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Last year 17 million tons of beans were sold for $300 per ton. This year 17 million tons of beans were sold for $285 per
ton. Which of the following changes in demand and supply could have caused this outcome?
(A)Demand = Increase ; Supply = Increase
(B)Demand = Increase ; Supply = Decrease
(C)Demand = Decrease ; Supply = Increase
(D)Demand = Decrease ; Supply = Decrease
(E)Demand = Increase ; Supply = No change
If an unusually cold summer destroyed a large portion of the bee population, the equilibrium price and quantity of
honey produced by bees will most likely change in which of the following ways?
(A)Price = Increase ; Quantity = Increase
(B)Price = Increase ; Quantity = Decrease
(C)Price = Increase ; Quantity = No change
(D)Price = Decrease ; Quantity = Decrease
(E)Price = No Change ; Quantity = Decrease
If shirts and ties are complements and if the price of shirts increases due to an increase in the price of cotton, which of
the following is most likely to occur in the market for ties in the short run?
(A)The equilibrium price and quantity of ties will increase.
(B)The equilibrium price and quantity of ties will decrease.
(C)The equilibrium price of ties will increase and the equilibrium quantity will decrease.
(D)The supply of ties will increase.
(E)The demand for ties will increase.
For consumers, assume that fish sticks and tacos are substitutes. Which of the following graphs illustrates the effect on
the taco market if the price of fish sticks increases?
(A)
(B)
(C)
(D)
(E)
The market for goldfish is perfectly competitive. From year 1 to year 2, both the price and the quantity of goldfish sold
increase. This is most likely caused by
(A)an increase in the supply
(B)a decrease in the supply
(C)an increase in the demand
(D)a decrease in the demand
(E)a decrease in both the demand and the supply
Given an increase in the price of material K, which is an input used to produce good X, and an increase in the price of
good Y, which is a substitute for good X, which of the following will definitely occur?
(A)The equilibrium price of good X will decrease.
(B)The equilibrium price of good X will increase.
(C)The equilibrium quantity of good X will be unaffected.
(D)The equilibrium quantity of good X will increase.
(E)The equilibrium quantity of good X will decrease.
Which of the following changes in the demand for and the supply of a good would necessarily lead to a decrease in the
equilibrium quantity of the good in the market in the short run?
(A)Demand = Increase ; Supply = Decrease
(B)Demand = Increase ; Supply = No change
(C)Demand = Decrease ; Supply = Increase
(D)Demand = Decrease ; Supply = Decrease
(E)Demand = No Change ; Supply = Increase
Assume that mustard and ketchup are considered substitutes by consumers. If the price of mustard increases, which of
the following graphs represents the most likely response in the ketchup market?
(A)
(B)
(C)
(D)
(E)
This table illustrates the demand data for Chad and everyone else that buys this product. It also includes the data for the
market supply of this product. In this market, the equilibrium price is
Chad’s
Demand
Everyone
else’s
Demand
Market
Supply
Price
Quantity
Quantity
Quantity
$15
200
8,200
9,220
$14
210
8,400
9,020
$13
220
8,600
8,820
$12
230
8,800
8,620
$11
240
9,000
8,420
(A)$15
(B)$14
(C)$13
(D)$12
(E)$11
If lumber is used to produce houses, an increase in the price of lumber will result in which of the following changes in
the market for new homes?
(A)The demand for new homes will go down, which leads to a shortage of new homes followed by upward pressure on
the price of new homes
(B)The demand for new homes will go down, which leads to a surplus of new homes followed by downward pressure on
the price of new homes
(C)The supply of new homes will go up, which leads to a surplus of new homes followed by downward pressure on the
price of new homes
(D)The supply of new homes will go down, which leads to a shortage of new homes followed by upward pressure on the
price of new homes
(E)The demand and supply of new homes will go up, which leads to a surplus of new homes followed by upward
pressure on the price of new homes
Let’s say consumers consider hamburgers and hotdogs to be substitutes. If the supply of hamburgers goes down, how
will that affect the hotdog market?
(A)The demand for hotdogs goes up, which causes the price of hotdogs to go up as well.
