Ag Econ 1041
Quiz 7, 30 points
October 25, 2012
Name _____KEY_____________________
8 a.m. Section
True/False are valued at one point each
T
F 1.
Equilibrium is the situation where prices and quantities will not change unless the
determinants of demand or supply change.
T
F 2.
Choosing an alternative with the lowest opportunity cost will lead to maximizing
utility.
T
F 3.
A comparative advantage is achieved by having a higher opportunity cost than
others.
T
F 4.
A market is where buyers and sellers meet, though not necessarily in person, to
exchange goods.
T
F 5.
An increase in advertising by Nike will lower costs in an effort to increase revenue.
T
F 6.
If the price of McDonald’s sandwiches is reduced, an increase in demand will result.
T
F 7.
Markets have different technical, physical and cultural attributes.
Multiple choice – two points each
__B___ 8. Which of the following raises the equilibrium price of cement?
a) An increase in the supply of cement
b) An increase in the demand for cement
c) A decrease in the demand for dement
d) An increase in the quantity of cement demanded
e) An increase in the quantity of cement supplied
__B___ 9. Which of the following raises the equilibrium price of a canoe?
a) An increase in the supply of canoes
b) An increase in the demand for canoes
c) An increase in the quantity of canoes supplied
d) A decrease in the demand of canoes
e) Both A and B are correct
TURN THE QUIZ OVER
__B___ 10. Consider the market for bread. If the price of wheat rises, then the
a) Demand curve for bread shifts leftward
b) Supply curve for bread shifts leftward
c) Price of bread falls
d) Equilibrium quantity of bread increases
e) Demand curve for bread shifts rightward
__C___ 11. Which of the following changes is likely to make demand more elastic?
a) A patent is issued
b) The good become important to many buyers
c) New substitutes are developed
d) Marginal utility increases and becomes a steeper function
e) None of the above
Short answers are valued at five points each
12. Why do resort owners on the Lake of the Ozarks (or at any summer resort area) charge a
lower price in the winter than the summer?
Reduced demand
13. Show the impact of an increase in income on the market for restaurant prepared meals. (Use
a supply and demand model.)
P
S
P1
P0
D1
D
0
Q0
Q1
Q
14. The demand for potato chips increases during spring into early summer. Name the change
in one of the determinants of demand that most likely explains this increase and give a
specific example associated with that determinant.
Utility; more picnics and parties (any good determinate with example okay)