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AP Micro Unit 2 Multiple Choice Questions 1. The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is _____.direct, inverse inverse, direct inverse, inverse direct, directstrong, weak 2. An increase in the price of a product will reduce the quantity demanded for that product because: supply curves are upward sloping the higher price means purchasing power has risenconsumers will substitute other products for the one whose price has risenconsumers get increasing marginal utility for each new unit of a good they consume more complementary goods will be purchased due to the resultant increase in consumer surplus3. Which of the following will NOT cause the demand for video games to change? a change in the price of a close substitute a change in consumer incomes a change in the price of video games a change in consumer tastesa change in consumer preferences 4. An economist for a computer company predicts that a rise in consumer incomes will increase the demand for computers. This prediction assumes thatthere are many substitutes for computersthere are many complementary goods for computersthere are few goods that are substitutes for computerscomputers are normal goodscomputers are an inferior good5. Which of the following statements is correct? A decrease in the price of X will increase the demand for substitute product YA decrease in income will decrease the demand for an inferior goodAn increase in income will decrease the demand for a normal goodAn increase in the price of X will decrease the demand for complementary product YAn increase in the price of X will increase the demand for complementary product Y6. A leftward shift of a supply curve for avocados (a normal good) might be caused by: an improvement in avocado picking techniquesa decrease in the wages that must be paid to avocado pickers an increase in consumer incomessome avocado farmers leaving the marketa news report stating that avocados are associated with good health7. Assuming Ramen noodles are an inferior good, a decrease in income will shift thesupply curve for Ramen noodles to the left. supply curve for Ramen noodles to the right. demand curve for Ramen noodles to the left. demand curve for Ramen noodles to the right there is no shift8. Which of the following events will cause the demand curve for hamburgers to shift to the right? An increase in the price of hamburgers An increase in the price of pizza, a substitute for hamburgersAn increase in the price of French fries, a complement to burgersA decrease in the number of hamburger consumersA decrease in the cost of producing hamburgers Figure A9. Refer to Figure A. At price $20, which of the following would occur? Shortage of 100 Shortage of 150 Surplus of 200 Surplus of 50 Surplus of $10010. Refer to Figure A. What would be the effect of a price floor at $60?It would ineffective A shortage of 50 Quantity demanded would increaseA shortage of 100A surplus of 10011. If the cost of producing automobiles increases, the price, equilibrium quantity and consumer surplus will most likely change in which of the following ways? Price Quantity Consumer SurplusIncrease Increase IncreaseIncrease Increase DecreaseIncrease Decrease DecreaseDecrease Increase DecreaseDecrease Decrease Decrease 12. Other things equal, if the price of a key resource used to produce product X falls, the:product supply curve of X will shift to the right.product demand curve of X will shift to the right.product supply curve of X will shift to the left.product demand curve of X will shift to the left. both the supply and demand of X will increase13. Which of the following statements is correct? If demand increases and supply decreases, equilibrium price will fall. If the demand and the supply both fall at the same time, quantity will be indeterminate If demand decreases and supply increases, equilibrium price will rise. If supply increases and demand decreases, equilibrium price will fall. If supply falls and demand remains constant, equilibrium price will fall. 14. If Buyer’s Max=$300, Seller’s Min=$150, & Price=$350 thenconsumer’s surplus is 50consumer’s surplus is 100producer’s surplus is 200producer’s surplus is 50there would be no exchange15. Assume that consumers consider tea and coffee to be substitutes. A significant increase in the supply of tea will affect the coffee market byincreasing the demand for coffee and therefore the supply of coffeeincreasing the demand for coffee and therefore the price of coffeedecreasing the demand for coffee and therefore the price of coffeeincreasing the supply of coffee and therefore the price of coffeedecreasing the supply of coffee and therefore the price of coffee16. Assume that Jacob spends his entire income on the purchase of two goods, almonds and Cheezy-PoofsTM. If his income and the prices of good almonds and Y all double, Jacob willdouble the purchase of goods almonds and Cheezy-PoofsTMbuy more of good almonds and less of good Cheezy-PoofsTMbuy less of good almonds and more of good Cheezy-PoofsTMbuy less of both goods almonds and Cheezy-PoofsTMbuy the same amounts of goods almonds and Cheezy-PoofsTM17. Following a severe drought, the price of bottled