The market demand curve for a given good shifts when there is a change in any of the following factors EXCEPT (Points : 3)The price of the good.The level of consumers’ income.The prices of goods related in consumption.The tastes of consumers.2. Which of the following would lead to a DECREASE in the demand for tennis balls? (Points : 3)An increase in the price of tennis balls.A decrease in the price of tennis rackets.An increase in the cost of producing tennis balls.A decrease in average household income when tennis balls are a normal good.None of the above.3. Which of the following would increase the supply of corn? (Points : 3)An increase in the price of pesticides.A decrease in the demand for corn.A fall in the price of corn.A severe drought in the corn belt.A decrease in the price of wheat.4. Which of the following will cause a change in quantity supplied? (Points : 3)A change in input prices.Technological change.A change in the number of firms in the market.A change in the market price of the good.5. Use the following general linear demand relation to answer this question:Qd = 680 – 9P + 0.006M – 4PR.Where M is income and PR is the price of a related good, R.From this relation it is apparent that the good is: (Points : 3)An inferior good.A substitute for good R.A normal good.A complement for good R.Both c and d.6. Use the following general linear demand relation to answer this question:Qd = 680 – 9P + 0.006M – 4PR.If M = $15,000 and PR = $20, the demand function is: (Points : 3)P = 690 – 9QdQd = 690 – 9PQd = 680 – 9PP = 680 – 9QdQd = 800 -19P7. Use the following general linear demand relation to answer this question:Qd = 680 – 9P + 0.006M – 4PR.If M = $15,000 and PR = $20 and the supply function is Qs = 30 + 3P , equilibrium price and quantity are, respectively, (Points : 3)P = $55 and Q = 195P = $6 and Q = 38P = $12 and Q = 200P = $50 and Q = 170P = $40 and Q = 2508. Use the following general linear demand relation to answer this question:Qd = 680 – 9P + 0.006M – 4PR.If M = $15,000 and PR = $20 and the supply function is Qs = 30 + 3P, then, when the price of the good is $60, (Points : 3)There is a shortage of 60 units of the good.There is equilibrium in the market.There is a surplus of 60 units of the good.The quantities demanded and supplied are indeterminate.9. Suppose that the market for salad dressing is in equilibrium. Then the price of lettuce rises. What will happen? (Points : 3)The price of salad dressing will rise.The supply of salad dressing will decrease.The demand for salad dressing will decrease.The quantity demanded of salad dressing will increase.10. Suppose that the market for engagement rings is in equilibrium. Then political unrest in South Africa shuts down the diamond mines there. South Africa is the world’s primary supplier of diamonds. What will happen? (Points : 3)The equilibrium quantity of engagement rings will decrease.The equilibrium price of engagement rings will decrease.The demand for engagement rings will decrease.The supply of engagement rings will increase.11. In which of the following cases will the effect on equilibrium output be indeterminate (i.e., depend on the magnitudes of the shifts in supply and demand)? (Points : 3)Demand increases and supply increases.Demand decreases and supply decreases.Demand decreases and supply increases.Demand remains constant and supply increases.12. With a given supply curve, a decrease in demand leads to (Points : 3)A decrease in equilibrium price and an increase in equilibrium quantity.An increase in equilibrium price and a decrease in equilibrium quantity.A decrease in equilibrium price and a decrease in equilibrium quantity.No change in price and a decrease in equilibrium quantity.None of the above.13. Use the following general linear supply function to answer this question:Qs = 40 + 6P – 8PI + 10FWhere Qs is the quantity supplied of the good, P is the price of the good, PI is the price of an input, and F is the number of firms producing the good.If PI = $20 and F = 60 what is the equation of the supply function? (Points : 3)Qs = 400 + 6PQs = 40 + 8PP = 480 + 6QsQs = 480 + 6PNone of the above.14. Use the following general linear supply function to answer this question:Qs = 40 + 6P – 8PI + 10Fthe equilibrium price and quantity are, respectively, (Points : 3)P = $10 and Q = 640P = $8 and Q = 326P = $10 and Q = 540P = $8 and Q = 640None of the above15. If the current price of a good is $10, market demand is Qd = 400 – 20P, and market supply is Qs = -50 + 10P, then (Points : 3)More of the good is being produced than people want to buy.A lower price will increase the shortage.At the current price there is excess demand, or a shortage, of 150 units.Both b and c.All of the above.16. Yesterday’s newspaper reported the results of a study indicating that people who eat more bananas are more attractive to the opposite sex. What do you expect to happen to the market price and quantity of bananas? (Points : 3)Price will decrease, quantity will decrease.Price will decrease, quantity will increase.Price will increase, quantity will decrease.Price will increase, quantity will increase.17. In which of the following cases must price always fall? (Points : 3)Demand increases and supply increases.Demand decreases and supply decreases.Supply increases and demand remains constant.Demand decreases and supply increases.Both c and d.18. Consumer surplus (Points : 3)Is positive for all but the last unit purchased.For a particular unit of consumption is computed by taking the difference between demand price and market price.For all units consumed is the area below demand and above market price over all the units consumed.Added to producer surplus provides a measure of the net gain to society from the production and consumption of the good.All of the above.19. The function a decision maker seeks to maximize or minimize is the ________ function. (Points : 3)OptimalDecision-makingObjectiveMarginalNone of the above20. An agency is having problems with personal phone calls made during working hours. Each minute of a personal call costs the agency $0.50 in wasted wages. The agency decides to hire operators to monitor calls in order to attain the optimal number of personal calls (minimize total cost of personal calls).Number of Operators
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