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Refer to the figure above, which shows three supply curves for corn. Which of the following would cause the supply of corn to shift from S<sub>1</sub> to S<sub>2</sub>? A) An increase in the price of fertilizer B) A change in consumer tastes away from cornbread C) A decrease in consumer incomes, assuming corn is a normal good D) The development of a more effective insecticide against corn rootworm Refer to the figure above, which shows three supply curves for corn. Which of the following would cause the supply of corn to shift from S1 to S2?


A) An increase in the price of fertilizer
B) A change in consumer tastes away from cornbread
C) A decrease in consumer incomes, assuming corn is a normal good
D) The development of a more effective insecticide against corn rootworm

E) All of the above
F) None of the above

Correct Answer

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If there's a huge increase in the number of Americans travelling to Europe (say, for the Olympics) , then the effect on the foreign exchange market is that the:


A) Demand for euros would increase
B) Supply of euros would increase
C) Demand for euros would decrease
D) Supply of euros would decrease

E) A) and D)
F) B) and D)

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There is a shortage in a market for a product when:


A) The current price is higher than the equilibrium price
B) Supply is less than demand
C) Quantity demanded is less than quantity supplied
D) Quantity demanded is greater than quantity supplied

E) A) and B)
F) C) and D)

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Other things being equal, the law of demand suggests that as:


A) The demand for iPads increases, this will cause the price to increase
B) Income increases, the quantity of iPads demanded will increase
C) The price of iPads decreases, the quantity demanded will increase
D) The price of iPads decreases, the quantity demanded will decrease

E) None of the above
F) A) and C)

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The table below shows the weekly demand for hamburger in a market where there are just three buyers. The table below shows the weekly demand for hamburger in a market where there are just three buyers. Refer to the above table. If the price of hamburger falls from $5 to $3, then the weekly market quantity demanded will: A) Increase from 24 to 52 B) Decrease from 52 to 24 C) Increase from 120 to 156 D) Increase from 29 to 55 Refer to the above table. If the price of hamburger falls from $5 to $3, then the weekly market quantity demanded will:


A) Increase from 24 to 52
B) Decrease from 52 to 24
C) Increase from 120 to 156
D) Increase from 29 to 55

E) A) and D)
F) B) and D)

Correct Answer

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Two goods are considered to be related goods by many buyers: if the price of one increases, buyers buy more of the other. This indicates that the two goods are complements.

A) True
B) False

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Refer to the above graph, which shows the market for bicycles. S<sub>1</sub> and D<sub>1</sub> are the original supply and demand curves. D<sub>2</sub> and D<sub>3</sub> and S<sub>2</sub> and S<sub>3</sub> are possible new demand and supply curves. Starting from the initial equilibrium (point 1) , which point on the graph is most likely to be the new equilibrium after an increase in wages of bicycle workers, and a significant increase in the price of gasoline? A) 6 B) 3 C) 4 D) 5 Refer to the above graph, which shows the market for bicycles. S1 and D1 are the original supply and demand curves. D2 and D3 and S2 and S3 are possible new demand and supply curves. Starting from the initial equilibrium (point 1) , which point on the graph is most likely to be the new equilibrium after an increase in wages of bicycle workers, and a significant increase in the price of gasoline?


A) 6
B) 3
C) 4
D) 5

E) B) and C)
F) A) and D)

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A surplus indicates that the quantity demanded is greater than the quantity supplied at that price.

A) True
B) False

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If the organizers of a major sports event set the ticket price above the equilibrium level, then scalping will develop in a secondary market for tickets.

A) True
B) False

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Refer to the diagram above, which shows three supply curves for corn. Which of the following would cause the supply of corn to shift from S<sub>1</sub> to S<sub>3</sub>? A) A decrease in the cost of equipment used in corn farming B) An increase in the price of soybeans C) A decrease in the price of corn D) An increase in the number of acres of farmland allocated to corn Refer to the diagram above, which shows three supply curves for corn. Which of the following would cause the supply of corn to shift from S1 to S3?


