Worksheets Name

Unit2 Progress Check MCQ

Class
Total questions: 27
Worksheet time: 2hrs 15mins
Instructor name: 전승현 전승현 Date

1.

The table shows the values of different elasticities of demand for good J at the market equilibrium price. Which
of the following is true about good J?
a) Good J is a substitute in consumption to good Z. b) Good J is a complement om consumption to good Y.
c) Good J is an inferior good. d) Good J is a normal good.
e) Good J's demand is elastic.

2.

Which of the following would result in the greatest rightward shift of the demand curve for good J?
a) A 20% increase in the price of good X. b) A 10% decrease in income.
c) A 10% increase in the price of good Y. d) A 50% decrease in the price of good J.
e) A 10% increase in the price of good Z.
3. An increase in the price of good X causes buyers to want to buy more of good Y. Which of the following explains
the resulting change in the market?
a) The demand curve for good Y will shift to the right b) There will be a downward movement along the
because the goods are substitutes in consumption. demand curve for good X because the goods are
complements in consumption.
c) The demand curve for good Y will shift to the left d) The demand curve for good X will shift to the left
because the goods are complements in because the goods are complements in
consumption. consumption.
e) The demand curve for good X will shift to the right
because the goods are substitutes in consumption.

4. Which of the following correctly describes the income effect associated with the law of demand?
a) If the price of a good decreases, the demand for the b) If the price of a good increases, the demand for the
good increases because the lower price increases good decreases because the demand for its
the demand for its complement in consumption. substitute in consumption increases.
c) If consumer income increases, there will be an d) If consumer income increases, the demand curve
upward movement along the demand curve for a will shift to the right for an inferior good.
normal good.
e) If the price of a normal good decreases, the
purchasing power of a consumer's income increases
and therefore consumers will be willing and able to
purchase more of the good.

5. A change in which of the following will cause a movement along a given demand curve for a normal good?
a) The price of the good b) The demand for the good
c) Consumer income d) The number of buyers
e) The price of a substitute good in consumption

6. Which of the following will occur as a result of a decrease in the prices of the inputs used to produce a good?
a) The price of the good would increase for any given b) The quantity supplied would increase as the price of
quantity supplied. the good increased.
c) The quantity supplied would increase at each d) The price of the good would increase as the
possible price for the good. quantity supplied decreased.
e) The quantity supplied would increase as the price of
the good decreased.
7. Which of the following explains why the supply curve is upward sloping?
a) At a higher price, producers are willing to sell more b) At a higher quantity, producers are more able to
to increase their profits. control the market price.
c) At a higher price, consumers are willing to buy more d) At a lower price, consumers are able to buy more of
of the good. the good.
e) Producers receive subsidies as they increase
production.

8. The market supply curve for a product is derived from the individual firm supply curves by
a) multiplying the quantities each producer sells by the b) multiplying the equilibrium quantity sold by the
market price. number of consumers in the market.
c) multiplying the equilibrium quantity sold by the d) summing the quantities each producer sells and
number of producers in the market. multiplying by the market price.
e) summing the quantities each producer sells at each
possible price.

9. A 10% increase in the price of a good results in a 4 percent increase in total revenue. From this information, it
can be concluded that the demand over this range of prices
a) has a price elasticity of demand equal to 2.5 b) is upward sloping
c) is inelastic d) has increased by 14%
e) has increased by 40%

10. A firm estimates that the absolute value of the price elasticity of demand for its signature sandwich is 2. If the
firm increases its sandwich price by 10 percent, what will happen to the quantity demanded?
a) It will increase by 5 percent. b) It will remain unchanged.
c) It will increase by 20 percent. d) It will decrease by 5 percent.
e) It will decrease by 20 percent.
11.

Which of the following statements is true about the demand curve?

a) Demand is inelastic between quantities 0 and 4. b) Demand is elastic at each given price because the
slope is constant an equal to -2.
c) Demand is elastic between quantities 4 and 8. d) The elasticity of demand increases when moving
from point X to point Y.
e) The elasticity of demand decreases when moving
from point X to point Y.

12. Which of the following would cause the supply of good X to become more elastic?
a) More elastic demand for good X. b) Increased prices of inputs required to produce
good X.
c) A short time frame for making production decision. d) Greater availability of substitutes for good X.
e) The ability to easily reallocate inputs to production
of good X.

13.

