AP Micro Unit 2 Review Questions

Front

What explains a downward sloping demand curve? I. diminishing marginal utility II. diminishing marginal returns III. the substitution effect IV. the income effect

Back

I, III and IV only

Front

If hot dogs are an inferior good, an increase in income will result in:

Back

a decrease in the demand for hot dogs

Front

Assume that coal is a normal good. If the price of coal increases and the quantity sold increases, what could explain this? Options: The price of oil, a substitute for coal, increased; A wage increase was given to coal miners; New machinery made coal mining more efficient; Consumers' incomes fell; The demand curve is inelastic.

Back

The price of oil, a substitute for coal, increased

Front

During a football game, it starts to rain and the temperature drops. The senior class raises the price of coffee from 50 cents to 75 cents a cup and sells more than ever before. What explains this?

Back

The demand for coffee increased

Front

Which one of the following statements best reflects the law of diminishing marginal utility? "I have to have a scoop of ice cream on my pie", "I'll never get tired of your cooking", "The last bite tastes just as good as the first", "I couldn't eat another doughnut if you paid me", "I prefer to eat several small meals a day, rather than three large ones"

Back

"I couldn't eat another doughnut if you paid me"

Front

If the cost of producing automobiles increases, how will price, equilibrium quantity, and consumer surplus change?

Back

Price increases, quantity decreases, and consumer surplus decreases

Front

Compare 2011 with 2012 in the chart. Which statement is true?

Back

Demand has increased and quantity supplied has increased

Front

During the 1990s, the price of VCRs fell by about 30 percent, and quantity sold decreased by the same amount. The demand for VCRs must:

Back

have shifted to the left

Front

What happens if a legal price floor is set below the free market equilibrium?

Back

The equilibrium price will ration the good

Front

What does it imply about the price elasticity of demand for concert tickets if gate receipts increase when ticket prices increase, even though fewer tickets are sold?

Back

Demand is inelastic