Economics Chapter 5 Module 5 – Demand The Market For Corn Kansas Considered Competitive

subject Type Homework Help
subject Pages 12
subject Words 3612
subject Authors Paul Krugman, Robin Wells

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Page 1
1.
The market for corn in Kansas is considered to be competitive. This means there are
_____ buyers and _____ sellers of corn in Kansas.
A)
many; few
B)
few; many
C)
many; many
D)
few; few
2.
The law of demand states that, other things equal, as the price:
A)
increases, the quantity demanded will increase.
B)
decreases, the demand curve will shift to the right.
C)
increases, demand will decrease.
D)
increases, the quantity demanded will decrease.
3.
A negative relationship between quantity demanded and price is called the law of:
A)
demand.
B)
increasing returns.
C)
market clearing.
D)
supply.
4.
Which statement illustrates the law of demand?
A)
An increase in tuition encourages more students to enroll in college because the
quality of education has risen.
B)
Consumers buy more personal computers because prices have fallen.
C)
Oil companies drill for new sources because prices are higher.
D)
Fewer people play golf because incomes are lower.
5.
_____ illustrates an inverse relationship between price and quantity.
A)
A demand curve
B)
A supply curve
C)
A production possibility frontier
D)
Equilibrium
6.
A negative relationship between the quantity demanded and price is called the law of:
A)
demand.
B)
marginality.
C)
efficiency.
D)
supply.
Page 2
7.
The law of demand is illustrated by a demand curve that is:
A)
horizontal.
B)
downward sloping.
C)
vertical.
D)
upward sloping.
8.
The law of demand implies that:
A)
consumers are not responsive to price changes.
B)
consumers will buy more at lower prices.
C)
sellers will offer more on the market at higher prices.
D)
sellers will offer less on the market at lower prices.
9.
The _____ apples will decrease when apple prices rise.
A)
demand for
B)
quantity demanded of
C)
supply of
D)
equilibrium of
10.
A decrease in the price of a good will result in:
A)
an increase in demand.
B)
an increase in supply.
C)
an increase in the quantity demanded.
D)
more being supplied.
11.
Which factor would result solely in a movement along the demand curve for a particular
good?
A)
a change in the prices of related goods
B)
a change in the price of that good
C)
a change in the size of the population
D)
both a change in the price of that good and a change in the size of the population
12.
A decrease in the price of eggs will result in an increase in the:
A)
demand for eggs.
B)
supply of eggs.
C)
quantity of eggs supplied.
D)
quantity of eggs demanded.
Page 3
13.
Which statement best exemplifies the law of demand?
A)
As income taxes rise, fewer new cars are purchased.
B)
As the price of corn rises, more acres of corn are planted.
C)
As the price of a car rental rises, fewer cars are rented.
D)
As the population rises, more electricity is consumed.
14.
Which statement is correct?
A)
A change in demand is a movement along the demand curve, and a change in
quantity demanded is a shift of the demand curve.
B)
Both a change in quantity demanded and a change in demand are movements along
the demand curve, only in different directions.
C)
Both a change in quantity demanded and a change in demand are shifts of the
demand curve, only in different directions.
D)
A change in quantity demanded is a movement along the demand curve, and a
change in demand is a shift of the demand curve.
15.
In much of the country, homeowners choose to heat their houses with either natural gas
or heating oil, both of which are normal goods. Which factor would cause an increase in
the demand for natural gas?
A)
an increase in the price of natural gas
B)
a decrease in the price of natural gas
C)
a decrease in the price of heating oil
D)
an increase in consumer incomes
16.
Raclette is a popular wintertime dish in Switzerland. It is essentially melted Raclette
cheese over boiled new potatoes. If the price of Raclette cheese decreased, we would
expect to see:
A)
an increase in demand for Raclette cheese.
B)
an increase in demand for new potatoes.
C)
no effect on the demand for either of the Raclette ingredients since this is a
traditional dish and its consumption does not depend on the prices of the
ingredients.
D)
an increase in demand for both Raclette cheese and new potatoes.
17.
When the economy suffers a downturn and the incomes of many people decrease,
vacationers are more likely to take car trips than to fly. Which statement provides one
possible explanation for this phenomenon?
A)
Air travel and travel by car are complementary goods.
B)
Air travel and travel by car are both normal goods.
C)
Air travel is a normal good and travel by car is an inferior good.
D)
Air travel is an inferior good and travel by car is a normal good.
Page 4
18.
A shift of the demand curve for thin-crust pizza would not be caused by a change in:
A)
buyers' incomes.
B)
the price of thin-crust pizza.
C)
the price of thick-crust pizza.
D)
the popularity of thin-crust pizza.
19.
If goods A and B are substitutes, a decrease in the price of good B will:
A)
increase the demand for good A.
B)
increase the demand for good B.
C)
decrease the demand for good A.
