CODE: SPRING Refer to Graph 1 below to answer questions 7 and 8. Graph 1 Section A : Multiple Choice Questions (25 marks) 1. As resources are moved from one product to another, this can be shown as: A. An inward shift of the production possibility frontier B. A movement along the production possibility frontier C. An outward shift of the production possibility frontier D. A movement of the production possibility frontier toward the origin . A competitive market is a market where: A. Sellers can choose the price at which they wish to sell B. There are only a few sellers C. Each individual seller has little impact on the price D. Sellers compete with aggressive adversiting . When an increase in the price of good A leads to a decrease in the price of good B, it is likely that good A and good B are: A. Substitutes 7. The price ceiling shown in Graph 1 - panel (a) would create: B. Complements A. A surplus in the market C. Inferior goods B. A shortage in the market D. Giffen goods C. No change in the market D. An unfair advantage to the sellers . Which of the following would result in an increase in equilibrium price and an _ . _ _ ambiguous change in equilibrium quantity? 8. The pnce ceiling shown In Graph 1 , panel (b) would create a: A. An increase in supply and demand A~ Shortage "1 the market B. An increase in supply and a decrease in demand 3- Surplus i" the market C. A decrease in supply and demand C. A shortage or surplus depending on whether the product is a necessity or not D. A decrease in supply and an increase in demand 9- None Of the above If price changes and total revenue changes in the opposite direction, we can conclude that: A. Demand is relatively elastic B. Demand is relatively inelastic C. Demand is perfectly elastic D. More information needed to answer Producer surplus measures all of the following EXCEPT the: A. Amount sellers receive above the minimum they would accept B. Benefit to sellers of participating in a market C. Amount sellers are paid less the amount they were willing to accept D. Total value of a good to sellers Page 90f29