Microeconomics
Problem set 4 –chapter 3
Choose the best answer:
1.
Apples are a normal good, so if the price of an apple increases from 50¢ to 60¢, the quantity of
apples demanded decrease because of
A) the substitution effect only.
B) the income effect only.
C) a change in income.
D) the substitution and income effects.
2. The "law of supply" states that, other things remaining the same, firms produce
A) more of a good the less it costs to produce it.
B) less of a good the more it costs to produce it.
C) more of a good the higher its price.
D) less of a good as the required resources become scarcer.
3. A supply curve shows the relation between the quantity of a good supplied and
A) income. Usually a supply curve has negative slope.
B) income. Usually a supply curve has positive slope.
C) the price of the good. Usually a supply curve has negative slope.
D) the price of the good. Usually a supply curve has positive slope.
4. In the above figure, what is the minimum supply price for the fourth gallon of ice cream?
A) $2.00
B) $3.00
C) $4.00
D) $5.00
Microeconomics
Problem set 4 –chapter 3
5.
The figure above shows supply curves for soft drinks. Suppose the economy is at point a. A
movement to point c could be the result of
A) a decrease in technology.
B) a decrease in the relative price of a soft drink.
C) an increase in the relative price of a soft drink.
D) an increase in the money price of a soft drink.
6.
The figure above shows supply curves for soft drinks. Suppose the economy is at point a. An
increase in the price of a soft drink is shown as a movement from point a to
A) none of the points that are illustrated.
B) point b.
C) point c.
D) point d.
7.
The figure above shows supply curves for soft drinks. Suppose the economy is at point a. A
movement to point d would be the result of
A) an increase in technology.
B) a decrease in the relative price of a soft drink.
C) an increase in the relative price of a soft drink.
D) an increase in the number of soft drink suppliers.
8. Which of the following does NOT shift the supply curve?
A) a technological advance
B) a decrease in the wages of labor used in production of the good
C) a fall in the price of a substitute in production
D) an increase in the price of the good
State whether the following statements are True/ False:
1- A movement along the demand curve shows a change in demand. F
2- An increase in the incomes of baseball fans in New York leads to a rightward movement
along the demand curve but does not shift the demand curve for Yankees tickets. F
Microeconomics
Problem set 4 –chapter 3
3- For consumers, chocolate chip cookies and doughnuts are substitutes. So, an increase in the
price of chocolate chip cookies will lead to a rightward shift in the demand curve for
doughnuts. T
4- The supply curve indicates the minimum quantity that a producer would be willing to
supply at alternative prices. F
5- An increase in price results in increase in supply but not an increase in the quantity supplied.
F