D)
increase the demand for good B and decrease the demand for good A.
20.
If goods A and Z are complements, an increase in the price of good Z will:
A)
increase the demand for good A.
B)
decrease the demand for good A.
C)
decrease the demand for good Z.
D)
decrease the demand for both good A and good Z.
21.
Over the past several years, consumers have had an increasing interest in getting tattoos.
This means that the _____ for tattoos has _____.
A)
quantity demanded; increased
B)
demand; decreased
C)
demand; increased
D)
quantity demanded; decreased
22.
Which factor will not cause an increase in demand for good X?
A)
a decrease in income if good X is an inferior good
B)
an increase in income if good X is a normal good
C)
a decrease in the price of good X
D)
an increase in the popularity of good X with consumers
23.
Which statement is true of a normal good?
A)
When income increases, the demand for the good remains unchanged.
B)
When income increases, the demand for the good decreases.
C)
When income increases, the demand for the good increases.
D)
Income and the demand are unrelated.
Page 5
24.
Which statement is TRUE of an inferior good?
A)
When income increases, demand remains unchanged.
B)
When income increases, demand decreases.
C)
When income increases, demand increases.
D)
Income and demand are unrelated.
25.
The demand curve for monthly subscriptions to HBO has shifted to the right. What
could have caused it?
A)
a fall in the price of HBO subscriptions
B)
an increase in the price of HBO subscriptions
C)
an increase in the supply of HBO subscriptions
D)
an increase in the incomes of buyers
26.
If people demand more of product A when the price of B falls, then A and B are:
A)
not related.
B)
substitutes.
C)
complements.
D)
inferior goods.
27.
If the demand for tires goes down when the price of gas goes up, then tires and gas are:
A)
substitutes.
B)
complements.
C)
both expensive.
D)
both inexpensive.
28.
An increase in the price of hamburger would probably result in _____ in the demand for
hamburger buns.
A)
a decrease
B)
an increase
C)
no change
D)
random fluctuations
29.
An announcement that smoking will harm your ability to think clearly will most likely
result in:
A)
an increase in the quantity of cigarettes demanded.
B)
a decrease in the demand for cigarettes.
C)
no change in smoking habits.
D)
an increase in the price of cigarettes.
Page 6
30.
If steak and potatoes are complements, when the price of steak goes up, the demand
curve for potatoes:
A)
shifts to the right.
B)
shifts to the left.
C)
stays the same.
D)
shifts to the right and then moves back.
31.
If chicken and beef are substitutes, then a fall in the price of chicken will bring about:
A)
an increase in the demand for beef.
B)
a decrease in the demand for beef.
C)
an increase in the quantity demanded of beef.
D)
no change in the demand for beef.
32.
For most goods, purchases tend to rise with increases in buyers' incomes and to fall with
decreases in buyers' incomes. Such goods are known as:
A)
inferior.
B)
direct.
C)
normal.
D)
indirect.
33.
An inferior good is one for which a(n) _____ in buyers' incomes causes a(n) _____.
A)
increase; increase in demand
B)
increase; increase in quantity demanded
C)
increase; decrease in demand
D)
decrease; decrease in demand
34.
Pizza is a normal good. If students' incomes at your college increase, the effect on pizza
will be:
A)
an increase in the demand.
B)
an increase in the quantity demanded.
C)
a decrease in the demand.
D)
no change in the demand.
35.
After graduation from college, you might have an increase in your income from a new
job. If as a result you decide that you will purchase more T-bone steak and less
hamburger, then for you hamburger is a(n) _____ good.
A)
normal
B)
substitute
C)
complementary
D)
inferior
Page 7
36.
An increase in the demand for gasoline today caused by concerns that gasoline prices
will be higher tomorrow is most likely attributable to a change in:
A)
income.
B)
consumer expectations.
C)
consumer preferences.
D)
prices of other goods.
37.
Which factor would shift the demand curve for new textbooks to the right?
A)
a decrease in the price of paper
B)
a fall in the price of used textbooks
C)
an increase in college enrollment
D)
a fall in the price of new textbooks
38.
Which factor is likely to cause a rightward shift in the demand for home-delivered
pizza?
A)
a lower price of pizza
B)
a lower price of fast-food hamburgers
C)
a higher price of pepperoni
D)
a larger population
39.
Which two goods are most likely substitutes in consumption?
A)
loaves of bread and sticks of butter
B)
loaves of bread and toasters
C)
loaves of bread and hamburger buns
D)
loaves of bread and gasoline
40.
The demand for meals at a local Chipotle will shift to the left if:
A)
Saladworks offers a 10% discount coupon in the local newspaper.
B)
the price of a meal at Chipotle rises.
C)
local incomes increase and Chipotle meals are a normal good.
D)
the price of gasoline falls in the area.
41.
