C.shift to the right of the supply curve.

d.shift to the left of the supply curve.

37.

If the price in a market happens to be below equilibrium, there will be a ________ in the market, and the price will tend to ________.

a.surplus, drop

b.surplus, rise

c.shortage, drop

D.shortage, rise

38.

If the price in a market happens to be above equilibrium, there will be a ________ in the market, and the price will tend to ________.

A.surplus, drop

b.surplus, rise

c.shortage, drop

d.shortage, rise

39.

Suppose that a scientific study just published demonstrates that eating apples makes people much healthier. How will this affect the equilibrium price and quantity in the market?

a.The equilibrium price will increase and the equilibrium quantity will decrease.

b.The equilibrium price will decrease and the equilibrium quantity will increase.

C.Both the equilibrium quantity and price will increase.

d.Both the equilibrium quantity and price will decrease.

40.

Suppose the price of corn syrup increases. Given that corn syrup is a major ingredient in the production of soft drinks, how will this affect the equilibrium price and quantity in the soda market?

A.The equilibrium price will increase and the equilibrium quantity will decrease.

b.The equilibrium price will decrease and the equilibrium quantity will increase.

c.Both the equilibrium quantity and price will increase.

d.Both the equilibrium quantity and price will decrease.

Elasticity and Its Application

41.

A good will tend to have an inelastic demand if:

a.the good has many close substitutes.

b.the good is a luxury.

C.the market is defined very broadly.

d.the time horizon is long.

42.

A perfectly elastic demand is represented graphically by a:

a.relatively steep demand curve.

b.relatively flat demand curve.

c.vertical demand curve.

D.horizontal demand curve.

43.

What effect will an increase in the price have on Total Revenue, if demand is elastic?

a.Total Revenue will increase.

B.Total Revenue will decrease.

c.Total Revenue will first decrease and then increase.

d.Total Revenue will remain unchanged.

44.

The price elasticity of demand tends to be more elastic:

A.at points further up and to the left along the demand curve.

b.at points further down and to the right along the demand curve.

c.when the demand curve becomes steeper.

d.when the demand curve is vertical.

45.

Suppose that General Cars increases the price of its Cadiclap model from $13, 500 to $16, 500. As a result of this, the quantity demanded of the Cadiclap model decreases from 600, 000 to 400, 000 per year. Find the price elasticity of demand of the Cadiclap using the Mid-Point method.

a.-3.0

b.-0.5

C.-2.0

d.-0.3

46.

If a firm needs to increase its Total Revenue, the firm should ________ the price, if the demand for its product is ________.

a.drop, inelastic

b.raise, elastic