Choose the correct Answer

1)Suppose that the demand and supply for wheat are represented by the following equation, where P is the price of wheat and Q is the number of units of wheat sold.

P = 92 - 2Q (demand)

P = 12 + 6Q (supply)

If the market is in equilibrium, what is the amount of total surplus?

a.$800

b.$700

c.$500

d.$600

e.$400

2)If India saves less now than in the past, then its production possibilities frontier will over time:

a.none of these answers is correct.

b.shift out more than in the past.

c.shift in during recessions, and out during expansions.

d.shift in.

e.shift out but not as much as in the past.

3)If China decreases its savings rate, its current production possibilities frontier will:

a.shift in.

b.shift in but more than in the past.

c.shift out during expansions, and in during contractions.

d.remain the same.

e.shift out, more than in the past.

4) Suppose that Dirk and Charity-Joy want to find a way to divide up household chores: dusting the rooms and cooking meals. It takes Dirk 30 minutes to dust a room and 15 minutes to cook a meal. It takes Charity-Joy 15 minutes to dust a room and 5 minutes to cook a meal. If Dirk and Charity-Joy trade, one dusting of a room should trade for more than ____ meals but fewer than ____ meals.

a.2; 3

b.1; 2

c.0.5; 2

d.0.33; 0.5

e.1.5; 2.5

5) Suppose the price of bottled water in a restaurant increases from $3 to $5. As a result, consumption drops from 1,000 to 900 bottles. Total revenue ________ because the price elasticity of demand for bottled water is ________.

a.fell; inelastic

b.fell; elastic

c.rose; inelastic

d.stayed the same; unitary elastic

e.rose; elastic