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Social Studies
10th -
University
AP Microeconomics Unit 2 - Test Prep
50 questions
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- 1. Multiple ChoiceThe graph represents: Demand or Supply?DemandSupply
- 2. Multiple Choice
The Law of Supply states:
as price increases, supply increases
as prices increases, supply decreases
as prices increases, quantity supplied increases
as prices increases, quantity supplied decreases
- 3. Multiple ChoiceWhen quantity supplied and quantity demanded is equalsurplusshortageequilibriumlaw of demand
- 4. Multiple ChoiceThousands of people leave a small town due to a factory closing down. Sales at the local grocery store become slow. What causes this change?Prices or availability of substitutesPrices or availability of complementary goodsChange in the weather or seasonChange in the number of buyers
- 5. Multiple ChoiceGoods that are bought and used together arecomplementary goodssubstitute goodsincome goodsunrelated goods
- 6. Multiple ChoiceWhich of the following is likely to increase the demand for peanut butter?Fewer children in the populationNews that insects have destroyed much of the peanut crop and that there will be less peanut butter on the shelves in three months.A big increase in the price of jelly.A report from the Surgeon General of the United States that eating peanut butter makes people nutty.
- 7. Multiple ChoiceWhich of the following will cause an increase in demand for snowboards?More costly production methodsA decrease in the price of lift tickets at resorts in ColoradoA decrease in consumer incomeA decrease in the population
- 8. Multiple ChoiceWhich of the following would not shift the supply curve for iphones?an increase in the price of iphonesa decrease in the number of sellers of iphonean increase in the price of plastic, an input into the production of iphonesan improvement in the technology used to produce iphones
- 9. Multiple ChoiceAn effective price floor must be set above equilibrium, resulting in:a shortagea surpluslimited choicesNone of the above
- 10. Multiple ChoiceWhat is the result of the government implementing a price floor of $60There would be a shortage of 100 since it is cheaper for consumersThere would be a surplus of 100 because it is more expensive for consumersThere would be a shortage of 100 because it is assisting the suppliersThere would be a surplus of 100 because it is beneficial to consumers
- 11. Multiple ChoiceWhat is the supply with a price floor of $60?50100150200
- 12. Multiple ChoiceThe quantity of peanuts supplied increased from 40 tons/week to 60 tons/week when the price of peanuts increased from $4/ton to $5/ton. The price elasticity of supply for peanuts over this price range is:ElasticInelasticUnit ElasticPerfectly Inelastic
- 13. Multiple Choice
If a 10 percent increase in the price of a good leads to a 25 percent decrease in the quantity demanded of a good, demand is:
Relatively inelastic; .4
Relatively elastic; 2.5
Perfectly elastic; 1
Perfectly inelastic; 0
- 14. Multiple ChoiceFor an inferior good, an increase in consumer income will cause:The demand curve to shift leftThe demand curve to shift rightThe supply curve to shift leftThe supply curve to shift right
- 15. Multiple Choice
A product is likely to have a price elasticity of demand that exceeds 1 when:
Its price falls
It is a necessity
It has close substitutes
Consumers are not very responsive to changes in price
- 16. Multiple Choice
What is elasticity?
the means by which total revenue is measured
a measure in the responsiveness to a change is price
the stretchy-ness of a rubber band
- 17. Multiple Choice
What is the effect of a tariff on Consumer Surplus?
Increase
Decrease
None
Disappears
- 18. Multiple ChoiceConsumer surplus in a market for a good exists because:Some producers charge different prices for the good in different marketsProducers don't have the ability to set their own priceWhen the price of goods decrease, most consumers buy moreSome consumers are willing to pay more than the equilibrium price
- 19. Multiple Choice
Producer Surplus is the area
Below the price and above the supply curve
Under the supply curve
Between the supply and demand curves
Under the demand curve, and above the price
- 20. Multiple Choice
Suppose that the demand for soft drinks is price elastic and the supply is price inelastic. If the government imposes a sales tax on soft drinks, which of the following will occur in the short run? (Hint: it helps to draw it!)
The tax burden will fall equally on producers & consumers
The tax burden will fall more on producers
The tax burden will fall more on consumers
The government will collect $0 in tax revenue
- 21. Multiple ChoiceAccording to the diagram, what is the amount of the tax?$0$0.45$1.00$1.45
- 22. Multiple ChoiceAn excise tax collected from the producers of a good:Shifts the supply curve upwardCreates deadweight lossHas a similar effect as a quotaAll of the above
- 23. Multiple Choice
A limit to the number of imports that may enter a country
tariff
embargo
demand
quota
- 24. Multiple Choice
What has caused the decrease in quantity demanded shown in the graph above?
A price decrease
A price increase
There was no change in quantity
a shift in the demand
- 25. Multiple Choice
Which of these is a substitute? (Hint: the rest are complements)
butter and margarine
peanut-butter and jelly
flashlight and batteries
cameras and film
- 26. Multiple Choicewhen consumers have a need for a product that is urgentthe demand curve is inelasticthe demand curve is elasticthe demand curve is complementarythe demand curve is unit demand
- 27. Multiple ChoiceThe extra usefulness of satisfaction a person gets from acquiring of using one or more unit of a productelasticitymarginal utilitysubstitutesincome effect
- 28. Multiple Choice
Wheat has seen a decrease in demand of 5%, while the price has increased 7% - What is the elasticity (and no, you don't need a calculator...its multiple choice!)
