Download 1 Sample Questions for Microeconomics 1. Which of the following is

Sample Questions for Microeconomics
1. Which of the following is not one of the four broad categories of resources?
a. labor
b. government
c. capital
d. entrepreneurship
e. land
2. The opportunity cost of attending college is
a. the money one spends on college tuition, books, and so forth.
b. the highest valued alternative one forfeits to attend college.
c. the least valued alternative one forfeits to attend college.
d. equal to the salary one will earn when one graduates from college.
3. The higher the opportunity cost of attending college,
a. the more likely an individual will go to college.
b. the more economics classes an individual will take at college.
c. the fewer economics classes an individual will take at college.
d. the less likely an individual will go to college.
4. Which of the following is a positive macroeconomics statement?
a. The central bank should increase the nation's money supply.
b. The increase in the nation's money supply helped push the nation's unemployment rate
down in the short run.
c. Ford Motor Company's new advertising campaign ended up hurting General Motors' sales.
d. The local government ought to spend more on recreational facilities.
5. Which of the following is a normative macroeconomics statement?
a. The central bank should increase the nation's money supply.
b. The increase in the nation's money supply helped push the nation's unemployment rate
down in the short run.
c. Ford Motor Company's new advertising campaign ended up hurting General Motors' sales.
d. The local government ought to spend more on recreational facilities.
6. The condition in an economy that makes a "rationing device" a necessity is the fact that
a. the economy is organized around free markets.
b. the economy is centrally planned by the government.
c. scarcity exists.
d. there are fewer types of goods than there are people in the economy.
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7. The latest Lady Gaga album is available to be downloaded for $12.99. Is this price a rationing device?
a. No, the album will be sold to anyone having the required number of dollars.
b. Yes, because the album will only be purchased by people who are willing and able to pay
$12.99.
c. No, for price to be a rationing device, it must be so high that only one unit of the item is
sold.
d. Yes, since that is a reasonable price.
8. In every economy people vie for the economy's rationing device, a process called
a. competition.
b. entrepreneurship.
c. marginal benefit.
d. positive economics.
9. Scarcity means
a. wants are greater than the limited resources available to satisfy these wants.
b. wants are less than the limited resources available to satisfy these wants.
c. resources are infinite.
d. wants are limited.
e. both c and d
10. In all cases, macroeconomics deals with
a. what is.
b. what should be.
c. relatively small units in the economy.
d. the entire economy.
11. In economics, a synonym for utility is
a. usefulness.
b. satisfaction.
c. sacrifice.
d. a service.
12. Decision making "at the margin" means making a choice based on __________ of a decision.
a. the total benefits
b. the total costs
c. comparing the total benefits and costs
d. comparing the additional benefits and costs
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13. Several years ago, a bookstore chain extended its closing time from 9 p.m. to 10 p.m. Now it is
considering a further extension to 11 p.m. In making this marginal decision, the results of having gone
from 9 p.m. to 10 p.m. are
a. no longer relevant to the current decision.
b. relevant if the marginal costs and benefits were unequal.
c. relevant since they are part of the calculation of total costs and benefits.
d. relevant if the marginal costs and benefits were equal.
14. At the optimal or efficient level of an activity, the activity’s marginal benefit must
a. be zero.
b. be greater than zero.
c. equal the marginal cost of the activity.
d. exceed the marginal cost of the activity.
