A. A
B. B
C. C
D. D
47. Refer to the graphs shown. Assume the graph reflects demand in the automobile market.
Which arrow best captures the impact of increased gasoline prices on the automobile market?
A. A
B. B
C. C
D. D
48. Refer to the graphs shown. The arrow that would best illustrate the impact on consumers of
reducing sales tax on a good paid by suppliers is:
A. A.
B. B.
C. C.
D. D.
49. Refer to the graphs shown. An increase in quantity demanded is best shown by which
arrow?
A. A
B. B
C. C
D. D
50. To derive a market demand curve from individual demand curves, it would be necessary to:
A. take the maximum quantity of each demand curve as the market quantity demanded at each
price.
B. sum the curves horizontally, adding quantities demanded at each price.
C. take the demand curve that is the furthest to the right as the market demand curve.
D. multiply the quantities demanded on each demand curve at each price to find the market
quantity demanded at each price.
51. Refer to the following graphs:
Which curve depicts the market demand from the following individual demand tables?
A. I
B. II
C. III
D. IV
52. Refer to the table that presents Mike and Janet’s demand for apples by the peck. If they are
the only two in the market, which of the following represents a point on the market demand
curve?
A. price = $1, quantity = 18
B. price = $2, quantity = 21
C. price = $4, quantity = 0
D. price = $4, quantity = 21
53. Refer to the table that presents Mike and Janet’s demand for apples by the peck. If they are
the only two in the market, a market demand curve derived from this data would show quantity
demanded is:
A. 22 at price = $1 and 18 at price = $2.
B. 21 at price = $1 and 17 at price = $2.
C. 28 at price = $1 and 21 at price = $2.
D. 21 at price = $1 and 28 at price = $2.
54. The law of supply states that, other things equal, as the price of a good goes:
A. up, the quantity supplied goes up.
B. up, the supply goes down.
C. down, the quantity supplied goes up.
D. down, the supply goes down.
55. Which statement is not consistent with the law of supply?
A. More of a good will be supplied, the higher the price, other things constant.
B. Less of a good will be supplied, the lower the price, other things constant.
C. Quantity supplied of a good is directly related to the good’s price.
D. Quantity supplied of a good is inversely related to the good’s price.
56. According to the law of supply:
A. supply curves slope upward.
B. supply curves slope downward.
C. price and quantity supplied are negatively related.
D. price and quantity supplied are inversely related.
57. The law of supply states that, other things constant, there is:
A. an inverse relation between price and the quantity supplied.
B. an inverse relation between price and supply.
C. a direct relation between price and the quantity supplied.
D. a direct relation between price and supply.
58. Suppose farmers can use their land to grow either wheat or corn. The law of supply predicts
that an increase in the market price of wheat will cause:
A. farmers to substitute wheat for the production of corn.
B. farmers to substitute corn for the production of wheat.
C. farmers to lower the production of corn and wheat.
D. farmers to raise the production of wheat and corn.
59. According to the law of supply, what will motivate firms to increase their quantity supplied
of a product?
A. Production cost
B. Fixed cost
C. Price
D. Supply
60. Refer to the graphs shown. The curve that best illustrates the law of supply is:
A. I.
B. II.
C. III.
D. IV.
61. Refer to the graphs shown. If quantity supplied is a fixed amount that does not vary with
price, then the supply curve looks like:
A. I.
B. II.
C. III.
D. IV.
62. The theory that quantity supplied and price are positively related, other things constant, is
referred to as the law of:
A. opportunity cost.
B. profit maximization.
C. supply.
D. demand.
63. If the price of steel rises, the law of supply predicts that, other things constant, the:
A. supply of steel will increase.
B. supply of steel will decrease.
C. quantity supplied of steel will increase.
D. quantity supplied of steel will decrease.
64. An upward sloping supply curve implies that:
A. quantity supplied increases when price decreases.
B. quantity supplied increases when price increases.
C. the law of supply is invalid.
D. there is no relationship between price and quantity supplied.
65. When applied to labor markets, the law of supply suggests that:
A. an increase in the wages earned by nurses will cause the quantity of nurses supplied to
increase.
B. a decrease in the wages earned by nurses will cause the quantity of nurses supplied to
increase.
C. an increase in the wages earned by nurses will cause the quantity of nurses demanded to
increase.
D. a decrease in the wages earned by nurses will cause the quantity of nurses demanded to
increase.
66. Suppose when you are offered $7.00 per hour to work in the campus library, you choose not
to work, but when you are offered $10.00 per hour, you accept a part-time position. Your
behavior can best be explained by the fact that your supply of labor curve is:
A. horizontal.
B. vertical.
C. downward-sloping.
D. upward-sloping.
67. If the law requires apartment building owners to lower rent, the law of supply predicts that,
other things constant, the:
A. supply of apartment units will shift leftward.
B. supply of apartment units will shift rightward.
C. quantity of apartment units supplied will rise.
D. quantity of apartment units supplied will fall.
68. The distinction between supply and the quantity supplied is best made by saying that:
A. the quantity supplied is represented graphically by a curve and supply as a point on that
curve.
