Download practice #3 - Columbia College

Econ 101
Columbia College
I Multiple choices
Practice #3
1. Which of the following events will cause a leftward shift in the supply curve of gasoline?
a. A decrease in the price of gasoline
b. An increase in the wage rate of refinery workers
c. Decrease in the price of crude oil
d. An improvement in oil refining technology
e. All of the above
2. The current market price for good X is below the equilibrium price, and then the demand curve for X shifts
rightward. What is the likely outcome of the demand shift?
a. The surplus increases.
b. The surplus decreases.
c. The shortage increases.
d. The shortage decreases.
e. None of the above
3. Quantity supplied is the amount of a commodity that
a. producers wish to sell at a given price during a given period of time.
b. producers actually sell during a given period of time at a given price.
c. households wish producers to sell during a given period of time at a given price.
d. is exchanged between producers and consumers at all possible prices.
e. None of the above
4. A rightward shift in the supply curve indicates
a. a decrease in the quantity supplied at each price.
b. that an increase in income results in an increase in the quantity demanded at each price.
c. that more is demanded at each price.
d. an increase in the quantity supplied at each price.
e. None of the above
5. From 1970 to 2010, the real price of eggs decreased. Which of the following would cause an unambiguous
decrease in the real price of eggs?
a. A shift to the right in the supply curve for eggs and a shift to the right in the demand curve for eggs.
b. A shift to the right in the supply curve for eggs and a shift to the left in the demand curve for eggs.
c. A shift to the left in the supply curve for eggs and a shift to the right in the demand curve for eggs.
d. A shift to the left in the supply curve for eggs and a shift to the left in the demand curve for eggs.
e. None of the above
6. Suppose the supply of textbooks is upward sloping and shifts leftward due to higher ink and paper costs. Which
of the following events would leave the equilibrium price of textbooks at the same level observed before the supply
shift?
a. Demand shifts rightward.
b. Demand shifts leftward.
c. Demand become steeper.
d. all of the above
e. none of the above
7. The price of beer rises sharply, and chicken wings and beer are complementary goods. Which of the following
will occur?
a. The price of chicken wings will tend to rise and the quantity of chicken wings demanded will tend to fall.
b. The price of chicken wings will tend to fall and the quantity of chicken wings demanded will tend to rise.
c. Both the price of chicken wings and the quantity of chicken wings demanded will tend to fall.
d. Both the price of chicken wings and the quantity of chicken wings demanded will tend to rise.
e. Non of the above.
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8. If the demand for computer software increases, while software-making technology improves, what happens to the
market equilibrium in the software market?
a. The price of software rises.
b. The price of software falls.
c. The quantity of software increases.
d. The quantity of software decreases.
e. The price of software and the quantity of software decrease.
9. If the money price of flour is $15 a bag, and the money price of chocolate is $5 a pack, the relative price of flour
is the same as
a. the money price of flour.
b. the money price of chocolate.
c. the opportunity cost of flour which is 3 packs of chocolate.
d. the opportunity cost of flour which is 1/3 pack of chocolate.
e. the price index for flour and chocolate.
10. Which of the following would cause a movement along the demand curve, ceteris paribus?
a A change in tastes in favour of the good.
b A rise in the price of a substitute good.
c A rise in average household income.
d An increase in population.
e None of the above.
II. The market demand and supply for tomatoes are:
Qd=83-3P
QS=4P-1
a. What is the quantity demanded and quantity supplied at P=15 ?
b. When the price of tomatoes increases from $5 to $10, quantity demanded changes from ____ to ___.
c. Find the equilibrium price and quantity.
III. Comparative statics. Predict the economic impact of each of the following events on the market by drawing
the appropriate shifts in a demand/supply diagram. Then use a +,-, 0 or ? to indicate whether there will be an
increase or decrease or no change or uncertain change in demand (D), supply (S), equilibrium price (P*) and
equilibrium quantity (Q*).
MARKET
EVENT
DIAGRAM
D S P Q
A. Tennis Balls
Golf becomes more expensive
B. Big Screen televisions
It becomes cheaper to make large
glass screens
C. Luxury Cars
The Canadian economy booms
which causes wealth to increase
substantially for average Canadians.
D. Visits to Vancouver Parking fees in Vancouver increase
nightclubs
substantially.
E. Restaurant meals
The average income of Canadians
rise at the same time the wages of
restaurant works increase too.
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