Microeconcomics Ch. 4 Quiz

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Mid Term II

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Created by mil8435 over 3 years ago
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Question 1

Question
In which of the following situations will the equilibrium price of wheat increase and the change in the equilibrium quantity of wheat be indeterminate?
Answer
  • if supply and demand both decline
  • if supply and demand both rise
  • if supply declines and demand rises
  • if supply rises and demand declines

Question 2

Question
Rent controls can result in?
Answer
  • deteriorating or abandoned buildings
  • strong incentives to oust protected tenants
  • payments to motivate tenants to move out
  • benefits to rich people who get a windfall from low rents
  • all of the answers are correct

Question 3

Question
Refer to exhibit 4-2. Which of the following would cause a shift of demand from D' to D?
Answer
  • an increase in the price of a substitute good
  • an increase in the number of consumers
  • a decrease in the price of a complementary good
  • a decline in consumers' incomes if it is a normal good
  • an increase in consumers' incomes if it is a normal good

Question 4

Question
consider exhibit 4-3. Which of the following statements is most likely correct regarding the market for corn?
Answer
  • in 2008 the quantity purchased exceeded the quantity sold
  • in 2008 the corn market was not in equilibrium
  • the weather for corn production was probably better in 2010 than in 2009
  • between 2010 and 2011 both the supply and demand for corn must have increased

Question 5

Question
The market for chewing gum is competitive with a current price of 50 cents per pack and a quantity of 100,000 packs per day. Which of the following events would lead to a new equilibrium price of 75 cents and a new equilibrium quantity of 125,000?
Answer
  • an increase in the price of other kinds of candy
  • an increase in the price of the ingredients used to make chewing gum
  • an agreement by workers in the chewing gum industry to work for lower wages
  • a decrease in the number of young people in the population

Question 6

Question
If the market for beef cattle was initially in equilibrium, an increase in the price of the feed grains used to fatten cattle would cause
Answer
  • the demand for beef cattle to increase, driving the price of beef upward
  • the supply of beef cattle to decline, driving the price of beef upward in the long run
  • the supply of beef to increase, placing downward pressure on the price of beef in the long run
  • both supply and demand to fall, leaving the price of beef virtually unchanged

Question 7

Question
Two events occur simultaneously in the market for automobiles; 1.an improvement in assembly line technology and 2. the economy enters a recession (which decreases consumers' income). An economist would predict with certainty that
Answer
  • equilibrium quantity will rise
  • equilibrium quantity will fall
  • equilibrium price will rise
  • equilibrium price will fall

Question 8

Question
refer to exhibit 4-13. The discovery that breast milk offers greater health protection to babies than baby formula will cause which of the following to happen?
Answer
  • movement from d to c on supply curve S2
  • supply shift from S2 to S1
  • movement from a to b on supply curve S1
  • supply shift from S1 to S2
  • movement from c to d on the supply curve S2

Question 9

Question
If demand increases and supply decreases, quantity will?
Answer
  • always increase
  • always decrease
  • increase only if supply decreases more than demand increases
  • increase only if supply decreases less than demand increases

Question 10

Question
Suppose the current equilibrium price of pizza is $5. If the government decides the price of pizza cannot rise above $4, the results of this policy would be?
Answer
  • shortage
  • surplus
  • that the market would remain in equilibrium but with a larger quantity bought and sold than $5
  • at the $4 price, the quantity sold would be greater than the quantity bought
  • a shift of demand to the right

Question 11

Question
If demand decreases and supply increases, price will?
Answer
  • always increase
  • always decrease
  • increase only if supply increases more than demand decreases
  • increase only if supply increases less than demand decreases

Question 12

Question
If both demand and supply increase, price will?
Answer
  • always increase
  • always decrease
  • increase only if supply increases more than demand does
  • increase only if demand increases more than supply does

Question 13

Question
Exhibit 4-5 depicts the milk market. The horizontal line, P, represents a price ceiling imposed by the government. Which of the following is true?
Answer
  • the quantity supplied at the price ceiling will equal the quantity sold
  • at the ceiling, there is a surplus
  • in equilibrium, the quantity demanded is 800 gallons
  • the quantity demanded at the price ceiling will equal the quantity supplied

Question 14

Question
Attempts are being made to develop a biodegradable plastic using agricultural produce such as potatoes. If these attempts are successful, what will happen to the equilibrium price and quantity of potatoes?
Answer
  • price will increase and quantity will decrease
  • price will increase and quantity increase
  • price will decrease and quantity will increase
  • price will decrease and quantity decrease

