Question

1)The reason that would cause a movement along a demand curve is

a.

income of the buyer.

b.

availability of close substitutes.

c.

a change in the price of the good itself.

d.

none of the above.

2)increase in input prices would cause

a.

increase in quantity supplied.

b.

decrease in quantity supplied.

c.

decrease in supply.

d.

increase in supply.

3)Suppose roses are currently selling for $20 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a

a.

shortage to exist and the market price of roses to increase.

b.

shortage to exist and the market price of roses to decrease.

c.

surplus to exist and the market price of roses to increase.

d.

surplus to exist and the market price of roses to decrease.

4)Suppose there is a shortage in the market for avocados. Assuming a competitive and unrestrained market, what happens over time?

a.

The price of avocados will fall, and the shortage will worsen.

b.

The price of avocados will rise, and the market will eventually reach equilibrium.

c.

The price of avocados will rise, and a large surplus will be created.

d.

Producers will stop growing avocados

5)Years ago, thousands of country music fans risked their lives by rushing to buy tickets for a Willie Nelson concert at Carnegie Hall. This behavior indicates

	a.	the ticket price was above the equilibrium price.
	b.	the ticket price was below the equilibrium price.
	c.	the ticket price was at the equilibrium price.
	d.	nothing about the equilibrium price.

6)10)Consider the market for bananas. Suppose that both the supply and the demand for bananas increases simultaneously. Which of these effects is certain?

	a.	The equilibrium price of bananas will increase
	b.	The equilibrium price of bananas will decrease.
	c.	The equilibrium quantity of bananas will increase.
	d.	The equilibrium quantity of bananas will decrease.