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1 | |
Suppose that college tuition is higher this year than last year and that more students are enrolled in college this year than last year. Based on this information, we can best conclude that: |
| | A) | the law of demand is invalid. |
| | B) | some other factor besides price changed. |
| | C) | the law of supply is invalid. |
| | D) | the demand for a college education is positively sloped. |
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2 | |
Consumers' ability to substitute among different goods explains: |
| | A) | the law of supply. |
| | B) | the law of demand. |
| | C) | the concept of economic equilibrium. |
| | D) | the relationship between income and demand. |
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3 | |
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Refer to the graph above. The arrow that would best illustrate the impact on demanders of reducing the sales tax on suppliers on this product is: |
| | A) | A |
| | B) | B |
| | C) | C |
| | D) | D |
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4 | |
Which statement is inconsistent with the law of supply? |
| | A) | More of a good will be supplied the higher the price, other things constant. |
| | B) | Less of a good will be supplied the lower the price, other things constant. |
| | C) | Quantity supplied of a good is directly related to the good's price. |
| | D) | More of a good will be supplied the lower the price, other things constant. |
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5 | |
Which of the following would be expected to cause an increase in the supply of fax machines? |
| | A) | An increase in the number of business firms demanding fax machines. |
| | B) | An increase in the price of fax machines. |
| | C) | An increase in the cost of manufacturing fax machines. |
| | D) | The expectation that the price of fax machines will fall in future. |
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6 | |
The supply of leather jackets would be expected to increase as a result of: |
| | A) | an increase in the cost of producing leather jackets. |
| | B) | an increase in the price of leather jackets. |
| | C) | an increase in the popularity of leather jackets. |
| | D) | the expectation that the price of leather jackets will fall in the future. |
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7 | |
In a market where there are strong social and political forces: |
| | A) | quantity demanded will be expected to equal quantity supplied. |
| | B) | quantity demanded might not equal quantity supplied. |
| | C) | the market will be in disequilibrium. |
| | D) | the invisible hand will overcome all other forces. |
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8 | |
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Refer to the graph above. At a price of $1.25, a decrease in demand from D2 to D1 initially would cause: |
| | A) | a surplus of 3000 dozen eggs per week. |
| | B) | a surplus of 2000 dozen eggs per week. |
| | C) | a shortage of 1000 dozen eggs per week. |
| | D) | a shortage of 2000 dozen eggs per week. |
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9 | |
One reason economists distinguish between micro and macro is: |
| | A) | the fallacy of composition does not always hold. |
| | B) | supply and demand can become interdependent when the market becomes larger. |
| | C) | economists do not believe in materiality. |
| | D) | economists generally believe micro and macro are entirely unrelated. |
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10 | |
If both buyers and sellers expect the price of a commodity to rise in future, it is likely that equilibrium price will ________ and equilibrium quantity will ________. |
| | A) | fall; change very little |
| | B) | rise; change very little |
| | C) | change very little; fall |
| | D) | change very little; rise |
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