Unit 2 Quiz
1. Question : Last month, the Tecumseh Corporation supplied 400 units of three-ring binders at $6 per unit. This month, the company supplied the same quantity of binders at $4 per unit. Based on this evidence, Tecumseh has experienced
Student Answer: a decrease in supply.
an increase in supply.
an increase in the quantity supplied.
a decrease in the quantity supplied.
2. Question : Table 3-1
Refer to Table 3-1. The table above shows the demand schedules for loose-leaf tee of two individuals (Sunil and Mia) and the rest of the market. If the price of loose-tea raises from $3 to $4 the market quantity demanded would
Student Answer: decrease by 32 pounds.
increase by 64 pounds.
increase by 32 pounds.
decrease by 64 pounds.
3. Question : In recent years the cost of producing wines in the U.S. has increased largely due to rising rents for vineyards. At the same time, more and more Americans prefer wine over beer. Which of the following best explains the effect of these events in the wine market?
Student Answer: The supply curve has shifted to the left and the demand curve has shifted to the right. As a result there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price.
Both the supply and demand curves have shifted to the right. As a result, there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity.
Both the supply and demand curves have shifted to the right. As a result, there has been an increase in both the equilibrium price and the equilibrium quantity.
The supply curve has shifted to the left and the demand curve has shifted to the right. As a result, there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity.
4. Question : Olive oil producers want to sell more olive oil at a higher price. Which of the following events would have this effect?
Student Answer: An increase in the price of olive oil presses.
A decrease in the cost of transporting olive oil to markets.
An increase in the price of land used to plant olives.
Research finds that consumption of olive oil reduces the risk of heart disease.
5. Question : Table 3-1
Refer to Table 3-1. The table above shows the demand schedules for loose-leaf tea of two individuals (Sunil and Mia) and the rest of the market. At a price of $5, the quantity demanded in the market would be
Student Answer: 51 lbs.
6. Question : If equilibrium is achieved in a competitive market
Student Answer: there will is no deadweight loss.
the deadweight loss will be maximized.
the deadweight loss will equal the sum of consumer surplus and producer surplus.
the deadweight loss will be the same as the opportunity cost of the last unit of output sold.
7. Question : Brett buys a new cell phone for $100. He receives consumer surplus of $80 from the purchase. How much does Brett value his cell phone?
Student Answer: $180
8. Question : In Singapore the government places a $5,000 tax on the buyers of new automobiles. After the purchase of a new car, a buyer must pay the government $5,000. How would the imposition of the tax on buyers be illustrated in a graph?
Student Answer: The tax will shift the demand curve to the right by $5,000.
The tax will shift the demand curve to the left by $5,000.
The tax will shift both the demand and supply curve to the right by $5,000.
The tax will shift the supply curve to the left by $5,000.
9. Question : John List and Jason Shogren conducted a study that tried to explain why people continue to give presents rather than cash for birthdays and holidays. Their study found that
Student Answer: the deadweight loss from giving cash was twice as great as the deadweight loss from giving presents.
on average, families and friends paid much more for presents than the recipients were willing to pay for them.
government restrictions are responsible for most of the deadweight losses associated with gift giving.
as much as half the value of a gift to a recipient was its sentimental value.
10. Question : Which of the follow is not a result of imposing a rent ceiling?
Student Answer: Some consumer surplus is converted to producer surplus.
A reduction in the quantity supplied of apartments.
An increase in the quantity demanded of apartments.
The marginal benefit of the last apartment rented is greater than the marginal cost of supplying it.