Quiz 4 - Demand and Supply

Question 1

An oil painting has an opportunity cost of $1,000. The painting was purchased for $1,500. How much consumer surplus did the buyer obtain?
Select one:
a. zero
b. $500
c. $1,000
d. $1,500
e. cannot be determined from the information given

Answer 1

E

Question 2

The opportunity cost of good A in terms of good B is equal to the
Select one:
a. ratio of the money price of good B to the money price of good A.
b. money price of good A plus the money price of good B.
c. money price of good A minus the money price of good B.
d. money price of good B minus the money price of good A.
e. ratio of the money price of good A to the money price of good B.

Answer 2

E

Question 3

Table 3.5.1
The Market for Car-Seat Heaters
Price
(dollars per heater)
40
50
60
70
80
90
100	
Quantity Demanded (heaters per month)
500
450
400
350
300
250
200	
Qs( heaters/month)
300
350
400
450
500
550
600
Refer to Table 3.5.1. If the price is set at $80, there will be a
Select one:
a. shortage of 200 units and demand will fall.
b. surplus of 200 units and price will fall.
c. shortage of 200 units and price will rise.
d. surplus of 200 units and supply will fall. 
e. surplus of 200 units and demand will rise.

Answer 3

B

-> Surplus lead to decrease in price

Question 4

If A and B are complements and the cost of a factor of production used in the production of A decreases, then the price of
Select one:
a. both A and B will fall.
b. A will rise and the price of B will fall.
c. A will fall and the price of B will rise.
d. A will fall and the price of B will remain unchanged.
e. both A and B will rise.

Answer 4

C

Question 5

If the market is at the competitive equilibrium, which area in the diagram indicates the cost of producing the quantity sold?

Answer 5

-> variable cost

the area underneath the marginal cost curve

Question 6

Which market is an example of a market for services?
Select one:
a. energy market
b. tennis lessons market
c. manufactured input market 
d. labour market
e. orange market

Answer 6

B

Question 7

The y- axis intercept of the demand curve is 60 and the slope is - 8. The equation of the demand curve is \_\_\_\_\_\_\_\_.
Select one:
a. P = 8 - 60QD
b. P = 60 + 8QD
c. P = 60 - 8QD 
d. QD = 60 - 8P
e. QD = 60 + 8P

Answer 7

C

Question 8

The supply curve of a good slopes upward to the right because of
Select one:
a. the fact that prices tend to rise over time.
b. the law of demand.
c. technological improvements over time.
d. the existence of substitutes in production.
e. the law of supply.

Answer 8

E