Economics

 

1. There are 100 consumers, each of whom values a concert ticket at a unique whole
number dollar amount between $1 and $100. One customer is willing to pay $1, a
second is willing to pay $2, a third is willing to pay $3, and so on. An unlimited number
of concert tickets are on sale for $15 each. What is the total consumer surplus in this
market?
A) $3,612.50
B) $4,250.00
C) $4,887.50
D) $5,000.00
2. Which of the following choices correctly illustrates how changes in opportunity costs
affect supply?
A) A farmer produces corn and wheat. The price of wheat rises, so he shifts his
resources toward wheat and the supply of wheat rises.
B) A fisherman fishes for lobsters and oysters. The price of lobsters rises, so he
decides to spend more of his time fishing for oysters because he can make the same
amount of money with fewer lobsters.
C) A textbook for economics becomes cheaper, so more students opt to buy that
particular textbook.
D) Milk and cereal are complementary goods, so when the price of cereal falls, the
quantity supplied of milk rises.
3. Recall the discussion about the demand for oil in your textbook. Which of the following
correctly explains why the demand curve for oil is negatively sloped? As the price of oil
rises:
A) consumers use oil for more and varied purposes.
B) consumers increasingly use oil only for those purposes without good substitutes.
C) consumers have an incentive to use oil more freely.
D) more producers are more willing and able to produce oil.
Page 2
4. Table: Maximum Willingness to Pay
Willingness to pay
Name for 1 lb of bananas
Jill $2.00
Joe 1.25
Jane 0.75
James 0.25
The table shows four individuals’ maximum willingness to pay for one pound of
bananas. If the market price of bananas is $0.50/lb, what is the total consumer surplus in
the market?
A) $4.00
B) $2.50
C) $2.75
D) $4.25
5. In the week before Hurricane Katrina, the price of flashlights rose in New Orleans
because of:
A) an increase in supply.
B) an increase in demand.
C) a decrease in supply.
D) a decrease in demand.
Use the following to answer question 6:
Figure: Potatoes
Page 3
6. (Figure: Potatoes) Refer to the figure. If the price of potatoes is $8 a pound, what is the
consumer surplus received?
A) $30,000
B) $60,000
C) $240,000
D) $360,000
7. Figure: Demand Shift
Refer to the figure. Which factor would cause the change in the figure?
A) a decrease in the price of a complement good
B) a decrease in the price of the product
C) a decrease in the price of a substitute good
D) an increase in taxes
8. If the price of shotguns ______, the demand for shotgun shells will _______.
A) increases; decrease
B) increases; increase
C) decreases; decrease
D) decreases; stay the same
9. Coke and Pepsi are substitute soft drinks. Which of the following would cause the
demand curve for Pepsi to shift to the left?
A) a new Pepsi ad campaign that increases the popularity of Pepsi
B) the price of Coke decreases
C) the price of Pepsi decreases
D) the cost of making Pepsi rises
Page 4
10. Figure: Chicken Legs
In the diagram, the current demand curve for chicken legs is represented by D1. If the
price of chicken thighs, a substitute for chicken legs, decreases, the demand curve for
chicken legs will:
A) shift to D2.
B) shift to D3.
C) remain at D1.
D) shift to D2 and then back to D1.
11. Peoples’ expectation of the price of gasoline going up tomorrow may increase the
demand for gasoline today. If so, what does this imply about the relationship between
gasoline tomorrow and gasoline today?
A) They are complements.
B) They are substitutes.
C) They are unrelated.
D) Although related, they are neither substitutes nor complements.
12. Recall the discussion in your textbook about the supply curve for oil. What explains
why the supply curve for oil is positively sloped?
A) As the price of oil rises, producers’ costs of drilling oil also rise.
B) As more and more producers enter the market, the price of oil rises.
C) As the price of oil rises, consumers buy less and less oil.
D) As the price of oil rises, more producers enter the market.
Page 5
13. Consider the (world) market supply curve for oil. Saudi oil production inhabits the
_____ part of the curve, and Canadian oil production inhabits the _____ part of the
curve.
A) upper; upper
B) lower; lower
C) upper; lower
D) lower; upper
Use the following to answer question 14:
Figure: Producer Surplus
14. (Figure: Producer Surplus) In the diagram, if the market price of coffee is $6, how much
producer surplus do suppliers earn?
A) $25
B) $125
C) $75.50
D) $62.50
Page 6
15. If prices rise, what happens to producer surplus (all other things being equal)?
A) It falls, because fewer people buy goods.
B) It falls, because it encourages competition, which reduces profits.
C) It rises, because each producer is getting more surplus per good sold.
D) It stays the same, because the forces increasing the surplus counteract the forces
reducing it.
16. If the government decided to heavily regulate small farmers who grow organic and
free-range food, the supply of that food:
A) would increase because the regulations would improve the quality of that food.
B) would decrease because the regulations are like a tax on the food; they make it
more expensive to produce.
C) would have no effect, because none of the shifters of supply are affected.
D) would increase because of changing expectations.
17. Anonymity on the Internet has lowered the cost of rudely confronting people. What has
happened to the supply of rude confrontations?
A) The supply has increased, shifting up and to the left.
B) The supply has increased, shifting down and to the right.
C) The supply has decreased, shifting up and to the left.
D) The supply has decreased, shifting down and to the right.
18. If producers form expectations that copper prices will be higher in the future, then this
will shift the:
A) demand curve for copper to the left.
B) supply curve of copper to the right.
C) demand curve for copper to the right.
D) supply curve of copper to the left.
Page 7
Use the following to answer questions 19-20:
Figure: Supply Shifts
19. (Figure: Supply Shifts) In the figure, the initial supply curve is S1. If producers form
expectations that the price will be lower in the near future, S1 will:
A) shift to S2 now.
B) shift to S3 now.
C) not shift now.
D) only shift to S3 in the future.
20. (Figure: Supply Shifts) In the figure, the initial supply curve is S1. Producers engage in
market speculation with the belief that the price of the good will increase in the near
future. This would be represented in the figure by shifting the:
A) supply curve to S2, resulting in a lower quantity supplied at each price.
B) supply curve to S2, resulting in a higher quantity supplied at each price.
C) supply curve to S3, resulting in a lower quantity supplied at each price.
D) supply curve to S3, resulting in a higher quantity supplied at each price.

