Econ 221 MC Quiz 3b WS04
| 1.
| Which of the following could cause a long-run shift in demand as part of the "guiding function of price"?
| A.
| a change in tastes and preferences
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| B.
| an increase in price caused by a shift in supply
|
| C.
| income shift caused by an economic recession
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| D.
| an increase in number of buyers
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| 2.
| What is the equilibrium quantity in this market?
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| 3.
| Suppose demand is expressed as QD = 300 - 50P. If we want to make this equation consistent with the typical supply and demand diagram, this equation must be stated as:
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| 4.
| The supply curve for 35mm camera film would shift up and to the left with which of the following events?
| A.
| an increase in the price of 35mm camera film
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| B.
| a decrease in the price of 35mm camera film
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| C.
| the imposition of an excise tax on 35mm film
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| D.
| an increase in the number of producers of 35mm camera film
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| E.
| an increase in the price of 35mm cameras
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| 5.
| Suppose that the demand curve for cigarettes slopes downward and that the supply curve for cigarettes slopes upward, as usual. The excise tax on cigarettes rises from $.16 per pack to $.32 per pack. Which of the following statements about the resulting new equilibrium price of cigarettes is correct?
| A.
| It will not rise at all.
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| B.
| It will rise by more than $.16 per pack.
|
| C.
| It will rise by exactly $.16 per pack.
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| D.
| It will rise by less than $.16 per pack.
|
| E.
| It will fall because stores will cut prices to keep customers.
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| 6.
| "Excess supply"
| A.
| refers to a market disequilibrium where the quantity demanded is greater than the quantity supplied.
|
| B.
| refers to a market disequilibrium where the quantity supplied is greater than the quantity demanded.
|
| C.
| refers to a market equilibrium where the quantity supplied is greater than the quantity demanded.
|
| D.
| refers to a market equilibrium where the quantity supplied is greater than the quantity demanded.
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| 7.
| If the relative price of gasoline rises, then all other things equal, consumers
| A.
| are wealthier and drive less.
|
| B.
| are wealthier and buy more gasoline.
|
| C.
| are poorer and buy less gasoline.
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| D.
| are poorer and drive more.
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| E.
| are poorer and buy more gasoline.
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| 8.
| Which of the following would cause a short run decrease in the quantity supplied of personal computers?
| A.
| the price of workstations decreases.
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| B.
| the price of PC software decreases.
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| C.
| the number of PC manufacturers decreases.
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| D.
| the cost of manufacturing PCs decreases.
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| 9.
| Consider Michael's monthly demand for tacos: qd = 5 - 2.5P + 1Ph - 2Pm + 2Inc, where P is the price of tacos, Ph is the price of hamburgers, and Pm is the price of a movie. All prices are in cents. Monthly income in thousands of dollars is represented by Inc. For Michael, what is the relationship between tacos and the other goods?
| A.
| impossible to tell given the information
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| B.
| tacos and hamburgers are complements; tacos and movies are complements
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| C.
| tacos and hamburgers are substitutes; tacos and movies are substitutes
|
| D.
| tacos and hamburgers are complements; tacos and movies are substitutes
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| E.
| tacos and hamburgers are substitutes; tacos and movies are complements
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| 10.
| Which of the following would indicate that price is temporarily below its market equilibrium?
| A.
| There are a number of producers who are left with unwanted inventories.
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| B.
| There are a number of customers who must be placed on waiting lists for the product.
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| C.
| Firms decide to leave the market.
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| D.
| The government must step in and subsidize the product.
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Which of the following will cause a decrease in market equilibrium price and quantity?
A decrease in demand will cause the equilibrium price to fall; quantity supplied will decrease. An increase in supply, all other things unchanged, will cause the equilibrium price to fall; quantity demanded will increase.
Which of the following will cause a decrease in market equilibrium price and a decrease in equilibrium quantity quizlet?
Which of the following will cause a decrease in market equilibrium price and a decrease in equilibrium quantity? increase in the price of new homes and decrease in quantity.
What happens when equilibrium price decreases and equilibrium quantity increases?
If the supply curve shifts downward, meaning supply increases, the equilibrium price falls and the quantity increases.
What happens to market equilibrium when price decreases?
Once you lower the price of your product, your product's quantity demanded will rise until equilibrium is reached. Therefore, surplus drives price down. If the market price is below the equilibrium price, quantity supplied is less than quantity demanded, creating a shortage.