Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
133. In the supply-and-demand diagram of the market for peanut butter, the equilibrium point has moved up and to the
right. What could have caused this?
a.
a fall in the price of peanuts
b.
a rise in the price of peanuts
c.
a rise in income, assuming that peanut butter is an inferior good
d.
a shift in preferences toward peanut butter
e.
none of the above
134. Jerry has $50,000 in his savings account and the average new car price is $23,000. Does Jerry have a demand for a
new car?
a.
Yes, since Jerry can afford a new car.
b.
Not necessarily. Jerry has the ability to buy a new car, but we don't know if he also has the willingness to buy
a new car.
c.
Yes, since Jerry's savings is more than double the average new car price.
d.
none of the above
135. __________ is the number of units that individuals are __________ to buy at a particular price during some time
period.
a.
Demand; willing and able
b.
Supply; willing and able
c.
Quantity demanded; willing and able
d.
Demand; able
e.
Quantity demanded; willing
136. Demand refers to
a.
how much of a good people are willing and able to buy at a particular price.
b.
the different quantities of a good people are willing and able to buy at different prices.
c.
the different quantities of a good people are willing and able to buy at a particular price.
d.
how much of a good people are willing to buy at different prices.
e.
none of the above
137. Which of the following is consistent with the law of demand?
a.
People substitute higher-priced goods for higher-quality goods.
b.
People substitute some higher-priced goods for other higher-priced goods.
c.
People substitute lower-priced goods for higher-priced goods.
d.
People substitute some lower-priced goods for other lower-priced goods.
138. If price is on the vertical axis and quantity demanded is on the horizontal axis, why is a demand curve downward
sloping (left to right)?
a.
Because a demand curve is the graphical representation of the law of demand, which specifies an inverse
relationship between price and supply, ceteris paribus.
b.
Because a demand curve is the graphical representation of the law of demand, which specifies a direct
relationship between price and quantity supplied, ceteris paribus.
c.
Because a demand curve is the graphical representation of the law of demand, which specifies an inverse
relationship between price and demand, ceteris paribus.
d.
Because a demand curve is the graphical representation of the law of demand, which specifies a direct
relationship between price and demand, ceteris paribus.
e.
Because a demand curve is the graphical representation of the law of demand, which specifies an inverse
relationship between price and quantity demanded, ceteris paribus.
139. In the market for good X there are three buyers, Adam, Bill, and Carolyn. Adam buys 3 units of good X at $4, Bill
buys 7 units of good X at $4, and Carolyn buys 8 units of good X at $4. One point on the market demand curve for good
X consists of a price of _____________ and a quantity demanded of __________________ units.
a.
$4; 10
b.
$4; 18
c.
$4; 15
d.
$5; 8
e.
none of the above
140. Which of the following statements is true?
a.
To an economist, demand is different from quantity demanded.
b.
A demand schedule is the numerical tabulation of the law of demand.
c.
A demand curve is the graphical representation of the direct relationship between price and quantity
demanded.
d.
a and b
e.
a, b, and c
141. Consider a point on a market demand curve. The point represents
a.
a single price and the quantity demanded by an individual buyer.
b.
a single price and the sum of the quantities demanded by all buyers.
c.
various prices and various quantities demanded.
d.
a single price and the quantity demanded by an individual buyer at that price and all other prices.
e.
a and c
142. If the demand for computer software rises as incomes rise, then computer software is a (an)
a.
inferior good
b.
substitute (good) for computers
c.
normal good
d.
complement (good) for computers
e.
c and d
143. There are two universities, A and B, in a city. Tuition rises at University A and, as a result, the demand for attending
University B rises. It follows that educational services at the two universities are
a.
complements.
b.
normal goods.
c.
inferior goods.
d.
substitutes.
e.
none of the above
144. Which of the following statements is false?
a.
The shift factors for the supply curve are: income, preferences, prices of related goods, the number of buyers,
and expectations of future price.
b.
A change in (own) price changes the quantity supplied of a good.
c.
A change in demand is graphically represented by a shift in the demand curve.
d.
A change in quantity demanded is represented by a movement along a given demand curve.
145. If potential buyers of good X expect the price of good X will soon fall, then the current
a.
demand for good X will rise.
b.
demand for good X will remain unchanged.
c.
demand for good X will fall.
d.
quantity demanded of good X will fall.
e.
quantity demanded of good X will rise.
146. Which of the following statements represents a correct and sequentially accurate economic explanation?
a.
Goods X and Y are substitutes. The price of X falls, the quantity demanded of X rises, and the demand for Y
rises.
b.
Goods X and Y are substitutes. The price of X rises, the demand for X falls, and the demand for Y rises.
c.
