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Exam 2 - gawk €240»er TIZ Ckk ug(’1 6 Please choose...

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Unformatted text preview: gawk €240»er TIZ Ckk?+ug (’1' 6 Please choose the best answer of the choices presented in the multine choice questions. Figure 4-1 g ~ 1. Refer to Figure 4—1. The movement from point A to point B on the graph would be caused by a. an increase in price. a decrease in price. 0. a decrease in the price of a substitute good. d. an increase in income. A 2. Pizza is a normal good if (E the demand for pizza rises when income rises. b. the demand for pizza rises when the price of pizza falls. 0. the demand curve for pizza slopes downward. d. the demand curve for pizza shifts to the right when the price of burritos falls, assuming pizza and burritos are substitutes. The table shows individual demand schedules for a market. Table 4-1 —_ —_ Z ‘ 3. Refer to Table 4-1. Whose demand does not conform to the law of demand? —_ __ a. Aaron’s J1. Angela’s Q Austin’s d. Alyssa’s Figure 4-7 Price $40 35 30 25 20 15 10 100 200 300 400 500 600 700 800 Quanti Refer to Figure 4-7. Equilibrium price and quantity are, respectively, a. $35 and 200. b. $35 and 600. (2) $25 and 400. d. $15 and 200. C ~ $2 GD Refer to Figure 4-7. At a price of $3 5, g a shortage would exist and the price would tend to fall from $35 to a lower price. a surplus would exist and the price would tend to rise from $35 to a higher price. C?) a surplus would exist and the price would tend to fall from $35 to a lower price. d. an excess demand would exist and the price would tend to fall from $35 to a lower price. E. 6. Today's demand curve for gasoline could shift in response to @ a change in today's price of gasoline. -—? 4 [MA C “W“ ”My a change in the expected future price of gasoline. \ . c. a change in the number of sellers of gasoline. w» GGPP‘V ‘9 N" v” 9+ ' d. All of the above are correct. s 7. A dress manufacturer recently has come to expect higher prices for dresses in the near future. We would expect a. the dress manufacturer to supply more dresses now than it was supplying previously. ® the dress manufacturer to supply fewer dresses now than it was supplying previously. the demand for this manufacturer's dresses to fall. ? no change in the dress manufacturer's current supply; instead, future supply will be affected. [W-awk \ Figure 4-10 Price Price Price 0 QB 09' Quantity 0 Oe' 03 Quantity C ‘ 8. Refer to Figure 4-10. Which of the four graphs represents the market for cars as a result of the adoption of new technology on assembly lines? a.A b.B @c d.D Br 9. What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly (a complementary good) fell, fewer firms decided to produce peanut buWalth f3 officials announced that eating peanut butter was good for you? Price will fall'and the effect on quantity is ambiguous. é) Price will rise and the effect on quantity is ambi ous.,'> u‘ibvcw‘y 0. Quantity will fall and the effect on price is ambiguous. d. The effect on both price and quantity is ambiguous. 32 10. If the price elasticity of demand for a good is 4.0, then a 10 percent increase in price results in a a. 0.4 percent decrease in the quantity demanded. b. 2.5 percent decrease in the quantity demanded. c. 4 percent decrease in the quantity demanded. d. 40 percent decrease in the quantity demanded. Figure 5-5 I I I I I. I I I I 1. I I I I I 50 100 150 200 250 300 350 400 450 500 Quantity _<‘ 11. Refer to Figure 5-5. When price falls from $50 to $40, it can be inferred that demand between those two prices is ,a/ inelastic, since total revenue decreases from $8,000 to $5,000. 7 inelastic, since total revenue increases from $5,000 to $8,000. \ elastic, since total revenue increases from $5,000 to $8,000. d. unit elastic, since total revenue increases from $5,000 to $8,000. Figure 5-8. A demand curve is shown on the graph below. On the graph, Q represents quantity demanded and P represents price. 61218 24 30 Q B 12'. Refer to Figure 5-8. The maximum value of total revenue corresponds to a price of a. $18. @ $30. c. $42. (1. $48. i ~ 13. If the demand for donuts is elastic, then a decrease in the price of donuts will (a) increase total revenue of donut sellers. ,b./ decrease total revenue of donut sellers. (‘2 not change total revenue of donut sellers. (it There is not enough information to answer this question. 