EC201 Chapters 2,3,4,5,6,14 practice

A change in which of the following will NOT shift the demand curve for Coke?

• 
  the price of Pepsi

• 
  the price of Coke

• the income of consumers purchasing Coke

• 
  the price of snacks purchased along with Coke

Suppose that the price of computer chips, an input used in the production of laptops, decreases.  According to our analysis of supply and demand, will this increase the demand for laptops?

• 
  No, not an increase in demand, a decrease in quantity demanded

• No, not an increase in demand, an increase in quantity demanded

• 
  Yes, the price of laptops will decrease causing the demand for laptops to increase

• No, the price of laptops will increase causing the demand for laptops to decrease

Suppose that hotdogs and hotdog buns are complements.  If the price rises for hotdogs, what effect do we predict in the market for hotdog buns?

• 
  the equilibrium price of hotdog buns will be lower, the equilibrium quantity of hotdog buns will be higher

  
  

• 
  the equilibrium price of hotdog buns will be lower, the equilibrium quantity of hotdog buns will be lower

  
  

• 
  the equilibrium price of hotdog buns will be higher, the equilibrium quantity of hotdog buns will be higher

• 
  the equilibrium price of hotdog buns will be higher, the equilibrium quantity of hotdog buns will be lower

Suppose that the number of firms in the market selling cookies increases.  What effect would we predict in the market for cookies?

• an increase in demand

• a decrease in demand

• an increase in supply

  
  

• 
  a decrease in supply

Which of the following would tend to increase the demand for Food Lion Cola?

• 
  an decrease in the price of Food Lion Cola

• 
  a decrease in sugar, an ingredient used to produce Food Lion Cola

• 
  a decrease in the price of Harris Teeter Cola, a substitute for Food Lion Cola

• a decrease in the income of consumers purchasing Food Lion Cola, assuming it is an inferior good

Suppose that the price of good A increasing causes the demand for good B to increase.  What do we know about these goods?

• 
  these goods are both inferior goods

• these goods are both normal goods

  
  

• these goods are complements

• 
  these goods are substitutes

  
  

Suppose Famous Amos decides to use Godiva brand chocolate chips in their cookies, increasing demand.  Assume though that using Godiva brand chocolate chips increases the price to produce Famous Amos cookies.  What are the net effects on the equilibrium price and quantity of Famous Amos cookies? 

• 
  an increase in the equilibrium price of cookies, while the effect on the equilibrium quantity of cookies is uncertain

• 
  a decrease in the equilibrium price of cookies, while the effect on the equilibrium quantity of cookies is uncertain

• an increase in the equilibrium quantity of cookies, while the effect on the equilibrium price of cookies is uncertain

• 
  a decrease in the equilibrium quantity of cookies, while the effect on the equilibrium price of cookies is uncertain

What is the mechanism which causes efficiency in a free market?

• the president within that economy deciding on the best price

• 
  the central bank within that economy deciding on the best price

• 
  a dictator within that economy deciding the best price

• 
  a free-flowing price within that economy decided by consumers and firms

A 20% decrease in price causes the quantity demanded of a good to increase by 40 percent.  The value for the price elasticity of demand is ___________, and demand is ____________.

• 
  -0.5, elastic

• 
  -0.5, inelastic

• 
  -2, inelastic

• 
  -2, elastic

If the value of the price elasticity of supply is greater than 1, supply is ___________.  If the elasticity of supply equals zero, supply is __________.

• elastic, perfectly inelastic

• elastic, perfectly elastic

• 
  inelastic, perfectly inelastic

• inelastic, perfectly elastic