Question # 1

For a given positively sloped supply curve the price increase to consumers resulting from a specific tax imposed on sellers will be.

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Greater the more price elastic demand is

Greater the less price elastic demand is

Equal to the entire tax when demand is perfectly elastic

Equal to half of the tax whenever demand is unit elastic

When two goods are substitutes a shock that raises the price of one good causes the price of the other goods to.

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Remain unchanged

Decrease

Increase

Change in an unpredictable manner

It is appropriate to use the supply and demand model if in a market.

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Everyone is a price taker with full information about the price and quantity of the good.

Firms sell identical products

Costs of trading are low

All of the above

The percentage change in the quantity demanded in response to a percentage change in the price is known as the.

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slope of the demand curve

Excess demand

Price elasticity of demand

All of the above

If the price of automobile were to decrease substantially the demand curve for automobiles would most likely.

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shift rightward

Shift left eard

Remain unchanged

Become steeper

To determine the total demand for all consumers sum the quantity each consumer demands.

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At a given price

At all prices and then sum this amount across all consumers

Both a and b will generate the same total demand

None of the above

If a government imposed price celling causes the observed price in a market to be below the equilibrium price.

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There will be excess demand

There will be excess supply

The curves will shift to make a new equilibrium at the regulated price

None of the above

If the demand curve for a good is horizontal and the price is positive then a leftward shift of the supply curve results in.

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a price of zero

An increase in price

A decrease in price

No change in price

If the price of automobiles were to increase substantially the demand curve for gasoline would most likely

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Shift leftward

Shift right ward

Become flatter

Become steeper

Equilibrium is defined as a situation in which.

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Neither buyers nor sellers want to change their behavior

No government regulations exist

Demand curves are perfectly horizontal

suppliers will supply and amount that buyers wish to buy

If the price of orange juice rises 10% and as a result the quantity demanded falls by 8% the price elastic of demand for orange juice is.

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-1.25

Inelastic

Both a and b

Neither A nor B above

A competitive equilibrium is described by

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A price only

A quantity only

The excess supply minus the exceess demand.

A price and a quantity

Suppose the demand curve for a good shifts rightward, causing the equilibrium price to increase this increase in the price of the good results in.

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A rightward shift of the supply curve

An increase in quantity supplied

A leftward shift of the supply curve

A leftward movement along the supply curve

Consumers and firms are known as price takers only it

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No market exists to determine the equilibrium price

they can set the market price

They cannot effect the market price

Excess demand exists

If price is initially above the equilibrium level.

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the supply curve will shift rightward

The supply curve will shift letward

Excess supply exists

All firms can sell as much as they want

A vertical demand curve for a particular good implies that consumers are.

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Sensitive to changes in the price of that good

Not sensitive to changes in the price of that good.

Irrational

Not interested in that good

If the price of automobiles were to decrease substantially the demand curve for public transpiration would most likely.

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shift rightward

Shift leftward

Remain unchanged

Remain unchanged while quantity demanded would change

An increases in the demand curve for orange juice would be illustrated as a.

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Leftward shift of the demand curve

Right ward shift of the demand curve

Movement up along the demand curve

Movement down along the demand curve

The expression increase in quantity supplied is illustrated graphically as a.

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Leftward shift in the supply curve

Rightward shift in the supply curve

Movement up long the supply curve

Movement down along the supply curve

Most Microeconomic models assume that decision makers wish to.

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Make themselves as well off as possible

Act selfishly

Not cooperate with others

None of the above

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