water normally increases significantly. If cities had passed laws prohibiting price increases for bottled water, during severe droughts such laws would most likelymake bottled water more availablecreate a shortage of bottled watershift the demand curve for bottled water to the rightshift the supply curve for bottled water to the lefthave no effect on the availability of bottled water18. According to the law of diminishing marginal utility, which of the following is true when consuming marshmallows?Total satisfaction decreases as more marshmallows are consumed.The additional satisfaction received from consuming extra marshmallows decreases as consumption of the good increases.The additional satisfaction received from consuming extra marshmallows decreases as consumption of the good decreases.The additional satisfaction received from consuming extra marshmallows increases as consumption of the good increases.When marginal marshmallow utility is decreasing, total marshmallow utility must also be decreasing.19. Which of the following would most likely result in an increase in the equilibrium price of avocados, a normal good?The weather during this avocado-growing season is better than last yearAn decrease in the price of almonds, a substitute for avocadosNew studies suggest that avocados contain traces of cancer-fighting substances A national recession decreases per capita income by 15%Firms enter the avocado industry seeking to compete for a share of the profits20. Promoters of a traveling circus know that if they charged $5 a ticket, 200 people would buy tickets for the circus, and if they charged $2 a ticket, 500 people would buy tickets. Over this price range, the demand for the tickets for the traveling circus iselasticinelasticunit elasticperfectly elasticperfectly inelastic21. Assume that people like sauerkraut with their bratwurst. If the supply of bratwurst increases, the demand for sauerkraut will most likelyremain unchanged because bratwurst and sauerkraut are different goodsincrease because bratwurst and sauerkraut are substitutesincrease because bratwurst and sauerkraut are complementsdecrease because bratwurst and sauerkraut are complementsdecrease because bratwurst and sauerkraut are substitutes22. A decrease in the effective minimum wage will have less of an impact on employment if the demand for labor isincreasingdecreasingrelatively elasticrelatively inelasticunit elastic23. Suppose that the market supply curve for milk is upward sloping and the market demand curve is downward sloping. How will the passage of a subsidy for dairy farmers affect the consumer surplus, the producer surplus, and the total surplus?Consumer Surplus Producer Surplus Total SurplusIncrease Increase IncreaseIncrease Increase DecreaseIncrease Decrease DecreaseDecrease Increase DecreaseDecrease Decrease Decrease 24. Considering chimichangas, delicious deep-fried burritos, which of the following best describes the law of demand? The price of chimichangas increases when the demand for chimichangas increasesThe price of chimichangas decreases when the supply of chimichangas decreasesWhen the price of chimichangas increases, demand for chimichangas decreases When the price of chimichangas increases, the quantity of chimichangas demanded increasesWhen the price of chimichangas decreases, the quantity of chimichangas demanded increases25. Which of the following will cause the supply curve for doughnuts to shift to the right? An increase in the price of coffee, assuming that doughnuts and coffee are complements A decrease in the price of muffins, assuming that doughnuts and muffins are substitutes An increase in the wages of doughnut makersAn increase in the number of firms producing doughnutsA decrease in the income of consumers, assuming that doughnuts are normal goods 26. Citing the epidemic of obesity and type 2 diabetes in America, congress approves a new tax on producers of high fructose corn syrup, one of the key ingredients in soda pop. The price paid by consumers and the quantity of soda pops sold will most likely change in which of the following ways?PriceQuantityIncrease DecreaseIncrease Increase DecreaseIncrease Decrease Decrease No changeNo change27. Which of the following will tend to make the demand for suspenders more elastic? New firms which produce similar products (such as belts) enter the industry A very popular celebrity starts wearing suspenders, making the product more desirableSuspenders are necessary for use with a complement Production of suspenders is protected by a patentProduction cost of suspenders decreases28. Which of the following is true if consuming one taco yields 50 utils and consuming a second taco increases satisfaction by 10 utils? The marginal utility of the first taco is 10The marginal utility of the second taco is 40 The marginal utility of the second taco is 60 The total utility of consuming two tacos is 60The total utility of consuming one taco is greater than the total utility of consuming two unitsAnswers Key1. A2. C3. C4. D5. D6. D7. D8. B9. D10. E11. C12. A13. C14. E15. C16. E17. B18. B19. C20. C21. C22. D23. A24. E25. D26. A27. A28. D ................
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