Question 1- This question has multiple answers:

You just took Uber from home to campus for the first time and were willing to pay $13 for the trip. It was so much easier than driving yourself that you are willing to pay $21 for the same trip tomorrow. Have you violated that law of demand?

Select 2 correct answers

1. No, because your willingness to pay has increased to $21 to get the Uber trip
2. No, because law of demand says you can purchase anything equal to your willingness to pay
3. Yes, because you already decided that you are willing to pay $13 for it

Question 2 (6 points )

Fei, Morgan and Lakesha are all in the market for new Levi's jeans. The marginal benefits for each pair of Jeans per year for each of them is provided in the following table.

a. If the price of a pair of Levi's jeans is $32, how many pairs of jeans will each person purchase?

b. How much consumer surplus does each of them received from the last pair of jeans purchased?

c. How much consumer surplus will each of them received for each of the pairs they buy at a price of $32?

Question 3(1 point)

Alexis is still at the supermarket for bread. She notices that tortillas are on sale. What happens to her demand curves for tortillas and bread as a result of the sale?

1. The lower sales price of tortillas causes quantity demand to increase along the curve. The quantity demanded for bread at the same prices decreases, causing demand curve to shift to the left
2. The demand for bread and tortilla remains the same, so nothing happens to the demand curves
3. The lower sales price of tortillas causes quantity demanded to increase along the curve. This cause decrease in price and bread, and causes quantity demanded to increase along the curve.

Question 4(1 point)

Chanel introduced a new luxury handbag in the market, branding it for exclusivity saying only 100 of these handbags will ever be made. However, seeing the demand rise, Chanel changes its strategies to make more handbags to meet demand. Buyers now become disappointed, since too many people now one this exclusive product, and so their demand for the handbag falls. What cause demand to fall?

1. Network effect
2. Congestion effect
3. Preference of buyers

Question 5 (2 points)

A 22% increase in the price of the oil reduces the quantity of oil demanded by 5.5% percent.

What is the price elasticity of demand for oil?

What can you say about the elasticity?

Price Elasticity of Demand = Percentage in Demand (5.5% or 0.055) /Percentage Change in Price (22% or 0.22)

Price Elasticity of Demand = 0.25 or 25%

This is an example of Elastic Demand where the quantity of demand is relatively responsive to a change in price.

Question 6 (1 point)

This question has multiple answers:

In which range of values can we say that quantity demanded is relatively insensitive to price?

Select 2 correct answers:

1. When elasticity is between -1 to 0
2. When elasticity is 0
3. When elasticity is between -1 and 1

Question 7( 1 point )

Roland has started his own line of perfumes. Each of his bottles of perfume is priced $5. The table shows his supply plan with marginal cost, how many bottles of perfumes should he produce? Explain you answer.

Question 8 (1 point)

Alexis goes to the supermarket to buy bread. In the bread section to buy some Italian style bread. However, she notices some tortillas too. What type of goods are bread and tortillas?

1. Inferior good
2. Complementary good
3. Substitute good

Question 9 (1 point) This question has multiple answers

Which of the following is not a factor causing shift in supply curves?

Select 2 correct answers:

1. Input prices
2. Price of goods/services
3. Income

Question 10 (1 point)This question has multiple answers

What does price elasticity of demand help measure?

Select 2 correct answers:

1. The change in quantity demanded due to 1% change in price.
2. The responsiveness of demand to price
3. The change in quantity supplied due to 1% change in demand

Question 11 (1 point)

Interdependence principle arises when there is scarcity. Therefore, when choosing among alternatives, there is a trade off.

1. True
2. False

Question 12 (1 point)

Batteries in Samsung smartphones begin to spontaneously combust. The demand curve for Samsung smartphones will:

1. Remain the same
2. Shift to the left
3. Shift to the right

Question 13 (1 point)

In order to choose between ranges of choices, you can look at the value of giving up the next best alternatives to choose it. This economics principle is known as:

1. Cost-benefit Principle
2. Opportunity Cost Principle
3. Marginal Principle

Question 14 (4 points)

Consider the following data from the market demand and supply for apartments. The average monthly rent for apartment is currently $1,300. At this price: (explain)

1. How many apartments will be rented in this market?

1. Is the market currently in equilibrium, experiencing a shortage, or experiencing a surplus?
2. What do you expect to happen to the average rent?

1. What is the equilibrium rent and quantity in the market?

Rent ($)	Quantify Demanded	Quantity Supplied
2500	5,000	25,000
2200	8,000	20,000
1900	11,000	18,000
1600	15,000	15,000
1300	19,000	11,000

Question 15 (1 point)

When quantity demanded exceeds, quantity supplied supply, there is a:

1. Equilibrium
2. Surplus
3. Shortage

Question 16 (1 point )

The cost benefits principle suggests that:

1. You need to look at the full set of costs and benefits for any choice.
2. Pursue all choices where benefits are equal to or smaller than costs.
3. Make sure to calculate how much it costs to consume one more unit of your choice.

Question 17 ( point )

Question 18 ( 1 point )

Microchips used in smartphones have become more powerful and less costly to produce. What happens to the supply and demand curves?

1. Demand curve shifts to the right, supply curve shift to the right, and price rises
2. Supply curve shifts to the right, quantity demanded increases, and price falls.
3. Demand curve shifts to the right, quantity supplied increases, and price falls

Question 19 (1 point)

When looking at your production's possibility frontier, if you plan your activities so that the values of your choices are below the PPF line, we can say that:

1. You are making inefficient use of your resources.
2. You are boosting your productivity and causing PPF line to shift.
3. You are making efficient use of your resources.

Question 20 (4 points)

Moira Rose has decided to go to a local wine subscription website to get boxes of wine. She decides to go for their wines in the $20 range. Her total benefits for more bottles are given in the below.

How many bottles of wine should she buy and why? Explain

Quantity of Wine	Total Benefits ($)
1	26
2	50
3	72
4	90
5	107

Question 21 (1 point) -The question has multiple answers:

Which of the following statement is true?

Select 2 correct answers:

1. When the price of tennis ball increases, the demand curve for tennis rackets shifts to the left.
2. When the price of play station falls, the demand curve for games shifts to the left
3. When the price of McDonald's falls, the quantity demanded for Burger King fall

Question 22 ( 1 point )

At equilibrium point, quantity demanded is equal to quantity supplied, the price is different.

1. True
2. False