Professional Documents
Culture Documents
1. A change in which of the following will NOT shift the demand curve for
hamburgers?
a. the price of hot dogs
b. the price of hamburgers
c. the price of hamburger buns
d. the income of hamburger consumers
2. An increase in ________ will cause a movement along a given demand curve,
which is called a change in ________.
a. supply, demand
b. supply, quantity demanded
c. demand, supply
d. demand, quantity supplied
3. Movie tickets and DVDs are substitutes. If the price of DVDs increases, what
happens in the market for movie tickets?
a. The supply curve shifts to the left.
b. The supply curve shifts to the right.
c. The demand curve shifts to the left.
d. The demand curve shifts to the right.
4. The discovery of a large new reserve of crude oil will shift the ________ curve for
gasoline, leading to a ________ equilibrium price.
a. supply, higher
b. supply, lower
c. demand, higher
d. demand, lower
Additional excercises
1. Maria has decided always to spend one-third of her income on clothing.
a. What is her income elasticity of clothing demand?
b. What is her price elasticity of clothing demand?
c. If Maria’s tastes change and she decides to spend only one-fourth of her income on
clothing, how does her demand curve change? What is her income elasticity and price
elasticity now?
2. Two drivers—Walt and Jessie—each drive up to a gas station. Before looking at the
price, each places an order. Walt says, “I’d like 10 gallons of gas.” Jessie says, “I’d
like $10 worth of gas.” What is each driver’s price elasticity of demand?
1. Emilio buys pizza for $10 and soda for $2. He has income of $100. His budget
constraint will experience a parallel outward shift if which of the following events
occur?
a. The price of pizza falls to $5, the price of soda falls to $1, and his income falls to
$50.
b. The price of pizza rises to $20, the price of soda rises to $4, and his income remains
the same.
c. The price of pizza falls to $8, the price of soda falls to $1, and his income rises to
$120.
d. The price of pizza rises to $20, the price of soda rises to $4, and his income rises to
$400.
2. At any point on an indifference curve, the slope of the curve measures the
consumer’s
a. income.
b. willingness to trade one good for the other.
c. perception of the two goods as substitutes or complements.
d. elasticity of demand.
3. Matthew and Susan are both optimizing consumers in the markets for shirts and
hats, where they pay $100 for a shirt and $50 for hat. Matthew buys 4 shirts and 16
hats, while Susan buys 6 shirts and 12 hats. From this information, we can infer that
Matthew’s marginal rate of substitution is _____ hats per shirt, while Susan’s is
_____.
a. 2, 1
b. 2, 2
c. 4, 1
d. 4, 2
4. Charlie buys only milk and cereal. Milk is a normal good, while cereal is an inferior
good. When the price of milk rises, Charlie buys
a. less of both goods.
b. more milk and less cereal.
c. less milk and more cereal.
d. less milk, but the impact on cereal is ambiguous.
5. If the price of pasta increases and a consumer buys more pasta, we can infer that
a. pasta is a normal good, and the income effect is greater than the substitution effect.
b. pasta is a normal good, and the substitution effect is greater than the income effect.
c. pasta is an inferior good, and the income effect is greater than the substitution effect.
d. pasta is an inferior good, and the substitution effect is greater than the income effect.
6. The labor-supply curve slopes upward if
a. leisure is a normal good.
b. consumption is a normal good.
c. the income effect on leisure is greater than the substitution effect.
d. the substitution effect on leisure is greater than the
1. Raj opens up a lemonade stand for two hours. He spends $10 for ingredients and
sells $60 worth of lemonade. In the same two hours, he could have mowed his
neighbor’s lawn for $40. Raj has an accounting profit of ______ and an economic
profit of ______.
a. $50, $10
b. $90, $50
c. $10, $50
d. $50, $90
2. Diminishing marginal product explains why, as a firm’s output increases,
a. the production function and total-cost curve both get steeper.
b. the production function and total-cost curve both get flatter.
c. the production function gets steeper, while the total-cost curve gets flatter.
d. the production function gets flatter, while the total-cost curve gets steeper.
Chapter 15 Monopoly