(B)The demand for hotdogs goes up, which causes the supply of hotdogs to go up as well.
(C)The demand for hotdogs goes down, which causes the price of hotdogs to go down as well.
(D)The supply of hotdogs goes up, which causes the price of hotdogs to go up as well.
(E)The supply of hotdogs goes down, which causes the price of hotdogs to go down as well.
What would cause the equilibrium price of apples to go down?
(A)Bad weather during the apple growing season.
(B)An increase in the price of a substitute for apples.
(C)Apple farmers come together to create a successful marketing strategy.
(D)An insect that destroys the apple crop is found to have spread across the region.
(E)It is discovered that eating apples causes a terminal illness.
People like ketchup on their hotdogs. If the supply of hotdogs goes down, the demand for ketchup will
(A)go down because hotdogs and ketchup are complements
(B)go down because hotdogs and ketchup are substitutes
(C)go up because hotdogs and ketchup are complements
(D)go up because hotdogs and ketchup are substitutes
(E)not change because hotdogs and ketchup are different goods
In this graph, the letters represent areas, not points. If the market reaches equilibrium, the total economic surplus is
represented by
(A)a + f
(B)a + b + d + f
(C)b + c + d + e
(D)a + b + c + d + e + f
(E)a + b + c + d + e + f + g + h
If the costs of production go down, how will the equilibrium price and quantity in an industry change?
(A)Price = Goes up ; Quantity = Goes up
(B)Price = Goes up ; Quantity = Goes down
(C)Price = Goes down ; Quantity = Goes down
(D)Price = Goes down ; Quantity = Goes up
(E)Price = No change ; Quantity = Goes up
In order for both the equilibrium price and quantity of a good to go up, what changes in demand and supply must to
occur?
(A)Demand = Go up ; Supply = No Change
(B)Demand = Go up ; Supply = Go up
(C)Demand = No change ; Supply = Go up
(D)Demand = Go down ; Supply = Go up
(E)Demand = No change ; Supply = Go down
If the supply of apples goes down and as a result the price of apples goes up, the substitution effect will motivate people
to
(A)try to earn more income to offset the increase in price
(B)demand less apples
(C)tell government to implement a price ceiling on apples
(D)decrease the quantity demanded of other fruits and increase the quantity demanded of apples
(E)increase the quantity demanded of other fruits and decrease the quantity demanded of apples
This graph shows the market demand for good B. A movement from point X to point Z would most likely be caused by
(A)the price of good A going up, if good A is a substitute
(B)the supply of good B going down
(C)production costs going down for good B
(D)consumers' income going down
(E)consumers' income going up
What would happen if growing strawberries becomes more profitable than growing oranges?
(A)Price of strawberries will go down.
(B)Price of oranges will go down.
(C)Supply of strawberries will go down.
(D)Demand for oranges will go up.
(E)Demand for strawberries will go up.
If the price is $10 in the graph above, what will happen?
(A)A surplus gets created which causes demand to go down
(B)A surplus gets created and price will eventually go down
(C)A shortage gets created and the price will eventually go up
(D)A shortage gets created which causes supply to go up
(E)Supply will go up while demand will go down
The market for avocados is in equilibrium at a price of $2 per avocado. What will happen if the demand for avocados
goes down?
(A)A shortage gets created at $2, causing price to go up, which leads to quantity supplied going up.
(B)A shortage gets created at $2, causing supply to go up and price to go down.
(C)A surplus gets created at $2, causing supply to go down and price to go up.
(D)A surplus gets created at $2, causing price and quantity supplied to go down.
(E)A surplus gets created at $2, causing price to go up and quantity demanded to go down.
Mrs. Gardener devotes her time to producing flowers and vegetables. If the demand for vegetables goes up, what will
happen?
(A)She will increase the amount of time dedicated to producing flowers.
(B)The price of soil will go down.
(C)Her opportunity cost of producing flowers will go up.
(D)The price of vegetables will go down.
(E)Her total revenue will drop.
Canned meat is considered and inferior good while pork tenderloin is considered to be a normal good. If consumer
income goes up, what will happen to the equilibrium price and quantity of each item?
