AP Micro Unit 2 Review

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

• an increase in the quantity demanded for hot dogs

• an increase in the demand for hot dogs

• a decrease in the quantity demanded for hot dogs

• a decrease in the demand for hot dogs

• no change in the demand for hot dogs

During a football game, it starts to rain and the temperature drops. The senior class, which runs the concession stand and is studying economics, raises the price of coffee from 50 cents to 75 cents a cup. They sell more than ever before. Which answer explains this?

• the supply of coffee increased

• the demand curve for coffee was elastic

• the supply of coffee decreased

• the demand for coffee increased

• the demand curve for coffee was inelastic

Which of the following will occur if a legal price floor is placed on a good below its free-market equilibrium?

• surpluses will develop

• shortages will develop

• underground markets will develop

• the equilibrium price will ration the good

• the quantity sold will increase

A marketing survey shows that gate receipts would increase if the price of tickets to a summer rock concert increased, even though the number of tickets sold would fall. What does this imply about the price elasticity of demand for concert tickets?

• demand is inelastic

• demand is elastic

• demand is unit elastic

• demand is perfectly inelastic

• demand is perfectly elastic

If there is a legal price ceiling imposed, which will occur?

• shortage

• surplus

• demand will increase

• none of these

• all of these

If the price of lunch at the school cafeteria increases and cafeteria revenue remains constant, the price elasticity of demand for a school lunch must be

• elastic

• perfectly elastic

• unit elastic

• inelastic

• perfectly inelastic

If an excise tax is imposed on a product, consumer surplus and producer surplus for this good will most likely change in which of the following ways?

• CS falls and PS falls

• CS falls and PS increases

• CS falls and PS does not change

• CS does not change and PS increases

• CS does not change and PS does not change

The substitution effect causes a consumer to buy less of a product when the price increases because the

• product is now less expensive compared to similar products

• product is now more expensive compared to similar products

• consumer's real income has decreased

• consumer's real income has increased

• consumer will buy more inferior goods and fewer normal goods

In a competitive market the value of consumer surplus is

• $0

• $11

• $18

• $33

• $42

If the government decided that only 4 units of Good X could be sold, the deadweight loss of this policy would be shown by area

• ABC

• ACEJ

• AHJ

• CFE

• BGJ