Question

Complete the following questions by selecting a SINGLE letter for each:

i) Which of the following is most likely to not be an inferior good?

a. concert tickets

b. Ramen noodle dinners

c. none of the above (all of the above are inferior goods)

d. used music CD's

e. trips to the laundromat

ii) If the government imposes a ceiling price on apartment rents, we would expect to observe which of the following?

a. an increase in the number of new apartment complexes being built

b. long waiting lists for apartment seekers and difficulty finding an open apartment

c. landlords offering bonuses to attract renters

d. a surplus of unoccuppied apartments

e. none of the above would happen

iii) If tornadoes in Mexico destroy large numbers of orange trees, it will cause

a. only the supply curve for orange juice to shift to the left.

b. neither the supply curve nor the demand curve for orange juice to shift to the left.

c. only the demand curve for orange juice to shift to the left.

d. both the supply curve and the demand curve for orange juice to shift to the left.

iv) Which of the following would not cause the demand curve for DVD movie rentals to shift?

a. an increase in the price of movie theatre tickets

b. a change in preferences for DVD movie rentals

c. a decrease in the price of movie theatre tickets

d. a decrease in the price of DVD movie rentals

e. an decrease in the price of DVD players and televisions

v) If an increase in income results in an increase in the demand for entertainment, then
entertainment is

a. a discretionary good.

b. a luxury good.

c. an essential good.

d. a normal good.

vi) Movements along a supply curve are called changes in _______ and result from changes in ________.

a. quantity supplied, costs of production

b. supply, price of this good.

c. quantity supplied, price of this good.

d. supply, demand

e. supply, costs of production

vii) The market demand curve can be obtained

a. by calculating the average of all individual demand curves.

b. by summing horizontally the individual demand curves for all consumers in the market

c. by multiplying any individual consumer's demand times the number of consumers in the market.

d. by summing the prices paid at each quantity demanded

e. by showing quantity demanded as a function of income.

Answer 1

(i) (a)

Demand for concert tickets most likely increases with increase in income, so it is a normal good.

(ii) (b)

A price ceiling causes a shortage in market since quantity demanded is higher than quantity supplied.

(iii) (a)

Oranges being input to production of orange juice, destruction of oranges will lower the input availability for juice producers who will lower output, decreasing market supply and shifting supply curve to left.

(iv) (d)

A change in a good's own price causes a movement along its demand curve, not a shift.

NOTE: As per Answering Policy, 1st 4 questions are answered.