294)
In order to increase the supply of a good, producers must
294)
A)
see an increase in quantity supplied by competitors.
B)
reduce their per–unit costs of producing the good.
C)
cut back on labor to reduce production costs.
D)
convince consumers to reduce the quantity demanded.
295)
Suppose that a new study finds that eating more peanut butter will improve a person’s health. As a
result
295)
A)
a smaller amount of peanut butter will be purchased.
B)
the demand for peanut butter will fall.
C)
the price of peanut butter will fall.
D)
the demand for peanut butter will rise.
296)
Which of the following does NOT cause a rightward shift in the supply curve?
296)
A)
a reduction in the price of the good
B)
a reduction in the expected future price of the good
C)
an increase in technology
D)
a reduction in resource costs
297)
The equilibrium or market clearing price occurs at the point at which
297)
A)
the supply curve intersects the horizontal axis.
B)
the demand curve intersects the vertical axis.
C)
there is a shortage of the desired good.
D)
quantity demanded equals quantity supplied.
298)
Suppose that short skirts that were fashionable in the 1990s become unfashionable in the late 2000s.
If other factors were held constant, then there would be
298)
A)
a leftward shift in the demand curve.
B)
a rightward shift of the demand curve.
C)
a leftward movement along the supply curve.
D)
a rightward movement along the supply curve.
299)
Of the following, which is the least likely to be an example of substitute goods?
299)
A)
margarine and butter
B)
beef and chicken
C)
tea and coffee
D)
beer and pretzels
300)
A demand curve is a
300)
A)
graphical representation of alternative demands.
B)
horizontal line connecting amounts demanded at various income levels.
C)
graphical relationship, that includes several things such as tastes, time, and supply.
D)
graphical representation of the demand schedule.
301)
If a decrease in the price of good A causes a decrease in demand for good B, the two goods are
301)
A)
substitutes.
B)
normal.
C)
complements.
D)
inferior.
302)
In the above figure, what are the equilibrium price and quantity?
302)
A)
$10 and 200 units
B)
$50 and 100 units
C)
$40 and 200 units
D)
$30 and 100 units
303)
A supply curve
303)
A)
has a direct or positive relationship between price and quantity supplied.
B)
shows the relationship between quantity supplied and income.
C)
has an indirect or negative relationship between price and quantity supplied.
D)
shows the relationship between complements.
A
304)
Total market demand can be calculated by
304)
A)
horizontally summing individual demand curves at each and every price level.
B)
vertically summing individual demand curves at each and every income level.
C)
looking at the changes in the products’ popularity.
D)
adding up the largest quantity demanded by each individual.
A
305)
The demand curve shows the relationship between quantity demanded and
305)
A)
income.
B)
supply.
C)
price.
D)
quantity supplied.
C
D
306)
A decrease in supply will occur when
306)
A)
the demand curve shifts downward to the left.
B)
the supply curve shifts upward to the left.
C)
the supply curve shifts downward to the right.
D)
the demand curve shifts upward to the right.
307)
Refer to the above table. There is an excess quantity supplied of 2,000 units at a price of
307)
A)
$450.
B)
$500.
C)
$600.
D)
$700.
308)
Which of the following is an example of the law of demand?
308)
A)
The amount of smartphones sold increases while the price of smartphones is constant.
B)
An increase in the price of tablets is followed by an increase in the sale of tablets.
C)
An increase in the price of magnetic optical disks is followed by a reduction in the amount of
magnetic optical disks purchased.
D)
A decrease in the price of milk has no effect on the amount of milk consumed.
309)
The price of a new textbook increased by 25 percent and the price of a used textbook increased by
30 percent. What happened to the relative price of the new textbook?
309)
A)
It increased, but we can’t tell by how much without more information.
B)
It decreased by 5 percent.
C)
It decreased, but we can’t tell by how much without more information.
D)
It increased by 5 percent.
310)
If more buyers came into the market for a good, we would expect to see the market demand curve
310)
A)
remain unchanged since none of the determinants of individual demand changed.
B)
shift outward and to the right.
C)
shift inward and to the left.
D)
reflect a positive relationship between price and quantity demanded.
311)
If consumers expect that the price of pretzels will decrease next week, what would happen today?
311)
A)
Demand today for pretzels would increase.
B)
Demand today for pretzels would be unaffected.
C)
Supply today of pretzels would decrease.
D)
Demand today for pretzels would decrease.
312)
The data points on a supply curve come from
312)
A)
companies’ annual reports.
B)
the supply schedule.
C)
survey analysis.
D)
the same place from which we get the data points on a demand curve.
313)
If two goods are substitutes, then
313)
A)
there is an inverse relationship between changes in the price of one good and changes in the
demand for the other.
B)
changes in the quantity demanded of one good will not affect the demand for the other.
