Question

(30)Consider the market for chicken, if consumers use chicken and beef as substitutes, an increase in the price of beef given ceteris paribus will:

(a)Decrease the demand for chicken creating a lower price and a smaller amount of chicken will be purchased in the market

(b)Increase the supply of beef creating a surplus of beef in the market and a smaller quantity of chicken purchased in the market

(c)(a) or (b) above           

(d)None of the above

(31)Which of the following situations best captures the market behavior of consumers described in Q#30 above?

(a)The demand curve for chicken shifts outwardly to the right

(b)The demand curve for beef shifts outwardly to the right

(c)The demand curve for chicken rotates outwardly to the right

(d)All of the above

(32)Which of the following equations appropriately represents the scenario described in the market for chicken in Q#31 above?

(a)S0=94 +4P and S1=125 + 2P

(b)D0=65 -8P and D1=45-5P

(c)D0=25-6P and D1=56-8P

(d)S0=10+4P and S1=10+ 2P

(33)Suppose given ceteris paribus, a government sets a binding maximum price of $5 per bushel in a market for Soya beans, which of the following will not occur in the market?

(a)The price will be set above the market equilibrium price

(b)Consumer surplus will expand in the market

(c)Producer’s surplus will increase

(d)The market will experience a shortage of soya beans

                            

(34)Which of the following statements is false?

If a government sets the wage rate at $20 per hour in the market for school bus drivers in a city and the market clearing wage rate is $12 per hour for school bus drivers, then it is plausible to conclude that:

(a)There will be more individuals willing to be school bus drivers than the schools will employ

(b)The government’s wage rate is known as a legally binding price floor

(c)The schools in the city cannot pay their bus drivers less than $20 per hour

(d)None of the above

(35)Which of the following statements is true?

A minimum wage law that stipulates $25 per hour for domestic workers in the state of Virginia is:

(a)A binding price ceiling

(b)A non-binding price floor

(c)Going to increase the rent of domestic workers

(d)Going to increase consumers’ surplus

(36)Suppose a government sets a pricing policy of $8 per ticket in a market for train tickets where the demand for these tickets is represented by the demand equation D=120-4P and the supply equation of these tickets is represented by S=90 +P, the government’s pricing policy could be aptly described as a:

(a)Binding price floor

(b)Non-Binding price floor

(c)Binding price ceiling

(d)None of the above

(37)The difference between the price that Felix is willing to pay for a gallon of orange juice and the price that he actually pays for it in a market is called:

(a)A minimum price

(b)Producers’ surplus

(c)Economic rent

(d)Consumer surplus

(38)Which of the following statements is false?

If a group of consumers are participants in a market for lettuce at a price of $4.50 per package of lettuce, if the price of lettuce decreases to $2.65, which of the following outcomes is likely?

(a)The total area of consumer surplus will expand below the demand curve for all consumers in the market and above the lower market price

(b)The area of consumer surplus for the consumers who bought lettuce at $4.50 will be bigger than the area of consumer surplus for consumers who enter the market at the lower price

(c)The consumption of lettuce by the consumers who enter the market at $2.65 will decrease if the price of lettuce increases to$4.50

(d)All of the above

               

(39)Which of the following statements is false?

Producers’ surplus:

(a)Is also known as economic rent

(b)Is a measure of the economic welfare of producers

(c)Varies inversely with changes in producers’ prices

(d)All of the above         

                 

Answer 1

30) (d)None of the above
(As beef and chicken are substitutes so increase in price of beef, decrease the demand for beef and increase the demand for chicken.)

31. (a)The demand curve for chicken shifts outwardly to the right
(Demand for chicken will increase which will cause the demand curve for chicken to shift outward to the right.)

32. (c)D0=25-6P and D1=56-8P
(Increase in demand for chicken is shown by these equations.)

33. (d)The market will experience a shortage of soya beans
(A binding maximum price means price ceiling is set below the equilibrium price so demand will exceed supply at this price and thereby there will be a shortage of soyabeans.)

(Note: Post 4 MCQs at a time.)