14. In college you and your college roommate ate fourteen packages of Ramen noodles each week. After graduating, both of you found jobs and have quadrupled your incomes. You still enjoy Ramen noodles very much and buy even more, but your roommate plans to buy fewer Ramen noodles in favor of foods she prefers more. When looking at income elasticity of demand for Ramen noodles, /a./ yours would be negative and your roommate's would be positive. (3) yours would be positive and your roommate's would be negative. ,cz yours would be zero and your roommate's would approach infinity. /d./ yours would approach infinity and your roommate's would be zero. 15. Suppose the cross—price elasticity of demand between hot dogs and mustard is -2.00. This implies that a 20 percent increase in the price of hot dogs will cause the quantity of mustard purchased to a. fall by 200 percent. 63? fall by 40 percent. c. rise by 200 percent. d. rise by 40 percent. 16. A key determinant of the price elasticity of supply is g the length of the time period. (dowl‘M-Lg the definition of the market. the number of close substitutes for the good in question. d. the extent to which buyers alter their quantities demanded in response to changes in their incomes. 17. Given the market for illegal drugs, when the government is successful in reducing the flow of drugs into the United States, 6? supply decreases, demand is unaffected, and price increases. ,bf demand decreases, supply is unaffected, and price decreases. «c/ demand and supply both decrease, leaving price essentially unchanged. supply decreases, demand increases, and price increases substantially as a result. \ Figure 6-7 Panel (a) Suppw Price Price Supply Rent Control Rent Control Demand Demand Quantity Quantity A. E @ Refer to Figure 6-7. Which panel best represents a binding rent control in the short run? a. panel (a) b. panel (b) @neither panel A @either panel (a) or panel (b), depending upon local housing conditions L 19. Which of the following 15 not a rationing mechanism used by landlords 1n cities with rent control? waiting lists ace £m+ Winn lwwa P539» £0» ”-9 MMJJrf/L‘ @2 price ":5: d. brlbes i- 20. Which of the following is not a result of govermnent—imposed rent control? a. fewer new apartments offered for rent b. less maintenance provided by landlords c. bribery B @ higher quality housing ___' 21. The minimum wage is an example of . a price ceiling. (E) a price floor. c. a wage subsidy. d. a price control that is not binding. Figure 6-11. On the graph below, the shift of the supply curve from 81 to 82 represents the imposition of a tax on a good. On the axes, Q represents the quantity of the good and P represents the price. KS5 mailer: Q g p . 22. Consider Figure 6-11. From the appearance of the graph, it is apparent that, for every unit of the good that i old, Q ‘ sellers are required to send one dollar to the government and buyers are required to send two dollars to the government. b. sellers are required to send two dollars to the government and buyers are required to send one dollar to the government. Q sellers are required to send three dollars to the government and buyers are required to send nothing to the government. d. sellers are required to send nothing to the government and buyers are required to send two dollars to the government. ~23. Consider Figure 6-11. As a result of the tax, the price paid by buyers rises from $5 to $7. /b/ the price received by sellers (after paying the tax) falls from $5 to $3. ,C/ the government collects $30 in tax revenue. AL/ All of the above are correct. _‘ ‘ 24. Consider Figure 6-11. Which of these statements about the effects of the tax is correct? ‘ a. The tax is paid by sellers; sellers bear one-half of the burden of the tax; government collects $24 from the tax. The tax is paid by sellers; sellers bear one-third of the burden of the tax; government collects $24 from the tax. ‘9; The tax is paid by sellers; sellers bear two-thirds of the burden of the tax; government from the tax. ects . The t ' aid by buyers; buyers bear two-thirds of the burden of the tax; government co $16 I the tax. A ' 25. In which of these cases will the tax burden fall most heavily on buyers of the good? a) The demand curve is relatively steep and the supply curve is relatively flat. b. The demand curve is relatively flat and the supply curve is relatively steep. c. The demand curve and the supply curve are both relatively flat. d. The demand curve and the supply curve are both relatively steep. Please turn in to me the exam and scantron when you are done. ...
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