Assuming that tablets are normal goods, which factor will not increase demand for
tablets?
A)
an increase in the incomes of tablet users
B)
cool new computer games that can only be played on tablets
C)
a very large company that makes tablets going out of business
D)
the price of laptop computers increasing
Page 8
42.
In the market for canned pinto beans, _____ will increase if income increases and if
pinto beans are a(n) _____ good.
A)
demand; inferior
B)
demand; normal
C)
supply; inferior
D)
supply; normal
43.
When the price of gas goes down, the demand for tires goes up. A likely possibility is
that tires and gas are:
A)
substitutes.
B)
complements.
C)
both inferior goods.
D)
both inexpensive.
44.
If the price of eggs decreased, it would probably result in _____ in the demand for
bacon, a complement good.
A)
a decrease
B)
an increase
C)
no change
D)
random fluctuations
45.
The demand curve for running shoes has shifted to the right. What could have caused it?
A)
a fall in the price of running shoes
B)
an increase in the price of running shoes
C)
an increase in the supply of running shoes
D)
an increased enthusiasm among the population for running as exercise
Use the following to answer questions 46-49:
Page 9
46.
(Ref 5-1 Figure: Demand for Coconuts) Use Figure: Demand for Coconuts. If fish is a
substitute good for coconuts and the price of fish increases, it will be represented in the
figure as a:
A)
shift from D1 to D2
B)
movement from point A to point B
C)
shift from D1 to D3
D)
movement from point B to point E
47.
(Ref 5-1 Figure: Demand for Coconuts) Use Figure: Demand for Coconuts. If coconuts
are a normal good and the income level of consumers falls, it will be represented in the
figure as a:
A)
shift from D1 to D2
B)
movement from point A to point B
C)
shift from D1 to D3
D)
movement from point B to point C
48.
(Ref 5-1 Figure: Demand for Coconuts) Use Figure: Demand for Coconuts. If there is an
increase in preference for coconuts, it will be represented in the figure as a:
A)
shift from D1 to D2
B)
movement from point A to point B
C)
shift from D1 to D3
D)
movement from point B to point E
49.
(Ref 5-1 Figure: Demand for Coconuts) Use Figure: Demand for Coconuts. If coconuts
are a normal good and consumers believe that the price of coconuts will rise
significantly in the near future, it will be represented in the figure as a:
A)
shift from D1 to D2
B)
movement from point B to point A
C)
shift from D1 to D3
D)
movement from point B to point E
Page 10
Use the following to answer questions 50-52:
50.
(Ref 5-2 Table: The Demand for Chocolate-Covered Peanuts) Use Table: The Demand
for Chocolate-Covered Peanuts. Barbara demands 20 bags of chocolate-covered peanuts
per month when the price of each bag is:
A)
$0.90.
B)
$0.80.
C)
$0.70.
D)
$0.60.
51.
(Ref 5-2 Table: The Demand for Chocolate-Covered Peanuts) Use Table: The Demand
for Chocolate-Covered Peanuts. If George, Barbara, and Dan are the only three buyers
in the market and the price of a bag of chocolate-covered peanuts is $0.80, the total
market quantity demanded is _____ bags per month.
A)
70
B)
80
C)
105
D)
280
52.
(Ref 5-2 Table: The Demand for Chocolate-Covered Peanuts) Use Table: The Demand
for Chocolate-Covered Peanuts. If George, Barbara, and Dan are the only three buyers
in the market and the price of a bag of chocolate-covered peanuts is $0.50, the total
market quantity demanded is _____ bags per month.
A)
80
B)
105
C)
210
D)
280
Page 11
Use the following to answer questions 53-54:
53.
(Ref 5-2 Figure: Demand for Online Movie Rentals) Use Figure: Demand for Online
Movie Rentals. A decrease in the price of Google Chromecast adapters (a complement
good) would result in a change illustrated by the move from:
A)
f to g in Panel A.
B)
h to i in Panel B.
C)
j to k in Panel C.
D)
l to m in Panel D.
54.
(Ref 5-2 Figure: Demand for Online Movie Rentals) Use Figure: Demand for Online
Movie Rentals. A decrease in the price of movie tickets (a substitute) would result in a
change illustrated by the move from:
A)
f to g in Panel A.
B)
h to i in Panel B.
C)
j to k in Panel C.
D)
l to m in Panel D.
Page 12
55.
A decrease in the price of eggs will result in a(n):
A)
increase in the demand for eggs.
B)
increase in the supply of eggs.
C)
shift in the supply curve for eggs.
D)
movement along the demand curve for eggs.
56.
A decrease in the price of a good will generally result in a(n):
A)
increase in demand.
B)
increase in supply.
C)
increase in the quantity demanded.
D)
increase in the quantity supplied.
57.
A competitive market occurs when there are many buyers and sellers of the same good.
A)
True
B)
False
58.