Goods X and Y are substitutes. The price of X falls, the demand for X rises, and the quantity demanded of Y
rises.
d.
Goods X and Y are substitutes. The price of X falls, the quantity demanded of X rises, and the demand for Y
falls.
e.
Goods X and Y are complements. The price of X falls, the quantity demanded of X rises, and the demand for
Y falls.
147. Which of the following statements represents a correct and sequentially accurate economic explanation?
a.
Good X is an inferior good and good Y is a substitute for X. Income rises, the demand for X falls, the price of
X falls, and the demand for Y rises.
b.
Good X is an inferior good and good Y is a substitute for X. Income rises, the demand for X falls, the price of
X falls, and the demand for Y falls.
c.
Good X is an inferior good and good Y is a substitute for X. Income falls, the demand for X rises, the price of
X rises, and the demand for Y falls.
d.
Good X is an inferior good and good Y is a substitute for X. Income rises, the quantity demanded of X rises,
the price of X rises, and the demand for Y falls.
e.
none of the above
148. In year 1 the average price of X is $10, and in year 2 the average price of X is $23. If consumers buy more units of X
in year 2 than in year 1, it follows that
a.
the law of supply does not hold for good X.
b.
demand for good X could be higher in year 2 than in year 1.
c.
supply of good X could be less in year 2 than in year 1.
d.
good X buyers have received an increase in income between year 1 and year 2, and good X is a normal good.
e.
b and d
149. Which of the following statements best represents the law of supply?
a.
Price and quantity supplied are inversely related.
b.
Price and quantity supplied are directly related.
c.
Price and quantity supplied are inversely related, ceteris paribus.
d.
Price and quantity supplied are directly related, ceteris paribus.
e.
Price and supply are directly related, ceteris paribus.
150. Which of the following statements is false?
a.
An upward-sloping supply curve graphically represents the law of supply.
b.
A vertical supply curve graphically represents the law of supply.
c.
If income rises and good X is a normal good, then the demand for good X will rise.
d.
If income falls and good Y is an inferior good, then the demand for good Y will rise.
151. A vertical supply curve represents:
a.
an inverse relationship between price and quantity supplied.
b.
an independent relationship between price and quantity supplied.
c.
an independent relationship between price and supply.
d.
a direct relationship between price and quantity supplied.
e.
a direct relationship between price and supply.
152. The government imposes a $2.50 per-unit tax on the production of good X. As a result the
a.
supply curve for good X shifts leftward and the price of good X rises.
b.
quantity supplied of good X falls and the price of good X rises.
c.
demand curve for good X shifts leftward and the price of good X falls.
d.
supply curve for good X shifts rightward and the price of good X falls.
e.
supply curve for good X shifts leftward and the price of good X falls.
153. Which of the following statements is false?
a.
A change in the price of good X will usually change the quantity supplied of good X, ceteris paribus.
b.
A change in the number of sellers of a good can change the supply of that good.
c.
Price and quantity supplied are directly related.
d.
A vertical supply curve represents a direct relationship between price and quantity supplied.
154. If a supply curve shifts rightward, this means
a.
suppliers are willing and able to offer less of the good for sale at every price.
b.
suppliers are willing and able to offer more of the good for sale at every price.
c.
quantity supplied is greater at every price.
d.
suppliers are willing and able to offer more of the good for sale only at a particular price.
e.
b and c
155. If a demand curve shifts rightward, this means
a.
quantity demanded is greater only at one particular price.
b.
quantity demanded is greater at every price.
c.
buyers are willing and able to purchase more of the good at every price.
d.
buyers are willing and able to purchase less of the good at every price.
e.
b and c
156. One reads the following in a newspaper: "Today the president and Congress agreed to impose new restrictive quotas
on Japanese cars coming into the country." As a result, an economist would predict that the
a.
supply of cars in the country will remain the same and the (average) price of cars will fall.
b.
supply of cars in the country will fall and the (average) price of cars will rise.
c.
supply of cars in the country will rise and the (average) price of cars will fall.
d.
demand for cars in the country will fall and the (average) price of cars will rise.
e.
demand for cars in the country will rise and the (average) price of cars will rise.
157. An economist says, "Technological advances have the power to lower the prices of many of the goods we buy." Here
is how this works:
a.
Technological advances lead to lower demand, which leads to lower prices.
b.
Technological advances lead to greater supply, which leads to lower prices.
c.
Technological advances lead to greater quantity supplied, which leads to lower prices.
d.
Technological advances lead to lower taxes, which lead to greater supply, which leads to lower prices.
e.
Technological advances lead to higher taxes, which lead to fewer subsidies, which lead to greater supply,
which leads to lower prices.
