ECO 212 Week Two Quiz - ECO212 Principles of Economics Week...

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ECO212 Principles of Economics Week Two Quiz SUPPLY & DEMAND AND PRICE ELASTICITY Section One: Multiple Choice 1. If a 20% decrease in the price of long distance phone calls leads to a 35% increase in the quantity of calls demanded, we can conclude that the demand for phone calls is: a. elastic. b. inelastic. c. unit elastic. d. stretchy elastic. 2. Which of the following pairs are examples of substitutes? Popcorn & Pepsi Automobiles & Bicycles Boats & Fishing Tackle Wine & Cheese 3. When we say that a price in a competitive market is “too high to clear the market” we usually mean that (given upward-sloping supply curves). a. no producer can cover the costs of production at that price b. quantity supplied exceeds quantity demanded at that price c. producers are leaving the industry d. consumers are willing to buy all the units produced at that price 4. Which of the following statements is incorrect? Assume upward-sloping supply curves. e. If the supply curve shifts left and the demand remains constant, equilibrium price will rise. Page 1 eco212
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ECO212 Principles of Economics f. If the demand curve shifts left and the supply increase, equilibrium price will rise. g. If the supply curve shifts right and the demand curve shifts left, equilibrium price will fall. h. If the demand curve shifts right and the supply curve shifts left, price will rise.
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