ECON 200 - Principles of Economics:

INTRODUCTION

Which graph above correctly illustrates the market adjustment that occurs in each situation that follows?

1. New robotic technology on factory production lines lowers the average cost of production for each Cherokee produced.

a. (A)

b. (B)

c. (C)

d. (D)

e. none

2. The price of Ford Broncos (a competitor) falls.

a. (A)

b. (B)

c. (C)

d. (D)

e. none

3. Consumers incomes rise due to prolonged growth in the economy.

a. (A)

b. (B)

c. (C)

d. (D)

e. none

4. The price of insurance for Cherokees drive vehicles triples. 

a. (A)

b. (B)

c. (C)

d. (D)

e. none

5. The government places a $2000 tax per vehicle on the production of all sports utility vehicles (including Cherokees) to discourage the production of low mileage cars.

a. (A)

b. (B)

c. (C)

d. (D)

e. none

6. A new union contract raises wages at Jeep Cherokee plants.

a. (A)

b. (B)

c. (C)

d. (D)

e. none

7. The price of gasoline rises to $5.89 per gallon.

a. (A)

b. (B)

c. (C)

d. (D)

e. none

8. The National Highway Safety Council releases a warning that tests and accident reports indicate that Sports Utility Vehicles, including the Jeep Cherokee, have a high rate of rolling over and are unsafe for small children and seniors as a result.

a. (A)

b. (B)

c. (C)

d. (D)

e. none

9. Cherokee prices are expected to rise in the near future.

a. (A)

b. (B)

c. (C)

d. (D)

e. none

10. Due to a successful, extended ad campaign consumer preferences become more positive for the Jeep Cherokee.

a. (A)

b. (B)

c. (C)

d. (D)

e. none

 

 

11. Refer to the graph immediately above. A new technology allows the costs of gasoline refining to fall by 50%. This will result in

a. the demand curve shifting in

b. the supply curve shifting in

c. the demand curve shifting out

d. the supply curve shifting out

12. The new equilibrium will be reached when

a. Supply falls and price rises

b. Supply rises and price falls

c. quantity supplied rises and price rises

d. Demand rises and price falls

13. Refer to Graph 1 above. Start over at equilibrium. Due to a technological breakthrough it is discovered that automobiles can now run on recycled cooking oil at half the price of gasoline. What adjustment will occur in the graph?

a. The demand line for gas will shift out, to the right.

b. The quantity supplied of gas will decrease due to a left shift of the Demand curve.

c. The supply line for gas will shift in, to the left

d. The supply line for gas will shift out, to the right.

14. This adjustment will cause

a. the price of gas to fall and output to increase

b. the price of gas to fall and output to decrease

c. the price of gas to rise and output to decrease

d. the price of gas to rise and output to increase

15. "Movements along a Demand curve", refer to

a. a rightward shift in the Demand curve

b. a leftward shift in the Demand curve

c. changes in the quantity Demand

d. an increase in Demand

1.   c                    6.   d                   11.   d
2.   b                    7.   b                   12.   b
3.   a                    8.   b                   13.   b
4.   b                    9.   b                   14.   b
5.   d                  10.   a                   15.   c