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Unformatted text preview: terminate, and the new equilibrium quantity of pencils is definitely lower. *** D. The new equilibrium price of pencils is definitely higher, and the new equilibrium quantity of pencils is indeterminate. 20. Today's demand curve for gasoline could shift in response to a change in A. today's price of gasoline. B. the number of sellers of gasoline. C. the expected future price of gasoline. *** D. [All of the above] 21. Susan works at the local coffee shop and gets an hourly wage of $20. Last Saturday evening, Susan decided to work for 3 hours at the local coffee shop, instead of spending that time by watching a movie with her friends. Susan’s opportunity cost of working is A. the enjoyment she would have received from the movie.*** B. $60 minus the cost of transportation from her home to the coffee shop. C. $60 minus the enjoyment she would have received from the movie. D. the cost of the movie ticket. 22. Which of the following economic transactions does NOT take place in the market for goods and services, according to the model of simple circular flow diagram? A. Dorothy pays a consultation fee of $100 to Alex who works in ‘Easy Tax Inc.’ for helping her prepare her Federal Income tax returns. B. Michael buys a box of chocolate doughnuts from ‘Danny’s Delicious Doughnuts’ for $10. C. Gloria earns $1000 per week working for an accounting firm. *** D. Jeff pays $2000 for his tuition at Purdue for spring semester. 23. Suppose that canned soup and crackers are complements. Which of the following will increase the demand for crackers? A. The price of crackers increases. B. The price of crackers decreases. C. The price of canned soup increases. D. The price of canned soup decreases. *** 24. Milk is used to make butter, and the price of milk increases. In the market for butter, we will expect A. an increase in both the equilibrium price and equilibrium quantity of butter. B. an increase in the equilibrium price and a decrease in the equilibrium quantity of butter. *** C. a decrease in the equilibrium price and an increase in the equilibrium quantity of butter. D. an increase in the equilibrium price , but the equilibrium quantity is indeterminate. 25. The price of food processing machinery increased. This increase will be reflected in A. both the CPI and the GDP deflator. B. the CPI, but not the GDP deflator. C. the GDP deflator, but not the CPI. *** D. neither the GDP deflator nor the CPI. 26. Which of the followin...
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- Fall '08