C)
if the price of one good falls, the demand for the other good falls also.
D)
an increase in the price of one causes the demand for the other to fall.
314)
When income increases, the demand curve for an inferior good
314)
A)
shifts to the left.
B)
remains constant.
C)
shifts to the right.
D)
moves up along the demand curve for the product.
315)
When there is an excess quantity supplied in the market
315)
A)
the price will increase, causing a decrease in demand and an increase in quantity supplied.
B)
the price of the product will decrease, causing an increase in quantity demanded and a
decrease in quantity supplied.
C)
the price of the product will increase, causing a decrease in demand and an increase in
supply.
D)
the price of the product will increase, causing a decrease in quantity demanded and an
increase in supply.
316)
Refer to the above figure. Other things being equal, if price is at P2, then we would expect
316)
A)
consumers to reduce their offering price for the good.
B)
an excess quantity demanded to occur.
C)
price to decline until an equilibrium is achieved at P0.
D)
consumers to bid against each other for goods and force the price still higher.
317)
According to the above figure for a gasoline market, an increase in the price from $2 to $4 will
result in
317)
A)
an increase in quantity supplied of 20 million gallons.
B)
an increase in demand of 20 million gallons.
C)
an increase in quantity demanded of 10 million gallons.
D)
a shortage of 30 million gallons.
318)
Here’s what we know about last year’s weekly demand for 2–night DVD rentals in the Village of
Harmony: When P = $3, Qd = 100; at P = $5, Qd = 75; and when P = $7, Qd = 50. This year the
village population has increased by 25%. What impact is this most likely to have?
318)
A)
The market demand curve for DVD rentals shifts left.
B)
The market demand for DVD rentals increases.
C)
Each individual‘s demand for DVD rentals will increase.
D)
Each individual’s demand curve for DVD rentals will shift to the left.
319)
An increase in demand occurs when
319)
A)
we measure price in money price rather than real price.
B)
the demand curve shifts to the right.
C)
the demand curve shifts to the left.
D)
we move up the demand curve.
320)
Two goods are substitutes when
320)
A)
the two goods have the same price.
B)
the two goods are used together.
C)
an increase in the price of one raises the demand for the other.
D)
an increase in the price of one reduces the demand for the other.
321)
For a normal good, an increase in consumer income will lead to
I. a movement down the demand curve
II. a rightward shift in the demand curve
III. a reduction in supply
321)
A)
I only
B)
II only
C)
III only
D)
Both II and III
322)
Assume that coffee and tea are substitutes. Given a downward sloping demand curve for tea, an
increase in the price of tea will cause
322)
A)
a decrease in the demand for coffee.
B)
a leftward shift of the demand curve for tea.
C)
a leftward shift in the demand for coffee.
D)
an increase in the demand for coffee.
323)
Which of the following situations could generate a shortage?
323)
A)
Demand for a good increases, resulting in a new higher market clearing price.
B)
Demand for a good decreases, but the price is not permitted to fall.
C)
Demand for a good decreases, resulting in a new lower market clearing price.
D)
Demand for a good increases, but the price is not permitted to rise.
D
324)
In economic terminology, an inferior good is a good
324)
A)
that has no monetary value.
B)
for which demand increases as income decreases.
C)
that no one will purchase.
D)
that doesn’t work properly.
B
325)
Refer to the above figure. For a normal good, the rightward shift of the curve could have been
caused by
325)
A)
a decrease in income.
B)
an increase in income.
C)
a technological improvement.
D)
an increase in the cost of inputs.
B
D
326)
Suppose that, at a rental rate of $1000 per month, 650 residents wish to rent apartments and that
landlords offer 800 apartments available for rent. Which one of the following statements is then
TRUE?
326)
A)
The market clearing rental price of apartments is less than $1000 per month.
B)
The market clearing rental price of apartments is too low.
C)
There is a shortage of 150 apartments.
D)
There is an excess demand for apartments.
327)
The effects of a per–unit tax imposed on sales of an industry’s product would likely include
327)
A)
a leftward movement along the market supply curve for the product.
B)
a lower product price at any amount of the product supplied.
C)
a leftward shift of the market supply curve for the product.
D)
none of the above.
C
328)
More cattle are found to have mad cow disease. As a result, consumer confidence in the safety of
beef is shaken. What would an economist predict will happen in the beef market?
328)
A)
The demand curve will shift to the left.
B)
The demand curve does not shift but consumers move to a point lower down the curve.
C)
As consumer preferences move away from beef, there is an upward movement along the beef
demand curve.
D)
absolutely no change in either the quantity demand or the demand for beef
A
329)
A decrease in demand would be represented by
329)
A)
a shift of the demand curve to the left.
B)
an increase in the cost of resources used to produce the good.
C)
a movement along the demand curve.
