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Page 1 MICRO EXAM 1 Study Spr07 Dr. Anealia Sasser Use the following to answer question 1: Quantity D 1 D 2 S 1 S 2 Price 1. Refer to the above diagram. Which of the following will increase equilibrium price and reduce equilibrium quantity? A) a shift of supply from S 1 to S 2 , with demand remaining at D 1 . B) a shift of supply from S 2 to S 1 , with demand remaining at D 2 . C) simultaneous shifts of demand from D 1 to D 2 and supply from S 1 to S 2 . D) simultaneous shifts of demand from D 2 to D 1 and supply from S 2 to S 1 . 2. Amanda buys a ruby for $330 for which she was willing to pay $340. The minimum acceptable price to the seller, Tony, was $140. Amanda experiences: A) a consumer surplus of $10 and Tony experiences a producer surplus of $190. B) a producer surplus of $200 and Tony experiences a consumer surplus of $10. C) a consumer surplus of $770 and Tony experiences a producer surplus of $480. D) a producer surplus of $10 and Tony experiences a consumer surplus of $190. 3. Graphically, producer surplus is measured as the triangle: A) under the demand curve and below the actual price. B) under the demand curve and above the actual price. C) above the supply curve and above the actual price. D) above the supply curve and below the actual price. Page 2 4. (Last Word) A prescription drug that has the same chemical properties and product quality as a previously patented drug is called a: A) synergistic drug. B) knock-off drug. C) generic drug. D) quasi-legal drug. 5. Allocative efficiency occurs where (for the last unit) maximum willingness to pay exceeds minimum acceptable price by the greatest amount. A) True B) False 6. A decrease in supply with no change in demand will increase equilibrium price and reduce equilibrium quantity. A) True B) False 7. Graphically, consumer surplus is measured as the triangle: A) under the demand curve and below the actual price. B) under the demand curve and above the actual price. C) above the supply curve and above the actual price. D) above the supply curve and below the actual price. 8. A decrease in supply is shown as a: A) movement from a higher point to a lower point on an existing supply curve. B) rightward shift of a supply curve. C) movement from a lower point to a higher point on an existing supply curve. D) leftward shift of a supply curve. 9. A shortage of a product will occur and a secondary market will emerge if the: A) product supply curve suddenly shifts to the right. B) preset price is below the equilibrium price. C) product demand curve suddenly shifts to the left. D) preset price is above the equilibrium price. Page 3 Use the following to answer question 10: S D a b e f d c Q 1 Q 2 Q 3 Quantity P 1 Price 10. Refer to the above diagram. At Q 2 : A) maximum willingness to pay exceeds minimum acceptable price. ... View Full Document

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