Which of the following is true about the supply curve between the given points?
a) The supply curve is elastic, because the price b) The supply curve is unit elastic, because the change
elasticity of supply is equal to 10. in price is $10 and the change in quantity supplied
is 10 units.
c) The supply curve is unit elastic, because the price d) The supply curve is perfectly elastic, because the
elasticity of supply is equal to 1. change in price is $10 and the change in quantity
supplied is 10 units.
e) The supply curve is inelastic, because the
percentage change in the price is greater than the
percentage change in the quantity supplied.
14. Suppose the price elasticity of supply for gasoline in the short run is estimated to be 0.4. Due to an unexpected
surge in the demand for gasoline, the price of gasoline increases by 20 percent. As a result, the quantity
supplied of gasoline will
a) decrease by 0.2 percent b) be impossible to determine from the given
information
c) increase by 50 percent d) increase by 8 percent
e) increase by 20 percent

15. At the current price of goods X and Y, the quantity demanded of good X is 10 units, and the quantity demanded
of good Y is 5 units. The cross-price elasticity of demand between good X and Y is 0.6. A 10 percent increase in
the price of good Y will result in which of the following?
a) A 60 percent increase in the quantity demanded of b) A 3 percent increase in the quantity demanded for
good X. good Y.
c) A 1 percent increase in the quantity demanded of d) A 6 percent increase in the quantity demanded of
good X. good X.
e) A 0.5 percent decrease in the quantity demanded
of good Y.

16.

In the market described by the diagram, the total economic surplus will be maximized at which of the following
price and quantity combinations?
a) P3 and Q1 b) P1 and Q1
c) P3 and Q3 d) P2 and Q2
e) P1 and Q3
17.

The table shows the supply and demand schedules in the orange market. Assume that the demand and supply
curves are liner. At the market equilibrium price, what are the consumer surplus and producer surplus?
a) Consumer surplus is $200; producer surplus is b) Consumer surplus is $45; producer surplus is $15
$200
c) Consumer surplus id $10; producer surplus is $10 d) Consumer surplus is $50; producer surplus is $50
e) Consumer surplus is $100; producer surplus is $100

18. The market for tomatoes is in equilibrium at the price of $10, and the quantity of 50 tomatoes. If consumer
surplus is $400 and total economic surplus is $650, what is the producer surplus in the tomato market and
why?
a) The producer surplus is $0, because producer b) The producer surplus is $250, because the total
surplus is offset by the costs of production surplus less what consumers receive must go to
tomatoes. producers.
c) The producer surplus is $650, because producer d) The producer surplus is $500, because the
surplus and total economic surplus are always producer surplus is the equilibrium price times the
equal. equilibrium quantity = $10x50=$500.
e) The producer surplus is -$400, because consumer
and producer surplus must offset one another.

19. Consider the market for arugula, a normal good. Which of the following changes would result in an increase in
both the equilibrium price and the equilibrium quantity of arugula?
a) An increase in the price of salad dressing, a b) An increase in the price of water irrigation for
complement I consumption arugula farms
c) A decrease in the price of radicchio, a substitute in d) An increase in population
consumption
e) A decrease in consumer income
20. Which of the following will initially result from an increase in the market demand for a good?
a) Total producer surplus in the market will decrease. b) There will be a matching increase in supply.
c) There will be a decrease in quantity supplied. d) The equilibrium price will decrease.
e) There will be a temporary shortage at the original
equilibrium price.

21. Assume that the market for a good is characterized by a downward-sloping demand curve and upward-sloping
supply curve. Suppose that there is an improvement in technology for producing the good. Which of the
following would occur?
a) The impact on consumer surplus would be b) The change in equilibrium price would cause
indeterminate, because of the offsetting impact of producer surplus to increase.
the changes in equilibrium price and quantity.
c) The supply curve would shift left resulting in an d) The total economic surplus in the market would
increase in the equilibrium price and the producer increase.
surplus.
e) The demand curve would shift right in response to
an increase in the equilibrium price.