D)
the price of a good going from $3 to $4.
A
A
330)
Which of the following will NOT affect the supply of cars?
330)
A)
an increase in the price of steel
B)
a decrease in the price of cars
C)
an improvement in automobile production technology
D)
an increase in the productivity of auto workers
331)
When the current price of an item is greater than the item’s market clearing price
331)
A)
quantity supplied is greater than quantity demanded.
B)
quantity supplied is less than quantity demanded.
C)
demand is greater than supply.
D)
supply is greater than demand.
332)
In the above figure, when the price of Good B increases, the result can be shown by
332)
A)
the movement from D2 to D1 in Graph A.
B)
the movement along D0 from P2 to P1.
C)
the movement from D1 to D2 in Graph A.
D)
the movement along D0 from P1 to P2.
333)
Another term for the equilibrium price is
333)
A)
law of demand.
B)
nominal price.
C)
excess demand.
D)
market clearing price.
334)
Which of the following statements is correct?
334)
A)
A shortage occurs when the quantity demanded is less than the quantity supplied at a price
below the market clearing price.
B)
A shortage occurs when the quantity demanded is greater than the quantity supplied at a
price below the market clearing price.
C)
A shortage occurs when the quantity demanded is less than the quantity supplied at a price
above the market clearing price.
D)
A shortage and scarcity are the same thing.
B
335)
If the price of cotton used in making blue jeans increases, which of the following will occur?
335)
A)
The supply curve for jeans will shift leftward.
B)
There will be a movement along an unchanged supply curve for jeans.
C)
The supply curve for jeans will shift rightward.
D)
There will be a rightward shift in the supply curve for jeans, followed by a movement along
the supply curve.
A
336)
A shortage will occur whenever
336)
A)
price is below the equilibrium price.
B)
the supply curve is upward sloping.
C)
price is above the equilibrium price.
D)
price is equal to the equilibrium price.
A
D
337)
Which of the following best represents the law of demand?
337)
A)
As the price of a good decreases, the demand curve for that good shifts to the right.
B)
As the demand for a good increases, the price of that good increases.
C)
As the price of a good increases, the quantity demanded of that good decreases.
D)
As the price of a good decreases, the demand for the good increases.
338)
The direct relationship between changes in price and changes in quantity supplied is
338)
A)
the law of supply.
B)
shown by a shift in the supply curve.
C)
the law of relative production.
D)
a change in supply.
339)
A technological improvement in the production of tablets would
339)
A)
increase the supply of tablets.
B)
increase the demand for tablets.
C)
decrease the demand for tablets.
D)
decrease the supply of tablets.
340)
Which of the following statements is consistent with a decrease in supply?
340)
A)
Consumers’ incomes have increased.
B)
There has been an advance in technology.
C)
Prices of raw material inputs have increased.
D)
The market price has decreased.
341)
Which one of the following statements is TRUE?
341)
A)
Rational consumers always ignore the monetary price of a good when deciding whether to
buy it.
B)
The relative price of a good refers to the opportunity cost of purchasing it.
C)
If the money price of a good increases, its relative price necessarily increases.
D)
If the money price of a good increases, its relative price necessarily decreases.
342)
Refer to the above figure. The rightward shift of the curve indicates
342)
A)
a decrease in quantity demanded.
B)
an increase in quantity demanded.
C)
a decrease in demand.
D)
an increase in demand.
343)
All of the following will cause the supply curve of good A to shift rightward EXCEPT
343)
A)
an increase in the market price of good A.
B)
a decrease in the per–unit tax on good A which producers must pay.
C)
a reduction in the prices of inputs used to produce good A.
D)
an increase in the number of firms in the industry producing good A.
344)
In the long run, the number of firms in an industry may change. If the number of firms increases,
then
344)
A)
the demand curve will shift inward to the left.
B)
the demand curve will shift outward to the right.
C)
the supply curve will shift inward to the left.
D)
the supply curve will shift outward to the right.
345)
Which of the following would most likely be considered complements?
345)
A)
butter and margarine
B)
rental cars and taxis
C)
tennis rackets and tennis balls
D)
plastic wrap and aluminum foil
346)
We know that products G and H are related goods, because when the price of G increases,
346)
A)
the demand curve for H will shift to the right, because G and H are complementary goods.
B)
the demand curve for H will shift to the left, because G and H are complementary goods.
C)
the demand curve for H will remain unchanged because G and H are substitute goods.
D)
the quantity of H demanded will shift along its demand curve, because G and H are
complementary goods.
347)
Which of the following will cause the demand curve for beer to shift right?
347)
A)
a decline in population
B)
a fall in the price of beer
C)
a fall in average incomes of beer consumers
D)
a successful advertising campaign linking beer consumption to lower cholesterol
D
348)
A demand curve for a normal good
348)
A)
shows the inverse relationship between price and quantity demanded.
