consumer's income?

B

The budget constraint for a consumer who only buys apples (A) and bananas (B) is PAA + PBB = I where consumer income is I, the price of apples is PA, and the price of bananas is PB. To plot this budget constraint in a figure with apples on the horizontal axis, we should use a budget line represented by the slope-intercept equation:

B = I/PB - (PA/PB)A

The more is better assumption states that a consumer represented by these indifference curves map is always going to prefer bundle:

B compared to A

An increase in the price of the good measured along the vertical axis will cause the budget line to

Become flatter

Refer to Figure 4.3. Which diagram most likely represents the indifference map for left shoes and right shoes?

D

An increase in the price of wheat, an important ingredient in the production of bread, combined with an increase in the number of people consuming bread, will result in which of the following changes in the bread market?

Equilibrium price will increase, but equilibrium quantity may decrease, increase, or stay the same.

Use the following two statements in answering this question: I. All Giffen goods are inferior goods. II. All inferior goods are Giffen goods.

I is true, and II is false.

Which of the following would cause a shift to the right of the supply curve for gasoline? I. A large increase in the price of public transportation. II. A large decrease in the price of automobiles. III. A large reduction in the costs of producing gasoline.

III only

Sally's Bakery specializes in making five types of treats: pies, muffins, ice cream, cookies, and milk shakes. Angel, a long-time customer, is addicted to Sally's ice cream. The cookies and milk shakes are equally appealing, but not quite addicting. She does not like the muffins very much and absolutely hate Sally's pies. If Sally chooses to make and sell only muffins, cookies, and ice cream, Angel will buy:

Ice cream

Which of these three consumers has generally the highest value for good X?

Jose

Which of these three consumers has generally the highest value for good Y?

Juan

Which of the following diagrams represent an indifference curve between right shows (X) and left shoes (Y), for a consumer that likes to always wear shoes in both feet?

L

Felix always consumes exactly four cookies with a glass of milk. Felix's indifference curves for cookies and milk would be

L-shaped

Suppose Frank is completely indifferent between drinking Coke or drinking Pepsi. Then Frank's indifference curves for Coke and Pepsi would be

Linear

Which of the following diagrams represent an indifference curve between coke (X) and pepsi (Y), for a consumer that likes both drinks the same?

Linear downward slope

Suppose Bart's MRS for sodas with chips is 6 bags of chips per soda. Also assume that Lisa's MRS for sodas with chips is 8 bags of chips per soda. Assuming that these rates of substitution don't depend on the amounts consumed, which of the following trades would make Bart and Lisa better off?

No mutually beneficial trade can occur here

If she spends all of her income on breadfruits and melons, Natalie can just afford 9 breadfruits and 10 melons per day. She could also use her entire budget to buy 3 breadfruits and 12 melons per day. The price of breadfruits is 8 yen each. How much is Natalie's income per day?

None of the above

In year 1, the price of good x was $3, the price of good y was $2, and income was $90. In year 2, the price of x was $9, the price of good y was $6, and income was $90. On a graph with x on the horizontal axis and y on the vertical, the new budget line is

None of the above

Suppose that the prices of good x and good y both double and income triples. On a graph where the budget line is drawn with x on the horizontal axis and y on the vertical axis,

None of the above

The more is better assumption states that a consumer represented by these indifference curves map is always going to prefer bundle:

None of the other choices is correct

Suppose a consumer buys pizza (P) and soft drinks (S). The price of pizza is $10, the price of soft drinks is $2 and the consumer's income is $100. If pizza is measured on the vertical axis and soft drinks are measured on the horizontal axis, then the consumer's budget constraint is given by

P = 10 - (1/5)S

Sally's Bakery specializes in making five types of treats: pies, muffins, ice cream, cookies, and milk shakes. Steve, a long-time customer, is addicted to Sally's muffins. The pies and milk shakes are equally appealing, but not quite addicting. He does not like the cookies very much and absolutely hate Sally's ice cream. If Sally chooses to make and sell only pies, cookies, and ice cream, Steve will buy:

Pies

Which of the following diagrams represent an indifference curve between John Mayer music (X) and Bob Dylan music (Y), assuming this consumer hates John Mayer?