22. Which of the following policies would result in an increase in the quantity supplied of a good in a market?
a) Eliminating a per-unit subsidy from sellers b) Imposing a binding price ceiling
c) Levying a per-unit tax on sellers d) Imposing a binding price floor
e) Imposing a nonbonding price floor

23. In which of the following cases would government intervention in a market result in an increase in the quantity
sold?
a) Setting a price ceiling below the equilibrium price b) Setting a price floor above the equilibrium price
c) Levying a per-unit tax on producers d) Providing producers of a product with a per unit
subsidy
e) Setting a price ceiling above the equilibrium price
24. Assume that the market for a good is characterized by a downward-sloping demand curve and an upward-
sloping supply curve and the market is in equilibrium at a price of $20 and a quantity of 100 units. After the
government imposes a $5 per-unit exercise tax on the good, the price that buyers pay for the good increases
by $3. Which of the following are possible values for the government tax revenue and deadweight loss in the
market?
a) Tax revenue is $300, deadweight loss $0 b) Tax revenue is $500, deadweight loss $300
c) Tax revenue is $200, deadweight loss $0 d) Tax revenue is $300, deadweight loss $100
e) Tax revenue is $500, deadweight loss $200

25.

The graph shows the domestic market for sandalwood in equilibrium at a price of $800 per kilogram in the
absence of international trade. Now assume the country begins to engage in international trade, and
sandalwood is selling at a price of $600 per kilogram in the world market. Which of the following would most
likely result?
a) The country would export sandalwood, and its total b) The country would export sandalwood, and its
economic surplus would increase, with the domestic consumer surplus would increase.
domestic consumer surplus increases by more than
the domestic producer surplus decreases.
c) The country would increase domestic production to d) The country would import sandalwood, and its
become competitive in the world market. total economic surplus would increases, with the
domestic consumer surplus increasing by more
than the domestic producer surplus deceases.
e) The country would import sandalwood, and its
total economic surplus would decrease, with both
the domestic consumer surplus and domestic
producer surplus decreasing.
26. Suppose the small country of Aronow imports 40,000 kg of bananas. The global price of bananas is $0.50 per
kg. The government of Aronow collects tariff revenues of $4,000 from banana imports. Which of the following
is true?
a) The removal of the tariff would cause domestic b) The domestic production of bananas in Aronow
consumer surplus in the market for bananas in would increase with the removal of the tariff.
Aronow to increase but by less than the decrease
in domestic producer surplus.
c) The deadweight loss in the market for bananas in d) The consumers in Aronow pay a price of $0.60 per
Aronow would increase with the removal of the kg of bananas,
tariff.
e) Aronow's total tariff revenue collected in the
banana market would be maximized if the per-unit
tariff were equal to the difference between its
autarky price and the world price.

27.

The tables show the domestic demand and domestic supply for two small countries participating in a large
global market with a world price of coffee equal to $3. Which of the following would be true given the price in
the world market is $3?
a) Country A would import 20 units of coffee, and b) Neither country would export coffee.
Country B would export 10.
c) Country A would export 20 units of coffee, and d) Given the demand and supply schedules, $3 cannot
Country B would import 10. be an equilibrium global price.
e) Neither country would import coffee.
Answer Keys
1. c) Good J is an inferior good. 2. c) A 10% increase in the price 3. a) The demand curve for good
of good Y. Y will shift to the right
because the goods are
substitutes in consumption.
4. e) If the price of a normal good 5. a) The price of the good 6. c) The quantity supplied would
decreases, the purchasing increase at each possible
power of a consumer's price for the good.
income increases and
therefore consumers will be
willing and able to purchase
more of the good.
7. a) At a higher price, producers 8. e) summing the quantities each 9. c) is inelastic
are willing to sell more to producer sells at each
increase their profits. possible price.
10. e) It will decrease by 20 11. e) The elasticity of demand 12. e) The ability to easily
percent. decreases when moving reallocate inputs to
from point X to point Y. production of good X.
13. e) The supply curve is inelastic, 14. d) increase by 8 percent 15. d) A 6 percent increase in the
because the percentage quantity demanded of good
change in the price is X.
greater than the percentage
change in the quantity
supplied.
16. d) P2 and Q2 17. d) Consumer surplus is $50; 18. b) The producer surplus is
producer surplus is $50 $250, because the total
surplus less what
consumers receive must go
to producers.
19. d) An increase in population 20. e) There will be a temporary 21. d) The total economic surplus
shortage at the original in the market would
equilibrium price. increase.
22. d) Imposing a binding price 23. d) Providing producers of a 24. d) Tax revenue is $300,
floor product with a per unit deadweight loss $100
subsidy
25. d) The country would import 26. d) The consumers in Aronow 27. a) Country A would import 20
sandalwood, and its total pay a price of $0.60 per kg units of coffee, and Country
economic surplus would of bananas, B would export 10.
increases, with the
domestic consumer surplus
increasing by more than the
domestic producer surplus
deceases.