1.4 inelastic
1.4 elastic
.71 inelastic
.71 elastic
- 29. Multiple Choice
Prada has seen a increase in demand of 70%, while the price has decreased 35%
.5 inelastic
.5 elastic
2 inelastic
2 elastic
- 30. Multiple ChoiceTo access Internet services, consumers must use a computer. If computer prices fall, what is the effect on the demand for Internet servicesthe demand for Internet services increasesthe demand for Internet services decreasesThe demand for Internet services remains unchangedThe demand for Internet services could increase, decrease, or stay the same depending on other factors
- 31. Multiple ChoiceWhen the price of a product increases, a consumer is able to buy less of it with a given money income. This describes:the cost effectthe inflationary effectthe income effectthe substitution effect
- 32. Multiple Choice
Jess owns a sandwich shop. The price of a sandwich recently increased from $5 to $7. Jess responded by increasing the quantity of sandwiches she supplied from 70 to 90 per day. Then, at the midpoint between these two prices, Jess's price elasticity of supply is equal to
1.33
0.75
3.00
1.50
- 33. Multiple Choice
If the quantity supplied and the price change by the same percentage, then supply is
elastic
inelastic
unit elastic
perfectly inelastic
- 34. Multiple ChoiceWhat is the equilibrium price of a book in this market?$75$80$85$90
- 35. Multiple Choice
You are the manager of Fun World, a small amusement park that only charges per ride. The diagram shows the demand curve for a typical customer. At $5 per ride, how much consumer surplus is in the market?
$5
$15
$25
$50
- 36. Multiple ChoiceIn the diagram, consumer surplus is represented by:P2, B, P3A, B, CP2, B, P0P1, C, A, P3
- 37. Multiple ChoiceSamantha loves her job so much, she would do it for free. Last year Samantha made $45,000 at her job. This year, she makes $50,000. Samantha's producer surplus for this year is:$0$5,000$50,000$95,000
- 38. Multiple Choice
Gordon lists his old Lionel electric trains on eBay and sets a minimum acceptable price at $75. He received three bids after five days on eBay: $25, $50, and $75. He accepts the latter. His producer surplus is:
$0
$25
$50
$75
- 39. Multiple ChoiceIf the government imposes a price ceiling at P3, which area would represent consumer surplus?a,b,ca,b,c,d,ea,b,df
- 40. Multiple ChoiceIf the government imposed an effective price ceiling at P3, which would be matched correctly?d,e,f- producer surplus; e- deadweight lossf- producer surplus, abc- consumer surplusc,e- deadweight loss; f- producer surplusa,b,d- producer surplus; c,e- deadweight loss
- 41. Multiple Choice
If an excise tax is imposed on a product, consumer surplus and producer surplus for this good will most likely change in which of the following ways?
CS falls and PS falls
CS falls and PS increases
CS falls and PS does not change
CS does not change and PS increases
CS does not change and PS does not change
- 42. Multiple Choice
In a competitive market the value of consumer surplus is
$0
$11
$18
$33
$42
- 43. Multiple Choice
In this example, which is larger?
Consumer Surplus
Producer Surplus
The Same gain
- 44. Multiple ChoiceIf the government is in need of more revenue and wants to tax a product. This strategy will work best if demand for the good isunit elasticityperfectly elasticrelatively elasticrelatively inelastic
- 45. Multiple ChoiceWhat are two possible reasons why price elasticity of supply is inelastic?Too short period of time, no capacity to increase,Too long period of time, not enough people want to buy the productNo substitutes and it is a necessityNo spare capacity and a smaller proportion of income spent on goods.
- 46. Multiple Choice
If Tom charges $10 per kg for his hand made donuts. And the elasticity of demand for donuts is 2.5, what should Tom do to increase revenue (PXQ)?
Raise his price
Keep his price the same
Close his shop down as he cannot make revenue
Lower his price
- 47. Multiple Choice
The definition of the law of diminishing marginal utility
As more units are consumed the marginal utility falls.
As more units are consumed the marginal utility increases.
As price decreases quantity demanded increases.
As price increases consumers are willing to pay more.
- 48. Multiple Choice
If Ann gets 100 units of utility from reading a book and 500 units of utility from playing with her cat, What can we determine about Ann?
She does not enjoy reading books.
She does not enjoy playing with her cat.
She prefers reading a book to playing with her cat.
She prefers playing with her cat to reading a book.
- 49. Multiple Choice
Which of the following best refers to the additional cost a person or firm incur to produce one more unit?
Consumer Benefit
Intersection
Marginal Benefit
Marginal Cost
- 50. Multiple Choice
The first four dinner rolls Joan consumes have total utility of 15, 27, 37, and 45 respectively. What is the marginal utility of the 4th dinner roll?
124 units of utility
45 units of utility
11.25 units of utility
8 units of utility
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