1. For a wood furniture manufacturer, an increase in the cost of lumber used in the production of furniture will cause the supply curve to A) become flatter. B) become steeper. C) shift to the left. D) shift to the right. 2. Which of the following would cause a decrease in the price of a good? A) an increasing shift in the supply of a good and no shift in demand B) a decreasing shift in the supply of a good and no shift in demand C) an increasing shift in the demand for good and a decreasing shift in supply D) an increasing shift in the demand for good and no shift in supply Answer the following question based on the following regression equation (Standard errors in parentheses, n = 150): QD = 1000 - 50PA + 10PB + .05I, (20) (7) (.04) where QD = quantity demanded of good A, PA = price of good A, PB = price of a competing good B, and I = per capita income. 3. Using the "rule of 2," which of the following variables can be deemed statistically significant? A) I B) PB C) PA D) All of the above 4. Which of the following statements about the short-run production function is true? A) MP always equals zero when TP is at its maximum point. B) When MP diminishes, AP is at its minimum point. C) MP always equals AP at the maximum point of MP. D) TP starts to decline at the point of diminishing returns. 5. If Marginal revenue product of labor (MRP) is greater than Marginal Labor Cost (MLC), it means that a firm should A) decrease its fixed capacity. B