Question 15

Question
The market for chewing gum is competitive with a current price of 50 cents per pack and quantity of 100,000 packs. Which of the following events would lead to a new equilibrium price of 40 cents and quantity of 80,000 packs?
Answer
  • an increase in the price of other kinds of candy
  • an increase in the price of the ingredients used to make chewing gum
  • a decrease in the number of young people in the population
  • an agreement by workers in the chewing gum industry to work for lower wages

Question 16

Question
If both supply and demand increase, then the change in equilibrium quantity is indeterminate.
Answer
  • True
  • False

Question 17

Question
If supply increases and demand decreases, then equilibrium price will fall.
Answer
  • True
  • False

Question 18

Question
If the demand for bicycles increases,
Answer
  • the quantity demanded decreases
  • equilibrium price increases and equilibrium quantity decreases
  • equilibrium price decreases and equilibrium quantity increases
  • quantity supplied increases
  • quantity supplied decreases

Question 19

Question
Suppose a market is in equilibrium and then a price ceiling is established below the equilibrium price. Which of the following will happen?
Answer
  • quantity demanded will decrease
  • a surplus will develop
  • a shortage will develop
  • the quantity sold will rise

Question 20

Question
In the market for chewing gum, the current price is 50 cents a pack and 100,000 packs are sold. Which of the following events would lead to a new equilibrium price of 60 cents and quantity of 90,000 packs?
Answer
  • an increase in the price of other kinds of candy
  • an increase in the price of the ingredients used to make chewing gum
  • a decrease in the number of young people in the population
  • an agreement by workers in the chewing gum industry to work for lower wages

Question 21

Question
Over the last few years, demand for DVDs has increased, and yet their equilibrium price has fallen. Which of the following best explains this situation?
Answer
  • the supply of DVDs must have increased more than the demand for DVDs increased
  • the demand curve for DVDs slopes upward, so an increase in demand leads to a lower price
  • the supply of DVDs must have decreased
  • there has been a shortage of DVDs
  • when the price falls, the quantity supplied increases

Question 22

Question
many people argue against increasing the minimum wage because they believe the result would be increased unemployment. Which of the following best summarizes this argument? A high minimum wage would?
Answer
  • increase the supply of labor while decreasing the demand for labor
  • decrease the supply of labor while increasing the demand for labor
  • increase the quantity supplied of labor while decreasing the quantity demanded of labor
  • decrease the quantity supplied of labor while increasing the quantity demanded of labor

Question 23

Question
A surplus occurs whenever
Answer
  • a current price is greater than equilibrium price
  • quantity supplied exceeds quantity demanded at the equilibrium price
  • quantity demanded is greater than quantity supplied
  • the problem of scarcity of a good is solved

Question 24

Question
Which of thee following is correct when a price is set below a market's equilibrium price?
Answer
  • quantity demanded exceeds quantity supplied at the set price
  • quantity demanded is less than quantity supplied at the set price
  • quantity demanded is equal to quantity supplied at the set price
  • at the set price there is a surplus

Question 25

Question
Refer to exhibit 4-13. An increase in the price of baby formula will cause which of the following to occur?
Answer
  • a movement from a to b on supply curve S1
  • supply shift from S2 to S1
  • a movement from d to c on supply curve S2
  • supply shift from S1 to S2

Question 26

Question
Suppose demand decreases and supply decreases. which of the following will happen?
Answer
  • equilibrium price will increase
  • equilibrium price will decrease
  • equilibrium quantity will increase
  • equilibrium quantity will decrease

Question 27

Question
If there is a shortage in the market for jeans,
Answer
  • producers' inventories will increase
  • the price should begin to rise
  • the demand curve will shift to restore equilibrium in the market
  • the supply curve will shift to restore equilibrium in the market
  • producers' expect government to impose a price ceiling

Question 28

Question
If demand increases and supply decreases,
Answer
  • equilibrium price will rise; equilibrium quantity will either rise, fall, or remain unchanged
  • equilibrium price will fall; equilibrium quantity will either rise or fall
  • equilibrium quantity will rise; equilibrium price will either rise or fall
  • equilibrium price and quantity will both rise

Question 29

Question
Tickets to the Michigan-Notre Dame football game are usually sold out in advance of game day. This suggests that
Answer
  • the price of the tickets must be very high or else people would not consider them valuable
  • the price is set below the equilibrium level
  • the football stadium is relatively small
  • everyone who attends the game will enjoy it
  • the price is determined primarily by the fixed supply of tickets

Question 30

Question
In exhibit 4-4, suppose a price floor is established at $20.00. What is the result?
Answer
  • there is no change from the situation that exists at the equilibrium price
  • a surplus of 20 units
  • a shortage of 20 units
  • a surplus of 10 units
  • a shortage of 10 units