There are not enough of four goods to satisfy the wants

| November 24, 2016

20) There are not enough of four goods to satisfy the wants of people. For good A, this is true when the price is $10. This is true for good B at a price of $1, for good C at a price of 25 cents, and for good D at a price of zero. Which situation reflects scarcity rather than shortage?

A) A

B) B

C) C

D) D

41) The demand curve is downward sloping because

A) an increase in the price will cause a leftward shift in the demand curve.

B) the price must rise to induce firms to increase quantity supplied.

C) a reduction in the price of a good causes individuals to increase their purchase of that good.

D) all of the above.

47) Suppose that short skirts that were fashionable in the 1990s become unfashionable in the late 2000s. If other factors were held constant, then there would be

A) a leftward shift in the demand curve.

B) a leftward movement along the supply curve.

C) a rightward movement along the supply curve.

D) a rightward shift of the demand curve.

57) In order to increase the supply of a good, producers must

A) cut back on labor to reduce production costs.

B) reduce their per-unit costs of producing the good.

C) convince consumers to reduce the quantity demanded.

D) see an increase in quantity supplied by competitors.

61) If more foreign auto plants relocate to the United States, we would expect

A) the U.S. supply curve for automobiles to shift to the right

B) that U.S. auto demand might change, but U.S. auto supply would remain static.

C) that the U.S. auto market would not respond.

D) the U.S. supply curve for automobiles would shift to the left.

69) Suppose that consumer income decreases and that hamburger is an inferior good. Which of the following will occur in the market for hamburger?

A) Market clearing price will fall, and equilibrium quantity will fall.

B) Market clearing price will rise, and equilibrium quantity will rise.

C) Market clearing price will fall, and equilibrium quantity will rise.

D) Market clearing price will rise, and equilibrium quantity will fall.

73) Other things being equal, a higher price induces

A) buyers to increase the amount they want to buy and sellers to increase the amount they are willing to sell.

B) buyers to increase the amount they want to buy and sellers to reduce the amount they are willing to sell.

C) buyers to reduce the amount they want to buy and sellers to increase the amount they are willing to sell.

D) buyers to reduce the amount they want to buy and sellers to reduce the amount they are willing to sell.

86) The effect of a legal minimum wage set above the equilibrium wage rate is

A) an increase in the quantity of labor demanded.

B) an excess quantity of labor supplied.

C) a decrease in quantity of labor supplied.

D) an excess quantity of labor demanded.

88) Suppose the tax rate on the first $10,000 income is 0 percent; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $30,000; and 40 percent on any income over $80,000. Family A has income of $40,000 and Family B has income of $100,000. What is the marginal and average tax rate for each family?

A) Family A: marginal-10 percent; average-10 percent; Family B: marginal-30 percent; average “??30 percent.

B) Family A: marginal-20 percent; average-15 percent; Family B: marginal-40 percent; average “??20 percent.

C) Family A: marginal-20 percent; average-20 percent; Family B: marginal-40 percent; average “??40 percent.

D) Family A: marginal-20 percent; average-10 percent; Family B: marginal-40 percent; average “??23 percent.

92) Suppose you purchased 100 shares of stock in 2000 for $25 a share and you sell them today for $50 a share. If the capital gains tax is 28 percent, your tax liability is

A) $70.

B) $700.

C) $2500.

D) indeterminate without knowing the inflation rate.

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