microeconomics midterm 3

The value of a $10 bill comes from all of the following except:

• the utility of the best thing you can buy with that $10 bill.

• the broad acceptance of dollars as a medium of exchange for goods.

• the ability to save that bill for later consumption.

• the inherent utility derived from the $10 bill itself.

This would be an example of the function of prices.

• allocative
• rationing

This would be an example of the function of prices.

• rationing
• allocative

The graph above shows the market supply and demand for parking spaces in a city. The equilibrium price is per day and the equilibrium quantity is parking spaces.

• $20; 10,000
• $18; 8,000

•  

  $22; 12,000

• shortage of 2,000

   

• shortage of 4,000

   

•  

  surplus of 2,000

   

•  

  surplus of 4,000

At $22, the market is in a [blank] of 4,000 parking spaces, and the current price will have to move [blank] towards the equilibrium price in order to convince more people to demand parking spaces and less firms to provide them.

• surplus, down

• surplus, up

• shortage; down

• shortage; up

When demand for a good falls as income falls is called a ..........good and when demand for a good rises when income falls is called a ........good.

The graph above shows the market supply and demand for smartphones. Trade protection measures cause the input prices of smartphone components to increase. As a result: A. Demand will shift left; both price and quantity will decrease. B. Demand will shift right; both price and quantity will increase. C. Supply will shift left; price will increase, and quantity will decrease. D. Supply will shift right; price will decrease, and quantity will increase.

• Demand will shift left; both price and quantity will decrease.

• Demand will shift right; both price and quantity will increase.

• Supply will shift left; price will increase, and quantity will decrease.

• Supply will shift right; price will decrease, and quantity will increase

Let the price of phone service and data plans fall. As a result:

• Demand will shift right; both price and quantity will increase.

• Demand will shift left; both price and quantity will decrease.

• Supply will shift left; price will increase, and quantity will decrease.

• Supply will shift right; price will decrease, and quantity will increase.

Suppose the events in questions 8 and 9 happen simultaneously: the price of phone service and data plans falls while, at the same time, protectionist policies make smartphone components more expensive. As a result:

• price increases; quantity is indeterminable.

• price increases; quantity decreases.

• price is indeterminable; quantity decreases.

• price is indeterminable, quantity increases