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WorksheetsAP Micro Unit 2A/2B Review
Total questions: 60
Worksheet time: 2hrs 1mins
Name
Class
Date
1.
A shortage will develop when...
a)
Quantity supplied is greater than quantity demanded
b)
Quantity demanded is greater than quantity supplied
c)
The govt gives taxes to businesses
d)
quantity supplied and quantity demanded are equal
2.
Which of the following describes when the government sets a price floor?
a)
The price cannot go any higher
b)
The price cannot go any lower
c)
The price will remain the same
3.
Which of the following describes when the government sets a price ceiling?
a)
The price cannot go any higher
b)
The price cannot go any lower
c)
The price will remain the same
4.
Which of the following is an example of a price floor?
a)
equilibrium
b)
rent control
c)
minimum wage
5.
If hot dog buns become cheaper, the demand for hot dogs will...
a)
Increase
b)
Decrease
c)
Remain the same
d)
Have no effect
6.
If a new machine is developed that cuts the time for making lawn mowers in half, the SUPPLY of lawn mowers
a)
increases
b)
decreases
c)
no change
7.
When prices rise for elastic goods, what happens to total revenue?
a)
Total Revenue Goes Down
b)
Total Revenue Goes Up
c)
Total Revenue Stays The Same
8.
A shortage will develop when...
a)
Quantity supplied is greater than quantity demanded
b)
Quantity demanded is greater than quantity supplied
c)
The govt gives taxes to businesses
d)
quantity supplied and quantity demanded are equal
9.
The following is a factor that will not cause the demand curve to shift:
a)
Advertising
b)
Population
c)
Price
d)
Consumer expectations
10.
Consuming more of one good because of a change in price of another good is known as the
a)
income effect
b)
substitution effect
c)
elasticity effect
d)
demand effect
11.
A shortage of a good is often a signal for a producer to
a)
lower production of that good.
b)
lower the prices of that good.
c)
raise the prices of that good.
d)
shift production to another good.
12.
Assume the image is showing the market for apples. Which of the headlines could indicate the pictured shift is occurring in the market?
a)
Pesticides on apples linked to mouth cancer.
b)
Storms destroy apple orchards.
c)
An apple a day really does keep the doctor away.
d)
New genetic strain leads to apple trees that produce twice as many apples.
13.
A government payment made to a business is a
a)
tax
b)
regulation
c)
subsidy
d)
resource
14.
When a good is elastic and the price drops...what happens to the quantity demanded?
a)
Large increase in quantity demanded
b)
Large increase in price demanded
c)
A large increase in Demand Demanded
d)
Say Demand one more time...
....demand
....demand
15.
Diminishing Marginal Utility means...?
a)
The more you consume of a product, the less utility it has
b)
The more you consume a product the more utility it has
c)
The demand for the product increases every time
d)
You consume until you cant consume and then you die
16.
If a good is Inferior and my income increases ...?
a)
My demand for inferior goods increase
b)
My demand for inferior goods decrease
c)
My demand for inferior goods is dictated by whether or not the income is constant or variable
d)
My demand for superior goods is greater
17.
Which of the following is a characteristic of a good that is inelastic?
a)
Good has little to no substitutions
b)
Good has substitutions
c)
Purchase of the good can be delayed
d)
The good cost a lot of money
18.
Consumers demand more of this type of good when their income rises.
a)
Normal good
b)
Inferior good
c)
Elastic good
d)
Substitution good
19.
The degree to which tax falls on a particular person or group
a)
Surplus
b)
Tax incidence
c)
Deadweight loss
d)
Elasticity
20.
True or false: if a demand is inelastic, it is more likely to be taxed higher by the government
a)
True
b)
False
21.
Efficiency loss is another term for...
a)
Deadweight loss
b)
Consumer surplus
c)
Producer surplus
d)
Elasticity
22.
The maximum price a consumer is willing to pay for a product and the actual price that they do pay
a)
Consumer surplus
b)
Producer surplus
c)
Deadweight loss
d)
Allocative Efficiency
23.