 

 

Page 1
Name: __________________________ Date: _____________
1. There are 100 consumers, each of whom values a concert ticket at a unique whole
number dollar amount between $1 and $100. One customer is willing to pay $1, a
second is willing to pay $2, a third is willing to pay $3, and so on. An unlimited number
of concert tickets are on sale for $15 each. What is the total consumer surplus in this
market?
A) $3,612.50
B) $4,250.00
C) $4,887.50
D) $5,000.00
2. Which of the following choices correctly illustrates how changes in opportunity costs
affect supply?
A) A farmer produces corn and wheat. The price of wheat rises, so he shifts his
resources toward wheat and the supply of wheat rises.
B) A fisherman fishes for lobsters and oysters. The price of lobsters rises, so he
decides to spend more of his time fishing for oysters because he can make the same
amount of money with fewer lobsters.
C) A textbook for economics becomes cheaper, so more students opt to buy that
particular textbook.
D) Milk and cereal are complementary goods, so when the price of cereal falls, the
quantity supplied of milk rises.
3. Recall the discussion about the demand for oil in your textbook. Which of the following
correctly explains why the demand curve for oil is negatively sloped? As the price of oil
rises:
A) consumers use oil for more and varied purposes.
B) consumers increasingly use oil only for those purposes without good substitutes.
C) consumers have an incentive to use oil more freely.
D) more producers are more willing and able to produce oil.
Page 2
4. Table: Maximum Willingness to Pay
Willingness to pay
Name for 1 lb of bananas
Jill $2.00
Joe 1.25
Jane 0.75
James 0.25
The table shows four individuals’ maximum willingness to pay for one pound of
bananas. If the market price of bananas is $0.50/lb, what is the total consumer surplus in
the market?
A) $4.00
B) $2.50
C) $2.75
D) $4.25
5. In the week before Hurricane Katrina, the price of flashlights rose in New Orleans
because of:
A) an increase in supply.
B) an increase in demand.
C) a decrease in supply.
D) a decrease in demand.
Use the following to answer question 6:
Figure: Potatoes
Page 3
6. (Figure: Potatoes) Refer to the figure. If the price of potatoes is $8 a pound, what is the
consumer surplus received?
A) $30,000
B) $60,000
C) $240,000
D) $360,000
7. Figure: Demand Shift
Refer to the figure. Which factor would cause the change in the figure?
A) a decrease in the price of a complement good
B) a decrease in the price of the product
C) a decrease in the price of a substitute good
D) an increase in taxes
8. If the price of shotguns ______, the demand for shotgun shells will _______.
A) increases; decrease
B) increases; increase
C) decreases; decrease
D) decreases; stay the same
9. Coke and Pepsi are substitute soft drinks. Which of the following would cause the
demand curve for Pepsi to shift to the left?
A) a new Pepsi ad campaign that increases the popularity of Pepsi
B) the price of Coke decreases
C) the price of Pepsi decreases
D) the cost of making Pepsi rises
Page 4
10. Figure: Chicken Legs
In the diagram, the current demand curve for chicken legs is represented by D1. If the
price of chicken thighs, a substitute for chicken legs, decreases, the demand curve for
chicken legs will:
A) shift to D2.
B) shift to D3.
C) remain at D1.
D) shift to D2 and then back to D1.
11. Peoples’ expectation of the price of gasoline going up tomorrow may increase the
demand for gasoline today. If so, what does this imply about the relationship between