158. One point on a market supply curve represents $4 and 100 units quantity supplied. If there are three suppliers, and at
a price of $4 one of the suppliers supplies 23 units, then which of the following combinations of price and quantity
supplied might hold for the other two suppliers?
a.
At $4, quantity supplied could be 40 units for one supplier and 27 for the other.
b.
At $4, quantity supplied could be 33 units for one supplier and 27 for the other.
c.
At $4, quantity supplied could be 40 units for one supplier and 37 for the other.
d.
At $4, quantity supplied could be 77 units for one supplier and 10 for the other.
e.
There is not enough information to answer this question.
159. The price of X was $10 in year 1 and $14 in year 2. Which of the following could be the correct reason for the rise in
price?
a.
The demand for X was higher in year 2 than in year 1, ceteris paribus.
b.
The supply of X was lower in year 2 than in year 1, ceteris paribus.
c.
The demand was higher, and the supply was lower, in year 2 than in year 1.
d.
a and b
e.
a, b, and c
160. Labor is a resource that is necessary to produce many goods. "If the price of labor falls," says the economist, "the
prices of goods will soon follow." How does this work?
a.
If the price of labor falls, the supply of goods rises, and the prices of those goods fall.
b.
If the price of labor falls, the quantity supplied of goods rises, and the prices of those goods fall.
c.
If the price of labor falls, the demand for goods falls, and the prices of those goods fall.
d.
If the price of labor falls, the demand for goods rises, and the prices of those goods fall.
e.
If the price of labor falls, the supply of goods falls, and the prices of those goods fall.
161. One reads in the newspaper: "Today the president and Congress enacted a law which adds new requirements that
child care providers must meet before they can offer their services for sale." As a result, an economist would predict that
a.
the supply of child care services will increase, thus lowering the price of child care services.
b.
the supply of child care services will be unaffected by the stiffer requirements and therefore the price of child
care services will not change.
c.
the demand for child care services will fall because people who buy child care services do not want stiffer
requirements placed on child care providers.
d.
the supply of child care services will decrease, thus raising the price of child care services.
e.
none of the above
162. If the demand for a good increases by more than the supply of the good increases, then the good’s equilibrium price
will __________ and its equilibrium quantity will __________.
a.
rise; fall
b.
rise; rise
c.
fall; fall
d.
fall; rise
163. If the demand for a good falls by less than the supply of the good rises, then the good’s equilibrium price will
__________ and its equilibrium quantity will __________.
a.
rise; fall
b.
rise; rise
c.
fall; fall
d.
fall; rise
164. If the demand for a good rises by more than the supply of the good falls, then the good’s equilibrium price will
__________ and its equilibrium quantity will __________.
a.
rise; fall
b.
rise; rise
c.
fall; fall
d.
fall; rise
165. A change in price will lead to a change in __________ and to a change in __________, while a change in preferences
will lead to a change in __________ and a change in the prices of relevant resources will lead to a change in __________.
a.
quantity supplied; demand; income; supply
b.
demand; quantity supplied; supply; quantity demanded
c.
quantity supplied; supply; quantity supplied; demand
d.
quantity supplied; quantity demanded; demand; supply
e.
quantity supplied; quantity demanded; supply; demand
166. The equilibrium price of a good in market A is $24. The current price of the good in market A is $21. At this price,
a(n) ________________________ of the good exists in market A.
a.
surplus
b.
shortage
c.
excess supply
d.
excess demand
e.
b and d
167. Which of the following statements is false?
a.
At equilibrium in a market, scarcity does not exist.
b.
If there is a shortage of 100 units at a price of $2 per unit, the shortage will be greater than 100 units at a price
of $1 per unit.
c.
If there is a surplus of 30 units at a price of $3, the surplus will be less than 30 units (or even nonexistent) at a
price of $2.
d.
If there is a surplus, suppliers will not be able to sell all they had hoped to sell at a particular price.
168. In year 1 the price of good X is $10 and 100 units are bought and sold. In year 2 the price of good X is $13 and 230
units are bought and sold. What can explain this?
a.
The supply of good X was higher in year 2 than in year 1 and the demand for good X was the same in year 2
as in year 1.
b.
The demand for good X was higher in year 2 than in year 1 and the supply of good X was the same in year 2
as in year 1.
c.
Both the demand for, and supply of, good X were higher in year 2 than in year 1.
d.
b or c
e.
a, b, or c
169. If computers and software are complements, then
a.
a fall in the price of computers will increase the demand for software and, ceteris paribus, the price of
software will rise.
b.
a rise in the price of computers will decrease the demand for software and, ceteris paribus, the price of
software will rise.
c.
a fall in the price of computers will decrease the demand for software and, ceteris paribus, the price of
software will fall.
d.
a rise in the price of software will increase the demand for computers and, ceteris paribus, the price of
computers will rise.
e.
a fall in the price of software will decrease the demand for computers and, ceteris paribus, the price of
computers will fall.