B. supply is represented graphically by a curve and quantity supplied as a point on that curve.
C. the quantity supplied is in a direct relation with prices, whereas supply is in an inverse
relation.
D. the quantity supplied is in an inverse relation with prices, whereas supply is in a direct
relation.
69. Refer to the graphs shown. The arrow that best shows an increase in supply is:
A. W
B. X
C. Y
D. Z
70. Refer to the graphs shown. The arrow that best captures the impact of a decline in price on
quantity supplied is:
A. W
B. X
C. Y
D. Z
71. Assume the graphs shown reflect the egg market. The arrow that would best capture the
impact of cheaper, prefabricated henhouses on the egg market is:
A. W
B. X
C. Y
D. Z
72. Graphically, a change in price causes:
A. both supply and demand to shift.
B. the demand curve to shift.
C. a movement along a given supply curve, not a shift.
D. the supply curve to shift.
73. Suppose OPEC announces that it will increase production. Using supply and demand
analysis to predict the effect of increased production on equilibrium price and quantity, the first
step is to show the:
A. demand curve shifting to the right.
B. demand curve shifting to the left.
C. supply curve shifting to the right.
D. supply curve shifting to the left.
74. Moore’s Law states that the processing power of the latest computer chips doubles about
every eighteen months. Assuming the graphs demonstrate the market for the latest computer
chips, which of the following diagrams describe this situation?
A. a
B. b
C. c
D. d
75. If Argentina imposes a 20 percent tax on natural gas exports to be paid by suppliers. Other
things equal, this causes the:
A. supply of natural gas exports to shift to the right.
B. supply of natural gas exports to shift to the left.
C. quantity of natural gas exports produced to increase.
D. demand for natural gas exports to shift to the right.
76. Which of the following would not move either the supply or the demand curve in the market
for housing?
A. An increase in the number of people who are retiring
B. An increase in the cost of home insurance
C. An increase in real-estate prices
D. A possibility of higher construction costs
77. Which of the following will move the supply curve for housing in Florida, a popular
retirement state, to the left?
A. Increasing the number of people who are retiring
B. Increase in the cost of insurance
C. Higher real-estate prices
D. Higher construction costs
78. Which of the following would be expected to cause the quantity of wool supplied to
decrease?
A. A decrease in the price of wool
B. Adecrease in the number of wool producers
C. An increase in the cost of raising sheep
D. An increase in wages paid to workers in the wool industry
79. Refer to the graph shown. A shift from S0 to S1 would most likely occur for what reason?
A. Adecrease in the number of suppliers in the market
B. An increase in taxes levied on producers of CDs
C. An increase in the price of CDs
D. Adecrease in the cost of producing CDs
80. Refer to the graph shown. A shift from S1 to S0 would most likely occur for what reason?
A. An increase in the number of suppliers in the market
B. A decrease in taxes levied on producers of CDs
C. An increase in the price of CDs
D. An increase in the cost of producing CDs
81. Refer to the graph shown. If the quantity supplied increases from 2 to 4 when the price of
CDs increases from $2.00 to $5.00, the response by producers would be shown by:
A. a shift from S0 to S1.
B. a shift from S1 to S0.
C. a movement upward and to the right along S0.
D. a movement upward and to the right along S1.
82. Refer to the graph shown. Suppose that at a price of $5.00, firm A is willing and able to
supply 4 units and firm B is willing and able to supply 4 units. Which of the following
statements is then true?
A. Curve S0 shows the quantity supplied of firm A and firm B combined.
B. Curve S1 shows the quantity supplied of firm A and firm B combined.
C. The addition of firm B to the market causes a movement upward and to the right along S0.
D. The addition of firm B to the market causes a movement upward and to the right along S1.
83. The supply of leather jackets would be expected to increase as a result of:
A. a decrease in the cost of producing leather jackets.
B. an increase in the price of leather jackets.
C. an increase in the popularity of leather jackets.
D. the expectation that the price of leather jackets will rise in the future.
84. Which of the following is not likely to change the supply of personal computers?
A. An increase in consumers’ incomes
B. A technological breakthrough that makes it much less costly to produce computer chips
C. A decrease in the wage paid to electrical engineers
D. An increase in taxes on computer chips paid by producers
85. Which of the following would best explain a decrease in the supply of squash?
A. An increase in the price of other vegetables
B. An increase in the price of squash
C. A decrease in the price of squash
D. A decrease in the cost of growing squash
86. Which of the following would be expected to cause an increase in the supply of fax
machines?
A. An increase in the number of business firms demanding fax machines
B. An increase in the price of fax machines
C. A decrease in the cost of manufacturing fax machines
D. The expectation that the price of fax machines will increase in future