ECONOMICS CHAPTER 3
1) The price of a bag of corn chips is $3, and the price of a bottle of soda is $1. What is
the relative price of a bag of corn chips?
A) 3 bottles of soda
B) 1/3 bottle of soda
C) $3
D) 33¢
Answer: A
2) Scarcity guarantees that
A) demands will exceed wants.
B) wants will exceed demands.
C) demands will be equal to wants.
D) most demands will be satisfied.
Answer: B
3) The quantity demanded is
A) always equal to the equilibrium quantity.
B) independent of the price of the good.
C) the amount of a good that consumers plan to purchase at a particular price.
D) independent of consumers’ buying plans.
Answer: C
4) The “law of demand” states that changes in
A) demand are related directly to changes in supply.
B) the quantity demanded of a good are not related to changes in the quantity supplied.
C) the quantity demanded of a good are inversely related to changes in its price.
D) demand are inversely related to changes in supply.
Answer: C
5) The “law of demand” refers to the fact that, all other things remaining the same, when
the price of a good rises
A) the demand curve shifts rightward.
B) the demand curve shifts leftward.
C) there is a movement down along the demand curve to a larger quantity demanded.
D) there is a movement up along the demand curve to a smaller quantity demanded.
Answer: D
6) The law of demand implies that demand curves
A) slope down.
B) slope up.
C) shift rightward whenever the price rises.
D) shift leftward whenever the price rises.
Answer: A
7) If the price of an apple increases,
A) its opportunity cost decreases.
B) its opportunity cost increases.
C) the substitution effect does not occur.
D) the income effect does not occur.
Answer: B
8) The “income effect” in the market for aspirin means that
A) aspirin are generally taken by people with higher than average incomes.
B) a decrease in the price of a substitute good like acetaminophen will make aspirin
takers feel a little poorer than they were before.
C) an increase in the price of aspirin will reduce the total purchasing power of aspirin
takers, making them able to afford fewer aspirin.
D) an increase in the price of aspirin will cause headache sufferers to look for a lower
priced remedy.
Answer: C
9) Which of the following shifts the demand curve for oranges?
A) disastrous weather that destroys about half of this year’s orange crop
B) a decrease in the price of a pound of bananas, a substitute in consumption for oranges
C) an increase in the price of the fuel used to transport oranges to supermarkets