15. All sellers may be tempted to raise the price of what they sell, but a negative unintended effect of raising
the price could be __________ in units sold large enough to __________ their total revenue earned.
a. an increase; raise
b. an increase; lower
c. a decrease; raise
d. a decrease; lower
16. Which of the following would NOT be considered a macroeconomic topic?
a. the reasons for a decline in the price of crude oil
b. the cause of a downturn in the economy
c. the effect of the government budget deficit on inflation
d. the causes of inflation and unemployment
17. A good provides __________ and a bad provides __________.
a. utility; satisfaction
b. disutility; utility
c. dissatisfaction; satisfaction
d. utility; disutility
e. satisfaction; utility
18. Every time you make a __________, you incur a (an) __________.
a. decision; unintended effect
b. choice; opportunity cost
c. competitive move; price
d. decision; mistake
e. none of the above
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19. Saying "the marginal costs are greater than the marginal benefits" is the same as saying
a. the average costs are greater than the average benefits.
b. the total costs are greater than the average benefits.
c. the benefits are greater than the costs.
d. the additional costs are greater than the additional benefits.
e. the costs minus the benefits equal the net costs.
20. Many people buy one newspaper per day, but rarely do they buy two of the same newspapers on the same
day. What is the economic justification for this behavior?
a. The marginal benefit of purchasing the second newspaper exceeds the marginal cost of
purchasing that paper.
b. The marginal cost of purchasing the second newspaper exceeds the marginal benefit of
purchasing that paper.
c. The marginal benefit of purchasing the second newspaper equals the marginal cost of
purchasing that paper.
d. none of the above is an appropriate economic justification for this behavior.
21. Ceteris paribus means
a. one variable too many.
b. the correct relationship specified.
c. assuming economic motives.
d. all other things held constant or nothing else changes.
22. Economists use the ceteris paribus assumption primarily in order to
a. make their analyses easier for them to conduct.
b. designate what they believe is the correct relationship between two variables.
c. explain why people sometimes consume more of a good when its price rises.
d. explain why those things that come first do not necessarily cause those things that come
later.
e. designate the difference between normative and positive economics.
23. Efficiency is consistent with
a. maximizing net benefits.
b. equating marginal benefits and marginal costs.
c. maximizing total benefits.
d. minimizing total costs.
e. a and b
24. Which of the following is not one of the four broad categories of resources?
a. labor
b. money
c. capital
d. entrepreneurship
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e. land
25. Points outside (or beyond) the PPF are
a. attainable.
b. unattainable.
c. efficient.
d. inefficient.
26. Which of the following statements is true?
a. In a world of efficiently used scarce resources, more of one good necessarily means less of
some other good.
b. The law of increasing opportunity costs assumes that all people have the same ability to
produce goods.
c. Efficiency implies that it is impossible to get more of one good without getting less of
another.
d. Even if a country has unemployed resources, it can still be operating on its production
possibilities frontier (PPF).
e. a and c
27. Through war, many of the factories in country 1 are destroyed and many of its people are killed. As a
result, the country's
a. production possibilities frontier (PPF) after the war has probably shifted to the right
compared to its PPF prior to the war.
b. PPF after the war has probably shifted to the left compared to its PPF prior to the war.
c. PPF after the war is probably the same PPF as before the war.
d. ability to produce goods and services has increased.
e. b and d
28. Both country 1 and country 2 are located on their respective production possibilities frontiers (PPFs), but
country 1 produces twice the output that country 2 produces. It follows that
a. country 1's PPF lies further to the right than country 2's PPF.
b. country 1 has a smaller population than country 2.
c. country 1 has a bigger population than country 2.
d. country 1 is efficient and country 2 is inefficient.
e. none of the above
29. Points inside (or below) the PPF are
a. unattainable.
b. attainable and productive efficient.
c. attainable but productive inefficient.
d. attainable and neither productive efficient nor productive inefficient.
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30. Which of the following statements is true?
a. The concept of opportunity costs cannot be illustrated within a PPF framework.
b. If scarcity did not exist, neither would a PPF.
c. All PPFs are downward-sloping straight lines.
d. There are more attainable points than unattainable points in every PPF diagram.
31. The point where the PPF intersects the horizontal axis is
a. unattainable.
b. attainable and productive efficient.
c. attainable but productive inefficient.
d. attainable and neither productive efficient nor productive inefficient.
32. An increase in the quantity of resources
a. shifts the PPF leftward.
b. shifts the PPF rightward.
c. moves the economy to a new point up along a given PPF.
d. moves the economy to a new point down along a given PPF.
