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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?
The demand curve for good Y will shift to the right because the goods are substitutes.
Which of the following correctly describes the income effect associated with the law of demand?
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.
A change in which of the following causes a movement along a given demand curve for a normal good?
The price of the good
Which of the following will occur as a result of a decrease in the prices of the inputs used to produce a good?
The quantity supplied would increase at each possible price for the good.
Which of the following explains why the supply curve is upward sloping?
At a higher price, producers are more able to cover the higher marginal cost associated with increasing production.
The market supply curve for a product is derived from the individual firm supply curves by
summing the quantities each producer sells at each possible price
A 10 percent 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
is inelastic
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?
It will decrease by 20 percent
Which of the following would cause the supply of good X to become more elastic?
The ability to easily reallocate inputs to production of good X
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
increase by 8 percent
At the current prices 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 goods X and Y is 0.6. A 10 percent increase in the price of good Y will result in which of the following?
A 6 percent increase in the quantity demanded of good X.
The market for tomatoes is in equilibrium at the price of $10, and quantity of 50 tomatoes. If consumer surplus is $400 and total surplus is $650, what is the producer surplus in the tomato market and why?
The producer surplus is $250 , because the total surplus less what consumers receive must go to producers.
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?
An increase in population
Which of the following will initially result from an increase in the market demand for a good?
There will be a temporary shortage at the original equilibrium price.
Assume that the market for a good is characterized by a downward-sloping demand curve and an upward-sloping supply curve. Suppose that there is an improvement in technology for producing the good. Which of the following would occur?
The total surplus (the sum of consumer and producer surpluses) in the market would increase.
Which of the following policies would result in an increase in the quantity supplied of a good in a market?
Imposing a binding price floor
In which of the following cases would government intervention in a market result in an increase in the quantity sold?
Providing producers of a product with a per unit subsidy