The demand curve for season tickets for the Miami Dolphins is the graphical
representation of the number of season tickets consumers want to buy at any given
price.
A)
True
B)
False
59.
An increase in demand for good X can be caused by a decrease in the price of X.
A)
True
B)
False
60.
The terms decrease in demand and decrease in quantity demanded can be used
interchangeably.
A)
True
B)
False
61.
According to the law of demand, if the price of steak increases in Rhode Island, the
demand for steak will decrease in Rhode Island.
A)
True
B)
False
Page 13
62.
An increase in income will always shift the demand curve to the right.
A)
True
B)
False
63.
If coffee and tea are viewed as substitutes in consumption, then an increase in the price
of coffee will increase the demand for tea.
A)
True
B)
False
64.
After graduation many students' demand for used cars decreases. This may be because
used cars are considered a normal good to college graduates.
A)
True
B)
False
65.
Apple and Samsung are large corporations that produce smartphones, the iPhone and the
Galaxy, respectively. They are constantly trying through expensive advertising and
product innovations to persuade customers to buy their brand. Is the smartphone market
a competitive one in an economic sense? Why or why not?
66.
Explain the law of demand. What does it tell us about the shape of a demand curve?
67.
Why are economists so particular about the difference between an increase in quantity
demanded and an increase in demand? Aren't they the same thing?
68.
A small private college increases tuition while a large public university in the same state
does not. What will happen to the demand (enrollment) for both schools?
69.
How would each of the listed events affect the demand for new textbooks?
I. The price of a used textbook rises.
II. The price of college tuition rises.
III. More high school graduates decide to attend college.
Page 14
70.
In the following cases, explain what happens to demand or quantity demanded and how
the change would be shown on a graph of the demand schedule.
I. Assuming that tickets to an NFL game are normal goods, what is the effect of an
increase in the incomes of NFL fans?
II. Assuming that DIRECTV and Dish satellite are substitutes, what happens if the
price of a DIRECTV subscription increases?
III. Assuming that data plans and cell phones are complements, what happens if the
price of data plans decreases?
71.
Markets that are characterized by many buyers and many sellers are:
A)
inefficient.
B)
competitive.
C)
foreign.
D)
monopolies.
72.
Alice goes to the local supermarket to purchase one package of kale. She often pays
$1.50 for a package, but she finds they are on sale for $1 each. According to the law of
demand, one can expect shoppers like Alice to:
A)
purchase an alternative good.
B)
purchase more kale than they normally would.
C)
decide not to purchase kale.
D)
buy the same amount of kale as they always do, on average.
73.
When the price of a good increases and the quantity demanded decreases, this
demonstrates:
A)
efficiency
B)
the law of demand
C)
the supply schedule
D)
the production possibilities frontier
74.
Recent research suggests that certain plastic containers may have cancer-causing
particles in them. As a result of this research being made public, one would expect:
A)
the demand for such containers to decrease.
B)
the quantity demanded for such containers to increase.
C)
no effect.
D)
the price of the containers to change because of a movement along the demand
curve.
Page 15
75.
Good X and good Y are related. If the price of good X increases and the demand for
good Y shifts left, these goods are:
A)
complements.
B)
substitutes.
C)
inferior.
D)
normal.
76.
Suppose oranges and clementines are substitutes. Holding everything else constant, if
the price of oranges increases, then the demand for _____ will _____.
A)
clementines; increase
B)
clementines; decrease
C)
oranges; increase
D)
oranges; decrease
77.
Good X and good Y are related goods. Holding everything else constant, if the price of
good X decreases and the demand for good Y increases, good X and good Y are
probably:
A)
complements.
B)
substitutes.
C)
inferior.
D)
normal.
78.
Good X and good Y are substitutes. Holding all other things constant, this means that,
when the price of good X increases, the demand for:
A)
good X will increase.
B)
good Y will increase.
C)
both good X and good Y will increase.
D)
good Y will decrease.
79.
Holding all other things constant, and assuming that ramen noodles are an inferior good
for Vanessa, then as her income increases, her demand curve for ramen noodles:
A)
will shift left.
B)
will shift right.
C)
will not shift at all.
D)
may shift left or right, but we're not sure by how much.
Page 16
80.
If Benjamin considers sushi to be a normal good and if his income increases by 20%, his
purchases of sushi will:
A)
decrease by 20%.
B)
increase.
C)
decrease.
D)
not change.
81.
The demand for a good will increase if:
A)
there is a decrease in the price of the good.
B)
the price of inputs needed in the production of the good decrease.
C)
there is an increase in the number of consumers in this market.
D)
the price of a complementary good increases.
82.
The horizontal summation of individual demand curves for a particular product, holding
the price constant and completed for all possible prices, gives you:
A)
market demand.
B)
market supply.
C)
complements in production.
D)
substitutes in production.
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