33. A PPF is more likely to be a downward-sloping curve that is bowed outward than a downward-sloping
straight line because most resources are
a. better suited for the production of some goods than others.
b. used efficiently.
c. relatively cheap at low levels of output.
d. used to produce consumption goods.
34. Productive inefficiency implies that
a. it is possible to obtain gains in one area without losses in another.
b. it is impossible to obtain gains in one area without losses in another.
c. there are too many resources.
d. there are too few resources.
e. none of the above
35. Within the production possibilities frontier (PPF) framework, choice is depicted by the
a. PPF itself.
b. PPF being bowed outward.
c. need to select among the points making up the PPF.
d. straight-line PPF.
36. An advance in technology commonly refers to the ability to produce
a. the same output with a smaller quantity of resources.
b. more output with a fixed quantity of resources.
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c. more output with a greater quantity of resources.
d. both a and b
e. both b and c
37. Jose has one evening in which to prepare for two exams and can employ two possible strategies:
Strategy
A
B
Score in Economics
94
77
Score in Statistics
79
90
The opportunity cost of receiving a 94 on the Economics exam in terms of the number of points on the
Statistics exam is
a. 79.
b. 17.
c. 11.
d. 90.
38. If the economy is on the production possibilities frontier (PPF), the economy is
a. productive inefficient.
b. operating with no unemployed resources.
c. productive efficient.
d. b and c
e. none of the above
39. An economy can produce either of these two combinations of goods X and Y: 1,000X and 0Y or 400Y
and 0X. Furthermore, the opportunity cost between the two goods is always constant. Which of the
following combinations of the two goods, X and Y, is it possible for the economy to produce?
a. 700X, 280Y
b. 600X, 250Y
c. 400X, 150Y
d. 100X, 600Y
e. 300X, 280Y
40. What is the reason for the law of increasing opportunity costs?
a. There is no reason: it is just one of the laws of economics.
b. Resources have varying abilities and those with lower opportunity costs of producing a
good will be used to produce it before resources with higher opportunity costs produce it.
c. The price of a good rises as more of it is demanded.
d. As more of a good is produced, the taxes applied to the production of the good rise.
e. c and d
41. The economy was at point A producing 100X and 200Y. It moved to point B where it produces 200X and
300Y. It follows that
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a. point A may have been a point below the economy's PPF, while point B may lie on the
PPF.
b. the economy's PPF could have shifted outward and point A was a point on the economy's
old PPF.
c. the economy has moved from one point on its PPF to another point on the same PPF.
d. a or b
e. a or c
42. Country X has a high unemployment rate. It follows that country X is operating
a. beyond its production possibilities frontier (PPF).
b. on its PPF.
c. inside (below) its PPF.
d. at a productive efficient point.
e. b and d
43. The PPF between goods X and Y will be a downward-sloping
a. straight line if increasing opportunity costs exist.
b. straight line if decreasing opportunity costs exist.
c. curve that is bowed inward if increasing opportunity costs exist.
d. straight line if constant opportunity costs exist.
44. The law of demand states that price and quantity demanded are
a. directly related, ceteris paribus.
b. inversely related, ceteris paribus.
c. independent.
d. positively related, ceteris paribus.
45. A demand schedule is a numerical tabulation of
a. prices and quantities supplied.
b. costs and quantities demanded.
c. prices and quantities demanded.
d. incomes and quantities demanded.
46. As the price of good X rises, the demand for good Y falls. Therefore, goods X and Y are
a. substitutes.
b. normal goods.
c. complements.
d. inferior goods.
e. none of the above
47. Resource X is necessary to the production of good Y. If the price of resource X rises,
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a.
b.
c.
d.
e.
the supply curve of Y shifts leftward.
the supply curve of Y shifts rightward.
the supply curve of Y is unaffected.
there is a movement down the supply curve of Y.
there is a movement up the supply curve of Y.
