Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
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1.
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For
each good produced in a market economy, the interaction of demand and supply
determines a. | the price of the
good, but not the quantity. | b. | the quantity of the good, but not the
price. | c. | both the price of the good and the quantity of the
good. | d. | neither price nor quantity, because prices and quantities are
determined by the sellers of the goods alone. | | |
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2.
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Buyers and sellers who have no influence on market price are referred to
as a. | market
pawns. | b. | marginalists. | c. | price
takers. | d. | price makers. | | |
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3.
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The
market for ice cream is a. | a monopolistic market. | b. | a competitive
market. | c. | a highly organized market. | d. | a market in
which there is no connection whatsoever between buyers and sellers. | | |
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4.
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Currently you purchase 6 packages of hot dogs a month. You will graduate from college
in December and you will start a new job in January. You have no plans to purchase hot dogs in
January. For you, hot dogs are a. | a substitute good. | b. | a normal
good. | c. | an inferior good. | d. | a law-of-demand
good. | | |
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5.
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Which
of the following statements about people’s tastes is correct? a. | Generally,
economists are interested in explaining people’s tastes. | b. | Generally,
economists are interested in how changes in people’s tastes affect
markets. | c. | Tastes never change enough over time to cause noticeable shifts
in demand curves. | d. | All of the above are correct. | | |
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6.
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Which
of the following demonstrates the law of demand? a. | Relative to last month, Jon buys more pretzels at $1.50 per
pretzel since he got a raise at work this month. | b. | Melissa buys
fewer muffins at $0.75 per muffin than at $1 per muffin, other things
equal. | c. | Dave buys more donuts at $0.25 per donut than at $0.50 per
donut, other things equal. | d. | Kendra buys fewer Snickers at $0.60 per Snickers since the
price of Milky Ways fell to $0.50 per Milky Way. | | |
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7.
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Today's demand curve for gasoline could shift in response to a. | a change in
today's price of gasoline. | b. | a change in the expected future price of
gasoline. | c. | a change in the number of sellers of
gasoline. | d. | All of the above are correct. | | |
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8.
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Suppose the American Medical Association announces that men who shave their heads are
less likely to die of heart failure. We could expect the current demand for a. | hair gel to
increase. | b. | razors to increase. | c. | combs to
increase. | d. | None of the above is correct. | | |
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9.
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Suppose scientists provide evidence to the effect that chocolate pudding increases
cholesterol. We would expect to see a. | no change in the demand for chocolate
pudding. | b. | a decrease in the demand for chocolate
pudding. | c. | an increase in the demand for chocolate
pudding. | d. | a decrease in the supply of chocolate
pudding. | | |
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10.
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According to the law of supply, a. | the quantity supplied of a good is negatively related to the
price of the good. | b. | when the price of a good falls, the quantity supplied of the
good rises. | c. | the supply curve for a good is
upward-sloping. | d. | All of the above are correct. | | |
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11.
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A
decrease in the number of sellers in the market causes a. | the supply curve
to shift to the left. | b. | the supply curve to shift to the
right. | c. | a movement up and to the right along a stationary supply
curve. | d. | a movement downward and to the left along a stationary supply
curve. | | |
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Figure 4-8
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12.
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Refer to Figure 4-8. If there is currently a shortage of 30 units of the good,
then a. | the law of
demand predicts that the price will rise by $5 to eliminate the shortage. | b. | the law of
supply predicts that the price will rise by $5 to eliminate the shortage. | c. | the law of
supply and demand predicts that the price will rise by $3 to eliminate the
shortage. | d. | the law of supply and demand predicts that the price will fall
from its current level by an indeterminate amount, exacerbating the
shortage. | | |
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Figure 4-10
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13.
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Refer to Figure 4-10. Graph C shows which of the following? a. | an increase in
demand and an increase in quantity supplied | b. | an increase in
demand and an increase in supply | c. | an increase in quantity demanded and an increase in quantity
supplied | d. | an increase in supply and an increase in quantity
demanded | | |
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14.
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If
the demand for a product increases, we would expect a. | equilibrium
price to increase and equilibrium quantity to decrease. | b. | equilibrium
price to decrease and equilibrium quantity to increase. | c. | equilibrium
price and equilibrium quantity both to increase. | d. | equilibrium
price and equilibrium quantity both to decrease. | | |
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15.
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Suppose the incomes of buyers in a market for a particular normal good decrease and
there is also a reduction in input prices. What would we expect to occur in this
market? a. | The equilibrium
price would increase, but the impact on the amount sold in the market would be
ambiguous. | b. | The equilibrium price would decrease, but the impact on the
amount sold in the market would be ambiguous. | c. | Both equilibrium
price and equilibrium quantity would increase. | d. | Equilibrium
quantity would increase, but the impact on equilibrium price would be
ambiguous. | | |
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