gasoline tomorrow and gasoline today?
A) They are complements.
B) They are substitutes.
C) They are unrelated.
D) Although related, they are neither substitutes nor complements.
12. Recall the discussion in your textbook about the supply curve for oil. What explains
why the supply curve for oil is positively sloped?
A) As the price of oil rises, producers’ costs of drilling oil also rise.
B) As more and more producers enter the market, the price of oil rises.
C) As the price of oil rises, consumers buy less and less oil.
D) As the price of oil rises, more producers enter the market.
Page 5
13. Consider the (world) market supply curve for oil. Saudi oil production inhabits the
_____ part of the curve, and Canadian oil production inhabits the _____ part of the
curve.
A) upper; upper
B) lower; lower
C) upper; lower
D) lower; upper
Use the following to answer question 14:
Figure: Producer Surplus
14. (Figure: Producer Surplus) In the diagram, if the market price of coffee is $6, how much
producer surplus do suppliers earn?
A) $25
B) $125
C) $75.50
D) $62.50
Page 6
15. If prices rise, what happens to producer surplus (all other things being equal)?
A) It falls, because fewer people buy goods.
B) It falls, because it encourages competition, which reduces profits.
C) It rises, because each producer is getting more surplus per good sold.
D) It stays the same, because the forces increasing the surplus counteract the forces
reducing it.
16. If the government decided to heavily regulate small farmers who grow organic and
free-range food, the supply of that food:
A) would increase because the regulations would improve the quality of that food.
B) would decrease because the regulations are like a tax on the food; they make it
more expensive to produce.
C) would have no effect, because none of the shifters of supply are affected.
D) would increase because of changing expectations.
17. Anonymity on the Internet has lowered the cost of rudely confronting people. What has
happened to the supply of rude confrontations?
A) The supply has increased, shifting up and to the left.
B) The supply has increased, shifting down and to the right.
C) The supply has decreased, shifting up and to the left.
D) The supply has decreased, shifting down and to the right.
18. If producers form expectations that copper prices will be higher in the future, then this
will shift the:
A) demand curve for copper to the left.
B) supply curve of copper to the right.
C) demand curve for copper to the right.
D) supply curve of copper to the left.
Page 7
Use the following to answer questions 19-20:
Figure: Supply Shifts
19. (Figure: Supply Shifts) In the figure, the initial supply curve is S1. If producers form
expectations that the price will be lower in the near future, S1 will:
A) shift to S2 now.
B) shift to S3 now.
C) not shift now.
D) only shift to S3 in the future.
20. (Figure: Supply Shifts) In the figure, the initial supply curve is S1. Producers engage in
market speculation with the belief that the price of the good will increase in the near
future. This would be represented in the figure by shifting the:
A) supply curve to S2, resulting in a lower quantity supplied at each price.
B) supply curve to S2, resulting in a higher quantity supplied at each price.
C) supply curve to S3, resulting in a lower quantity supplied at each price.
D) supply curve to S3, resulting in a higher quantity supplied at each price.

 

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