48. Suppose the government decides that every family should own its own home. To bring this about, the
government decides to subsidize the home-construction industry by giving the home-construction
companies $10,000 for every house that they build. As a result of this,
a. the supply curve of new houses would shift leftward, since it now costs $10,000 more for
builders to produce a house.
b. the demand curve for new houses would shift rightward, since now every family would
want to buy a house.
c. the demand curve for new houses would shift leftward.
d. the supply curve of new houses would shift rightward, since builders would be willing to
produce and sell more houses at each given price.
e. c and d
49. At a price below the equilibrium price, there is
a. a surplus.
b. a shortage.
c. excess supply.
d. sub-equilibrium.
e. none of the above
50. On a supply-and-demand diagram, consider a price for which the horizontal distance to the supply curve
is shorter than the horizontal distance to the demand curve. There is a __________ at that price and
the current price must be __________ the equilibrium price.
a. shortage; above
b. shortage; below
c. surplus; above
d. surplus; below
51. If demand decreases by a greater amount than supply increases, then equilibrium price __________ and
equilibrium quantity __________.
a. rises; rises
b. rises; falls
c. falls; rises
d. falls; falls
52. A rightward shift in the demand curve for tennis balls could be caused by
a. a fall in the price of tennis balls.
b. a fall in the price of tennis rackets.
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c. a rise in the price of tennis lessons.
d. a fall in income, assuming tennis balls are a normal good.
53. An increase in the expected price of corn would likely do the following to the current supply and demand
for corn:
a. increase both the demand and the supply.
b. decrease both the demand and the supply.
c. increase the demand, but decrease the supply.
d. increase the supply, but decrease the demand.
54. A "decrease in demand" means that
a. the demand curve has shifted to the left.
b. price has declined and consumers want to purchase more of the good.
c. the demand curve has shifted to the right.
d. the price of the good can be expected to decline, assuming supply stays constant.
55. Equilibrium price and quantity are
a. $3 and 25 units.
b. $3 and 15 units.
c. $5 and 15 units.
d. $5 and 25 units.
e. $1 and 25 units.
56. A price of $5 will result in a ___________________ in this market which will cause the price of
the product to gravitate _______________.
a. shortage; downward.
b. shortage; upward.
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c. surplus; downward.
d. surplus; upward.
57. A price of $1 will result in a ___________________ in this market which will cause the price of
the product to gravitate ________________.
a. shortage; downward.
b. shortage; upward.
c. surplus; downward.
d. surplus; upward.
58. A market is said to be in disequilibrium if
a. it exhibits either a surplus or a shortage.
b. the number of units that individuals are willing to buy exceeds the number of units they
can afford.
c. it is a market for an inferior good.
d. none of the above
59. An economic concept that explains why Disney World charges more for the first day of admission than
they do for each additional day is the law of
a. supply.
b. demand and supply.
c. diminishing marginal utility.
d. diminishing returns.
e. none of the above
60. __________ is the number of units that individuals are __________ to buy at a particular price during
some time period.
a. Demand; willing and able
b. Supply; willing and able
c. Quantity demanded; willing and able
d. Demand; able
e. Quantity demanded; willing
61. If potential buyers of good X expect the price of good X will soon fall, then the current
a. demand for good X will rise.
b. demand for good X will remain unchanged.
c. demand for good X will fall.
d. quantity demanded of good X will fall.
e. quantity demanded of good X will rise.
62. Which of the following statements is false?
a. An upward-sloping supply curve graphically represents the law of supply.
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b. A vertical supply curve graphically represents the law of supply.
c. If income rises and good X is a normal good, then the demand for good X will rise.
d. If income falls and good Y is an inferior good, then the demand for good Y will rise.
