MULTIPLE-CHOICE QUESTIONS For Questions 111 refer to below statement and demand and supply functions. Suppose that demand and supply curves for avocado in Brooklyn are as the followings: Qd=7212P Q'=18+6P where Qd and Qs are quantities demanded and supplied in tons respectively, and P is the price of avocado in dollars per kg? 1) If price elasticity of demand for avocado at price P* is equal to 6/9, how much is P*? a) $2 b) $2.20 C) $2.40 d) 52.60 e) 52.80 2) What is quantity demanded at price P* at which price elasticity of demand for avocado equals -6/9? a) 42.2 tons b) 43.2 tons c) 44.2 tons d) 45.2 tons e) 46.2 tons 3) If price elasticity of demand for avocado at price P* is equal to -9/6, how much is P*? a) $3.00 b) 53.20 c) $3.40 d) 53.60 e) 53.80 4) What is quantity demanded at price P* at which price elasticity of demand for avocado equals to -9/6? a) 28.2 tons b) 28.4 tons c) 28.6 tons d) 28.8 tons e) 29.2 tons 5) What is the slope of the demand curve? a) -12 b) *6 c) 3 d) l/lZ e) -l/6 6) What is the slope of the supply curve? a) 18 b) 3 c) 6 d) 1/3 e) 1/6 7) what is market clearing equilibrium price and quantity in Brooklyn avocado market? a) $1; 60 tons b) $2; 48 tons c) $3; 36 tons d) $4; 24 tons e) $5; 12 tons 8) What is the total revenue created at market clearing equilibrium price and quantity in Brooklyn avocado market? a) $24000 b) $36000 c) $48000 d) $56000 e) $60000 9) What is the total amount of surplus if the price of avocado is 56'00 per kg in Brooklyn avocado market? a) b) 6 tons 9 tons m d e 12 15 18 tons tons tons 10) What is the total amount of shortage if the price of avocado is $3.00 per kg ' Brooklyn avocado market? 11'} m b m m e 12 24 36 48 72 tons tons tons tons tons 11) While the avocado market is in equilibrium if avocado sellers decide to raise their prices by 2% above the market equilibrium price, what will happen to the percent change in quantity demanded? a) It Will decrease by 5%. b) It Will decrease by 10% c) It will decrease 15%. d) It will decrease by 20% e) It will decrease by 25% 12) Which of the following would not shift the supply curve for avocado to the right? a.An increase in the number avocado farms b. Good weather for growing avocado c.A reduction in wages for avocado pickers d.An increase in the expected price of avocado in the future e. A technology for growing avocado with less water l3) which of the following would not shift the supply curve for avocado to the left? .Bad weather for growing avocado .An increase in wages for avocado pickers .A shift in tastes from avocado to tomatoes .An increase in the cost of the inspection and certification paid by avocado producers .An increase in the expected price of coffee in the future Q 0 U m m 14) Suppose that the supply of avocado increases due to an improvement in the technology for growing avocado with less watering costs. Which of the following describes the mechanism of price and quantity adjustment assuming that there is no change in the demand curve? a.There is a downward pressure on prices and an increase in the equilibrium quantity. b.There is an upward pressure on prices and an increase in the equilibrium quantity. c, There is no change in equilibrium price and quantity. d.There is a downward pressure on prices and a decrease in the equilibrium quantity. e.None of the above. 15) In answering the following question, it may be helpful to draw a supply and demand diagram. What is the effect on equilibrium price and quantity of an decrease in both supply and demand? a.There is an increase in equilibrium price and an increase in equilibrium quantity. b.There is no change in equilibrium price but a decrease in equilibrium quantity. c. There is a decrease in equilibrium price and an increase in equilibrium quantity. d. There is no change in equilibrium price or quantity. e. There is an ambiguous effect on equilibrium price and a decrease in equilibrium quantity. Suppose we know that the price elasticity of demand for organic apples is *1.2. If a grocer increases the price of organic apples by 15%, what would we expect to happen to the quantity of organic apples purchased? a) Decrease by 1.2% b) Decrease by 12% c) Decrease by 1.8% d) Decrease by 18% e) Decrease by 2.4 % Suppose we know that the price elasticity of demand for sandals is e 1.5. A shoe stores normally sells 100 pairs of sandals each month. If it decides to raise the price of its sandals by 30%, how many sandals would it then sell per month? a) 115 b) 85 c) 70 d) 60 e) 55 18) If a increase in the price of apples from $1 to $2 per kg leads to an decrease in the quantity of apples demanded from 150 million to 100 million kg, then applying the midpoint formula, the price elasticity of demand equals: a) 4/10 b) '6/10 c) -2/3 d) -3/2 e) -4/3 19) Suppose we observe that the revenue a music store receives from CD sales increases when the price of CBS is decreased. What can we conclude? a) The price elasticity of demand for CDs is zero. b) The demand for CBS is perfectly inelastic. c) The price elasticity of demand for CBS is -1. d) The price elasticity of demand for CBS is greater than -1 . e) The price elasticity of demand for CBS is less than -1. 20) The main difference between positive economics and normative economics is that m a) while positive pessimistic. b) while positive objective. c) while positive biased. d) while positive optimistic. e) while positive prescriptive. economics economics economics economics economics is is is is is objective, while the normative one is pessimistic, while the normative one is optimistic, while the normative one is biased, while the normative one is descriptive, the normative one is For Questions 21 and 22, refer to the graph below. Output 2 0mm: 1 21) According to the graph above, in order to maximize the level of wellbeing what bundle of commodities should be produced? a) Bundle A b) Bundle B c) Bundle C d) Bundle D e) We can't be determine from the graph. 22) which one of the following statements is false? 3) Bundle A is inefficient. b) Bundle C is efficient. c) Bundle A is preferred to Point B. d) Bundle D cannot be attained with current technology. e) Bundle B is efficient. 23) If pasta is a Giffen good, thenm a. pasta is also a normal good. 1). pasta is also a luxury good. c. an decrease in the price of pasta will increase the quantity demanded. d.an increase in the price of pasta will increase the quantity demanded . e.pasta must make up a small portion of consumers' total expenditures