170. Which of the following is descriptive of the law of diminishing marginal utility?
a.
The third hamburger consumed provides less utility than the second hamburger consumed.
b.
The third hamburger is priced higher than the first hamburger.
c.
As price falls, quantity demanded rises, ceteris paribus.
d.
The price of a good rises as the costs of producing that good rise.
e.
none of the above
171. Economists state that the __________ utility a person receives from a unit of a good, the __________ the price he or
she is willing to pay for it.
a.
more; lower
b.
more; higher
c.
less; higher
d.
less; lower
e.
b and d
172. If the U.S. government imposes a more restrictive import quota on Japanese video gaming systems, the
____________ curve for Japanese video gaming systems in the U.S. will shift ___________.
a.
supply; leftward
b.
supply; rightward
c.
demand; leftward
d.
demand; rightward
173. If the price a buyer pays for a good is $50 and the maximum price she would be willing and able to pay is $53, then
____________ is _______________.
a.
producers’ surplus; $103
b.
consumers’ surplus; $103
c.
consumers’ surplus; $3
d.
producers’ surplus; $3
e.
consumers’ surplus; $40
174. If consumers’ surplus is $30 and the price paid for the good is $50, then the maximum price a buyer is willing and
able to pay for the good is
a.
$80.
b.
$30.
c.
$50.
d.
$20.
e.
There is not enough information to answer the question.
175. If the maximum price a person is willing and able to pay for a good is $50, and consumers’ surplus is $20, then it
follows that the price the buyer paid for the good is
a.
$20
b.
$70
c.
$50
d.
$30
e.
There is not enough information to answer the question.
176. What is the definition of producers’ surplus?
a.
price received minus maximum selling price
b.
maximum selling price minus price received
c.
price received minus minimum selling price
d.
highest price minus lowest price
e.
none of the above
177. If the producers’ surplus is $50, and the consumers’ surplus is $40, then what is the minimum selling price of the
good?
a.
$10
b.
$40
c.
$50
d.
$90
e.
There is not enough information to answer the question.
178. One can determine producers’ surplus if the minimum selling price and the _____________ are known.
a.
price received
b.
price paid
c.
tax paid
d.
tax received
e.
a and c
179. One can determine the consumers’ surplus if the _______________ are known
a.
tax paid
b.
maximum buying price
c.
price paid
d.
maximum buying price and price paid
e.
maximum buying price and tax paid
180. At a price of $9.99, Danielle buys 3 digital books per month. When the price decreases to $7.99, Danielle buys 4
digital books per month. Jason says that Danielle's demand for digital books has increased. Is Jason correct?
a.
Yes, Jason is correct.
b.
No, Jason is incorrect. Danielle's demand has decreased.
c.
No, Jason is incorrect. Danielle's quantity demanded has decreased, but her demand has stayed the same.
d.
No, Jason is incorrect. Danielle's quantity demanded has increased, but her demand has stayed the same.
e.
No, Jason is incorrect. Danielle's quantity demanded has increased and her demand has decreased.
181. Resource X is necessary to the production of good Y. If the price of resource X falls,
a.
the supply curve of Y shifts leftward.
b.
the supply curve of Y shifts rightward.
c.
the supply curve of Y is unaffected.
d.
there is a movement down the supply curve of Y.
e.
there is a movement up the supply curve of Y.
182. At a price for which the quantity supplied exceeds the quantity demanded, a __________ is experienced, which
pushes the price __________ toward its equilibrium value.
a.
surplus; downward
b.
surplus; upward
c.
shortage; downward
d.
shortage; upward
183. The “voluntary bumping plan” used by airlines to resolve the problem of overbooked flights was developed by
economist
a.
Adam Smith.
b.
John Maynard Keynes.
c.
Alan Greenspan.
d.
Julian Simon.
184. Suppose Smith wants one iPhone no matter what the price is between $0 and $350, Jones wants one iPhone no matter
what the price is between $0 and $200, and Griffith wants one iPhone no matter what the price is between $0 and
$450. In this case, each individual buyer’s demand curve will be __________________ and the market demand curve
will be __________________.
a.
downward sloping; vertical
b.
vertical; downward sloping
c.
vertical; vertical
d.
downward sloping; downward sloping
185. One reason that helps to explain the law of demand is the law of
a.
diminishing marginal utility.
b.
diminishing marginal returns.
c.
increasing opportunity costs.
d.
supply.
