1.The law of demand implies that:
a. consumers are not responsive to price changes.
b. consumers will, all other things unchanged, buy more at lower prices.
c. sellers will, all other things unchanged, offer more on the market at higher prices.
d. sellers will, all other things unchanged, offer less on the market at lower prices.
2. A decrease in the price of eggs, all other things unchanged, will result in a/an:
a. increase in the demand for eggs.
b. increase in the supply of eggs.
c. greater quantity of eggs supplied.
d. greater quantity of eggs demanded.
3. The price of oranges falls. What happens in the market for apples, which are a substitute for oranges?
a. The equilibrium price falls and the equilibrium quantity rises.
b. The equilibrium price rises and the equilibrium quantity falls.
c. The equilibrium price and quantity rise.
d. The equilibrium price and quantity fall.
4. After graduation from college you will receive a substantial increase in your income from a new job. If you decide that you will purchase more T-bone steak and less hamburger, then for you hamburger would be considered a/an:
a. normal good.
b. substitute good.
c. complementary good.
d. inferior good.
5. The primary difference between a change in supply and a change in the quantity supplied is:
a. a change in quantity supplied is a shift in the supply curve, and a change in supply is a movement along the supply curve.
b. both a change in quantity supplied and a change in supply are movements along the supply curve, only in different directions.
c. a change in quantity supplied is a movement along the supply curve, and a change in supply is a shift of the supply curve.
d. a change in supply is a movement to the left along the supply curve and a change in quantity supplied is a movement to the right along the supply curve.
6. If the price of a commodity increases as the result of increased demand, you would expect the:
a. supply to increase.
b. quantity supplied to increase.
c. quantity supplied to decrease.
d. supply curve to shift to the right.
7. In this exhibit (demand and supply curves), the highest price per unit that buyers would be willing to pay for 250 units is:
a. $0.
b. $5.
c. $10.
d. $15.
8. In this exhibit (demand and supply curves), a price of $25 per unit will result in:
a. a surplus of 50 units.
b. a surplus of 200 units.
c. a surplus of 250 units.
d. quantity demanded exceeding quantity supplied.
9. If the price in the market for a commodity is above the market equilibrium price, the:
a. price will remain unchanged.
b. price will rise to clear the market.
c. quantity supplied exceeds the quantity demanded.
d. quantity demanded exceeds the quantity supplied.
10. A market shortage occurs if the:
a. price is above the equilibrium price.
b. price is equal to the equilibrium price.
c. equilibrium price is above the market price.
d. equilibrium price is below the market price.
11. If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded does not change, this indicates that, if other things are unchanged, the price elasticity of demand is:
a. 0.
b. -0.5.
c. -1.
d. -2.
12. If the price elasticity of demand is found to be -3/4, then demand is:
a. price inelastic.
b. price elastic.
c. unit price elastic.
d. positively sloped.
13. If total revenue goes down when price falls, the price elasticity of demand is said to be:
a. price inelastic.
b. unit price elastic.
c. price elastic.
d. positive.
14. The demand for agricultural output is price inelastic. This means that if farmers, taken collectively, have a bumper crop, they will experience:
a. lower prices, greater quantities sold, and lower incomes.
b. higher prices, greater quantities sold, and higher incomes.
c. lower prices, quantities sold, and incomes.
d. higher prices, quantities sold, and incomes.
15. In this exhibit (Demand for Bungalow Bob’s Bagels) total revenue remains unchanged if the price ________ from ________.
a. decreases; $0.50 to $0.40
b. decreases; $0.60 to $0.50
c. decreases; $0.70 to $0.60
d. increases; $0.60 to $0.70
16. In this exhibit (Demand for Shirts) the price elasticity of demand for the segment CD is:
a. greater than 1 (absolute value).
b. -1.
c. -0.71.
d. -0.29.
17. A demand curve that is perfectly inelastic:
a. will be vertical.
b. will be horizontal.
c. will be upward sloping.
d. has an elasticity equal to 1 everywhere on the curve.
18. If the price of chocolate-covered peanuts increases and the demand for strawberries does not change, this indicates that these two goods are:
a. unrelated goods.
b. inferior goods.
c. substitute goods.
d. complementary goods.
19. The cross price elasticity of demand for Coke with respect to the price of Pepsi has been estimated to be 0.61. If the price of Pepsi falls by 10 percent in a period, how will that affect the demand for Coke in that period, all other things unchanged?
a. The demand for Coke will increase but by less than 6.1 percent.
b. The demand for Coke will increase by 6.1 percent.
c. The demand for Coke will not change because many people prefer Coke over Pepsi.
d. The demand for Coke will fall.
20. Although in most cases the price elasticity of labor supply is ________ , for some individuals it may be ________ .
a. negative; zero
b. negative; positive
c. positive; negative
d. zero; negative