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| 1 | |
How will a change in income affect the demand for an inferior product? |
| | A) | The demand will increase if the incomed of consumers increase. |
| | B) | The demand will increase if the incomed of consumers decrease. |
| | C) | The demand for an inferior product is not affected by consumer incomes. |
| | D) | The demand will remain the same, but the quantity demanded will increase if incomes decrease. |
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| 2 | |
Which of the following factors will shift the demand curve left? |
| | A) | An increase in the price of a substitute product |
| | B) | A decrease in the price of a complementary product |
| | C) | An increase in incomes if the product is an inferior product |
| | D) | The expectation that future prices of the product will be higher |
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| 3 | |
A rightward shift in the supply curve for a product could be caused by all of the following except one. Which is the exception? |
| | A) | The expectation by suppliers that the future price of the product will be higher |
| | B) | A decrease in the price of a productive resource used in its manufacture |
| | C) | A decrease in the price of a product that is a substitute in production |
| | D) | A technological improvement in manufacturing methods |
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| 4 | |
What is the effect of a decrease in the supply of a product? |
| | A) | It will cause an increase in both price and the quantity traded. |
| | B) | It will cause an increase in price but a decrease in the quantity traded. |
| | C) | It will cause a decrease in both price and the quantity traded. |
| | D) | It will cause a decrease in price but an increase in the quantity traded. |
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| 5 | |
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Refer to Table 2.11 above to answer this question. What are the values of equilibrium price and quantity traded? |
| | A) | $3 and 52 |
| | B) | $3 and 62 |
| | C) | $4 and 58 |
| | D) | $4.50 and 56 |
| | E) | They cannot be determined from the data. |
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| 6 | |
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Refer to Table 2.11 now to answer this question. What will happen if the price of the product is $3? |
| | A) | There would be a surplus of 18, which would lead to a decrease in price. |
| | B) | There would be a shortage of 18, which would lead to an increase in price. |
| | C) | There would be a shortage of 18, which would lead to a decrease in price. |
| | D) | There would be a surplus of 18, which would lead to an increase in price. |
| | E) | There would be neither a surplus nor a shortage. |
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| 7 | |
In what way are products A and B related if an increase in the price of product A leads to a decrease in the demand for product B? |
| | A) | Product A must be a resource used in the manufacture of product B. |
| | B) | Product B must be a resource used in the manufacture of product A. |
| | C) | The two products must be complements. |
| | D) | The two products must be substitutes. |
| | E) | The two products must be inferior products. |
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| 8 | |
What is the effect of a shortage? |
| | A) | It will cause a decrease in price, leading to an increase in the quantity supplied and a decrease in the quantity demanded. |
| | B) | It will cause a decrease in price, leading to a decrease in the quantity supplied and an increase in the quantity demanded. |
| | C) | It will cause an increase in price, leading to an increase in the quantity supplied and a decrease in the quantity demanded. |
| | D) | It will cause an increase in price, leading to a decrease in the quantity supplied and an increase in the quantity demanded. |
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| 9 | |
What is the effect of an increase in demand for a product? |
| | A) | Its price will rise, and the quantity traded will decrease. |
| | B) | Its price will rise, and the quantity traded will increase. |
| | C) | Its price will fall, and the quantity traded will decrease. |
| | D) | Its price will fall, and the quantity traded will increase. |
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| 10 | |
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Refer to Figure 2.15 above to answer this question. What will be the effect if the price is now $1200? |
| | A) | There would be a surplus of 30. |
| | B) | There would be a shortage of 30. |
| | C) | 160 would be purchased. |
| | D) | There would be a surplus of 60. |
| | E) | The price will increase. |
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