5.If the demand for a good increases by more than the supply of the good increas

Question

5.If the demand for a good increases by more than the supply of the good increases, then equilibrium price will __________ and equilibrium quantity will __________.
Choose one answer.
a. fall; rise
b. rise; rise
c. fall; fall
d. rise; fall

6.For a straight-line, downward-sloping demand curve, price elasticity of demand
a. decreases as we move down and along the curve from higher to lower prices.
b. a or b depending on the actual slope of the demand curve
c. increases as we move down and along the curve from higher to lower prices.
d. remains constant along the entire demand curve.

7.Joe is currently in consumer equilibrium by consuming cheese and crackers, such that the last cracker consumed yielded 8 utils and the last piece of cheese consumed yielded 12 utils. Assume the price of crackers is two cents per cracker and the price of cheese is three cents per piece. If the price of crackers increases to four cents, Joe should __________ his consumption of crackers and his marginal utility from crackers will __________ and also __________ his consumption of cheese and his marginal utility from cheese will __________.
Choose one answer.
a. increase; increase; increase; increase
b. increase; decrease; increase; decrease
c. decrease; increase; decrease; increase
d. increase; increase; decrease; decrease
e. decrease; increase; increase; decrease


: 8.
if a production possibilities frontier (PPF) is concave downward, it follows that
a. none of the above
b. the opportunity costs (of producing the good on the horizontal axis) fall as more of the good is produced.
c. the opportunity costs (of producing the good on the horizontal axis) first rise and then fall as more of the good is produced.
d. opportunity costs are constant between two goods.
e. the opportunity costs (of producing the good on the horizontal axis) rise as more of the good is produced.

11.
Suppose people are in consumer equilibrium buying 10,000 units of good X at a given price. Then the price of good X falls to $0. It follows that people will buy more of good X and that the marginal utility of the last additional unit they buy will be __________ the __________ of the 10,000th unit.
a. the same as; marginal utility
b. lower than; marginal utility
c. greater than; marginal utility
d. greater than; average utility
e. none of the above

12.Which of the following is false?
a. Graph (2): As supply increases, equilibrium quantity remains constant.
b. Graph (1): There is a shortage when price is P3.
c. Graph (3): As demand increases, equilibrium price remains constant.
d. Graph (4): As supply changes, equilibrium price stays the same.

13. A theory is
a. a and b
b. built on the major factors or variables that the theorist believes explain some event.
c. a simplified abstract representation of the real world.
d. a, b, and c
e. used to understand the real world.

16.Consider two straight-line PPFs. They have the same vertical intercept, but curve I is flatter than curve II. The opportunity cost of producing the good on the horizontal axis
Choose one answer.
a. is the same along both curves.
b. is greater along curve II.
c. is greater along curve I.
d. cannot be compared for the two curves without more information.

17. The movement from point A to point B is a movement from
Choose one answer.
a. a productive efficient point to a productive inefficient point.
b. a productive inefficient point to an productive efficient point.
c. a point with more guns and less butter to a point with more butter and even more guns.
d. a productive efficient point to another productive efficient point.

18.If price P1 is a price ceiling, then
Choose one answer.
a. the quantity exchanged is Q3.
b. there is a shortage in this market.
c. it is the highest price that can legally be charged in this market.
d. all of the above
e. both b and c.

21. When price decreases from $3.50 to $2.50, the price elasticity of supply is
a. 5.0.
b. 0.
c. 1.0.
d. 0.1.
e. 0.5.



21. When price decreases from $3.50 to $2.50, the price elasticity of supply is
Choose one answer.
a. 5.0.
b. 0.
c. 1.0.
d. 0.1.
e. 0.5.

22.The opportunity cost of attending college
a. consists of the tuition costs plus the costs of room and board and other expenses.
b. both b and c
c. varies from person to person.
d. is zero, if the student receives a scholarship that covers the costs of tuition, room and board, and other expenses.
e. consists of the tuition costs only.


23.Currently, 100 units of good X are being produced and the opportunity cost of producing 1X is 3Y. If good X is produced at increasing opportunity costs, then when the economy produces 120 units of good X the opportunity cost of producing 1Y could be
Choose one answer.
a. 1/3X
b. 1X
c. 1/2X
d. none of the above
e. 1/4X

24. The law of increasing opportunity cost helps to explain why PPF

Explanation / Answer

23.Currently, 100 units of good X are being produced and the opportunity cost of producing 1X is 3Y. If good X is produced at increasing opportunity costs, then when the economy produces 120 units of good X the opportunity cost of producing 1Y could be
Choose one answer.
a. 1/3X
b. 1X
c. 1/2X
d. none of the above
e. 1/4X

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