Question

1. Consider the following supply schedules for Kelby, Jack, and Kate, who are the only suppliers in the market for Good Y:

    Kelby   Jack   Kate
Price   Units Produced
$5   12   8   4
$4   11   6   3
$3   9   4   2
$2   5   2   1
$1   2   1   0

If the market sees 15 units of Good Y exchanged, what is the likeliest price in the market?

A. $1
B. $2
C. $3
D. $4
E. $5

2. Given that the cross-price elasticity of goods Bee and Zee is −20 and the quantity of Bee decreases by 40 percent, which of the following statements is correct?

A. They are substitutes, and the price of Zee goes up by 2 percent.
B. They are substitutes, and the price of Zee goes down by 2 percent.
C. They are complements, and the price of Zee goes up by 2 percent.
D. They are complements, and the price of Zee goes down by 2 percent.
E. They are complements, and the price of Zee goes down by 8 percent.

3. Which of the following is most likely to occur if a competitive market has moved from one equilibrium to another?

A.An increase in demand lowers the equilibrium price and increases the equilibrium quantity.
B.An increase in supply lowers the equilibrium price and increases the equilibrium quantity.
C.A decrease in demand and increase in supply will cause equilibrium price to increase but make equilibrium quantity indeterminate.
D. An increase in demand will decrease equilibrium price, quantity, and producer surplus.
E. An increase in supply increases the equilibrium price and quantity and lowers producer surplus.

4. A government imposes a per-unit tax on light bulbs in a competitive market. Afterward, the seller's after-tax price increases from the original equilibrium price of $12 to $14. The marginal cost of lightbulbs was $9 before the tax and $12 after the tax was implemented. The quantity supplied decreases from a before-tax quantity of twelve thousand bulbs per month to ten thousand bulbs per month after the tax. Based on this, which of the following is true?

A. Total expenditures on light bulbs increase after the tax.
B. The amount of deadweight loss is $20,000 after the tax.
C. Total revenue earned by light bulb producers increases after the tax.
D. The total tax revenue collected by the government is $30,000 per month.
E. Consumers and producers are sharing an equal percentage of the tax burden.

5. A business notices that after it lowered its price it saw more quantity demanded but lower total revenue. What does this mean?

A. It is operating at productive inefficiency.
B. It is experiencing diminishing marginal returns.
C. It is in the elastic part of the demand curve for its product.
D. It is in the inelastic part of the demand curve for its product.
E. Its product's elasticity coefficient must be greater than one.

Answer 1