B)
is constructed based on the assumption that an inverse relationship exists between price and
income.
C)
slopes upward and to the right.
D)
is constructed based on the assumption that income is rising.
A
349)
The law of demand is based on the observation that
349)
A)
people are indifferent to price changes.
B)
stores go out of business if they lower prices.
C)
people buy more of a product when the price falls.
D)
people buy less of a product when the product becomes less fashionable.
C
B
350)
Assuming that turkey, chicken, pork, and beef are substitutes, suppose that the price of turkey has
fallen. This will, other things being equal
350)
A)
leave demand for chicken, pork, and beef unchanged.
B)
increase demand for chicken, pork, and beef.
C)
reduce demand for chicken, pork, and beef.
D)
increase quantity demanded of beef.
351)
Which one of the following statements is FALSE?
351)
A)
The nominal price of a good is its price measured in current dollars.
B)
Generally, what matters most to consumers is what a good costs in dollars.
C)
When the price of beer goes up by the same proportion as the prices of all other goods, the
relative price of beer does not change.
D)
The relative price of a good is its price measured relative to the price of other goods.
352)
The law of demand shows that there is
352)
A)
a direct relationship between price and quantity demanded.
B)
an inverse relationship between price and profit.
C)
an inverse relationship between price and quantity demanded.
D)
an inverse relationship between price and resource cost.
353)
In economic terminology, a normal good is a good
353)
A)
on which a monetary value cannot be placed.
B)
for which demand increases when income increases.
C)
for which demand increases when price increases.
D)
that is liked only by normal people.
354)
A demand curve represents a(n)
354)
A)
direct relationship between price and demand.
B)
direct relationship between price and quantity demanded.
C)
indirect or inverse relationship between price and supply.
D)
indirect or inverse relationship between price and quantity demanded.
355)
Suppose it is discovered that consumption of butter leads to a longer life. This information would
lead to
355)
A)
an increase in quantity demanded.
B)
a decrease in quantity demanded.
C)
a decrease in demand.
D)
an increase in demand.
356)
Which of the following will occur as the price of a good decreases?
356)
A)
Demand for that good will increase.
B)
The demand curve for that good will shift to the right.
C)
The demand curve for that good will shift to the left.
D)
The quantity demanded for that good will increase.
357)
John increases his consumption of Good X and Good Y when his income increases. For John
357)
A)
Good X and Good Y are substitute goods.
B)
Good X and Y are normal goods
C)
Good X is an inferior good.
D)
Good X and Good Y are complement goods.
358)
According to the market data for good X in the above table, a stable equilibrium price is established
at
358)
A)
$4.
B)
$6.
C)
$8.
D)
$2.
359)
Refer to the above figure. At a price of two cents, the quantity of bubble gum demanded will be
359)
A)
2.
B)
3.
C)
4.
D)
5.
360)
The law of demand states that
360)
A)
the quantity demanded of a good is higher at a lower relative price than at a higher relative
price.
B)
consumers will exhaust their incomes as they purchase goods and services at given absolute
prices.
C)
there is a direct positive relationship between relative price and quantity demanded.
D)
if the price of a good increases both relatively and absolutely, there will be no change in
quantity demanded.
361)
What happens as the result of a surplus?
361)
A)
Consumers begin to view the good as an inferior good because it is too commonplace.
B)
Demand for the good increases.
C)
There is downward pressure on prices.
D)
There is upward pressure on prices.
C
362)
The law of demand implies that the demand curve
362)
A)
has a negative slope.
B)
shifts to the right when the price of a good increases.
C)
has a positive slope.
D)
shifts to the left when the price of a good decreases.
A
363)
The market supply curve is found by
363)
A)
vertically summing up the equilibrium prices of individual firms.
B)
estimating what the supply curve would be of one huge firm large enough to serve the entire
market.
C)
horizontally summing up the supply curves of individual firms.
D)
surveys of consumer groups.
C
A
364)
Refer to the above figure. A movement from Point A to Point B is caused by
364)
A)
an expectation of a decrease in the price of the good in that figure.
B)
a decrease in the price of the good in that figure.
C)
an increase in income.
D)
all of the above.
365)
The law of supply includes the statement “other things being equal.” These other things include all
of the following EXCEPT
365)
A)
consumer’s income.
B)
producers’ expectations.
C)
technology.
D)
resource prices.
366)
In economics, “demand” refers to
366)
A)
how much of a good people will buy at any price during a given time period.
B)
the intensity of desire for a good.
C)
the satisfaction a good will provide a person.
D)
the amount of a good people need rather than the amount they want.
367)
The price of a commodity in terms of another commodity is
367)
A)
the law of demand.
B)
the relative price.
C)
the money price.
D)
a substitute.