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-Exam Review
Answers to Multiple Choice Review
1.
Which one of the following is consistent with resource
markets?
d.
firms demand resources
2.
Which of the following is NOT a role of households?
b. demand resources
3.
When the price of Product A increases
d.
quantity demanded of Product A will decrease.
4.
According to the Law of Supply
c.
the quantity supplied of Product A is directly related to the
Price of A.
5.
If, during recessions, when average consumer income declines,
the demand for fast food burgers increases, we would class fast food
burgers as a(n)
a.
inferior good.
(note: this type of question will not be on the exam)
6.
When the price of Product B decreases, the demand curve for
Product A shifts to the right. In this case we can infer that Product B is
a(n)
d.
complement good to Product A.
(note: this type of question will not be on the exam)
7.
When the price of Product B decreases, the demand curve for
Product A shifts to the left. In this case we can infer that Product B is
a(n)
c.
substitute good to Product A.
(note: this type of question will not be on the exam)
8.
Suppose that Cleartone Ltd. manufactures (supplies) 600 TV
remote control units per day when the price is $15 per unit. Assuming that
there are a total of 10 firms identical to Cleartone Ltd., what would the
daily market supply be, at a price of $15 per unit?
b.
6000 units per day
9.
If the government provides a $0.20 per bushel subsidy to
Canadian wheat producers, this would cause
c.
an increase in supply of Canadian wheat.
Figure
1: Market for One-Bedroom Apartment Units in A Small Canadian City
10.
Refer
to Figure 1 above to answer the following. The equilibrium monthly rent
for the one bedroom apartment units in the small Canadian city is
c.
$250
11.
Refer
to Figure 1 above to answer the following. If the monthly rent was
initially set at $400 per rental unit,
b.
there would be a surplus of 12 000 units per month.
12.
Refer
to Figure 1 above to answer the following. If the monthly rent was
initially set at $100 per rental unit
d.
there would be a shortage of 12 000 units per month.
13.
Suppose
that two factors affecting the apartment rental market in a small Canadian
city were happening at the same time.
Factor 1: The provincial government is providing new subsidies to
construction companies who decide to construct new one bedroom apartments.
Factor 2: The population of renters in this small city significantly
declines. Predict what will happen to the apartment rental market in this
city.
b.
Equilibrium rental prices will decrease, but equilibrium
quantities will be uncertain.
14.
In
general, if the cost of manufacturing cars in Canada declines, we can
expect
a.
an increase in supply of Canadian cars and a decrease in
equilibrium price of Canadian cars.
15.
Assume
that the price of gasoline is a complement product to brand new large
sport utility vehicles (SUVs). If the price of gasoline significantly
decreases, in the long-run this will result in
c.
an increase in demand for SUVs, and a increase in equilibrium
price of SUVs.