Econ final
1) The law of demand states that, other things constant, there is: A) an inverse relationship between price and the quantity demanded. B) an inverse relationship between price and demand. C) a direct relationship between price and the quantity demanded. D) a direct relationship between price and demand.
A
10) For many years, the price of personal computers has fallen and the quantity sold risen. This can best be attributed to: A) improved technology which has caused supply to shift rightward. B) improved technology which has caused supply to shift leftward. C) greater popularity which has caused demand to shift rightward. D) an increase in the number of computer users, which has caused demand to shift leftward.
A
6) Which of the following events can be expected to cause an increase in the supply of milk? A) A decrease in the price of feed for cows. B) A decrease in the number of dairy farmers. C) An increase in the price of milk. D) An increase in the demand for milk.
A
7) If, at a good's current price, the quantity demanded is 2,000 units and the quantity supplied is 1,000 units then: A) the current price is below the equilibrium price. B) producers are not responsive to price changes. C) the current price is above the equilibrium price.
A
8) If there is excess demand in the market, we can expect that: A) prices will rise because some suppliers will be able to sell their goods at higher prices. B) prices will fall because suppliers will find it in their interest to increase supply. C) prices will rise because firms will exploit consumers by decreasing supply. D) the supply curve will shift to the right to restore equilibrium.
A
8)A perfectly competitive firm is currently producing a profit-maximizing quantity of 100 units. Its price is $10 and its average total cost is $9. In the long run, economists would expect this firm's profits to equal: A) $0. B) $1. C) $100. D) $1,000.
A
9) An increase in the demand for a product will cause: A) a higher equilibrium price and a higher equilibrium quantity. B) a decrease in supply and a higher equilibrium price and a lower equilibrium quantity. C) an increase in supply and a lower equilibrium price and a higher equilibrium quantity.
A
1) Which of the following is not a condition of perfectly competitive markets? A) A large number of firms B) Firms that set prices C) No barriers to entry D) Profit-maximizing firms
B
10)If a perfectly competitive firm is incurring a loss then in the long run economists would expect to see: A) higher prices and more firms in this market. B) higher prices and fewer firms in this market. C) lower prices and more firms in this market. D) lower prices and fewer firms in this market.
B
11) The law of demand states that an increase in price, other things constant: A) will decrease demand. B) will decrease quantity demanded. C) will increase demand. D) will increase quantity demanded.
B
12) When the price of his cable TV increased, Michael switched to satellite TV. This illustrates: A) that the satellite company is maximizing profits, but the cable company is not. B) how an individual's tendency to substitute between goods can explain the law of demand C) the law of diminishing returns. D) how competition between businesses can explain the law of supply.
B
13) Assume movies are a normal good. Therefore, in the market for movies, an increase in income will lead to: A) movement along the demand curve down and to the right. B) a rightward shift of the demand curve. C) a leftward shift of the demand curve. D) movement along the demand curve up and to the left.
B
14) Which of the following would economists expect to shift the demand curve for bacon to the left? A) an increase in the price of bacon. B) an increase in the price of a complement like eggs. C) a decrease in the price of bacon. D) a decrease in the price of a complement like eggs.
B
15) If the market supply of oranges decreases, this will create: A) a higher price and a higher quantity of oranges traded in the market. B) a higher price and a lower quantity of oranges traded in the market. C) a lower price and a higher quantity of oranges traded in the market. D) a lower price and a lower quantity of oranges traded in the market.
B
2) Which of the following would most likely result in an increase in the demand for beef? A) A decrease in the supply of beef. B) An increase in family incomes. C) An increase in the price of feed grains. D) A decrease in the price of pork.
B
5) According to the law of supply, the quantity of an item supplied will fall as a result of: A) an increase in the number of firms producing the item. B) decreases in the prices of inputs used to produce the item. C) an increase in the price of the item. D) a decrease in the price of the item.
B
In this graph, the perfectly competitive firm's supply curve is: A) the MC curve between points B & E. B) the MC curve between points C & E. C) the AVC curve to the right of point C. D) the ATC to the right of point D.
B
16) Which of the following would cause the supply of MP3 players to shift to the right? A) An increase in the price of MP3 players. B) A decrease in the price of MP3 players. C) A technological advance that decreases the cost of electronic memory. D) A change in copyright laws allowing all MP3s to freely and legally be downloaded from the internet.
C
17) There is a shortage of parking spaces on campus, but there is no room for any additional parking spots. If campus administrators let the free market work, it could eliminate this shortage by creating: A) higher prices for parking passes, which would increase supply. B) lower prices for parking passes, which would increase supply. C) higher prices for parking passes, which would decrease quantity demanded. D) lower prices for parking passes, which would increase quantity supplied and decrease quantity demanded.
C
18) Other things constant, if the price of timber increases, we would expect to see: A) an increase in the equilibrium price and quantity of new housing. B) a decrease in the equilibrium price and quantity of new housing. C) an increase in the price of new housing and a decrease in the number of new homes built. D) a decrease in the price of new housing and an increase in the number of new homes built.
C
19) If scientists discovered that eating too much macaroni and cheese can cause your hairto fall out then, ceteris paribus, we would expect to see: A) an increase in the equilibrium price and quantity of macaroni and cheese. B) an increase in the price of macaroni and cheese and a decrease in its sales. C) a decrease in the equilibrium price and sales of macaroni and cheese. D) a decrease in the price of macaroni and cheese and an increase in its sales.
C
3) We would speak of a movement along a demand curve—rather than of a shift in demand—if: A) incomes rose. B) expectations changed. C) the price of the good in question rose. D) the prices of other goods changed.
C
5) Given the information in the question number 4 graph, in the long run economists would expect to see: A) firms entering the industry and driving up prices. B) firms exiting the industry and driving up prices. C) firms entering the industry and driving down prices. D) firms exiting the industry and driving down prices.
C
Given the information in the graph, this perfectly competitive firm's total profits equal: A) $0. B) $100. C) $800. D) $2,800.
C
2) The profit maximizing rule for perfectly competitive firms is: A) the customer is always right. B) MR = MP. C) MR = P. D) P = MC.
D
4) To be consistent with the law of supply, a graph depicting the relationship between price and quantity supplied will be: A) horizontal. B) vertical. C) negatively-sloped. D) positively-sloped.
D
9) In long-run competitive equilibrium, price is equal to: A) MR. B) MC. C) LRATC. D) all of the above.
D
7)Given the single firm's graph in question number 4, show graphically, how an upward shift of industry's demand curve will affect the single firm's total profit.
Demand shifts right -> price goes higher more total profit.
6)Given the single firm's graph in question number 4, show graphically, how a right shift of industry's supply curve will affect the single firm's total profit.
Supply shifts to right -> price goes lower, undetermined effects on firms' profits.