Name_________________

This exam has 32 questions.

Unless a question explicitly says otherwise, assume that all supply

curves slope upward and all demand curves slope downward.

True/False.

Mark box A for True and box B for False. Each correct answer adds
2 points to your score. Each blank answer gives you 1 point.

1. A price increase results in greater revenue for sellers only if

supply is price elastic.

2. __ When an economy is producing in the interior of its PPF there

is no tradeoff associated with increasing the output of one
of the two goods.

3. The more inelastic demand for a product is, the greater the
impact of a binding price floor on consumption of the
product.

4. __ If demand for a good increases at the same time that supply of

the good increases, its equilibrium price will definitely
go up.

5. __ In a competitive equilibrium, buyers will pay the marginal

benefit of each of the units of the good they purchase.

6. The law of demand implies that the marginal benefit increases

when more of a good is consumed.
 Answer Key

Number Answer

1 False
2 True
3 False
4 False
5 False

6 False
7 True
8 True
9 True
10 False

11 B
12 A
13 A
14 C
15 D

16 D
17 A
18 D
19 E
20 C

21 A
22 C
23 B
24 A
25 B

26 D
27 B
28 E
29 A
30 A
31 C
32 A