63. If a demand curve shifts rightward, this means
a. quantity demanded is greater only at one particular price.
b. quantity demanded is greater at every price.
c. buyers are willing and able to purchase more of the good at every price.
d. buyers are willing and able to purchase less of the good at every price.
e. b and c
64. Labor is a resource that is necessary to produce many goods. "If the price of labor falls," says the
economist, "the prices of goods will soon follow." How does this work?
a. If the price of labor falls, the supply of goods rises, and the prices of those goods fall.
b. If the price of labor falls, the quantity supplied of goods rises, and the prices of those
goods fall.
c. If the price of labor falls, the demand for goods falls, and the prices of those goods fall.
d. If the price of labor falls, the demand for goods rises, and the prices of those goods fall.
e. If the price of labor falls, the supply of goods falls, and the prices of those goods fall.
65. A change in price will lead to a change in __________ and to a change in __________, while a change in
preferences will lead to a change in __________ and a change in the prices of relevant resources will
lead to a change in __________.
a. quantity supplied; demand; income; supply
b. demand; quantity supplied; supply; quantity demanded
c. quantity supplied; supply; quantity supplied; demand
d. quantity supplied; quantity demanded; demand; supply
e. quantity supplied; quantity demanded; supply; demand
66. Which of the following is descriptive of the law of diminishing marginal utility?
a. The third hamburger consumed provides less utility than the second hamburger consumed.
b. The third hamburger is priced higher than the first hamburger.
c. As price falls, quantity demanded rises, ceteris paribus.
d. The price of a good rises as the costs of producing that good rise.
e. none of the above
67. If consumers’ surplus is $30 and the price paid for the good is $50, then the maximum price a buyer is
willing and able to pay for the good is
a. $80.
b. $30.
c. $50.
d. $20.
e. There is not enough information to answer the question.
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68. One can determine the consumers’ surplus if the _______________ is known
a. tax paid
b. maximum buying price
c. price paid
d. b and c
e. a and b
69. Suppose Smith wants one iPod no matter what the price is between $0 and $150, Jones wants one iPod no
matter what the price is between $0 and $200, and Young wants one iPod no matter what the price is
between $0 and $250. In this case, each individual buyer’s demand curve will be
__________________ and the market demand curve will be __________________.
a. downward sloping; vertical
b. vertical; downward sloping
c. vertical; vertical
d. downward sloping; downward sloping
70. Good Y is an inferior good. If the average income of those who buy good Y rises, the _____________
curve for good Y will shift ____________ resulting in a(n) _____________ in the equilibrium price
of Y and a(n) ____________ in the equilibrium quantity of Y.
a. supply; rightward; decrease; increase.
b. demand; leftward; decrease; decrease
c. demand; rightward; increase; increase
d. supply; leftward; increase; decrease
e. supply; leftward; increase; increase
71. When P = $65, the quantity demanded of a good is 80 units, and the quantity supplied of the good is 40
units. For every $10 increase in the price of this good, quantity demanded falls by 10 units and
quantity supplied rises by 10 units. The equilibrium price of this good is ___________and the
equilibrium quantity of this good is _________ units.
a. $55; 30
b. $75; 50
c. $75; 70
d. $85; 50
e. $85; 60
72. A change in price will lead to a change in __________ and to a change in __________, while a change in
government subsidies will lead to a change in __________ and a change in the number of buyers will
lead to a change in __________.
a. quantity demanded; quantity supplied; supply; demand
b. demand; quantity supplied; supply; quantity demanded
c. quantity demanded; supply; quantity supplied; demand
d. quantity supplied; quantity demanded; demand; supply
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e. quantity demanded; demand; quantity supplied; supply
73. A price ceiling is a government-mandated
a. minimum price below which legal trades cannot be made.
b. maximum price above which legal trades cannot be made.
c. minimum price above which legal trades cannot be made.
d. maximum price below which legal trades cannot be made.
74. Jake is an excellent barber. However, all customers who come to him for a haircut must buy a bottle of
shampoo. This type of arrangement is known as
a. a tie-in sale.
b. a sweetheart deal.
c. an exclusive contract.
d. a cross subsidy.
