1. A market can be described by the equations Qd = 100 P and Qs = P. What are the equilibrium price and quantity in this market?

A. The equilibrium price is $50 and the equilibrium quantity is 50 units.

B. The equilibrium price is $100 and the equilibrium quantity is 100 units.

C. The equilibrium price is $0 and the equilibrium quantity is 0 units.

D. The equilibrium price is $0 and the equilibrium quantity is 100 units.

2. In free markets, shortages lead to:

A. lower prices.

B. higher prices.

C. surpluses.

D. unexploited gains from trade

3. The demand curve for Froot Loops breakfast cereal is very elastic because:

A. most breakfast cereals are considered a luxury good.

B. there are many good substitutes for Froot Loops.

C. the demand curve is negatively sloped.

D. it is one of the most advertised cereals in the world.

4. Which good below might be expected to have the most inelastic demand curve?

A. salt

B. women's blouses from Walmart

C. potato chips

D. Tylenol