1. A market begins in equilibrium, and then moves to a new equilibrium with a higher price and lower quantity. Which of the following could explain this outcome?

a. An increase in the costs of production.

b. A decrease in consumer income.

c. Development of a more efficient technology of production.

d.An increase in the number of consumers in the market.

2. A market begins in equilibrium, and an increase in income causes no change in the equilibrium quantity. Which of the following could explain this result?

a. At the same time income increased, the number of producers in the market increased.

b. The good is an inferior good.

c. Supply in this market is perfectly inelastic.

d. None of the other answers are correct.

3. In which of the following situations would you expect a shift in supply to have a large change in price and small associated change in quantity?

a. A market where there are many substitutes in demand.

b. A market with a lot of time for consumers to adjust their behavior.

c. A market where the good is a luxury.

d. A market where the good is a small share of consumer spending.

4. Which of the following goods would you most expect to have a higher price elasticity of demand?

a.Gasoline

b.Prescription drugs

c.Sugar

d.Vacation airline travel

5. As an hourly contract consultant, you're currently trying to decide between a month-long, all-inclusive package vacation in Europe, or keeping your standard consulting schedule. Which of the following best illustrates the idea of the opportunity cost of the vacation?

a. The sticker price of the vacation package.

b.The sticker price of the vacation package and your foregone wages.

c.Your foregone wages.

d.The sticker price of the vacation, your foregone wages, and all the other things you can't do while on vacation.

6. The idea of producer surplus illustrates

a.The difference between the price of a product and its marginal cost of production.

b.The difference between the price of a product and its marginal value of consumption.

c.The difference between the price of a product and the fixed costs of the firm.

d.None of the other answers are correct.

7. The market price of rental cars has skyrocketed during the pandemic. Which of the following changes to equilibrium effects could explain this?

a. Rental car firms sold off a lot of their cars during the pandemic.

b. An unusual number of people plan on taking vacations this summer.

c. Both the sell off and vacation changes are possible.

d. None of the answers are correct.

8. Which of the following would decrease the supply of gasoline in the market?

a. An increase in consumer income.

b.Expanded use of hydrofracking.

c.An increase in population.

d.An increase in the wage of refinery workers.

9. Which of the following would best illustrate the first law of demand?

a. An increase in global income in the market for meat.

b. An increase in the population age in the market for medical care.

c. A decrease in local population in the market for housing.

d. A decrease in price in the market for smartphones.

10. The price of lumber rose substantially in the last couple years. Assume the new housing market is perfectly competitive - what effect do we expect this will have on housing prices in the short run?

a.The supply curve will shift inward (left), raising housing prices.

b.The demand curve will shift inward (left), lowering housing prices.

c.The supply curve will shift outward (right), raising housing prices.

d. The demand curve will shift outward (right), raising housing prices.

11. Following up on the prior question, what do we expect will eventually happen in the market for new housing?

a. Prices will fall because long run demand is less elastic.

b. Prices will fall because long run supply is more elastic.

c. Prices will rise because long run demand is more elastic.

d. Prices will rise because long run supply is less elastic.