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| 1 | |
When an economist says that the demand for a product has increased, this means that: |
| | A) | quantity demanded is greater at each possible price. |
| | B) | firms make less of the product available for sale. |
| | C) | consumers respond to a lower price by buying more. |
| | D) | the demand curve becomes steeper. |
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| 2 | |
When movie ticket prices increase, families tend to spend less time watching movies and more time at home watching videos instead. This best reflects: |
| | A) | diminishing marginal utility. |
| | B) | the income effect. |
| | C) | the rationing function of markets. |
| | D) | the substitution effect. |
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| 3 | |
If consumer incomes increase, the demand for product Y: |
| | A) | will necessarily remain unchanged. |
| | B) | will shift to the right if Y is a complementary good. |
| | C) | will shift to the right if Y is a normal good. |
| | D) | will shift to the right if Y is an inferior good. |
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| 4 | |
When drawing demand and supply curves, economists are assuming that the primary influence on production and purchasing decisions is: |
| | A) | price. |
| | B) | the cost of production. |
| | C) | the overall state of the economy. |
| | D) | consumer incomes. |
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| 5 | |
Refer to the following diagrams:
 <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0077337727/883730/ch03_q5.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (64.0K)</a>]]>
Which one of the above diagrams best illustrates the effect of an increase in crude oil prices on the market for gasoline? |
| | A) | A |
| | B) | B |
| | C) | C |
| | D) | D |
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| 6 | |
A decrease in the price of a product will increase the amount of it demanded because: |
| | A) | supply curves are upsloping. |
| | B) | the lower price will decrease real incomes. |
| | C) | the lower price induces consumers to use this product instead of other products. |
| | D) | firms produce more at lower prices. |
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| 7 | |
"Because of unusually good growing conditions, the supply of strawberries has substantially increased." This statement indicates that: |
| | A) | the demand for strawberries will necessarily rise. |
| | B) | the equilibrium quantity of strawberries will fall. |
| | C) | the amount of strawberries that will be available at various prices has increased. |
| | D) | the price of strawberries will rise. |
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| 8 | |
Goods X and Y are complements while goods X and Z are substitutes. If the supply of good X increases: |
| | A) | the demand for both Y and Z will increase. |
| | B) | the demand for Y will increase while the demand for Z will decrease. |
| | C) | the demand for Y will decrease while the demand for Z will increase. |
| | D) | the demand for both Y and Z will decrease. |
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| 9 | |
The following data show the supply and demand schedule for a competitively produced good.
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Refer to the above data. At the equilibrium price, the quantity exchanged in this market will be: |
| | A) | 190. |
| | B) | 220. |
| | C) | 245. |
| | D) | 250. |
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| 10 | |
An improvement in production technology for a specific good will cause a(n): |
| | A) | increase in demand and an increase in price. |
| | B) | increase in demand and a drop in price. |
| | C) | drop in price and increase in quantity demanded. |
| | D) | increase in supply and an increase in price. |
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