Quiz #2 - At a price of $2 per unit a. the quantity...

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Principles of Microeconomics ECON 101 6-28-06 Quiz #2 1. If an individual is able to produce a good with relatively less time, effort, or resources than anybody else, then that individual has a. avoided opportunity costs. b. an interaction advantage. c. cornered the market. d. removed scarcity. e. a comparative advantage. 2. Given a production possibilities curve for defense goods and non-defense goods, if a nation is producing at a point inside the production possibilities curve, then a. too many resources are being used for non-defense goods. b. only new technology will increase the production of defense or non-defense goods. c. too many resources are being used for defense goods. d. society is maximizing output from the limited number of resources. e. it is possible to increase defense goods without sacrificing non-defense goods. Price Quantity Demanded Quantity Supplied $1 1000 100 $2 900 350 $3 500 500 $4 300 1000 $5 100 1200 3. Consider the market represented by the table above.
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Unformatted text preview: At a price of $2 per unit a. the quantity purchased is 1,000 units. b. there will be a tendency for the price to decrease. c. there is a surplus of 300 units. d. the quantity sold is 350 units. e. the quantity purchased equals the quantity sold. 4. In the table above the equilibrium price and quantity is a. $4, 1000 units b. $3, 500 units c. $2, 900 units d. $3, 300 units 5. Using the table given, calculate the elasticity of demand between $3 and $4. (Write down the formula you are using.) State whether demand is elastic, inelastic or unitary. 6. Compare a market where demand is very elastic to one where demand is very inelastic. Suppose the current equilibrium price and quantity are the same in both markets. Suppose further that the government imposes a price ceiling which is below the equilibrium price. Compare the shortages or surpluses that result. Explain the difference in these two cases....
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Quiz #2 - At a price of $2 per unit a. the quantity...

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