TRUEFALSE QUESTIONS T F 1. An increase in the supply of lettuce decreases its equilibrium price and increases its equilibrium quantity.

T F 2. A decrease in the demand for an American flag in creases its equilibrium price and decreases its equilibrium quantity. T F 3. When demand for American flags increases, there is an increase in the quantity supplied as the equilibrium price rises, but no increase in supply. T F 4. In the market for pink salmon, the reason that the equilibrium quantity increased as that the increase in supply as greater than the decrease in demand. T F !. In the market for gasoline, the reason that the equilibrium quantity increased as that the increase in demand as less than the decrease in supply. T F ". In the market for sushi, an equal increase in supply and demand ill increase the equilibrium price, but ha#e no effect on the equilibrium quantity. T F $. If the go#ernment sets a price ceiling belo hat ould be the competiti#e market price of a product, a shortage of the product ill de#elop. T F %. A price floor set by go#ernment ill increase the equilibrium price and quantity in a market. T F &. Assume that a do nsloping demand cur#e Intersects a #ertical supply cur#e. A left ard shift in the supply cur#e ill result in a surplus of a product.

FILL-IN QUESTIONS 1. A decrease in the supply of lettuce ill result in an equilibrium price that 'increases, decreases( )))))))))))))))) and an equilibrium quantity that 2. An increase in the demand for American flags ill result in an equilibrium price that 'increases, decreases( )))))))))))))) and an equilibrium quantity that ))))))))))))). 3. An increase in the supply of pink salmon that is greater than the decrease in the demand for pink salmon ill result in an equilibrium price that 'increases, decreases, stays the same( )))))))))))))))) and an equilibrium quantity that )))))))))))))))). 4. An increase in the demand for gasoline that is greater than the decrease in the supply of gasoline ill result in an equilibrium price that 'increases, decreases, stays the same( )))))))))))))))) and an equilibrium quantity that ))))))))))))))). !. An increase in the demand for sushi that is equal to the increase in the supply of sushi ill result in an equilibrium price that 'increases, decreases, stays the same( ))))))))))))))))))))) and an equilibrium quantity that )))))))))))))))))). ". If go#ernment sets a legal price for a product, a short age ould arise from a price 'ceiling, fl r( )))))))))) and a surplus ould arise from a price )))))))))).

$. Are the follo ing statements normati#e or positi#e* a( +he go#ernment should pro#ide free tuition to all college students. b( An effecti#e ay to increase the skills of the ork force is to pro#ide free tuition to all college students. c( +he go#ernment must pro#ide ,ob training if e are to compete ith other countries. d( +he -orth American .ree +rade Act ill increase the skill requirements of orkers in the /0. e( +he -orth American .ree +rade Act should not be supported because it ill take ,obs a ay from the /0.

17. 3onsider the market for automobiles in the /0. 4etermine hat happens to the equilibrium price and quantity of automobiles under each of the follo ing situations5 a( the price of fiber glass decreases. b( the price of gasoline increases. c( the /nited Automobiles Workers of America successfully strike for higher ages. d( the go#ernment announces a large income ta1 cut for all Americans. e( se#eral automobile manufacturers e1it the industry due to negati#e profits and ne s reports indicate that Americans are mo#ing to li#e ithin alking distance of their ork. f( automobile manufacturers implement a more efficient production method and manufacturers add ne internet based applications to the typical automobile.

%. What is the effect of each of the follo ing e#ents on the equilibrium price and quantity of computers in the /0 market* a( +he price of plastic increases. b( +he price of printers 'a complement in consumption( decreases. c( +he go#ernment e1pands the entry of foreign2 made computers into the /.0. d( +he go#ernment increases the income ta1 rate on all consumers. e( +he price of silicon chips decreases and internet ser#ice pro#iders lo er their prices. f( 3onsumers e1pect that the price of computers ill decrease in the future and the go#ernment imposes a ta1 on all computer manufacturers.

&. 3onsider the market for hamburgers in the /0. 4etermine hat happens to the equilibrium price and quantity of hamburgers under each of the follo ing situations5 a( the price of hot dogs rises. b( the price of hamburger buns increases. c( the cost of co feed increases. d( se#eral thousand cattle ranchers e1it the industry. e( consumer income rises due to an economy2 ide e1pansion and cattle ranches are infested ith a herd2killing disease. f( en#ironmentalists successfully put pressure on cattle ranchers to adopt costly 6green6 ranching methods and consumers learn that hamburger contains a nutrient that causes sterility in males.