Positive linear sloe

The demand curve for the new computer game, Rock and Roll Trivia, is given as follows: Q = 200 - 5P - .1Pc - .5Pd + .2A - I where P is the price of the game Pc is the price of a computer Pd is the price of a diskette A is the level of advertising Q is the level of income See the information in Scenario 4.4. From this demand curve, one can infer that:

Rock and Roll Trivia is an inferior good

Sue views hot dogs and hot dog buns as perfect complements in her consumption, and the corners of her indifference curves follow the 45-degree line. Initially, the price of hot dogs is $3 per package (8 hot dogs), the price of buns is $3 per package (8 hot dog buns), and Sue's budget is $48 per month. How does her optimal consumption bundle change if the price of hot dog buns increases to $5 per package?

She reduces her consumption by 2 packages of hot dogs and 2 packages of hot dog buns.

If prices and income all change by the same proportion

The budget line doesn't change

Suppose you only consume food and clothing, and clothing is plotted on the vertical axis. Also, you purchase food at a fixed price (PF), but the price of clothing declines as you buy in larger quantities (i.e., quantity discounts). What does the budget line look like in this case?

The budget line is now convex to (bows in toward) the origin

You have just won a cash award of $500 for academic excellence.

The income effect of this award will be larger than its substitution effect.

Suppose that supply increases and demand decreases. What is the most likely effect on price and quantity?

The price will decrease, but quantity may increase, decrease, or stay the same.

Two products are perfect complements if

They are valuable only when used together in fixed proportions

The demand curve for the new computer game, Rock and Roll Trivia, is given as follows: Q = 200 - 5P - .1Pc - .5Pd + .2A - I where P is the price of the game Pc is the price of a computer Pd is the price of a diskette A is the level of advertising Q is the level of income See the information in Scenario 4.4. Suppose that the price should increase slightly from $10, how will this affect the total expenditure of consumers on the game?

Total expenditures will increase

The demand for erasers (Q) is given as follows: Q = 240 - 4Pe + 2I + Pb + A where Pe is the price of erasers I is the level of income Pb is the price of another good A is the level of advertising Suppose that Q = 240, Pe = 10, Pb = 10, and A = 2. Given the information in Scenario 4.3, suppose that the price of erasers increases slightly from $10. How will this affect the total revenue collected by the firm?

Total revenue will increase

A decrease in demand and a decrease in supply will lead to ________ in equilibrium quantity and ________ in equilibrium price.

a decrease; an indeterminate change

The demand for erasers (Q) is given as follows: Q = 240 - 4Pe + 2I + Pb + A where Pe is the price of erasers I is the level of income Pb is the price of another good A is the level of advertising Suppose that Q = 240, Pe = 10, Pb = 10, and A = 2. Given the information in Scenario 4.3, erasers are:

a normal good

An increase in the price and an ambiguous change in quantity is most likely caused by:

a shift to the left in supply and a shift to the right in demand.

A beneficial technological change enhances the production of cranberries. At the same time, scientists discover the health benefits of cranberries. This will result in:

an increase in the equilibrium quantity and an uncertain impact on the equilibrium price of cranberries

A recent news story reported that OPEC is expected to decrease the supply of oil next summer. Summer is traditionally a time of increased demand for oil because of the many families driving and flying to vacation sites. What would be the combined effect of these two events on the summer market for gasoline?

an increase in the price and an unpredictable change in the quantity

An increase in demand and a decrease in supply will lead to ________ in equilibrium quantity and ________ in equilibrium price.

an indeterminate change; an increase

Assume that food is measured on the horizontal axis and clothing on the vertical axis. If the price of food falls relative to that of clothing, the budget line will:

become flatter.

If an individual has a constant MRS of shoes for sneakers of 3/4 (that is, he or she is always willing to give up 3 pairs of sneakers to get 4 pairs of shoes) then, if sneakers and shoes are equally costly, he or she will

buy only sneakers

Suppose a consumer only purchases food and clothing, and food is plotted along the horizontal axis of the consumer's indifference map. If the price of clothing increases and the price of food and income do not change, then the budget line changes by rotating:

counter-clockwise about the fixed horizontal axis intercept.

