1. Popeye's Parlour supplies both piercing and tattoo services. Higher prices for piercings cause Popeye's O A. supply of tattoos to increase. O B. quantity supplied of tattoos to decrease. O C. quantity supplied of tattoos to increase. O D. quantity demanded of tattoos to increase. O E. supply of tattoos to decrease. 2. A technological breakthrough lowers the cost of yoga mats. If the demand for yoga mats is price inelastic, yoga mat sales O A. increase and total revenue increases. O B. decrease and total revenue increases. O C. increase and total revenue decreases. O D. decrease and total revenue decreases. O E. increase, but changes in total revenue depend on elasticity of supply. 3. Figure 4.2.1 Market Demand and Supply for Pet Rocks Price $1 $2 $3 $4 $5 $6 97 Quantity Demanded 900 800 600 500 420 350 320 Quantity Supplied 100 200 420 500 580 640 680 O A. below S4. O B. $5. O c. above $4. O D. $7. O E. $4. 4. A technological change that lowers the cost of producing pencils O A. decreases the supply of pencils. O B. increases the quantity supplied of pencils. O C. increases the supply of pencils. O D. increases the demand for pencils. O E. decreases the quantity supplied of pencils. 5. If the market for Twinkies is in equilibrium, then O A. the quantity demanded equals the quantity supplied. O B. there is a surplus. O C. consumers would like to buy more at the current price. O D. businesses would like to sell more at the current price. O E. Twinkies must be a normal good. 6. When supply decreases A. price falls with no change in quantity demanded. B. demand decreases so that price remains the same. O C. price falls and quantity demanded increases. D. price rises and quantity demanded decreases. O E. price rises and demand increases. 7. The law of supply tells us that, if other factors do not change, as the O A. cost of producing gasoline decreases, the supply of gasoline increases. O B. price of gasoline rises, the quantity of gasoline supplied decreases. O C. cost of producing gasoline increases, the price of gasoline rises. O D. supply of gasoline increases, the price of gasoline rises. O E. price of gasoline falls, the quantity of gasoline supplied decreases. 8. If a 4 percent increase in income causes a 2 percent increase in the consumption of pencils then O A. the income elasticity of demand for pencils is negative. O B. pencils are a necessity and a normal good. O C. pencils are a luxury and a normal good. O D. pencils are an inferior good. O E. both A and D. 9. A perfectly inelastic demand curve is O A. upward sloping. O B. horizontal. O C. downward sloping O D. vertical. OE. none of the above. 10. If a 4 percent rise in the price of peanut butter causes total revenue to decrease by 8 percent, then demand for peanut butter O A. has a price elasticity of 1/2. O B. is inelastic. O C. has a price elasticity of 2. O D. is unit elastic O E. is elastic. 11. The supply curve shifts rightward from all of the following except O A. a fall in the price of a related product or service in production. O B. the introduction of a cost - saving technology. O C. an increase in the number of businesses selling. O D. a rise in input prices. O E. an expectation that future prices will be lower. 12.Peter gets a 20 percent wage raise and increases his hours worked by 50 percent. Peter's elasticity of supply is O A. 40. O B. 20. O C. 2.50. O D. 50. O E. 25