Economics 172 Quiz 1

Fall 2007 Name:

Circle the correct answer.

1) The figures to the left shows three different supply-and-demand graphs. Which graph best represents the market for vacations on Mars?

A) Graph A Shows a supply curve that is high, relative to demand, since it intersects the y axis at a higher price then the demand curve. This is the correct answer.

B) Graph B Shows a high supply and low demand.

C) Graph C Shows a market price for Mars vacations, which does not exist.

D) None of the above.

2) After tickets for a major sporting event are purchased at the official box office price, a market often develops whereby these tickets sell at prices well above the official box office price. Which of the following scenarios would NOT be able to explain this result?

A) The official price was below equilibrium from the moment the tickets were available. This can explain excess demand.

B) Increased publicity causes the demand curve for the event to shift rightward. This can explain a higher than expected demand.

C) The event was not a sellout. If this was true, there would be no market for tickets at above the official price.

D) Not everyone who wanted a ticket was able to buy one at the box office. This is certainly true.

3) When import restrictions are placed on a good, and as a result the price of the good increases, the demand curve for that good will

A) shift rightward. Import restrictions have no impact on demand. They reflect supply factors.

B) shift leftward.

C) become steeper.

D) be unaffected.

4) If a consumer doubles her quantity of ice cream consumed when her income rises by 25%, then her income elasticity of demand for ice cream is

Income elasticity is pct chg Q/ pct chg income. 100%/25% = 4

A) 8.0.

B) 4.0.

C) .25.

D) .08.

5. The figure to the right shows the market for crude oil. If a consumer group convinces the government to set a maximum price of $2 per barrel, then

a. 300 barrels of crude oil will be sold at $2. firms are unwilling to sell any at a price under $3.

b. zero barrels of crude oil will be sold. Yes

c. zero barrels of crude oil will be demanded. No, the quantity demanded by consumers would be 300.

d. None of the above.