19) Refer to Figure 2-5. At a price of $5, 4 ) there would be a shortage of 4 units. B) there would be a scarcity of 4 units. () there would be a shortage of 6 units. D) there would be a surplus of 4 units. 20) Use the following graph for a competitive market to answer the question below. Price A S2 51 $3.50 $2.50 $1.25 D 300 400 Quantity Which of the following would best explain why the shift from $1 to $2 would cause the price to rise from $2.5 to $3.5? A) After the shift in supply, there would be an initial surplus at $3.5 B) After the shift in supply, there would be an initial surplus at $2.5 () After the shift in supply, there would be an initial shortage at $3.5 D) After the shift in supply, there would be an initial shortage at $2.5 21) If the cost to produce frozen chicken nuggets decreases at the some time as consumer tastes shift away from frozen chicken nuggets and the shift in supply is greater than the shift in demand, which of the following is true? A ) Both the equilibrium quant ity and price will decrease. B) Both the equilibrium quantity and price will increase. () The equilibrium price will decrease and the equilibrium quantity will not change. ") The equilibrium price will decrease and the equilibrium quantity will increase. 22) If the cost to produce U.S. made cell phones is decreasing, at the same time, the prices of Korean made cell phones are increasing. Based on this scenario, what would be expected to happen to the equilibrium price and equilibrium quantity of U.S. made cell phones? A ) Both the equilibrium quant ity and price will decrease. B) Both the equilibrium quantity and price will increase. C) Quantity will increase; price cannot be determined. D) Quantity will decrease; price cannot be determined. 23) Assume the demand function for good X can be written as Qq = 80 - 3PX + 6Py + 101, where Px = the price of X. Py is the price of Y and I is consumer income. If the price of Y decreases by 5 dollars, all else constant, what is the change in Px have to be in order to keep the quantity demanded of X unchanged by the change in the price of A) increased by 10 dollars B) decrease by 1 dollar 5C) decrease by 10 dollars D) decrease by 2.5 dollars Figure 2-5 Price $20 Quantity 24) Refer to Figure 2-5. In a free markeT such as ThaT depicTed above, a shorTage is eliminaTed by A) a price decrease, decreasing The quanTiTy supplied and increasing The quanTiTy demanded. B) a price decrease, decreasing The supply and increasing The demand. C) a price increase, increasing The quanTiTy supplied and decreasing The quanTiTy demanded. D) a price increase, increasing The supply and decreasing The demand. 25) A "change in demand" is caused by a change in The price of The good iTself. A) True B) False 26) Managerial economics refers To The applicaTion of microeconomics To business decision making. A) True B) False 27) Assume The demand funcTion for good X can be wriTTen as Qd=40-1.5Px-Py-5I where PX = The price of X, Py = The price of relaTed good V, and I = Consumer income. This demand equaTion implies ThaT X is an inferior producT. A) True B) False 28) Assume The demand and supply TuncTions for good X can be wriTTen as QD = 500 - 20P Q5 = -100 + 10P In This markeT, equilibrium price is $20 and equilibrium quanTiTy is 200 uniTs. A) True B) False