A) A decrease in the cost of equipment used in corn farming
B) An increase in the price of soybeans
C) A decrease in the price of corn
D) An increase in the number of acres of farmland allocated to corn

E) C) and D)
F) B) and D)

Correct Answer

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All of the following would affect the position of the supply curve for cranberries, except the:


A) Popularity of cranberry drinks
B) Price of agricultural land for cranberries
C) Cost of fertilizers for cranberry production
D) Development of a new pest control for cranberries

E) B) and C)
F) None of the above

Correct Answer

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Refer to the four graphs above. Select the graph above that best shows the changes in demand and supply in the market specified in the following situation: In the market for corn, if gasoline producers use more ethanol from corn, and good weather during the growing season yields a bumper harvest. A) Graph A B) Graph B C) Graph C D) Graph D Refer to the four graphs above. Select the graph above that best shows the changes in demand and supply in the market specified in the following situation: In the market for corn, if gasoline producers use more ethanol from corn, and good weather during the growing season yields a bumper harvest. A) Graph A B) Graph B C) Graph C D) Graph D Refer to the four graphs above. Select the graph above that best shows the changes in demand and supply in the market specified in the following situation: In the market for corn, if gasoline producers use more ethanol from corn, and good weather during the growing season yields a bumper harvest.


A) Graph A
B) Graph B
C) Graph C
D) Graph D

E) A) and B)
F) B) and C)

Correct Answer

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The graph above represents a competitive market for a product where the government now has introduced a price floor of 0C. Which area in the graph represents the producers' sales revenue after the imposition of the price floor? A) 0CFL B) 0CEJ C) 0BGK D) 0BHL The graph above represents a competitive market for a product where the government now has introduced a price floor of 0C. Which area in the graph represents the producers' sales revenue after the imposition of the price floor?


A) 0CFL
B) 0CEJ
C) 0BGK
D) 0BHL

E) A) and C)
F) B) and C)

Correct Answer

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Refer to the above diagram illustrating the market for corn. If the price in this market is fixed at $2 per bushel, then: A) Sellers will not be able to sell all the corn that they intended to sell B) Sellers will quickly run out of corn that they bring to market C) Buyers will find too much corn in the market D) Buyers will be able to get as much corn as they wish to buy Refer to the above diagram illustrating the market for corn. If the price in this market is fixed at $2 per bushel, then:


A) Sellers will not be able to sell all the corn that they intended to sell
B) Sellers will quickly run out of corn that they bring to market
C) Buyers will find too much corn in the market
D) Buyers will be able to get as much corn as they wish to buy

E) A) and B)
F) None of the above

Correct Answer

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Last year the price of corn was $3 a bushel and the quantity of corn demanded was 10 million bushels. This year the price of corn was $4.00 a bushel and the quantity demanded was 9 million bushels. Is this evidence that law of demand does not apply to corn?


A) Yes, because there is a direct relationship between the price of corn and the quantity supplied
B) Yes, because there is an inverse relationship between the price of corn and the quantity demanded
C) No, because the other-things-equal assumption was violated over the two year period
D) No, because the evidence indicates that there is a shortage of corn

E) All of the above
F) B) and C)

Correct Answer

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In competitive markets, a surplus or shortage will:


A) Never exist because the markets are always at equilibrium
B) Cause changes in the quantities demanded and supplied that tend to eliminate the surplus or shortage
C) Cause shifts in the demand and supply curves that tend to eliminate the surplus or shortage
D) Cause changes in the quantities demanded and supplied that tend to intensify the surplus or shortage

E) A) and B)
F) C) and D)

Correct Answer

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What is the likely effect on the market for wine of a simultaneous increase in both consumer incomes and producer taxes on wine?


A) An increase in both price and quantity
B) An increase in price and a decrease in output
C) A decrease in price and an indeterminate effect on quantity
D) An increase in price and an indeterminate effect on quantity

E) A) and C)
F) A) and B)

Correct Answer

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A result of a fall in the price of gasoline, consumers can afford to buy more gasoline for more driving trips. This is an illustration of:


A) The income effect
B) The substitution effect
C) Diminishing marginal utility
D) Consumer sovereignty

E) All of the above
F) A) and D)

Correct Answer

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Why is there a shortage of donated human organs available for transplant?


A) The supply curve for human organs is horizontal at the current zero price
B) The demand curve for organs is vertical at the current zero price
C) The quantity supplied is greater than the quantity demanded at the current zero price
D) The quantity demanded is greater than the quantity supplied at the current zero price

E) C) and D)
F) A) and B)

Correct Answer

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A decrease in the price of digital cameras would lead to a(n) :


A) Increase in the price and quantity sold of memory cards
B) Decrease in the price and quantity sold of memory cards
C) Increase in the price and a decrease in quantity sold of memory cards
D) Decrease in the price and an increase in quantity sold of memory cards

E) None of the above
F) B) and C)

Correct Answer

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