(A)Canned Meat Price = Goes down and Canned Meat Quantity = Goes up ; Pork Tenderloin Price = Goes up and Pork Tenderloin Quantity = Goes down
(B)Canned Meat Price = Goes down and Canned Meat Quantity = Goes down ; Pork Tenderloin Price = Goes up and Pork Tenderloin Quantity = Goes up
(C)Canned Meat Price = Goes down and Canned Meat Quantity = Goes down ; Pork Tenderloin Price = Goes down and Pork Tenderloin Quantity = Goes down
(D)Canned Meat Price = Goes up and Canned Meat Quantity = Goes up ; Pork Tenderloin Price = Goes down and Pork Tenderloin Quantity = Goes down
(E)Canned Meat Price = Goes up and Canned Meat Quantity = Goes down ; Pork Tenderloin Price = Goes up and Pork Tenderloin Quantity = Goes down
Which of the following would make the equilibrium price of good Z go up?
(A)A technological advance that reduces the cost of producing Z.
(B)Good Z is a normal good, and income taxes go up by 3%.
(C)Goods Z and W are complements, and the government taxes good W.
(D)An increase in the costs of producing good Z.
(E)Good Z is an inferior good, and income taxes go down by 10%.
This graph shows the market for corn. It is announced that eating corn once a day makes you healthier. At the same
time, insect infestation severely damages the corn crop. Which of the following will definitely occur as a result?
(A)The price of corn goes up.
(B)The supply of corn goes up.
(C)The demand for corn goes down.
(D)The quantity of corn grown goes down.
(E)The profits of farmers who specialize in growing corn go down.
Banana leaves and bananas are produced together so that an increase in the production of one results in an increase in
the production of the other. If the demand for banana leaves goes up, which of the following will most likely occur?
(A)a decrease in the price of banana leaves
(B)a decrease in the equilibrium quantity of bananas sold
(C)a decrease in the price of bananas
(D)an increase in the demand for bananas in the short run
(E)an increase in the supply of banana leaves
Assume that nachos and movie attendance are complements and that Nacho Jones grows corn suitable for making
nacho tortilla chips. Mr. Jones will most likely sell a greater quantity of tortilla chip corn at a higher price if which of the
following occurs?
(A)The wages of farm workers and movie theater employees decrease.
(B)A new machine results in less expensive and more efficient harvesting of corn.
(C)The introduction of a new flavored potato chip provides new competition in the snack-food market.
(D)New government regulations force movie theaters to serve healthier food.
(E)The release of four hit movies sets records for movie attendance.
In a perfectly competitive market, which of the following shifts in the Demand and Supply curves will definitely cause
both the equilibrium price and quantity to decrease?
(A)Demand Curve = Shifts to the left ; Supply Curve = No Shift
(B)Demand Curve = No change ; Supply Curve = Shifts to the left
(C)Demand Curve = Shifts to the right ; Supply Curve = Shifts to the right
(D)Demand Curve = Shifts to the right ; Supply Curve = No Shift
(E)Demand Curve = Shifts to the left ; Supply Curve = Shifts to the left
Let’s say a normal good is being produced in a competitive market. Which of these sequence of events could cause the
price of the good to go up and the quantity to go down?
(A)Consumer income goes up and the number of producing firms goes up
(B)Consumer income goes down and the number of producing firms goes up
(C)The price of a substitute good goes up and the number of producing firms goes up
(D)The number of consumers goes down and the price of a variable input goes down
(E)Consumer income goes up and the price of a variable input goes up
A factory pollutes a waterway that serves as the water supply for a town. From an economist's point of view, pollution
from the factory should be reduced until the
(A)marginal benefit from cleaner water = 0
(B)marginal benefit from cleaner water is at its largest value
(C)marginal benefit from cleaner water = the marginal cost of making the water cleaner
(D)total benefit from cleaner water = total cost of making the water cleaner
(E)total benefit from cleaner water is at its largest value
If this market reaches equilibrium, what will be the area of consumer surplus?
(A)HFG
(B)OBGD
(C)CFHE
(D)AFGB
(E)JBG