Other things equal, a decrease in the average income of buyer's of good X will __________ the market price of good X (assume good X is a normal good).

decrease

Other things equal, an increase in one of the inputs needed to produce good Y, a complement of good X, will __________ the market price of good X.

decrease

Other things equal, an increase in the price of gasoline, a complement for cars, will __________ the market price of cars.

decrease

Other things equal, an increase in the price of good Y, a complement of good X, will __________ the market price of good X.

decrease

When a market is experiencing a surplus of supply the equilibrium price tends to:

decrease

Marge has spent her entire budget on milk and cookies. The last glass of milk provided Marge with 10 additional utils and the last cookie provided her with 25 additional utils. The price of a cookie is twice the price of a glass of milk. Given this information, Marge should:

decrease her consumption of milk and increase her consumption of cookies.

Say you own a few 1- bedroom apartments around campus town. If enrollment at the university unexpectedly declined, should you increase or decrease the rent you charge in order to deal with the increase in vacancy rates?

decrease rent

When a good has a unitary price elasticity, consumer expenditures for the good

do not change when the price of the good decreases

When there is a substitution effect between blue pencils and red pencils (perfect substitutes), that substitution effect must be

equal to total effect

Rice and potatoes are substitutes. If the price of rice rises and there is a bumper crop of potatoes, in the market for potatoes one would expect the:

equilibrium price to rise, fall, or stay the same and equilibrium quantity to rise.

Gasoline, a derivative of oil, is a large part of transportation costs for many producers. If the price of oil increases at the same time that incomes fall for many consumers, one would expect the equilibrium price of many normal goods to ________, while their equilibrium quantities would ________.

fall, rise, or stay the same; decrease

An increase in which of the following determinants of demand will have an ambiguous (uncertain) effect on price?

income

Other things equal, a decrease in the average income of buyer's of good X will __________ the market price of good X (assume good X is an inferior good).

increase

Other things equal, a decrease in the price of good Y, a complement of good X, will __________ the market price of good X.

increase

Other things equal, an increase in the average income of buyer's of good X will __________ the market price of good X (assume good X is a normal good).

increase

Other things equal, an increase in the price of good Y, a substitute of good X, will __________ the market price of good X.

increase

Other things equal, an increase in the price of oranges, a substitutes for apples, will __________ the market price of apples.

increase

When a market is experiencing a shortage of supply the equilibrium price tends to:

increase

The demand for erasers (Q) is given as follows: Q = 240 - 4Pe + 2I + Pb + A where Pe is the price of erasers I is the level of income Pb is the price of another good A is the level of advertising Suppose that Q = 240, Pe = 10, Pb = 10, and A = 2. Given the information in Scenario 4.3, it would be correct to say that demand is:

inelastic, but not completely inelastic.

Suppose that the price of good x triples and the price of good y doubles while income remains constant. On a graph where the budget line is drawn with x on the horizontal axis and y on the vertical axis, the new budget line

is steeper than the old one and lies below it.

Assume that beer is a normal good. If the price of beer rises, then the substitution effect results in the person buying ________ of the good and the income effect results in the person buying ________ of the good.

less, less

Assume that beer is an inferior good. If the price of beer falls, then the substitution effect results in the person buying ________ of the good and the income effect results in the person buying ________ of the good.

more, less

Suppose the price of rice increases and you view rice as an inferior good. The substitution effect results in a ________ change in rice consumption, and the income effect leads to a ________ change in rice consumption.

negative, positive

Good A is an inferior good. If the price of good A were to suddenly double, the substitution effect would cause the purchases of good A to increase by

none of the above

Suppose a consumer only purchases food and clothing, and food is plotted along the horizontal axis of the consumer's indifference map. If the price of food and clothing increase and income does not change, then the budget line changes by rotating:

none of the above

From 1970 to 2010, the real price of eggs decreased and the total annual consumption of eggs decreased. Which of the following would cause an unambiguous decrease in the real price of eggs and an unambiguous decrease in the quantity of eggs consumed?

