Microeconomics Exam 2

Now suppose that the price of Pepsi increases, and the demand for Coca Cola increases as a result. From this we can conclude that Coca Cola and Pepsi are _______________. A. Substitutes in consumption B. Complements in production C. Normal Goods D. Complements in consumption

A

Other things being equal, an increase in the demand for labor in manufacturing will (Note: wage is the price of labor) A. increase both the equilibrium wage and quantity of labor in manufacturing B. decrease the equilibrium wage and quantity of labor supplied in manufacturing C. have no effect on either the equilibrium wage or the equilibrium quantity of labor supplied in manufacturing D. increase the equilibrium wage, but decrease the equilibrium quantity of labor supplied in manufacturing

A

Other things equal, which of the following might shift the demand curve for gasoline to the left? A. The development of a low-cost electric automobile B. A large decline in the price of automobiles C. An increase in the price of train and air transportation D. The discovery of vast new oil reserves in Montana

A

When the market for a good is in equilibrium A. the price of the good will tend neither to increase nor decrease B. None of the above C. everyone's desires are satisfied D. quantity supplied exceeds quantity demanded

A

Which of the diagrams illustrates the effect of an increase in automobile worker wages on the market for automobiles? A. D B. A C. C D. B

A

Relate to the following table that shows a hypothetical supply and demand schedule for a product. If a price floor set by the government is established at $4.20, there will be a A. shortage of 450 pounds B. surplus of 450 pounds C. surplus of 300 pounds D. no surplus no shortage, market achieves equilibrium E. shortage of 300 pounds

B

A firm's supply curve is upward sloping because: A. consumers envision a positive relationship between price and quality B. beyond some point the production costs of additional units of output will rise C. mass production economies are associated with larger levels of output D. the expansion of production necessitates the use of qualitatively inferior inputs

B

From Figure 1 above, if Coca-Cola is priced at $16.00, there is a __________ of Coca-Cola, and we expect the price to _________. A. Shortage, decrease B. Surplus, decrease C. Surplus, increase D. Shortage, increase

B

Suppose that there are only three consumers of a product. At a price of $3 per unit, the first consumer would buy 6 units of the product, the second consumer would buy 5 units, and the third consumer would buy 7 units of the product. If you drew a market demand curve for this product, the quantity demanded at a price of $3 would be: A. 11 units B. 18 units C. 13 units D. 15 units E. 12 units

B

The current price set by promoters of a concert by Clint Black is $25 per ticket. At that price, the quantity of tickets demanded is 100,000 for concert and the capacity of the stadium in which the concert is being held is 15,000. It follows that A. There will be a surplus of tickets to the concert B. The equilibrium price of a ticket to the concert is greater than $25 C. The equilibrium price a ticket to the concert is $25 D. The equilibrium price of a ticket to the concert is less than $25

B

To prevent gas stations from passing on the burden of a new 4.3 cents per-gallon gas tax, a price ceiling of $3 per gallon is imposed. Given the demand and supply curves show below, what will the effect of price ceiling be? A. Uncertain B. No shortage, no surplus, market equilibrium C. 2 thousands of gallons of surplus D. 2 thousands of gallons of shortage

B

A change in the quantity demanded of a product is the result of a change in: A. consumer preferences B. the price of related goods C. the price of the product D. consumer income E. the cost of producing the product

C

Assume that the market equilibrium now is at Y. Which factor would cause the equilibrium to shift to X? A. Consumers are more in favor of the products B. Price of raw materials for producing increase C. Consumers are less in favor of the products D. Producers expect the price of product increases next month

C

If a new oil reservoir in Alaska is found, then (oil is the raw material for gasoline production) A. the supply of gasoline will decrease and its price will increase B. the demand for gasoline will increase C. the supply of gasoline will increase and its price will decrease D. the demand for gasoline will decrease

C

Pork and beef are substitutes. Other things being equal, a decrease in the price of beef will A. increase the demand for pork B. put upward pressure on the price of pork C. decrease the demand for pork D. have no effect on the demand for pork

C

Refer to the graph below A decrease in supply is depicted by a: A. move from point y to point x B. move from point x to point y C. shift from S2 to S1 D. shift from S1 to S2

C

The Law of Supply states that: A. producers can charge whatever price they want to for their goods B. producers should only sell the items when the price is right C. there is a positive relationship between price and quantity supplied, holding everything else constant D. producers should only produce what they can sell E. producers are legally required to make necessary items available in the marketplace

C

Which of the following is a consequence of rent controls established to keep housing affordable for the poor? A. The quality of rental housing declines as landlords lack the funds and incentive to maintain properties. B. Apartment buildings are torn down in favor of office buildings, shopping malls, and other buildings where rents are not controlled. C. All of these are consequences of rent controls. D. Less rental housing is available as prospective landlords find it unprofitable to rent at restricted prices

C

Which of the following statements is correct? A. A decline in the price of X will increase the demand for substitute product Y B. A decrease in income will decrease the demand for an inferior good C. An increase in the price of C will decrease the demand for complementary product D D. An increase in income will reduce the demand for a normal good

C

A typical society strives to get the most it can from its scarce resources. At the same time, the society attempts to distribute the benefits of those resources to the members of the society in a fair manner. In other words, the society faces a tradeoff between A. work and leisure B. inflation and unemployment C. guns and butter D. efficiency and equity

D

As the price of leather increases A. the quantity of leather shoes demanded will decrease B. the supply of leather shoes will increase C. the demand for leather shoes will increase D. the quantity supplied of leather will increase

D

The graph below shows the supply of and demand for raw green coffee bean. The current equilibrium price for raw coffee beans is $2 per pound, at which price 10 million pounds per day are sold. Suppose the government steps into control the price of coffee and establishes a price floor of $2 per pound for coffee. After the price floor is announced, there's a sharp increase in the supply of the coffee beans, possibly due to the harvest of coffee beans. Given the $2 price floor in the market, the increase in supply will result in a shortage/surplus of how many gallons? A. 2.5 millions of pounds of surplus B. No shortage, no surplus, market equilibrium C. 2.5 millions of pounds of shortage D. 5 millions of pounds of surplus

D

From Figure 1 above, what is the equilibrium price and quantity for Coca-Cola? A. PE = $2.00, QE = 1 B. PE = $18.00, QE = 9 C. PE = $18.00 , QE = 1 D. PE = $2.00, QE = 9 E. PE = $10.00, QE = 5

E

If the equilibrium price of a good increases and the equilibrium quantity of the good decreases, we can conclude that: A. both demand and supply increased B. demand decreased C. demand increased D. supply increased E. supply decreased

E

Trevor demands more chocolate as his income increases. From this, we can conclude that, for Trevor: A. chocolate is a complementary good B. chocolate is an inferior good C. chocolate is a substitute good D. chocolate is cheap E. chocolate is a normal good

E