AP Micro Unit 2 Review

Front

A downward sloping demand curve can be explained by diminishing marginal utility, substitution effect, and the income effect.

Back

I, III, and IV only

Front

If hot dogs are an inferior good, an increase in income will result in

Back

a decrease in the demand for hot dogs

Front

If the price of coal increases and the quantity sold increases, which of the following is consistent with these observations?
- the price of oil, a substitute for coal, increases
- a wage increase was given to coal miners
- new machinery made coal mining more efficient
- consumers' incomes fell
- the demand curve is inelastic

Back

the price of oil, a substitute for coal, increases

Front

During a football game, it starts to rain and the temperature drops. The senior class, which runs the concession stand and is studying economics, raises the price of coffee from 50 cents to 75 cents a cup. They sell more than ever before. Which answer explains this?

Back

the demand for coffee increased

Front

If the cost of producing automobiles increases, how will the price, equilibrium quantity, and consumer surplus change? Options: P increases, Q increases and CS increases; P increases, Q decreases, CS increases; P increases, Q decreases, CS decreases; P decreases, Q increases, CS decreases; P decreases, Q decreases, CS decreases

Back

P increases, Q decreases, CS decreases

Front

During the 1990s, the price of VCRs fell about 30 percent, and QUANTITY SOLD decreased by the same amount. The DEMAND for VCRs must

Back

have shifted to the left

Front

Which of the following will occur if a legal price floor is placed on a good below its free-market equilibrium?
surpluses will develop,
shortages will develop,
underground markets will develop,
the equilibrium price will ration the good,
the quantity sold will increase

Back

the equilibrium price will ration the good

Front

A marketing survey shows that gate receipts would increase if the price of tickets to a summer rock concert increased, even though the number of tickets sold would fall. What does this imply about the price elasticity of demand for concert tickets?

Back

demand is inelastic

Front

If there is a legal price ceiling imposed, which will occur?

Back

shortage

Front

Which of the following statements about price controls is true?
a price ceiling causes a shortage if the ceiling price is above the equilibrium price,
a price floor causes a surplus if the price floor is below the equilibrium price,
a price ceiling causes an increase in demand if the ceiling price is set below the equilibrium price,
a price ceiling causes a decrease in demand if the price floor is set above the equilibrium price,
price ceilings and price floors result in a mis-allocation of resources.

Back

price ceilings and price floors result in a mis-allocation of resources.