none of the other choices is correct

Suppose the price of public transportation increases. You know that the income effect of this increase is 5, the substitution effect is 10, but you do not know the signs. The total effect of the increase in the price of public transport could be either:

none of the other choices is correct

Young Alasdair loves lollipops and hates oatmeal. To induce him to eat enough oatmeal and to restrain him from eating too many lollipops, his mum pays him 10 pence for every quart of oatmeal that he eats. The only way that he can get lollipops is to buy them at the sweet shop, where lollipops cost 5 pence each. Besides what he earns from eating oatmeal, Alasdair gets an allowance of 10 pence per week. If Alasdair consumes only oatmeal and lollipops and if his consumption bundles are graphed with quarts of oatmeal on the horizontal axis and lollipops on the vertical axis, then Alasdair's budget line has a slope

of 2

An important determinant of the amount of grains harvested next year by Ethiopian farmers is the amount of seeds planted this year. Given that Western nations have guaranteed to donate five hundred tons of grain next year, this year the Ethiopian farmers will:

plant fewer seeds as the price of grain will be lower with the food aid

The following indifference map represents the preference of many consumers in the market for ham and eggs. The income effect of an increase in the price of ham will be:

point B to point C

Suppose that more police and security workers become aware that wearing bulletproof vests can protect them from injury and decide to start wearing bulletproof vests. At the same time, the price of ceramics used to produce the vests falls. The equilibrium relative price of bulletproof vests ________ and the equilibrium quantity produced ________.

probably changes, but in an ambiguous direction; increases

An increase in the price of sugar (an ingredient for soft drinks) and an increased concern about tooth decay caused by the consumption of soft drinks will result in which of the following in the soft drink market?

quilibrium quantity will decrease, but equilibrium price may decrease, increase, or stay the same

A freeze in Florida's orange growing regions will:

result in a sharp increase in the price of oranges in the short run because demand and supply are highly inelastic.

Suppose that the demand for artichokes (Qa) is given as: Qa = 200 - 4P Use the information in Scenario 4.2. Suppose that the price of artichokes is increased slightly from $10. The total expenditure by consumers on artichokes will ________ and the number of artichokes sold will ________.

rise, fall

In year 1, the price of good x was $4, the price of good y was $1, and income was $70. In year 2, the price of x was $9, the price of good y was $2, and income was $70. On a graph with x on the horizontal axis and y on the vertical, the new budget line is

steeper than the old one and lies below it

The demand for erasers (Q) is given as follows: Q = 240 - 4Pe + 2I + Pb + A where Pe is the price of erasers I is the level of income Pb is the price of another good A is the level of advertising Suppose that Q = 240, Pe = 10, Pb = 10, and A = 2. Given the information in Scenario 4.3, erasers and good b, are:

substitutes

The battery packs used in electric and hybrid automobiles are one of the largest cost components for manufacturing these cars. As the price of these batteries decline, we expect that the:The battery packs used in electric and hybrid automobiles are one of the largest cost components for manufacturing these cars. As the price of these batteries decline, we expect that the:

supply curve for electric and hybrid autos will shift rightward.

Suppose biochemists discover an enzyme that can double the amount of ethanol that may be derived from a given amount of biomass. Based on this technological development, we expect the:

supply curve for ethanol to shift rightward

The equilibrium price in the market tends to fall when the market is experiencing a:

supply surplus

Thomas consumes coffee (C) and doughnuts (D). His budget line was described by the equation D = 20 - 2C. At a later time, his budget line could be described by the equation D = 10 - C. The change between the earlier budget line and the later could be explained by the fact that

the price of coffee increased and Thomas's income decreased

Suppose there are two goods, the prices of both goods are positive, and a consumer's income is also positive. If the consumer's income doubles and the price of both goods triple,

the slope of the consumer's budget line does not change but the budget line shifts inward toward the origin

Sugar can be refined from sugar beets. When the price of those beets falls,

the supply curve for sugar would shift righ

When an industry's raw material costs increase, other things remaining the same,

the supply curve shifts to the left.

For an inferior good, the income and substitution effects

work against each other.

If you have an income of $40 to spend, commodity 1 costs $4 per unit, and commodity 2 costs $8 per unit, then the equation for your budget line can be written

x1 + 2x2 = 10

If you have an income of $40 to spend, commodity 1 costs $2 per unit, and commodity 2 costs $10 per unit, then the equation for your budget line can be written

x1 + 5x2 = 20

The substitution effect between left shoes and right shows (perfect complements) is:

zero