Problem 1. A new taco-making machine that is similar in size and cost to hog dog carts has encouraged more street vendors to begin selling tacos. What SHORT RUN impact do you think this might have on the market for hot dogs?
A decrease in the demand for hot dogs
B. increase in the demand for hot dogs
C. decrease in the supply of hot dogs
D. increase in the supply of hot dogs
Problem 2. Which of the following statements is NOT true?
A. an increase in demand causes equilibrium price and quantity to rise
B. a decrease in demand causes equilibrium price and quantity to fall
C. an increase in supply causes equilibrium price and quantity to rise
D. a decrease in supply causes equilibrium price and quantity to fall
Problem 3. In the short run, change in the equilibrium price will
A. always lead to inflation
B. cause a shift in the demand curve
C cause a shift in the supply curve
D cause a change in the quantity demanded or supplied
Problem 4. Suppose demand is expressed as Qd = 300 - 50P. If we want to make this equation consistent with the typical supply and demand diagram, this equation must be stated as:
A. P = 300 - 50Q
B. P = 6 - .02Q
C. P = 50 - 300Q
D. Q = 6 - .02P
Problem 5. Which of the following refers to a shift in the demand curve?
A. "this new advertising campaign should really increase our demand."
B. "let's drop our price to increase our demand."
C. "we dare not raise our price because our demand will drop."
D. "if new sellers enter the market, the demand for the product is bound to increase."