ECON705

Refer to the above diagram. The equilibrium price and quantity in this market will be: A. $1.00 and 200. B. $1.60 and 130. C. $.50 and 130. D. $1.60 and 290.

A. $1.00 and 200.

Which of the above diagrams illustrate(s) the effect of a decrease in incomes upon the market for secondhand clothing? A. A and C B. A only C. B only D. C only

B. A only

Which of the following would not shift the demand curve for beef? A. a widely publicized study which indicates beef increases one's cholesterol B. a reduction in the price of cattle feed C. an effective advertising campaign by pork producers D. a change in the incomes of beef consumers

B. a reduction in the price of cattle feed

Which of the above diagrams illustrate(s) the effect of a governmental subsidy on the market for AIDS research? A. A only B. B only C. C only D. D only

C. C only

Which of the following will not cause the demand for product K to change? A. a change in the price of close-substitute product J B. an increase in consumer incomes C. a change in the price of K D. a change in consumer tastes

C. a change in the price of K

An increase in the price of a product will reduce the amount of it purchased because: A. supply curves are upsloping. B. the higher price means that real incomes have risen. C. consumers will substitute other products for the one whose price has risen. D. consumers substitute relatively high-priced for relatively low-priced products.

C. consumers will substitute other products for the one whose price has risen.

An effective ceiling price will: A. induce new firms to enter the industry. B. result in a product surplus. C. result in a product shortage. D. clear the market.

C. result in a product shortage.

If the price of K declines, the demand curve for the complementary product J will: A. shift to the left. B. decrease. C. shift to the right. D. remain unchanged.

C. shift to the right.

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

D. beyond some point the production costs of additional units of output will rise.

Refer to the above diagram. A price of $20 in this market will result in: A. equilibrium. B. a shortage of 50 units. C. a surplus of 50 units. D. a surplus of 100 units. E. a shortage of 100 units.

E. a shortage of 100 units.

If the cost of making bicycles falls, the price goes down, causing the demand curve to shift to the right. True or False

False The lower price of bicycles resulting from cost reductions does make more people purchase bicycles, but this effect is reflected by a movement along the demand curve.

If the demand curve shifts to the right, then we move up and to the right along our supply curve. True or False

True As the price increases due to the shifting demand curve, suppliers respond by increasing the quantity supplied.

What happens in the market for airline travel when the price of traveling by rail decreases? a. The demand curve shifts left. b. The demand curve shifts right. c. The supply curve shifts left. d. The supply curve shifts right. e. We move along the supply curve.

a. The demand curve shifts left.

All the following shift the demand curve for automobiles to the right except: a. the local factory gives a big raise to its employees. b. a brand new automobile dealership opens in town. c. the price of gasoline falls. d. None of the Above

b. a brand new automobile dealership opens in town.

The Supply Curve is upward-sloping because: a. As the price increases, so do costs. b. As the price increases, consumers demand less. c. As the price increases, suppliers can earn higher levels of profit or justify higher marginal costs to produce more. d. None of the Above

c. As the price increases, suppliers can earn higher levels of profit or justify higher marginal costs to produce more.

When college students leave town for the summer, the demand for meals at the local restaurants declines. This results in a. a decrease in equilibrium price and an increase in quantity. b. an increase in equilibrium price and quantity. c. a decrease in equilibrium price and quantity. d. an increase in equilibrium price, and a decrease in quantity. e. None of the Above

c. a decrease in equilibrium price and quantity.

When a price ceiling is imposed above the equilibrium price, a. a shortage results. b. a surplus results. c. the equilibrium outcome prevails. d. there is not enough information to determine the outcome.

c. the equilibrium outcome prevails.

If the cost of computer components falls, then a. the demand curve for computers shifts to the right. b. the demand curve for computers shifts to the left. c. the supply curve for computers shifts to the right d. the supply curve for computers shifts to the left

c. the supply curve for computers shifts to the right

If a sin tax is placed on sales of alcohol, a. the demand curve shifts to the left. b. the demand curve shifts to the right. c. the supply curve shifts to the left. d. the supply curve shifts to the right.

c. the supply curve shifts to the left.

Part of the reason that Michael Jordan earns millions of dollars each year while school teachers may earn $30,000 is because a. The supply of superstar basketball players is very low, while the supply of competent teachers is much larger. b. Demand for Michael Jordan's talents is very high since he can generate so much revenue for a firm. c. Consumers enjoy basketball to the point that they are willing to spend lots of money and time attending games and watching commercials. d. All of the Above

d. All of the Above