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Review Unit 2

Total questions: 77

Worksheet time: 1hrs 10mins

Name
Class
Date
1.

A price ceiling is usually set

a)

above the equilibrium price and quantity

b)

at the intersection of the supply and demand curves

c)

by subtracting the highest price for supply and the lowest point for demand on their respective curves

d)

below the equilibrium price

e)

none of the above

2.

Consumer surplus is measured by

a)

the area to the right of the supply curve but below the price equilibrium

b)

the sum of the buyer and seller surplus

c)

the area above the supply curve but below the price equilibrium

d)

the quotient of percent change in quantity supplied and percent change in price

e)

the quotient of percent change in quantity demanded and percent change in price

3.

All of the following would influence the position of the demand curve for golf clubs EXCEPT

a)

the price of golf clubs

b)

the price of golf balls

c)

the price of golf shoes

d)

the size of the population

e)

A and C

4.

Another name for excess supply is

a)

disequilibrium

b)

equilibrium point

c)

Gini ratio

d)

surplus

e)

shortage

5.

Establishing an effective price floor would help

a)

reduce a surplus

b)

increase a surplus

c)

remove the need for government regulation

d)

decrease demand

e)

increase government regulation

6.

Dead weight loss (DWL) refers to

a)

the lost benefit to society caused by the movement away from the market equilibrium

b)

the gained benefit to suppliers caused by the increase in the market equilibrium

c)

the incremental benefit or loss when the consumer increases consumption by one additional unit

d)

the legal maximum price above which a product cannot be sold

e)

the legal minimum price below which a product cannot be sold

7.

a)

A

b)

B

c)

C

d)

D

e)

E

8.

a)

A

b)

B

c)

C

d)

D

e)

E

9.

a)

A

b)

B

c)

C

d)

D

e)

E

10.

a)

A

b)

B

c)

C

d)

D

e)

E

11.

a)

A

b)

B

c)

C

d)

D

e)

E

12.

a)

A

b)

B

c)

C

d)

D

e)

E

13.

a)

A

b)

B

c)

C

d)

D

e)

E

14.

a)

A

b)

B

c)

C

d)

D

e)

E

15.

a)

A

b)

B

c)

C

d)

D

e)

E

16.

a)

A

b)

B

c)

C

d)

D

e)

E

17.

a)

A

b)

B

c)

C

d)

D

e)

E

18.

a)

A

b)

B

c)

C

d)

D

e)

E

19.

Demand is the consumers...

a)

willingness to buy something

b)

ability to buy something

c)

willingness and ability to buy something

d)

something I need really badly

20.

Why is the Demand curve always downward sloping?

a)

Inverse relationship between price and quantity

b)

Law of diminishing marginal utility

c)

Direct relationship between price and quantity

d)

Income Effect

e)

Substitution Effect

21.

Which of the following are the shifters of Demand?

a)

Taste and Preference

b)

Number of Consumers

c)

Income

d)

Price of Related Goods

e)

Future Expectations

22.

Which of the following will NOT shift the Demand curve?

a)

Taste and Preferences

b)

Number of Consumers

c)

Price

d)

Price of Related Goods

23.

Which of the following would cause the increase in Demand?

a)

Decrease in number of consumers

b)

Price of strawberries go down

c)

Bathing in chocolate makes you live longer

d)

BOGO chocolate bars will happen next week

24.

Supply is the producers...

a)

willingness to sell something

b)

ability to sell something

c)

willingness and ability to sell something

d)

something a producer should really sell

25.

Why is the supply curve always upward sloping?

a)

Inverse relationship between price and quantity

b)

Income effect

c)

Direct relationship between price and quantity

d)

Substitution effect

26.

Which of the following are shifters of the Supply curve?

a)

Price of input/resource costs

b)

Number of Sellers

c)

Government Action

d)

Future Expectations

e)

Technology

27.

What would have caused the increase in supply?

a)

Decrease in sellers

b)

Increase in resource costs

c)

Decrease in resource costs

d)

A hurricane

28.

The point where the Demand and Supply curve is known as...

a)

disequilibrium

b)

equilibrium

c)

equal point

d)

equity

29.

Price elasticities of demand is (a)   when it is less than 1.

30.

The formula for PED is...

a)

% change Q / % change in Y

b)

% change P / % change Q

c)

% change D / % change S

d)

% change Q / % change P

31.

