#1) A higher price for batteries would tend to:
a) increase the demand for flashlights
b) increase the demand for electricity
c)decrease the demand for electricity
d)increase the demand for batteries

#2 An advance in production technology will:
a)increase a firms costs
b)allow firms to raise the price of their product
c)shift the supply curve to the right
d)both a and b are correct

#3 If the supply of a product decreases, we would expect equilibrium price:
a) to increase and equilibrium quantity to decrease
b)to decrease and equilibrium quantity to both increae
c) and equilibrium quantity to both increase
d) and equalibrium quantity to both decrease

#4) If a shortage exists in a market we know the actual price is:
a)below equilibrium price & quantity demanded is greater than quantity supplied
b)above equilibrium price & quantity demanded is greater than quantity suppied
c)above equilibrium price and quantity supplied is greater than quantity demanded
d) below equilibrium price and quantity supplied is greater than quantity demanded

#5 If a surplus exists in a market we know that the actual price is:
a)above equilibrium price & quantity supplied is greater than the quantity demanded
b)above equilibrium price & quantity demanded is greater than the quantity supplied
c) below equilibrium price & quantity demanded is greater than quanity supplied
d)below equilibrium price & quantity supplied is greater than quantity demanded

#1: the answer is B.  The reason is the substitution effect: "the
tendency of consumers...to consume less of the good when its relative
price increases (two "substitute" away from that good)."  (Page 747)
Because electricity is a substitute for batteries, the demand for
electricity will increase in response to a higher price for batteries.

#2: the answer is C.  An advance in production technology reduces the
cost required to produce the particular good.  This increases the
supply available at each price, thereby shifting the supply curve to
the right.  (Page 54)

#3: the answer is A. " Under conditions of shortage, the competition
among buyers for limited goods causes the price to rise..." and the
equilibrium quantity to decrease.  (Page 56)

#4: the answer is A.  A shortage is an "...excess of quantity demanded
over quantity supplied...." A shortage will exist until the actual
price rises to meet the equilibrium price.  (Pages 55-56)

#5: the answer is A.  A surplus is an "...excess of quantity supplied
over quantity demanded...." A surplus will exist until the actual
price drops to meet the equilibrium price.  (Page 55)

Sincerely,

Wonko

Source: "Economics," 14th edition, by Samuelson & Nordhaus,
McGraw-Hill Inc., 1992