WARM-UP QUESTIONS FOR SECTION III

. A supply increase means: (a) a rigiitward shifi of the whole supply curve (b) leltward shift oi the whole supply cvirve (c) suppliers will offer a greater quandt) at each price (d) suppliers will offer every quantity at a lower price (e) al! of tlie above biU (b).

B. Reanswer for a supply decrease.

C. Excess demand is: (a) the difference between the quantity demanded and supplied at die equilibrium price (b) the difference between quantity demanded and supplied at au)- particular price, (c) the same thing as a surplus (d) never zero (e) all of die above.

D. Price ceilings aie: (a) maximum prices (b) necessarily prices above the market clearing level (c) necessarily prices below the market clearing level

(d) another name for market clearing prices (e) both (a) and (b).

E. In a compeddve industry we expect the market supply curve and the supply faced by individual households to respectively: (a) slope upward and lie flat (b) slope downward and lie flat (c) lie flat and slope downward (d) slope upward and slope upward

(e) slope onward and upward.

1* F. Wich of the following will cause a"leftward shift in the supply of oranges? (a) an increase m the price of irrigadon water (b) bad weather (c) anodi-s.er fruit fly infestadon (d) a higher A\age for orange

pickers (e) all of the above.

jG. Which of the following does not represent a .shift ofthe market supply curve? (a) a deciease in the price of the product (b) technological progress (c) a change in the price of inputs (d) an increase in the number of suppliers.

H. We can approximate the market supply curve (a) verdcally summing the supply curves of individual sellers (b) horizomally summing the supply

curves of individual sellers (c) coundng the number of firms (d) none of the above.

1. If the government makes it illegal to sell wheat

below a price which exceeds the market clearing one, we would have an example of a: (a) price floor followed by a surplus (b) price floor followed by a shortage (c) price ceiling followed by a surplus (d) price ceiling followed by a shortage (e) none ofthe above.

J. If the government makes it illegal to rent an apartment for more than a certain price, and if this price lies below the market clearuig price, we would have an example of: (a) a price ceiling followed by a surplus (b) a price ceiling followed by a shortage (c) a price floor followed by a shortage (d) a price floor followed by a surplus (e) all of the above.

K. Price-makers: (a) face upward sloping demand curves (b) cannot control both the price and the quantity sold (c) are the same as price-takers (d) set the price but do not care what quandty they sell (e) none of the above.

L. An equilibrium price: (a) is another name for the market clearing price (b) arises from the self interests of buyers and sellers (c) is a price consistent with the plans of both buyers and sellers (d) will emerge in perfectly competidve markets (e) all ofthe above.

M. An increase in the quandt) supplied: (a) is the .same as an increase in the quantity demanded (b) is another name for an increase in supply (c) is always caused by changes in forces other than price (d) represents a movement along a stationary suppl)- (e) will not occur if the supply curve is upward sloping.

N. Which of the following is(are) flat? (a) the supply curve of a good to a price-taking household

(b) the demand curve of a perfectly compedtive firm

(c) the demand curve of labor faced by a household supplying labor in a perfecdy competitive labor market (d) all ofthe above (e) none of the abo\e

Supply &Equ,Ubnl

QUESTIONS FOR SECTION III

1. Which of the following would not result in a shift of the market supply curve of candy bars? (a) a rise in the wages of candy-bar workers (b) the discovery of a more efficient mixing process (c) an increase in the price of sugar (d) a decrease in the price of candy bars (e) none of the above.

2. Shortages and scarcity: (a) are two different names for the same thing (b) are permanent and temporary states respecdvely (c) are related in that whenever scarcity occurs, shortages occur (d) are related in that there can be no shortage of a good unless it is already scarce (e) will not occur unless there is excess demand.

3. Which of the following is not likely to follow the imposition of rent control in Isla Vista? (a) an increase in the number of complaints regarding discrimination (b) a decrease in the number of out-of-state students rushing fraternities and sororides (c) decreased apartment maintenance (d) fewer dogs (e) an increase in the average age of Isla Vista tenants.

4. We would expect to find persistent su luses in the news if: (a) demand decreases (b) the government sets a price ceiling above the market clearing price (c) the government sets a price floor at the market clearing price (d) supply sharply increases (e) none of the above.

5. Which of the following would tend to reduce a shortage of a normal good? (a) repeal of a price floor (b) an increase in consumer income (c) an increase in the price of complements to the good experiencing a shortage (d) a reducdon in a price ceiling (e) none of the above.

6. A, B, and are each prepared to supply one unit of the good for every dollar the price rises above $6. D and E are each prepared to supply one unit of the good for every dollar the price rises above $7. At a price of $8, the quandty these producers would supply is: (a) 6 (b) 5 (c) 4 (d) 8 (e) 10.

7. The three firms below supply calculators according to the following:

Price of a calculator: $25 $50 $75 $100 Texas Instruments: 1,000 5,000 10,000 20,000 Hewlett-Packard: 0 0 1,000 5,000

Casio: 10,000 20,000 25,000 30,000

What would be their aggregate contribuuon to market supply at $25, $50, $75, and $100 respe, tively? (a) 0, 0, 1000, 5000 (b) 10,000, 20,000, 25 OOftl 30,000 (c) 11,000, 25,000, 35,000, 50,000 (d) 1] qooI 25,000, 36,000, 55,000 (e) none of the above. *

8. The demand schedule for tickets to DodgeS games is as follows:

Price of Tickets $8 $7 $6 $5 $4

Number of Purchaser; 15,000 20,000 25,000 30,000 35,000

If ground capacit) is 30,000, then the excess dema for dckets (if priced at $4) would be: (a) $2 (b) $1 (c) 10,000 (d) 5,000 (e) 0.

