Assignment:
1. The market is in equilibrium; then the cost of a substitute good declines and the taxes paid by the producer increase. What will happen to equilibrium price and quantity?
A. Equilibrium price will be indeterminate and equilibrium quantity will fall.
B. Equilibrium price will fall and equilibrium quantity will be indeterminate.
C. Equilibrium price will be indeterminate and equilibrium quantity will rise.
D. Equilibrium price will fall and equilibrium quantity will fall.
E. Equilibrium price will rise and equilibrium quantity will rise.
2. Prices in year one are $400. In year two they are $700. In year three they are $800. In year four they are $900. What is the price index for year three?
A. 963
B. 1000
C. 214
D. 150
E. 200
3. The market is in equilibrium and then the number of buyers for this product increases and the cost of the resources for this product increases. What will happen to equilibrium price and quantity?
A. Equilibrium price will fall and equilibrium quantity will be indeterminate.
B. Equilibrium price will rise and equilibrium quantity will be indeterminate.
C. Equilibrium price will fall and equilibrium quantity will rise.
D. Equilibrium price will fall and equilibrium quantity will fall.
E. Equilibrium price will rise and equilibrium quantity will rise.
4. An example of a labor resource is:
A. An engineer who comes up with a better way of producing mouse traps
B. A computer programmer working on new software
C. A new factory being built to manufacture calculators
D. Sand used to make glass jars
5. Consumption is 800. Investment is 600. Government spending is 700. Exports are 900. Imports are 1000. The price index is 200. What is real GDP?
A. 10,000
B. 1,654
C. 789,456
D. 60,000
E. 1000
6. A point inside the production possibility curve can be reached by:
A. Allocating more resources toward consumer goods and sacrificing capital goods
B. Allocating more resources toward capital goods and sacrificing consumer goods
C. Gaining more resources
D. None of the answers
E. Under utilizing the current stock of resources