The formula for PES is...

a)

% change Q / % change in Y

b)

% change P / % change Q

c)

% change QS / % change P

d)

% change QD / % change P

32.

XED is the...

a)

responsiveness to change in price of a related good

b)

responsiveness to change in price

c)

responsiveness to change in demand of a related good

d)

responsiveness to change in demand of supply

33.

Price elasticity of supply is (a)   when it is greater than 1.

34.

Price ceilings are set by the government to...

a)

protect producers by setting min price

b)

protect consumers by setting max price

c)

protect producers by setting max price

d)

protect consumers by setting min price

35.

Price floors are set (a)   the equilibrium point in order to protect producers.

36.

Which line is elastic?

a)

Blue

b)

Green

37.

Quotas are set by the government to...

a)

prevent supply

b)

prevent harm to environment

c)

prevent demand

d)

protect producers

38.

Government imposed tax will...

a)

increase supply

b)

decrease supply

39.

Supply: Quantity of a good/service that producers are willing to produce for any given price. (Different from "Quantity Supplied")

a)

Supply

b)

Demand

c)

Producer Preference Quantity

d)

Thumbtacks

40.

Assume that demand for bottled water is relatively price elastic. An increase in supply of bottled water will result in which of the following?

a)

A decrease in price, leading to an increase in total revenue

b)

A decrease in price, leading to a decrease in total revenue

c)

An excess supply of bottled water

d)

An excess demand for bottled water

e)

A relatively small decrease in price and no change in equilibrium quantity

41.

If a 10 percent increase in the price of a good leads to a 25 percent decrease in the quantity demanded of the good, demand is

a)

relatively inelastic

b)

relatively elastic

c)

unit elastic

d)

perfectly elastic

e)

perfectly inelastic

42.

Assume a 10 percent increase in price increased the market quantity supplied by 20 percent. Which of the following is true?

a)

The value of the price elasticity of supply is 2.

b)

The value of the price elasticity of supply is 0.5.

c)

Supply is price inelastic.

d)

Demand is price elastic.

e)

This price-quantity combination violates the law of supply.

43.

Assume that the price elasticity of supply for good Y is 0.5. If the price of good Y decreases by 30 percent, the quantity supplied of good Y will

a)

decrease by 60 percent

b)

decrease by 30 percent

c)

decrease by 15 percent

d)

increase by .5 percent

e)

increase by .15 percent

44.

Assume the income elasticity of demand for good Z equals -5.0. Which of the following is true?

a)

Good Z is a normal good.

b)

Good Z must have an inelastic demand.

c)

An increase in income will lead to a decrease in demand.

d)

An increase in income will lead to an increase in demand.

e)

The income effect of a price increase will be a decrease in quantity demanded at every price.

45.

If the income elasticity of demand for good X is negative and the cross-price elasticity of demand between good X and good Y is negative, which of the following must be true of good X?

a)

X is a normal good and is a substitute for Y.

b)

X is a normal good and is a complement to Y.

c)

X is an inferior good and is a substitute for Y.

d)

X is an inferior good and is a complement to Y.

e)

X is a normal good and Y is an inferior good.

46.

To alleviate a financial crisis, a university increases student fees. This action will increase university revenues if the price elasticity of demand for university education is

a)

inelastic

b)

unit elastic

c)

elastic

d)

equal to the price elasticity of supply

e)

equal to one

47.

If a one-of-a-kind Etruscan vase is offered for sale at an auction, which, if any, of the following correctly shows the supply curve for the vase?

a)
b)
c)
d)
e)

It is impossible to determine the shape of the supply curve from the given information.

48.
A complement example would be all except
a)
butter and margarine 
b)
peanut-butter and jelly
c)
flashlight and batteries 
d)
cameras and film 
49.
The quantity of peanuts supplied increased from 40 tons/week to 60 tons/week when the price of peanuts increased from $4/ton to $5/ton. The price elasticity of supply for peanuts over this price range is:
a)
Elastic
b)
Inelastic
c)
Unit Elastic
d)
Perfectly Inelastic
50.
A city's transit authority increases the price of subway and bus tickets from $1.25 to $1.50. If the demand for these tickets is price inelastic, 1) the # of people riding buses & subways AND 2) the city's revenues will change in which way (respectively)?
a)
1) Increase; 2)Increase
b)
1) Decrease; 2) Increase
c)
1) Decrease; 2) Decrease
d)
1) No Change; 2) Increase
51.
A 10 percent decrease in the price of a Pepsi decreases the demand for a Coca-Cola by 50 percent. The cross elasticity of demand between a Pepsi and Coca-Cola is:
a)
50
b)
0.20
c)
10
d)
5
52.
A 10 percent decrease in income decreases the quantity demanded of scented candles by 3 percent. The income elasticity of demand for scented candles is:
a)
0.3
b)
-0.3
c)
3
d)
-3.3
53.

