Question

1. Consider a market in which the efficient level of trade is 7,500 units.There would be apositive Deadweight-Loss if _________ units were traded.

A.9,250. B.4,500. C.5,125. D.More than one (perhaps all) of the above answers are correct.

2. Which of the following statements is correct for the market equilibrium in the model of supply and demand?

A. Stable-- If we are there we will stay there, unless outside forces change

B. Unique-- there is one and only one equilibrium, a property which follow from the "law of demand" and "law of supply"

C. Self-enforcing-- at higher prices There is downward pressure on price; at lower prices there is a upward pressure on price-- therefore if we are at some other price, we will be pushed toward the equilibrium price.

D. All the above.

3. using the following table.

price per video game Quantity demanded per year Quantity supplied per year

$5 30 102

$4 48 84

$3 66 66

$2 84 48

$1 102 30

Beginning with Equilibrium in the table above an increase in price of $2 would:

A. Cause a shortage of 36 B. Cause a surplus of 36 C. Cause a shortage of 72 D.Cause a surplus of 72.