1. Consider a market characterized by the following inverse demand and supply functions: PX = 40 - 4QX and PX = 10 + 2QX. Compute the surplus received by consumers and producers.
A. $25 and $25, respectively.
B. $20 and $40, respectively.
C. $40 and $20, respectively.
D. $50 and $25, respectively.
2. If A and B are substitute goods, an increase in the price of good A would:
A. have no effect on the quantity demanded of B.
B. lead to an increase in demand for B.
C. lead to a decrease in demand for B.
D. none of the statements associated with this question are correct.
3. If A and B are complementary goods, a decrease in the price of good A would:
A. have no effect on the quantity demanded of B.
B. lead to an increase in demand for B.
C. lead to a decrease in demand for B.
D. none of the statements associated with this question are correct.
4. Other things held constant, the higher the price of a good
A. the lower the producer surplus.
B. the greater the producer surplus.
C. the higher the supply.
D. the lower the supply.
5. Suppose supply decreases and demand increases. What effect will this have on the quantity?
A. It will fall.
B. It will rise.
C. It may rise or fall.
D. It will remain the same.
6. Suppose both supply and demand increase. What effect will this have on the equilibrium price?
A. It will fall.
B. It will rise.
C. It may rise or fall.
D. It will remain the same.
7. Suppose the market supply for good X is given by QXS = -100 + 5PX. If the equilibrium price of X is $100 per unit then producer surplus is
A. $400.
B. $1,600.
C. $16,000.
D. none of the statements associated with this question are correct.
8. Suppose the market demand for good X is given by QXd = 20 - 2PX. If the equilibrium price of X is $5 per unit then consumer surplus is
A. $100. 2
B. $75.
C. $50.
D. $25.
9. An excise tax of $1.00 per gallon of gasoline placed on the suppliers of gasoline would shift the supply curve
A. down by $1.00.
B. down by more than $1.00.
C. up by $1.00.
D. up by less than $1.00.
10. Demand shifters do not include the
A. rise of the price of the good.
B. consumer's tastes and preferences.
C. the price of the other related goods.
D. consumer's expectations about future prices of the good.