Jennifer buys a piece of costume jewelry for $33 for which she was willing to pay $42. The minimum acceptable price to the seller, Nathan, was $30. Jennifer experiences...
a)
A consumer surplus of $12 and Nathan experiences a producer surplus of $3
b)
A producer surplus of $9 and Nathan experiences a consumer surplus of $3
c)
A consumer surplus of $9 and Nathan experiences a producer surplus of $3
d)
A producer surplus of $9 and Nathan experiences a consumer surplus of $12
24.
Graphically, if the supply and demand curves are linear, consumer surplus is measured as the triangle...
a)
under the demand curve and below the actual price
b)
under the demand curve and above the actual price
c)
above the supply curve and above the actual price
d)
above the supply curve and below the actual price
25.
When determining the consumer's purchasing choice based off of marginal utility you should first...
a)
Determine your own utility for that same product
b)
Calculate the marginal utility per dollar
c)
Determine the utils of each product
d)
Find the square root of happiness
26.
What are inferior goods?
a)
goods that are not well produced
b)
goods no one wants to buy
c)
goods for which the demand rises when income falls
d)
goods for which the demand rises when income rises
27.
Suppose there is a 6 percent increase in the price of good X and a resulting 6 percent decrease in the quantity of X demanded. Price elasticity of demand for X is
a)
0
b)
1
c)
6
d)
36
28.
The price elasticity of demand measures how much
a)
quantity demanded responds to a change in price.
b)
quantity demanded responds to a change in income.
c)
price responds to a change in demand.
d)
demand responds to a change in supply.
29.
If the price elasticity of supply is 0.2, and a price increase led to a 3% increase in quantity supplied, then the price increase is about
a)
0.07%.
b)
0.60%
c)
6%
d)
15%
30.
OPEC successfully raised the world price of oil in the 1970s and early 1980s, primarily due to
a)
an inelastic demand for oil and a reduction in the amount of oil
supplied.
b)
a reduction in the amount of oil supplied and a world-wide oil embargo.
c)
a world-wide oil embargo and an elastic demand for oil.
d)
a reduction in the amount of oil supplied and an elastic demand for oil.
31.
Income elasticity of demand measures how
a)
the quantity demanded changes as consumer income changes.
b)
consumer purchasing power is affected by a change in the price of a good.
c)
the price of a good is affected when there is a change in consumer income.
d)
many units of a good a consumer can buy given a certain income level.
32.
Which of the following correctly describes the change in the price of good A's impact on the demand for its complement?
a)
When the price of one good increases, the demand for the other decreases
b)
When the price of one good increases, the price of the other increases
c)
When the demand of one good increases, the price of the other decreases
d)
When the supply of one good increases, the demand of that good increases
33.
If cross price elasticity of of good a and good b is -2. What does this mean about good a and b?
a)
They are substitutes
b)
They are complements
c)
They are inferior goods
d)
They are not related
34.
If income elasticity is .4 what can we assume about this good?
a)
it is an inferior good
b)
it is a normal good
c)
it is a complement
d)
it is a substitute
35.
Which might have perfectly inelastic supply?
a)
Water
b)
Tickets to a Cub's playoff game
c)
Oil
d)
Paper
36.
Which might have perfectly inelastic supply?
a)
Water
b)
Tickets to a Cub's playoff game
c)
Oil
d)
Paper
37.
You are on a committe that is considering ways to raise money for your city's symphony program. You would recommend increasing the price of symphony tickets only if you thought the demand curve for these tickets was
a)
Inelastic
b)
Elastic
c)
Unit Elastic
d)
Perfectly Elastic
38.
What does this graph show?
a)
price ceiling and a market surplus
b)
price floor and a market surplus
c)
price floor and a market shortage
d)
price ceiling and a market shortage
39.
If a price floor was set at 320, what quantity would be purchased?
a)
20
b)
40
c)
60
d)
80
40.
A tax imposed on the sellers of a good will
a)
raise both the price buyers pay and the effective price sellers receive.
b)
raise the price buyers pay and lower the effective price sellers receive.
c)
lower the price buyers pay and raise the effective price sellers receive.
d)
lower both the price buyers pay and the effective price sellers receive.