Assume the income elasticity of demand for good Z equals −5.0. Which of the following is true?

a)

An increase in income will lead to a decrease in demand.

b)

Good Z is a normal good.

c)

An increase in income will lead to an increase in demand.

d)

Good Z must have an inelastic demand.

54.

What is the DWL created by the tax?

a)

150

b)

100

c)

200

d)

250

55.

What is deadweight loss?

a)

Gained benefit to suppliers from voluntary exchange

b)

Gained benefit to consumers from voluntary exchange

c)

Lost benefit to society caused by movement away from market equlibrium

d)

Legal maximum price that can be charged in a market

56.

What will happen to the supply of corn if the US Government established a price floor for it.

a)

reduce the surplus

b)

cause a surplus

c)

decrease supply

d)

Shift the demand curve outwards

57.
The shaded area of the graph represents
a)
Consumer surplus
b)
Loss of consumer surplus
c)
Loss of producer surplus
d)
Deadweight loss
58.

If an excise tax is imposed on a product, consumer surplus and producer surplus for this good will most likely change in which of the following ways?

a)

CS falls and PS falls

b)

CS falls and PS increases

c)

CS falls and PS does not change

d)

CS does not change and PS increases

e)

CS does not change and PS does not change

59.

If the government decided that only 4 units of Good X could be sold, the deadweight loss of this policy would be shown by area

a)

ABC

b)

ACEJ

c)

AHJ

d)

CFE

e)

BGJ

60.

On the graph, what area represents consumer surplus when the price is $10?

a)

A

b)

B

c)

C

d)

A and B

e)

B and C

61.

If the equilibrium price is equal to P2, consumer surplus is

a)

fgh

b)

fgi

c)

ijk

d)

hj

e)

gi

62.

If a country allows trade and the domestic price of a good is higher than the world price...

a)

The country will become an exporter of the good.

b)

The country will become an importer of the good.

c)

The country will neither import nor export

d)

Additional information about demand is needed to determine whether the country will export or import the good.

63.

A tariff and import quota will both...

a)

Increase the quantity of imports and raise domestic price.

b)

Increase the quantity of imports and lower the domestic price.

c)

Reduce the quantity of imports and raise the domestic price.

d)

Reduce the quantity of imports and lower the domestic price.

64.

Which of the following is a situation in which trade is advantageous?

a)

Two countries produce the same goods for the same costs.

b)

Two countries produce different goods for different costs.

c)

Two countries are isolated.

d)

Two countries have the same market.

e)

None of the above.

65.

What country is #5

a)

Morocco

b)

Chad

c)

South Africa

d)

Kenya

66.

What country is #8

a)

Ethiopia

b)

Egypt

c)

Madagascar

d)

Mali

67.

What country is in red?

a)

Germany

b)

France

c)

Spain

d)

Italy

68.

What country is in yellow?

a)

Greece

b)

Italy

c)

Turkey

d)

Denmark

69.

What country is in blue?

a)

Israel

b)

UAE

c)

Jordan

d)

Iraq

70.

What is the brown country?

a)

Greenland

b)

Iceland

c)

Ireland

d)

Bermuda

71.
Which country is shown here?
a)
Pakistan
b)
India
c)
Nepal
d)
China
72.
Which country is shown here?
a)
Sri Lanka
b)
India
c)
Bangladesh
d)
Malaysia
73.
Which country is shown here?
a)
Mongolia
b)
China
c)
Japan
d)
North Korea
74.
What is the name of this mountain range?
a)
The Alps
b)
The Pyrenees
c)
The Himalayas
d)
The Fujis
75.

How are seas and ocean different?

a)

ocean is salty, a sea is not

b)

an ocean is bigger than a sea

c)

oceans are surround by land, but sees arent

d)

they are not different

76.

Which one is not apart of the seven seas?

a)

Mediteranean Sea

b)

Red Sea

c)

Pacific Ocean

d)

Black Sea

77.

Which ocean is the largest?

a)

Pacific Ocean

b)

Atlantic Ocean

c)

Indian Ocean

d)

Artic Ocean

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