75. Suppose the government sets a price floor that is above the equilibrium price for a given good. It can be
said that at the price floor,
a. although sellers are selling all of the product that they desire at this price, the consumers
are not able to buy all that they desire.
b. although consumers are purchasing all of the product that they desire at this price, the
sellers are not selling all that they desire.
c. both sellers and buyers are satisfied with the quantity that is being exchanged.
d. both sellers and buyers are exchanging the equilibrium quantity of this good.
e. b and d
76. A price floor set above the equilibrium price will
a. clear the market for the good.
b. result in a shortage of the good.
c. result in a surplus of the good.
d. force some firms in this industry to go out of business.
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77. If price P1 is a price ceiling, then
a. there is a surplus in the market for good X.
b. the highest price that can legally be charged in this market is P 3.
c. the price at which exchange legally takes place is P 2.
d. the price at which exchange legally takes place is P 1.
e. both a and b
a.
b.
c.
d.
e.
78. If price P2 is a price ceiling, then
there is a shortage in the market for good X.
the highest price that can legally be charged in this market is P 3.
the price at which exchange legally takes place in the market for good X is P 2.
the quantity exchanged is less than the quantity demanded.
all of the above
a.
b.
c.
d.
e.
79. If price P3 is a price ceiling, then
the price ceiling does not have an effect on the market for good X.
the price at which exchange takes place is P 3.
the price at which exchange takes place is P2.
there is a shortage in the market for good X.
both a and c
a.
b.
c.
d.
80. Which of the following is true?
If price P3 is set as a price ceiling it will have an effect on the market for good X.
If price P3 is set as a price floor it will have an effect on the market for good X.
Price P3 is the equilibrium price for good X.
Price P3 is the highest price that can legally be charged in the market for good X.
a.
b.
c.
d.
81. If price P1 is a price ceiling, then
the quantity exchanged is Q3.
there is a shortage in this market.
it is the highest price that can legally be charged in this market.
both b and c.
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e. all of the above
82. If P1 is a price ceiling, the maximum (per-unit) amount buyers are willing to pay to purchase
Q1 units is
a. P1.
b. P2.
c. P3.
d. P1 + P2.
e. P3 - P1.
a.
b.
c.
d.
83. Which of the following is true?
If price P1 is set as a price ceiling it will have an effect on the market for good X.
If price P1 is set as a price floor it will have an effect on the market for good X.
Price P1 is the equilibrium price for good X.
If price P1 is set as a price floor, then it is the highest price that can legally be charged in
the market for good X.
84. If the price of good X is $100 and the price of good Y is $40, it follows that the relative price of one unit
of good Y is ___________ unit(s) of good X.
a. 0.40
b. 0.20
c. 2.50
d. 4.00
e. There is not enough information to answer the question.
85. If the relative price of one unit of good X is 5 units of good Y, then it follows that the absolute price of
good X can be __________ and the absolute price of good Y can be __________.
a. $20,000; $10,000
b. $40,000; $8,000
c. $30,000; $5,0000
d. $5,000; $40,000
e. a and c
86. If the minimum wage law sets a price floor above the equilibrium wage in the market for unskilled labor,
then the
a. minimum wage will create a surplus of unskilled labor.
b. minimum wage will create a shortage of unskilled labor.
c. minimum wage will not impact the unskilled labor market.
d. unskilled labor market will change, but we cannot be certain how.
87. A minimum wage law (that sets the minimum wage above the equilibrium wage) can be expected to
a. clear the market for unskilled workers.
b. increase employment for unskilled workers.
