Select the TRUE statement below regarding aggregate supply in the short and long run.

• The relationship between price level and RGDP is negative in the short run.
• In the long run, there is a close relationship between price level and RGDP.
• In the long run, there are no limits on production.
• The LRAS curve can move over time.

If a certain brand of furry boots are suddenly all the rage and the market price increases to $500 a pair,but very few people buy them because they are too expensive, which of the following will happen next?

• The price will continue to rise indefinitely.
• The price will stay the same.
• The price will rise until it reaches equilibrium.
• The price will fall until it reaches equilibrium.

Which statement below about producer surplus is NOT true?

• Producer surplusrepresents the revenue generated from sales over and above the minimum price at which sellers are willing to sell.
• Producer surplus is basicallythe same as profit.
• When producer surplus drops to zero, firms stop producing.
• Producer surplus is a similar conceptto consumer surplus.

Select the statement below that is true of ONLY price ceilings.

• Are binding when they are above equilibrium
• The market is allowing for trade to occur between buyers and sellers
• Can create a shortage of product
• The market clears, there are no shortages or surpluses

If the short run aggregate supply curve intersects with the aggregate demand curve at a point that is greaterthan theLRAScurve, which statement below is true?

• Producers are using inventory faster than it can be replaced.
• The government will probably implement expansionary macroeconomic policies.
• This situation will most likely coincide with high unemployment.
• The economy may be in equilibrium.

Which of the following istrue about a market at equilibrium price?

• The market does not clear.
• Demand is low because the price is so high.
• There tend to be shortages because the price is so low.
• At the prevailing price, there is no market basis for the price to change.

Assuming ceteris paribus,what principle behind the law of demand is this graph is illustrating?

• Barring special circumstances, an increasein price will always lead to a decrease in quantity.
• Barring special circumstances, a decrease in price will have no effect on an increase or decrease in quantity.
• Barring special circumstances, an increase in price will always lead to an increase inquantity.
• Barring special circumstances, andecreasein price will always lead to a decrease inquantity.

In economic terms, which of the following happened when cupcakes went from being homemade treats to being specialized gourmet goodies with multiple TV shows devoted to them and people waiting in line for them?

• Changes in public tastes created a shift in the demand curve.
• Changing tastes created a shift inthesupply curve.
• As the price of cupcakes rose, so did demand.
• A change in the quantity of cupcakes demanded caused movement along the demand curve.

Jack is willing to pay as much as $1,300 for a new camera but is happy to find one he likes that costs $400.

Select the term below that corresponds to this situation.

• Consumer surplus
• Ceteris paribus
• Equilibrium
• Producer surplus

Which statement below will be true if demand for a product is inelastic and a tax is imposed on it?

• Consumers cannot easily find substitutes.
• Producers will have to bear most of the burden of the tax.
• Both consumers and producers will bear the burden of the tax equally.
• Producers will not be able to raise the price to cover most of the tax.

Which of the following would NOT cause a shift in the supply curve for cheese?

• Thousands ofdairy cattle come down with a mysterious illness and need to be quarantined.
• A celebrity chef develops a new technique for making cheese that makes it easierto increase output.
• The price of feed for the dairy cattle goes up significantly.
• The results of a medical study show that eating too much cheese can lead to premature aging.

As the price level falls, people feel as if they have more money, so they spend more, which influences which of the following, in economic terms?

• Interest rate effect
• Exchange rate effect
• Aggregate demand
• Aggregate supply

What economic rule is generally used in the decision of a regulator to impose a binding price constraint?

• When consumer and producer surplus are maximized
• When it transfers surplus from producers to consumers
• When it creates deadweight loss
• When the benefit to a specific group of people is greater than deadweight loss