Multiple choice questions:

15. Which of the following would cause buyers to increase consumption of an inferior good?

a. An increase in buyers' incomes

B. An increase in the price of a complement

C. A decrease in the price of a substitute\

D. A decrease in buyers' incomes

E. A decrease in its expected future price

16. The African country Ghana has set a new minimum wage above the equilibrium market wage

a. There will be a shortage of labor at the minimum wage

B. It will have no effect on the quantity of labor employed

C. The unemployment rate will rise

D. The quality of the labor force will decrease

E. The unemployment rate will fall

17. Betsy graduates from college, where she earned $3000 year working part-time, and takes a job as a third grade teacher, where she now earns $30000 per year. After receiving her first paycheck, she gave away her bicycle and purchased a new car. Therefore,

a. Bicycles are good for Betsy

B. Automobiles are an inferior good for Betsy

C. Automobiles are a normal good for Betsy

D. Betsy's supply curve for automobiles is upward-sloping

E. Bicycles and automobiles are complementary goods for Betsy

18. Of the following, which is true of the relationship between the quantity of a good supplied and its price?

a. As price increases, the quantity supplied usually decreases

B. As price increases, the quantity supplied usually increases

C. As price increases, supply increases

D. When demand increases, so will supply

E. They always meet at the point of equilibrium in the market

19. Let us suppose that Tylenol and aspirin are substitutes. If the production costs of aspirin increase, then it would _____the price of aspirin and _____the price of Tylenol

a. decrease, increase

B. Decrease, decrease

C. Increase, decrease

D. Increase, increase

E. None of the above

20. Before Hawaii allowed trading of macadamia nutes, on e pound of nuts was selling at $15 in Hawaii.The world price of macadamia is $25 per pound. Once Hawaii freely trades any macadamia with other countries, Hawaii begins

a. Exporting macadamia and the price per pound in Hawaii stays at $15

B. Exporting macadamia and the price per pound in Hawaii increase to $25

C. Importing macadamia and the price per pound in Hawaii stays at $15

D. Importing macadamia and the price per pound in Hawaii increases to $25

E. Importing macadamia and the price per pound in Hawaii increases to $20

21. Economics is the study of choice under conditions of

a. Demand

B. Supply

C. Scarcity

D. Opportunity

E. Abundance

22. If the US imports a certain product, then in the US

a. Consumer surplus and producer surplus both increase

B. Consumer surplus and producer surplus both decrease

C. Consumer surplus increases and producer surplus decreases

D. Consumer surplus decreases and producer surplus increases

E. Consumer surplus increases and producer surplus stays the same

23. When a tax is imposed, the largest deadweight loss will occur in a market with

a. Inelastic supply and elastic demand

B. Inelastic supply and inelastic demand

C. Elastic supply and elastic demand

D. Elastic supply and inelastic demand

E. Insufficient information

24. Suppose the income elasticity of demand for a good is between 0 and 1, then the good is

a. An economic luxury

B. An economic necessity

C. One with relatively little demand

D. Provided by a monopoly producer

E. Provided by competitive producers

25. Price ceiling can result in a net loss in consumer surplus when the _____

a. Demand, very elastic

B. Demand, very inelastic

C. Supply, very inelastic

D. None of the above - price ceilings always increase consumer surplus

E .None of the above - price ceiling always decrease consumer surplus

26. On a graph where the supply and demand curves of a product are represented by straight lines, the deadweight loss from a tariff is represented on the graph by

a. The area of one triangle

B. The area of one rectangle

C. The aggregate area of two different triangles

D. The aggregate area of two different rectangles

E. The area of one trapezoid

27. The country of Happyranch does not trade with other countries. In Happyranch, one can exchange 1 pound of beef for 2 pounds of tomatoes. In other countries, people exchange 1 pound of beef for 4 pounds of tomatoes. From this information, we can deduce that

a. Compared to other countries, Happyranch has a comparative advantage in producing beef

B. Compared to Happyranch, other countries have an absolute advantage in producing beef

C. In Happyranch, the price of beef is greater than the world price

D. Happyranch would export tomatoes if it allows trading with other countries

E. Other countries would export beef to Happyranch if trading were allowed