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Econ 202 –Quiz 3 - KEY
1. A response to a price change would be described as a:
movement along an existing demand curve.
2. One can say with certainty that equilibrium price declines when supply
increases and demand decreases.
3. An effective minimum wage law will
cause unemployment for some affected workers.
4. Assume that land suitable for growing corn is also suitable for growing soybeans. A decrease
in the price of corn will therefore:
increases the supply of soybeans
or
reduce the cost of growing soybeans.
5. If prices are expected to rise in the future, today's market:
is affected by an increase in demand and a higher equilibrium price.
6. A decrease in supply would result from:
an increase in the prices of input resources.
7. Orange juice and cranberry juice are consumer substitutes. An increase in the price of orange
juice, will
decrease the quantity demanded of orange juice
8. Price floors and price ceilings
are a result of government intervention to change market equilibriums.
9. An increase in the number of buyers in the market causes
an increase in demand
10. A price floor on corn would have the effect of
creating a surplus when the price floor is set above the equilibrium price.
11. An important determinant of the amount of grains harvested next year by Ethiopian farmers is
the amount of seeds planted this year. Given that Western nations have guaranteed to donate
five hundred tons of grain next year, this year the Ethiopian farmers will:
plant less seeds as the price of grain will be lower with the food aid.
12. Between 1990 and 2003 the price of heroin decreased from $235 per gram to $76. Over the
same period, the quantity of heroin consumed increased from 376 metric tons to 482 metric
tons. What is the most likely explanation for these results?
poppy, a necessary component of heroin, production is very high, increasing supply of
heroin.
13. If government implements a $10 price floor, the result would be
no current impact on the market.
14. Consider Miller Lite and Bud Light. If the price of Miller Lite falls, we may predict that:
(a) and (c).
15. If P1 is a price ceiling, the maximum (per-unit) amount buyers are willing to pay to purchase Q1
units is
P3.
16. Suppose the government imposes a price ceiling on a good below its equilibrium price. Which
of the following is a likely result?
-- Multiple answers
17. The quantity demanded of a product increases as
the price of the product falls.
18. The government sometimes creates an excess demand for a product by setting a maximum price
at which the product may be sold to consumers. This is sometimes called a
price ceiling.
19. Assume that tortilla chips and salsa are complements. When the price of tortilla chips decreases
the demand for salsa increases.