Mock Quiz

Opportunity cost is best defined as

• The cost of making a choice
• The value of the next best alternative that is forgone when making a choice.
• The value of the least desirable alternative
• The cost of an opportunity

Scarcity is a condition that exists when

• there is an abundant supply of resources compared to the demand.
• there is no demand for resources.
• there is a limited supply of resources compared to the demand
• resources are evenly distributed among all individuals.

A movement along a demand curve may be caused by a change in

• technology
• income
• price
• supply

Coke and Pepsi are substitutes if

• They can be used interchangeably to satisfy the same need or desire.
• They are both carbonated beverages.
• They have the same taste.
• They are both sold in cans and bottles.

Which of the following is correct? The supply curve will shift when

• there is a change in factors other than price that affect the quantity supplied
• there is a change in demand that affects the quantity supplied.
• there is a change in price that affects the quantity supplied.
• there is a change in government regulations that affects the quantity supplied.

For each of the following sets of supply and demand curves, calculate equilibrium price and quantity.

 

a.   QD = 2000 - 2P; QS = 2P

b.   QD = 500 - P; QS = 50 + P

c.   QD = 5000 - 10P; QS = -1000 + 5P

• a.   Q = 1000, P = 500

  b.   Q = 275, P = 225

  c.   Q = 1000, P= 400

• a.   Q = 1000, P = 600

  b.   Q = 275, P = 225

  c.   Q = 1000, P= 400

• a.   Q = 2000, P = 500

  b.   Q = 275, P = 225

  c.   Q = 1000, P= 400

• a.   Q = 1000, P = 500

  b.   Q = 275, P = 225

  c.   Q = 1000, P= 500

Annual demand and supply for the Entronics company is given by:

 

            QD = 5,000 + 0.5 I + 0.2 A - 100P, and QS = -5000 + 100P

where Q is the quantity per year, P is price, I is income per household, and A is advertising expenditure.

 

a.   If A = $10,000 and I = $25,000, what is the demand curve?

b.   Given the demand curve in part a., what is equilibrium price and quantity?

c.   If consumer incomes increase to $30,000, what will be the impact on equilibrium price and quantity?

• a.   QD = 19,500 - 100P

  b.   P = $122.50, Q =7,250

  c.   The new demand curve is QD = 22,000 - 100P. Thus the new equilibrium price is $135, and the new quantity is 8,500.

   

• a.   QD = 19,500 - 200P

  b.   P = $122.50, Q =7,250

  c.   The new demand curve is QD = 22,000 - 100P. Thus the new equilibrium price is $135, and the new quantity is 8,500.

   

• a.   QD = 19,500 - 100P

  b.   P = $122.50, Q =8,250

  c.   The new demand curve is QD = 22,000 - 100P. Thus the new equilibrium price is $135, and the new quantity is 8,500.

   

• a.   QD = 19,500 - 100P

  b.   P = $122.50, Q =7,250

  c.   The new demand curve is QD = 22,000 - 100P. Thus the new equilibrium price is $130, and the new quantity is 8,500.