Test Questions without Answers
Chapter 12. Supply and Demand Together.
Equilibrium. Maximum Total Surplus
Chapter 12 – Question1
The law of diminishing marginal utility implies that consumer surplus from the second banana
- is equal to that from the first banana
- is lower than that from the first banana
- is higher than that from the first banana
- none of the above
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Chapter 12– Question 2
A tax is imposed on Commodity A and Commodity B. Demand for A is more elastic than demand for B.
Which of the following is likely to happen
- consumers bear a greater burden of the tax on Commodity A than of the tax on Commodity B
- consumers bear a greater burden of the tax on Commodity B than of the tax on Commodity A
- consumers will buy more of A
- sellers will bear the burden of the tax on B.
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Chapter 12– Question 3
If a tariff is raised on a commodity,
- foreign producers charge a lower price
- foreign producers receive a higher price
- domestic producers receive a higher price
- domestic producers charge a lower price
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Chapter 12 –Question 4
If the government sets a price floor above equilibrium price of a commodity, which of the following will happen
- an increase in tax revenues for the government
- an increase in demand for the commodity
- excess supply of the commodity
- excess demand for the commodity
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Chapter 12– Question 5
An increase in the tax on petrol causes
- the demand curve for petrol to shift upwards
- the demand curve for petrol to shift downwards
- a movement upwards the demand curve
- a movement downwards the demand curve.
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Chapter 12– Question 6
If consumers expect the price of bananas to rise, the following will happen
- equilibrium price rises, equilibrium quantity rises
- equilibrium price declines, equilibrium quantity declines
- equilibrium price rises, equilibrium quantity declines
- equilibrium price declines, equilibrium quantity rises
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Chapter 12– Question 7
What is the effect of each of the following on the market for cinema tickets
1) an increase in the prices of DVDs
2) an increase in consumer incomes
3) an increase in the price of cinema tickets
4) a long period of good weather
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Chapter 12– Question 8
What precisely does it mean to say that suppliers must bear a tax because supply is inelastic?
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Chapter 12 – Question 9
Which are the effects of rent control
- the quality of many flats will deteriorate with time
- landlords have more possibilities of discriminating against certain tenants
- the future supply of flats will fall
- all of the above
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Chapter 12– Question 10
Indirect tax revenues are likely to be higher when demand is inelastic. True or false? Explain your answer.
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Chapter 12– Question 11
The demand function for strawberries is q = 80 - 8p. Its supply function is q = 40 + 12p. What is the equilibrium price?
- $10
- $ 2
- $4
- $5
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Chapter 12– Question 12
If a commodity's value to its buyer is higher than the marginal cost to the firm producing the commodity
- this is the normal outcome on a market with perfect competition
- there is a surplus of the commodity
- there is a shortage of the commodity
- there is no producer surplus
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Chapter 12– Question 13
The quantity sold is 400 units. The equilibrium price is $30. The highest value ascribed to the commodity is $80. The lowest marginal cost incurred by a supplier is $20. What is total surplus?
- $60
- $24,000
- $9,000
- $12,000
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Chapter 12– Question 14
What is the difference between profit and producer surplus?
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