1.If supply increases and demand also increases, we can conclude that the new equilibrium:

a.Quantity must increase but market price may fall, stay the same or even increase.

b.Price must fall but market quantity may fall, stay the same or even increase.

c.Price must increase but market quantity may fall, stay the same or even increase.

d.Quantity must decrease but market price may fall, stay the same or even increase.

e.Both market quantity and market price must increase.

f.Market quantity must increase and market price must decrease.

2. One of the following equations represents a supply curve and the other a demand curve.You have to decide which is which.Circle the answer for question three that is the closest to being correct.The equations are:

Q=150-10P Q=100+5.6P

Approximately, what will the equilibrium quantity be?

a. 3.2

b. 60.0

c. 111.0

d. 118.0

e. 130.0

f. 150.0

3.Here is a function that is either a demand function or a supply function (but not both):

Q=2-5P

A change occurs so that the following function now represents the situation:

Q=6-5P

We can conclude that.

a. demand has increased

b. demand has decreased

c. supply has increased

d. supply has decreased

e. quantity supplied has decreased

f. quantity demanded has decreased

g. quantity demanded has increased

h. quantity supplied has increased

4.Here is a demand function:Q=6-6P: circle your choice for its marginal revenue (MR) function.

a.MR=2-.4Q

b.MR=3-.5Q

c.MR=1.5-.2Q

d.MR=1-.333Q

e.MR=1-.167Q

f.MR=1.5-.333Q

6.Circle your choice for the quantity that will maximize total revenue for the function in 4 (above).

a.1

b.3

c.4.5

d.5

e.6

f.7.5

6.Suppose the price elasticity of demand for bread is 0.20.If the price of bread falls by 10%, the quantity demanded will increase by:

a.2 percent and total expenditures on bread will rise.

b.2 percent and total expenditures on bread will fall.

c.20 percent and total expenditures on bread will rise.

d.20 percent and total expenditures on bread will fall.

e.20 percent and total expenditures on bread will be unchanged.

7.Suppose that a 10% decrease in the price of good Y causes a 20% increase in demand for good X.The coefficient of cross-price elasticity of demand is:

a. negative and therefore these goods are inferior goods.

b. negative and therefore these goods are complements.

c. positive and therefore these goods are substitutes.

d. positive and therefore these goods are normal goods.

8.When the price of candy bars increased from $0.45 to $0.55 the quantity demanded decreased from 21,000 per day to 19,000 per day.In this range, the price elasticity of demand is:

a.0.39

b.0.5

c..89

d.1.0

e.1.75

f.2.83

9.If the elasticity of supply for crude oil is 2.5, how much will the price have to increase to increase production 20%?

a.2.5%

b.8%

c.10%

d.15%

e.25%

f.40%

10.Demand for X increases from 100 to 125 when the price of Y increases from $6 to $7.The cross-price elasticity of demand is:

a.-3.67

b.-1.22

c.1.22

d.1.44

e.3.67

f.4.33