Suppose that the quantity demanded for cars exceeds the quantity supplied of cars. We would expect that
A. the demand will decrease (demand will shift to the left to meet the supply.
B. the price of cars will increase.
C. the supply will increase (supply will shift to the right to meet the demand.
D. the price of cars will decrease.
Ans: B. the price of cars will increase.
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Player 1 and Player 2 are playing a game in which Player 1 has the first move at A in the decision tree shown below. Once Player 1 has chosen either Up or Down, Player 2, who can see what Player 1 has chosen, must choose Up or Down at B or C. Both players know the payoffs at the end of each branch. 
What is the equilibrium outcome of this game?
A. Player 1 chooses Up and Player 2 chooses Down. B. Player 1 chooses Down and Player 2 chooses Up. C. Player 1 and Player 2 both choose Up. D. Player 1 and Player 2 both choose Down.
Refer to Figure 4-4. The figure above represents the market for iced tea. Assume that this is a competitive market. If 10,000 units of iced tea are sold
A) the marginal benefit of each of the 10,000 units of iced tea equals $3. B) marginal benefit is less than marginal cost. C) the deadweight loss is equal to economic surplus. D) producer surplus equals consumer surplus.
If an individual earns $1,500 a month and spends it evenly throughout the month, transaction balances will average
A) $50 per month. B) $750 per month. C) $1500 per month. D) $3000 per month.
When the elasticity of demand for a particular good is between zero and -1, _____
a. demand is elastic b. demand is inelastic c. demand is unit-elastic d. the good is an inferior good e. the good is a normal good