Download Izmir University of Economics Department of Economics Econ 101

Izmir University of Economics
Department of Economics
Econ 101 - Principles of Microeconomics
PROBLEM SET - 2
Multiple Choice Questions
1. Refer to the graph below. Which arrow represents supply in input markets?
a. A
b. B
c. C
d. D
2. The inputs that are used in the production process are labeled as factors of production.
Which of the following below is a factor of production?
a. Land
b. Labor
c. Capital
d. All of the above
3. The law of demand states that
a. Goods that are more scarce tend to be more expensive.
b. When a good or service is less available, people don't consume as much of it;
therefore, the price will fall.
c. There is an inverse relationship between the price and the quantity demanded of a
good or service.
d. When demand for a good increases, beyond some point, the price will necessarily
begin to increase.
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Izmir University of Economics
Department of Economics
Econ 101 - Principles of Microeconomics
4. Refer to the graph below. Assume that TVs and VCRs are two complement goods and
that the diagram below represents the demand for VCRs. Which move best describes
the impact of a decrease in the price of TVs?
a. The move from A to C.
b. The move from A to
c. B.
d. Both moves. Demand first moves from A to B, then from B to C.
e. None of the above. Since this is the demand for VCRs, changes in the price of
other goods would have no impact on it.
5. Determinants of demand other than price include all of the following except:
a. The cost of production.
b. Wealth, or net worth.
c. The tastes and preferences of household.
d. The prices of other goods and services.
e. Household expectations.
6. Suppose the demand for tea goes down when the price of coffee goes down. We can
say that these two goods are
a. Complements
b. Substitutes
c. Normal goods
d. Inferior goods
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Izmir University of Economics
Department of Economics
Econ 101 - Principles of Microeconomics
7. Refer to the graphs below. Which one shows the impact of a decrease in income,
assuming that the good in question is a normal good?
a. D
b. B
c. C
d. A
8. According to the law of supply, there is a
a. negative relationship between price and the quantity of a good supplied.
b. positive relationship between price and the quantity of a good supplied.
c. negative relationship between price and the change in supply.
d. positive relationship between price and the change in supply.
Refer to the figure above to answer the questions 9 and 10.
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Izmir University of Economics
Department of Economics
Econ 101 - Principles of Microeconomics
9. A decrease in the wage rate of pizza makers will cause a movement from Point B on
supply curve S2 to
a. Point A on supply curve S2.
b. Point B on supply curve S2.
c. supply curve S3.
d. supply curve S1.
10. An increase in the price of pizza sauce will cause a movement from Point B on supply
curve S2 to
a. supply curve S3.
b. supply curve S1.
c. Point A on supply curve S2.
d. Point C on supply curve S2.
11. Refer to the figure below. The market for blue jeans is in equilibrium at a price of
__________ and a quantity of __________ blue jeans.
a. $20; 1,000
b. $20; 200
c. $30; 175
d. $40; 100
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Izmir University of Economics
Department of Economics
Econ 101 - Principles of Microeconomics
12. Refer to the figure below. Which of the following statements is correct?
a. After the market settles in equilibrium, quantity supplied will have increased.
b. After the demand curve shifts from D2 to D3, there is excess demand at the price
of $8.
c. The shift in demand will create upward pressure on price.
d. All of the above.
13. When the magnitude of a decrease in supply is greater than the magnitude of a
decrease in demand:
a. Both equilibrium quantity and price will increase.
b. Equilibrium quantity will increase, and equilibrium price will decrease.
c. Equilibrium quantity will decrease, and equilibrium price will increase.
d. Both equilibrium quantity and price will decrease.
14. Which of the following situations certainly leads to a lower equilibrium price?
a. An increase in demand accompanied by an increase in supply.
b. A decrease in demand accompanied by an increase in supply.
c. A decrease in supply accompanied by an increase in demand.
d. An increase in demand, without a change in supply.
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Izmir University of Economics
Department of Economics
Econ 101 - Principles of Microeconomics
Essay Questions
1. What does a change in the quantity demand / supply imply and what is its difference
from a change in demand / supply?
2. Consider the table below and answer the following questions
Price of A
Quantity Demanded for A
Quantity Supplied of A
10
32
4
20
28
7
30
24
10
40
20
13
50
16
16
60
13
19
70
8
22
a. Draw the supply and demand curves
b. Why does supply curve have an upward slope and demand curve have a
downward slope? Explain.
c. Determine Equilibrium Price and Quantity for Good A
d. Determine the amount of surpluses and shortages at P=30 and P=60
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