Principles of Economics International Edition 10th Edition by Roger – Test Bank

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Principles of Economics International Edition 10th Edition by Roger A. Arnold – Test Bank

Chapter 5—Supply, Demand, and Price: Applications

MULTIPLE CHOICE

1.Colleges and universities use such things as grade point averages and standardized test scores as

a.	a measure of consumer utility.
b.	non-price rationing devices.
c.	a means to shift the supply curve for a college education.
d.	solely to frustrate prospective students.

ANS: B PTS: 1 DIF: Easy NAT: Analytic

LOC:Supply and demandMSC:Application #5

2.If the purchase and sale of a currently illegal drug, such as marijuana, were decriminalized, we would expect

a.	an increase in demand and supply of this drug.
b.	an increase in demand and a decrease in supply of this drug.
c.	a decrease in demand and an increase in supply of this drug.
d.	a decrease in demand and supply of this drug.

ANS: A PTS: 1 DIF: Moderate NAT: Analytic

LOC:Supply and demandMSC:Application #11

3.If the purchase and sale of marijuana become legalized

a.	the equilibrium price and quantity will both rise.
b.	the equilibrium price will fall, but the change in equilibrium quantity depends upon whether the demand curve shifts more or the supply curve shifts more.
c.	the equilibrium quantity will rise, but the change in equilibrium price depends upon whether the demand curve shifts more or the supply curve shifts more.
d.	the equilibrium price and quantity will both fall.

ANS: C PTS: 1 DIF: Difficult NAT: Analytic

LOC:Supply and demandMSC:Application #11

4.If the government decided to legalize the purchase and sale of marijuana, the equilibrium quantity would _________ and the price would ________ if the supply of marijuana increased by _______ than the demand for marijuana increased.

a.	fall; fall; more
b.	fall; rise; more
c.	rise; fall; more
d.	rise; fall; less
e.	none of the above

ANS: C PTS: 1 DIF: Difficult NAT: Analytic

LOC:Supply and demandMSC:Application #11

5.Since most colleges and universities charge the same tuition to every student regardless of what time students choose to take their classes,

a.	the schools must develop some type of non-price rationing device.
b.	it follows that all classes will have a shortage of seats.
c.	it follows that all classes will have a surplus of seats.
d.	it follows that some classes will likely have a shortage of seats while other classes may have a surplus of seats.
e.	a and d

ANS: E PTS: 1 DIF: Moderate NAT: Analytic

LOC:Supply and demandMSC:Application #10

6.The space on the freeway is fixed at any instant of time. A supply curve that shows this is

a.	perfectly horizontal.
b.	upward sloping.
c.	downward sloping.
d.	perfectly vertical.

ANS: D PTS: 1 DIF: Easy NAT: Analytic

LOC:Supply and demandMSC:Application #6

7.When congestion occurs on the freeway (because of a shortage of freeway space), the economist would say that it is because

a.	the freeway is too small.
b.	there are too many cars.
c.	the price of driving on the freeway is below the equilibrium price.
d.	a and c

ANS: C PTS: 1 DIF: Moderate NAT: Analytic

LOC:Supply and demandMSC:Application #6

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