41.
The per-unit burden of the tax on buyers is
a)
$6
b)
$8
c)
$14
d)
$24
42.
A price ceiling is
a)
often imposed on markets in which “cutthroat competition” would prevail without a price ceiling.
b)
often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price ceiling.
c)
All are correct.
d)
a legal maximum on the price at which a good can be sold.
43.
The government controlling the rent of an apartment to help consumers was an example of a
a)
price fixing
b)
a price floor
c)
a price ceiling
d)
price support
44.
What is the value of total surplus at the current market equilibrium of P1 and Q1?
a)
A, B, D, F
b)
A, B, C
c)
C, F
d)
A, B, C, D, E, F
45.
Suppose the government instituted a tax on this market and the equilibrium shifted to P2 and Q2. What area of the graph represents the new producer surplus?
a)
A
b)
D, F
c)
B, D
d)
F
46.
Suppose the government instituted a tax on this market and the equilibrium shifted to P2 and Q2. What area of the graph represents the government revenues generated from the tax?
a)
A
b)
D, F
c)
B, D
d)
F
47.
Assume a tax shifts equilibrium to a price of $50 and a quantity of 100. What is the value of the market deadweight loss?
a)
$100
b)
$1,000
c)
$500
d)
$250
48.
Assume a tax shifts equilibrium to a price of $50 and a quantity of 100. When comparing total surplus before and after the tax, how much total surplus was lost due to the tax?
a)
$2,000
b)
$1,500
c)
$500
d)
$250
49.
When inputs are readily available, will price elasticity of supply tend towards
a)
Elastic
b)
Inelastic
50.
In this example, is the price elasticity of supply
a)
Perfectly elastic
b)
Relatively elastic
c)
Relatively inelastic
d)
Perfectly inelastic
51.
For price elasticity of demand, unit elasticity results in
a)
%∆Qd > %∆P
b)
%∆Qd < %∆P
c)
%∆Qd = %∆P
d)
%∆P has no effect on %∆Qd
52.
Unit elastic, elastic, and inelastic demand have coefficients respectively of:
a)
<1, >1, 1
b)
1, <1, >1
c)
1, >1, <1
d)
>1, 1, <1
53.
A positive Ec when calculating the cross price elasticity of demand tells us that the products involved are
a)
substitute goods
b)
complementary goods
c)
normal goods
d)
inferior goods
54.
A negative Ec when calculating the cross price elasticity of demand tells us that the products involved are
a)
substitute goods
b)
complementary goods
c)
normal goods
d)
inferior goods
55.
A positive Ei which is >1 when calculating the income elasticity of demand tells us that the products involved are
a)
luxury goods
b)
necessary goods
c)
inferior goods
d)
normal good
56.
A rise in the price of a product from US$50 to US$60 causes quantity demanded to fall from 800 to 760. What is the price elasticity of demand?
a)
-0,25
b)
-0,5
c)
-2,0
d)
-4,0
57.
If the price elasticity of demand for some good is estimated to be 4, then a 1% increase in price will lead to a:
a)
20% increase in quantity demanded
b)
0,25% decrease in quantity demanded
c)
0,5% increase in quantity demanded
d)
4% increase in quantity demanded
e)
4% decrease in quantity demanded
58.
A perfectly inelastic demand curve
a)
indicates the value of PED as infinity
b)
is a vertical line parallel to the X-axis
c)
is a vertical line parallel to the Y-axis
d)
indicates the value of PED as 1
59.
Jeff earns $50,000 a year and pays 25% tax and Beth earns $100,000 and pays 12.5% tax, this is an example of what type of tax?
a)
Progressive
b)
Regressive
c)
Proportional
d)
Lump Sum
60.
If there is a 20% increase in the price of burritos and the demand for burritos falls 10% the demand for burritos is...
a)
Elastic
b)
Inelastic
c)
Perfectly Elastic
d)
Perfectly Inelastic
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