9 The equilibrium price is one at which: (a) surplus exists (b) a shortage exists (c) buyers sellers plans are inconsistent (d) firms leave industry (e) no tendency for the price to chan occurs.

10. If the government sets a maximum price at the equilibrium price of clothing, then we would expect to find: (a) a deterioration in the quality ( clothing (b) illegal transactions above the maximu price (c) excess demand for clothing (d) diffic in purchasing desired quantities of clothing (e) of the above.

12. WTiich of the following would not cause supply schedule for beef to shift outward? (a) increase in beef prices (b) a new antibiotic for ho and mouth disease (c) improvements in slaughteriij techniques (d) a fall in cowboys wages (e) a rcdi tion in die price of feed grains.

12. WTiich of the following would cause a rig ward shift in the supply curve of automobiles? (a) increase in demand for automobiles (b) an incr in consumers incomes (c) an increase in the price < steel (d) an increase in the wages of auto-workers (e) the discovery of a cheaper and better means removing impurities from iron-ore.

13. Which of the following would not shift die suj ply curve of dentists? (a) a decrease in price of de

tal lexibooks (b) a change in the cost of dental school tuiuon (c) an increase in the wages of denusts (d) a decrease in dormitory prices (e) a change in dental school parking fees.

14. Compact discs are supplied by firms and demanded by consumers at each price in the following way:

# Supplied/Week

(diousands) 0 50 100 150 200 250 300 350 400 Price of Discs $0 $2 $4 $6 $8 $10 S12 S14 $16

# Demanded/Week

(diousands) 600 500 400 300 200 150 100 50 0

What, then, would the equilibrium price be? (a) $2 (b)$4 (c)$6 (d)$8 (e)$I0.

15. For the same quesdon, the equilibrium quandty supplied would be (in thousands): (a) 250 (b) 200 (c) 150 (d) 100 (e) 50.

16. In equilibrium, the aggregate consumer surplus would be about: (a) $0 (b) $100,000 (c) 5200,000 (d) $300,000 (e) $800,000.

17. If the government were to set a price floor at I; $10, the excess demand for discs would be (in thousands): (a) 300 (b) 150 (c) 0 (d) -100 (e) -300.

18. The Santa Barbara County Bowl has a seating capacity of 2,500 and all seats at the Bowl ha\e the same price. The demand for concert dckets to the B-

,52s is as follows:

price $6

landty of

Fdckets demanded 3500

$8 $10 $12 $14

3000 2500 2000 5000

f the resale of tickets is illegal, all citizens are law abiding, and tickets go on sale at $8, then which of the fol-llowing would occur? (a) an excess demand for ticket-s k(b) an excess supply of dckets (c) neither excess supply nor demand (d) insufficient information to nswer (e) demand yvould decrease.

p9. If instead, the Santa Barbara Count) Bowl sold its tickets to an agenc) at $8 and the agenq could resell them at any price it wished, the maximum price "t which the agency could sell all its tickets would be: p>) $6 (b) $8 (c) $10 (d) $12 (e) $14.

If the government imposes a price floor above e equilibrium price of a good, then: (a) demand

will increase (b) positive excess demand will occur

(c) the quality will decrease (d) less will be sold (e) no change in price will occur

21. If in one period the supply cur\e is to be found lying above its position in an earlier period, we would have an example of: (a) a supply increase (b) a supply decrease (c) an income change (d) a non-equilibrium (e) none of the above.

22. Technological progress can be expected to:

(a) shift the supply curve rightward (b) shift the supply curve leftward (c) make the supply curve flatter

(d) cause demand to increase (e) cause demand to decrease.

23. After the Second World War the average American farm yielded about 50 bushels of corn per acre. Today because of improved strains and better farming methods yields of three times that amount are typical. These improvements caused: (a) a leftward shift of the supply curve, i.e., a supply increase (b) a leftward shift of the supply curxe, i.e. a supply decrease

(c) a rightward shift of the supply curve, i.e., a supply increase (d) a rightward shift of the supply curve, i.e., a supply decrease (e) a movement along a stationary supply curve.

24. If Congress proposes to reduce the minimum wage required for teenagers, we would expect the American Federadon of Labor to be: (a) neutral-because almost all union members make much more than the minimum wage (b) against because teenage labor is a substitute for union labor (c) for because teenage labor is a complement for union labor

(d) against because of labor solidarii) (e) against because teenage labor is a complement to union labor.

25. Normally its much easier to find a motel room near a nauonal park than a camping site within the park. This is a sign that: (a) motels come closer to clearing their markets than do national parks

(b) motels are over-built (c) the Park Service should permit more campers (d) a demand curve for camping sites does not exist (e) all of the abo\e.

26. Which of the following are examples of excess demand? (a) the fact that UCSB rejects students who are willing and able to pay the current fee (b) power blackouts (c) people waidng on the streets at 5:00 a.m. in order to secure a place for the Rose Parade