VERSION 1 Name________________ ECON 2020 Exam #1 Directions: Read each question and EVERY possible answer VERY carefully.

Select the best answer from the alternatives. Good luck! Use the following figure to answer questions 1 4. P $48 S

$31

$16 D Q 1. 50 120 200 Equilibrium occurs in this market at a price of ____ and quantity of _____ units. A. $31, 200 B. $31, 120 C. $16, 200 D. $48, 50 E. $16, 50 If the price in this market rises from $16 to $31, then the dotted area represents A. the additional consumer surplus to the initial buyers B. the consumer surplus to new buyers C. the additional producer surplus to the initial sellers D. the producer surplus to new sellers A price floor of $16 in this market would cause a ____ of ____ units. A. shortage, 70 B. surplus, 70 C. shortage, 150 D. surplus, 150 E. it would have no effect A price ceiling of $16 in this market would cause a ____ of ____ units. A. shortage, 70 B. surplus, 70 C. shortage, 150 D. surplus, 150 E. it would have no effect

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VERSION 1 5. According to the Circular Flow diagram, in product markets ___ demand ___ which are supplied by ____ in exchange for money. A. Milk was a bad choice. B. firms, goods and services, households C. households, resources, firms D. households , goods and services, firms E. firms, resources, households How do expectations of lower future prices affect the market for Toilet Store toilets today? A. demand increases and supply decreases, causing a rise in equilibrium price and an indeterminate change in quantity B. demand decreases and supply increases, causing a fall in equilibrium price and an indeterminate change in quantity C. demand increases and supply decreases, causing a fall in equilibrium price and an indeterminate change in quantity D. demand decreases and supply increases, causing a rise in equilibrium price and an indeterminate change in quantity Which of the following will NOT shift the demand curve? A. change in the price of an input B. change in the price of a complement C. change in the price of a substitute D. change in tastes and preferences E. changes in all of the above WILL shift demand Economists define no tendency for change as A. equilibrium B. price C. cost D. marginal E. I don't know how to put this, but I'm kind of a big deal. Which of the following would NOT increase the supply of blue suits? A. an increase in the number of blue suit sellers B. a fall in the price of blue thread (an input) C. a rise in the price of blue suits D. a decrease in taxes on the production of blue suits E. all of the above WILL increase the supply of blue suits Beef is an input in burritos. Burritos and chips are complements. How would a decrease in the price of beef affect the market for chips? A. the equilibrium price and equilibrium quantity both would rise B. the equilibrium price and equilibrium quantity both would fall C. the equilibrium price would fall and equilibrium quantity would rise D. the equilibrium price would rise and equilibrium quantity would fall

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VERSION 1 11. When the price of a good increases, A. producer surplus decreases and consumer surplus decreases B. producer surplus decreases and consumer surplus increases C. producer surplus increases and consumer surplus increases D. producer surplus increases and consumer surplus decreases E. I miss being with you. I miss being near you. I miss your laugh. I miss your scent. I miss
your musk. When this all gets sorted out, I think you and me should get an apartment together!

Use the following demand and supply schedules to answer question 12. Price Quantity Demanded Quantity Supplied 12. $50 0 70 $40 21 56 $30 42 42 $20 63 28 $10 84 14 $0 105 0

The equilibrium price in the above market is A. $40 B. $30 C. $20 D. $10 E. What? You pooped in the refrigerator? And ate the whole wheel of cheese? Howd you do that? Heck, Im not even mad -- thats amazing! A rise in the price of a mystery good caused a change in the market for ribs that led to a fall in the price of ribs. Which of the following could possibly be the mystery good? A. barbeque sauce (a complement) B. steak (a substitute) C. pigs (an input) D. A and C only E. B and C only The condition whereby the resources we use to produce goods and services are limited relative to our wants for them is referred to by economists as A. marginal B. quantity supplied C. opportunity cost D. a shortage E. scarcity How would an increase in the price of an input affect the market for cat fashions? A. supply increases B. initially there is a surplus at the old price C. equilibrium price falls D. equilibrium quantity falls

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VERSION 1 16. Which of the following consequences results from an effective price floor? A. a surplus B. a shortage C. wasted resources D. A and C only E. B and C only Use the following graph of the supply of cake to answer questions 17 18.
Price

S1 C B A

P1 P2

S2

Quantity

Qs3 17.

Qs2

Qs1

A decrease in the price of cake would cause a movement from A. point C to point B B. point A to point B C. point B to point A D. point B to point C An increase in the price of eggs (an input) would cause a movement from A. point C to point B B. point A to point B C. point B to point A D. point B to point C Economics is the social science concerned with A. Im Ron Burgundy? B. how individuals, institutions, and society make optimal choices under conditions of scarcity C. surplus opportunity cost D. minimizing social welfare E. marginal profit

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VERSION 1 Use the Bricks demand for tridents to answer questions 20 21. Willing Quantity 20. $80 1 $75 2 $65 3 $50 4 $45 5 $40 6 $30 7

If the price of a trident is $50, how many will the Brick purchase? A. 3 B. 4 C. 5 D. 6 E. 7 If the price of a trident is $50, what is Bricks consumer surplus? A. $20 B. $185 C. $220 D. $70 E. Milk was a bad choice. Which of the following statements is FALSE? A. Economists believe that price rationing is the most efficient rationing method. B. Price rationing is the allocation of goods among consumers using prices. C. Price rationing allows every consumer that would like the good to have it. D. Price rationing allows every consumer willing to pay the equilibrium price to have it. Wes Mantooth is getting ready for news team poker night at his apartment. He spent $80 on cigars, $40 on chips and pretzels, and $140 on drinks. If he wasnt having poker night, then he could have made $600 working the late night news broadcast. Which of the following statements about his costs is FALSE? A. His opportunity cost is $600 B. His economic costs are $860 C. His explicit costs are $260 D. His implicit cost is $260 If consumers consider Sex Panther cologne an inferior good, what happens to the market for Sex Panther cologne when consumer income falls? A. supply would decrease, causing equilibrium price to rise and quantity to fall B. demand would decrease, causing equilibrium price and quantity both to fall C. demand would decrease, causing equilibrium price and quantity both to rise D. demand would increase, causing equilibrium price and quantity both to fall E. demand would increase, causing equilibrium price and quantity both to rise

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VERSION 1 25. In a market where the demand is given by the equation Qd = 400 9P and supply is given by the equation Qs = 40 + 3P, find the equilibrium price and equilibrium quantity. A. $73; 260 units B. $37; 67 units C. $30; 130 units D. $60; 220 units E. Sixty percent of the time, it works every time.