MICROECONOMICS SECTION I Time - 70 minutes 60 Questions Directions: Each of the questions or incomplete statements below is followed by five suggested answers or completions. Select the one that is best in each case and then fill in the corresponding oval on the answer sheet. 1. The allocation of resources in a market economy 3. Which of the following is true of a price floor? is described by which of the following state- ments? I. The government decides which goods will be produced and which consumers will receive them. II. Buyers and sellers exchange goods and services on a voluntary basis. III. Prices and costs help producers decide whether they are producing too little or too much of a good. (A) I only (B) II only (C) III only (D) I and III only (E) II and III only (A) The intention of the government in creating the price floor is to assist the producers of the good. (B) To have an impact in the market for the good, the price floor should be set below the existing market price of the good. (C) An effective price floor will increase the quantity demanded of the good. (D) The price floor would tend to create a short- age of the good in the market. (E) The creation of the price floor would not change the quantity supplied of the good if the supply curve were upward-sloping to the right. (A) There will be a movement to the right along the supply curve. (B) There will be a movement to the right along the demand curve. (C) The supply curve will shift to the right. (D) The supply curve will shift to the left. (E) The demand curve will shift to the right. x SUPPlY / \ Demand QUANTITY OF TOMATOES 4. On the basis of the graph above, which of the following stateme...
