# Review of Supply and Demand

### Review Test

When the supply curve shifts outwards, what is the effect on equilibrium price and quantity?

Which of the following could remedy a shortage caused by a price ceiling?

If the substitution effect is stronger than the income effect, how will Jake's consumption of chips and candy be affected when the price of candy rises, if both are normal goods?

When the government taxes suppliers for the goods they sell, what effect does it have on the market?

If good A and good B are perfect complements, which combination is the most preferable?

If the supply function in a market is Q = -10 + 10P and the demand function is 18 - 4P, and the government puts in a price floor at \$3, what will the result be?

Which of the following is something indifference curves can never do?

What is the expected value of a stock with possible future values of \$0, \$5, \$10, and \$50, with respective probabilities of 30%, 50%, 15%, and 5%?

What do you need to optimize a buyer's utility?

What do you need to optimize a seller's profit?

What is Ben's monthly profit if he has to pay \$1000 rent, \$250 utilities, and \$850 wages, and he sells 3 \$1000 computers and 2 \$3000 computers?

If the substitution effect is stronger than the income effect, ham is a normal good, and Spam is an inferior good, what happens to consumption of ham and Spam when the price of ham increases?

In a competitive market, marginal revenue is equal to which of the following?

Which of the following refers to the tendency to buy more of a good when its price falls in relationship to other goods?

Tim's budget constraint for boxers and pants shifts inwards. What is one possible explanation?

If the prices of goods X and Y both increase by 20%, which will be stronger, the income effect or the substitution effect?

If Daniela's demand function for pairs of shoes is Q = 20 - P/2, which of the following could be her demand function after an outward shift of her demand curve?

If Sam's supply function for qwerty's is Q = -4 + 5P and Don's supply function for qwerty's is Q = -2 + 3P, what price per qwerty will you have to pay to buy a total of 10 qwerty's from the two of them?

If Bethany's demand function for books is Q = 30 - 3/4P, and Anne's demand function for books is Q = 40 - 4/3P, who will have a higher demand for books?

Which of the following would be most likely to cause an inward shift of the demand curve for ski equipment?

If a firm's "profit rectangle" is above the line for average revenue, what does this mean?

With simultaneous shifts in supply and demand curves, which of the following is NOT a possible equilibrium outcome?

Which of the following pairs of terms CANNOT describe goods X and Y?

How do you calculate a firm's total profits?

Which of the following is an example of a decision a firm can make in the short run?

Which of the following would NOT be an example of government intervention in the economy?

Which of the following is NOT a characteristic of aggregate demand?

Equilibrium price:

What is the correct term for a good that has an upward-sloping demand curve?

If shirts and sweaters are normal goods, and shirts go on sale, how will Justin's consumption patterns be affected if the substitution effect is stronger than the income effect?

If Steve tends to buy T-shirts and shorts together, what would you call T-shirts and shorts?

What is the correct formula for calculating profit?

Which of the following is an example of a fixed cost?

If A is a normal good and B is an undesirable good, which action will increase utility?

What distinguishes a natural monopoly from a regular monopoly?

What is an indifference curve?

What is one characteristic that distinguishes a monopolist from a competitive firm?

Horizontal addition can be used to find which of the following?

If Sophia gets a raise and buys less of good X, then we know that good X:

Which of the following will most likely cause a shift in the demand curve for ice cream?

Which of the following are possible examples of substitute goods?

Which of the following will most likely result in a shortage

If the government raises taxes on liquor stores for the alcohol they sell, what will be the most likely result?

Which of the following could cause an increase in the price of a good?

Which of the following actions could cause a higher market price and lower quantity consumer at equilibrium?

Which will be the most likely to cause an outward shift of Julie's budget constraint for peaches and plums?

Which of the following is NOT characteristic of a market economy?

Rob paints houses. If his supply equation is Q = -2 + W/2, where Q is the number of hours and W is the hourly wage, what is the minimum amount you would have to pay him to paint for 5 hours?

If good A and good B are both normal goods, and a decrease in the price of A increases consumption of both goods, what is one possible explanation?

If Quincy's demand for sandwiches fits the equation Q = 10 - 5P, what will his demand be if the price is \$3 per sandwich?

Scott's demand function for frisbees is Q = 11 - P. Marion's demand function for frisbees is Q = 27 - 3P. What will their combined demand for frisbees be if the selling price is \$10?

Chris sells comic books according to his supply function Q = -15 + 3P. Paul buys comic books according to his demand function Q = 27 - 4P. The two of them make up the entire market for comic books. What will the equilibrium quantity be?

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