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c. increase the number of firms in those industries where the law is effective.
d. reduce the hours worked for some unskilled workers.
e. all of the above
88. If goods are not rationed according to price, if follows that
a. they won't get rationed at all.
b. some mechanism will be used to ration the goods.
c. first-come-first-served will necessarily be the rationing device.
d. there will be surpluses in the market.
e. none of the above
89. Suppose that the price of butter is $3 per pound and the price of margarine is $2 per pound. If the price
of butter rises to $3.60 and the price of margarine rises to $3, then the absolute price of butter has
_______________ and the relative price of butter has _______________.
a. risen; fallen
b. fallen; risen
c. risen; risen
d. fallen; fallen
90. Price serves as a
a. rationing device.
b. transmitter of information.
c. means of determining who gets what of the available limited resources and goods.
d. a and b
e. all of the above
91. A price floor is usually set _____________ the equilibrium price.
a. above
b. at
c. below
d. at or below
92. Colleges and universities use such things as grade point averages and standardized test scores as
a. a measure of consumer utility.
b. non-price rationing devices.
c. a means to shift the supply curve for a college education.
d. solely to frustrate prospective students.
93. Since most colleges and universities charge the same tuition to every student regardless of what time
students choose to take their classes,
a. the schools must develop some type of non-price rationing device.
b. it follows that all classes will have a shortage of seats.
c. it follows that all classes will have a surplus of seats.
d. it follows that some classes will likely have a shortage of seats while other classes may
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have a surplus of seats.
94. Refer to above Exhibit, which shows supply and demand for freeway space at both 8 a.m.
and 11 p.m. At P = $0, there is a ________ of freeway space at 8 a.m. and ________ at 11 p.m.
a. shortage; a surplus
b. surplus; a shortage
c. surplus; equilibrium
d. shortage; equilibrium
95. Which toll creates equilibrium at 8 a.m.?
a. P2
b. P1
c. 0
d. It is not constant.
a.
b.
c.
d.
96. A toll of P1 creates __________ at 8 a.m. and __________ at 11 p.m.
a shortage; a surplus
a surplus; a shortage
equilibrium; a surplus
a shortage; equilibrium
a.
b.
c.
d.
97. Which toll creates equilibrium at 11 p.m.?
P2
P1
0
It is not constant.
98. A toll of P2 creates __________ at 8 a.m. and __________ at 11 p.m.
a. a shortage; a surplus
b. a surplus; a shortage
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c. equilibrium; a surplus
d. a shortage; equilibrium
99. Suppose that the government decides to set the money price of driving on the freeway
at zero, but builds more freeways to eliminate the shortage of freeway space at 8 a.m.
Graphically, the result of the increase in freeway space would be shown by
a. shifting the supply of freeway space curve rightward.
b. shifting the demand for freeway space curve leftward from D 8a.m. to D11p.m.
c. a movement up along D8a.m. to the point where D8a.m. intersects the supply curve.
d. shifting the supply of freeway space curve leftward.
100. Suppose that the government decides to set the money price of driving on the
freeway at zero, but creates programs that encourage drivers to carpool. If the carpooling
program is sufficiently successful to eliminate the shortage of freeway space at 8 a.m.,
graphically the result of the increase in carpooling would be a
a. rightward shift of the supply of freeway space curve.
b. leftward shift of the demand for freeway space curve from D 8a.m. to D11p.m.
c. movement up along D8a.m. to the point where D8a.m. intersects the supply curve.
d. leftward shift of the supply of freeway space curve.
101. The demand for seats in 10 a.m. classes at the university is higher than the demand for seats in 8 a.m.
classes. The supply of seats is fixed. If the university prices classes at the price required to achieve
equilibrium at 10 a.m., there will be
a. a shortage at 8 a.m.
b. a surplus at 8 a.m.
c. equilibrium at 8 a.m.
d. disequilibrium at 8 a.m., but we cannot determine which type.
102. University A sets tuition at the equilibrium level based on price and then imposes entrance requirements
in the form of minimum high school GPA and SAT scores. Enrollment at this school will likely be
a. at equilibrium.
b. below equilibrium because of the non-price rationing.
c. above equilibrium because of the combination of price and non-price rationing.
d. none of the above
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