Question;1. If a consumer's income doubles and she now purchases more of good X, we can infer that good X is a(n) _______________ good.NormalInferiorNeither normal nor inferiorGiffen2. All of the following can lead to an increase in the demand for ice cream, a normal good, EXCEPT:An increase in incomeA decrease in incomeAn increase in the price of popsiclesA new scientific study that finds eating ice cream does not cause weight gain3. A decrease in supply will lead to:An increase in priceA increase in quantityAn increase in demandAn increase in sales4. Generally, with all else held constant, when the price of a good increases, consumerspurchase:More of the goodLess of the goodThe same amount of the goodNone of the good5. An increase in demand will lead to:An increase in supplyA fall in quantityAn increase in priceA decrease in producer surplus6. Which of the following events would lead to an increase in demand for air travel?An increase in the number of people who are afraid to flyA fall in the price of oilAn increase in the price of ground transportationA decrease in income levels7. Which of the following will cause a rightward shift of the market supply curve?An increase in the product priceA decrease in input costsChange in consumers? tastesAn increase in income8. Substitutes are goods that people buyMore of when their incomes increaseLess of when their incomes increaseInstead of another product whose price has increasedTo use with another product9. Which of the following is consistent with the law of supply?a. As the price of calculators rises, the supply of calculators increases, ceteris paribus.b. As the price of calculators falls, the supply of calculators increases, ceteris paribus.c. As the price of calculators rises, the quantity supplied of calculators increases, ceteris paribus.d. As the price of calculators rises, the quantity supplied of calculators decreases, ceteris paribus.10. The quantity demanded of Pepsi has decreased. The best explanation for this is that The price of Coca?Cola has increased.Pepsi?s advertising is not as effective as in the pastThe price of Pepsi increasedPepsi consumers had an increase in income11. Assume your demand for gingerale remains constant, but the price of gingerale increases. Your consumer surplusDecreasesIncreasesRemains constantMay increase or decrease depending on the amount of the price decrease12. Assume hamburgers and french fries are complements. A decrease in the price of french fries will cause a. An increase in quantity demanded for hamburgersb. A decrease in quantity supplied of hamburgersc. A decrease in the supply of hamburgersd. An increase in the demand for hamburgers13. Suppose you are given the following equations for demand and supply of copper in the US.Demand: Qd = 500 ? 3PSupply: Qs = 2Pwhere P = price, Qd = quantity demanded and Qs = quantity supplied.Find the no trade equilibrium.14. Suppose the world price is set at $80 and we have free trade. Using the equations in question 13 (also reproduced below), find what the domestic producers would produce at this price and what the domestic consumers would consume. Would the US export of import copper as a result? How much?Qd = 500 ? 3PQs = 2P15. On the basis of what you have found in questions 13 and 14, do you think there would be gains from trade? Will the consumer surplus increase or decrease as a result of trade? Will producer surplus increase or decrease? What about the sum of CS and PS? (Hint: draw a graph for yourself, as in the practice questions for quiz 1. You DO NOT need to reproduce the graph here).
Paper#56237 | Written in 18-Jul-2015Price : $26