ECN100 Quiz 3 Attempt 2

1) If the increase in the supply of a product is greater than the increase in the demand, what will be the
immediate result?
A) A shortage.
B) The price will increase.
C) A surplus.
D) Cannot be determined.
2)

Refer to the above graph to answer this question. If the demand were to increase by 500 units and the
supply were to increase by 200 units, what would be the resulting equilibrium price and quantity?
A) $70 and 900.
B) $70 and 1,000.
C) $70 and 1,300.
D) $80 and 900.
E) $60 and 1,300.

3) If the government puts a $2 excise tax on a product and as a result, price rises by $0.75, which of the
following statements is correct?
A) The quantity demanded of the product rises by 37.5%.
B) The quantity demanded of the product falls by 37.5%.
C) The government's tax revenue falls.
D) The sellers pay more of the tax than the buyers.
E) The buyers pay more of the tax than the sellers

4) Graphically, what is the effect of imposing an excise tax on a product?

A) It will shift the supply curve for the product to the left and the demand curve to the right.
B) It will shift both the supply and the demand curve for the product to the left.
C) It will shift the supply curve for the product to the right.
D) It will shift both the supply and the demand curve for the product to the right.
E) It will shift the supply curve for the product to the left.
5) Price floors are often introduced in agricultural markets for which of the following reasons?
A) To decrease sale price.
B) In order to decrease the price of the product abroad below the cost of production.
C) To support farmers.
D) To stop collusion between firms.

6) The data shows the demand and supply for sugar:

quantity of kilograms (in thousand per week)

Refer to the information above to answer this question. What would happen if the government were to
establish an effective price floor of $3 per kilogram of sugar?
A) The market would be in equilibrium selling 50,000 kilograms of sugar in the market.
B) There would be a shortage of 40,000 kilograms of sugar in the market.
C) The farmers could sell only 40,000 kilograms of sugar in the market.
D) There would be a surplus of 40,000 kilograms of sugar in the market.
E) The farmers would sell all 70,000 kilograms of sugar in the market.

7) The data shows the market for daycare workers in a particular city:
(quantity of workers in hundreds)

Refer to the information above to answer this question. Suppose that after the imposition of a minimum
wage of $6.50, a number of new daycare centres opened up increasing the demand for workers by 400.
In what way would this market be affected?

A) The wage would remain at $6.50 and there would now be 200 vacancies.
B) The wage would remain at $6.50 but there would now be no unemployment.
C) The wage would remain at $6.50 and there would now be 200 unemployed daycare workers.
D) The wage would drop to $5 and there would be no unemployment.
E) The wage would increase to $7 and there would be no unemployment.
8) Under what circumstances can an illegal market exist?
A) Whenever supply exceeds demand.
B) When the price of a product is above equilibrium.
C) When a price floor is imposed.
D) When a price ceiling is imposed.

9) Under what circumstances might an illegal market exist?

A) When price is not at equilibrium.
B) When there is a big surplus of a product.
C) When a price ceiling is imposed.
D) When a price floor is imposed.

10)

Refer to the graph above to answer this question. If the government imposes a price ceiling of $7, what
will be the new price and quantity in the market?
A) $5 and 35
B) $6 and 40
C) $6 and 30
D) $4 and 30

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