Question

73 Suppose the price of pepperoni falls. In the market for pizza, in which pepperoni of a popular ingredient, one would expect that

1 the supply of pizza would increase, and the price would fall
2 the demand for pizza would increase, and the price would increase
3. the demand for pizza would decrease, and the price would fall
4. the supply of pizza would decrease, and the price would rise

71 Suppose that consumer income INCREASES and that ground meat is an inferior good. Which of the following will occur in the market for ground meat?
1. market clearing price will rise, and equilibrium quantity will rise
2 market clearing price will fall, and equilibrium quantity will fall
3 Market clearing price will rise, and equilibrium quantity will fall
4 market clearing price will fall, and equilibrium quantity will rise

63.

The input of labor	Total product
0	0
1	20
2	50
3	80
4	105
5	125
6	140
7	150

In the above table, the marginal product of the fourth worker is
1 30
2 25
3 20
4 14

60 A Price ceiling set below a market equilibrium price causes
1. surplus
2. shortage
3. producers to receive higher prices
4. consumers to pay higher prices

61. price floors
1. provide free-market incentives for producers
2 create surpluses by setting the price above equilibrium
3 create shortages by setting the price above equilibrium
4 are used by advocates of the free market

Answer 1

Answer : 73) The correct option is 1. Because pepperoni is the ingredient of pizza . Now if ingredients cost fall then obviously production increase which increase the market supply and this lead to fall the market price level of product. Hence, after falling price level of pepperoni the market pizza supply increase and this lead to fall the price level.

71) The correct option is 2. Because in case of inferior good if income increase then demand decrease which shift the demand curve to leftward. As demand decrease , the market price level decrease and as price price falls the market quantity supply decrease.

63) The correct option is 2. According to the given table information, after including 3rd labour the total product is 80 and for 4th labour the total product is 105. Therefore, the maginal product of 4th labour is (105 - 80) = 25.

60) The correct option is 2. If the price level exist below the market equilibrium price level then there occurs excess demand in comparison to maket supply. This means there is a shortage of market supply.

61) The correct option is 2. If the market price level is above the market equilibrium price level then there occurs excess market supply in comparison to market demand. This means there is surplus in market supply.