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Unformatted text preview: Chapter 2: DEMAND, SUPPLY, AND MARKET EQUILIBRIUM Multiple Choice 2-1 If the price of a complement decreases, all else equal, a. quantity demanded will decrease. b. quantity supplied will decrease. c. demand will increase. d. demand will decrease. e. supply will increase. 2-2 The market demand curve for a given good shifts when there is a change in any of the following factors EXCEPT a. the price of the good. b. the level of consumers' income. c. the prices of goods related in consumption. d. the tastes of consumers. 2-3 Which of the following would lead to a DECREASE in the demand for tennis balls? a. An increase in the price of tennis balls b. A decrease in the price of tennis rackets c. An increase in the cost of producing tennis balls d. A decrease in average household income when tennis balls are a normal good e. None of the above 2-4 If input prices increase, all else equal, a. quantity supplied will decrease. b. supply will increase. c. supply will decrease. d. demand will decrease. 2-5 Which of the following would increase the supply of corn? a. an increase in the price of pesticides b. a decrease in the demand for corn c. a fall in the price of corn d. a severe drought in the corn belt e. a decrease in the price of wheat 2-6 When Sonoma Vineyards reduces the price of its Cabernet Sauvignon from $15 a bottle to $12 a bottle, the result is an increase in a. the demand for this wine. b. the supply of this wine. c. the quantity of this wine demanded. d. the quantity of this wine supplied. 2-7 Which of the following will cause a change in quantity supplied? a. a change in input prices b. technological change c. a change in the number of firms in the market d. a change in the market price of the good 2-8 When the average price of videocassette recorders (VCRs) fall, the result is a. an increase in supply of VCRs. b. an increase in the quantity of VCRs supplied. Chapter 2 : DEMAND, SUPPLY, AND MARKET EQUILIBRIUM 11 c. an increase in the quantity of VCRs demanded. d. a decrease in the quantity of VCRs demanded. Use the following generalized linear demand relation to answer questions 9 through 13: 680 9 0.006 4 d R Q P M P =- +- where M is income and R P is the price of a related good, R . 2-9 From this relation it is apparent that the good is: a. an inferior good b. a substitute for good R c. a normal good d. a complement for good R e. both c and d 2-10 If M = $15,000 and R P = $20, the demand function is a. 690 9 d P Q =- . b. 690 9 d Q P =- . c. 680 9 d Q P =- . d. 680 9 d P Q =- . e. 800 19 d Q P =- . 2-11 If M = $15,000 and R P = $20 and the supply function is 30 3 s Q P = + , equilibrium price and quantity are, respectively, a. P = $55 and Q = 195....
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- Spring '11