2.1 quiz

An inferior good is: a) one whose demand curve will shift rightward as incomes rise. b) one whose price and quantity demanded vary directly. c) one which has not been approved by the Federal Food and Drug Administration. d) not accurately defined by any of these statements.

d

Economists use the term "demand" to refer to: a) a particular price-quantity combination on a stable demand curve. b) the total amount spent on a particular commodity over a fixed time period. c) an upsloping line on a graph that relates consumer purchases and product price. d) a schedule of various combinations of market prices and amounts demanded.

d

Graphically, the market demand curve is: a) the vertical sum of individual demand curves. b) greater than the sum of the individual demand curves. c) steeper than any individual demand curve that is part of it. d) the horizontal sum of individual demand curves.

d

In the past few years, the demand for donuts has greatly increased. This increase in demand might best be explained by: a) consumers expecting donut prices to fall. b) an increase in the cost of making donuts. c) an increase in the price of coffee. d) a change in buyer tastes.

d

The term "quantity demanded": a) means the same thing as demand. b) refers to the entire series of prices and quantities that comprise the demand schedule. c) refers to a situation in which the income and substitution effects do not apply. d) refers to the amount of a product that will be purchased at some specific price.

d

When the price of a product falls, the purchasing power of our money income rises and thus permits consumers to purchase more of the product. This statement describes: a) an inferior good. b) the substitution effect. c) the rationing function of prices. d) the income effect.

d

A normal good is one: a) the consumption of which varies directly with incomes. b) whose amount demanded will increase as its price decreases. c) whose demand curve will shift leftward as incomes rise. d) whose amount demanded will increase as its price increases.

a

A shift to the right in the demand curve for product A can be most reasonably explained by saying that: a) consumer preferences have changed in favor of A so that they now want to buy more at each possible price. b) the price of A has declined and, as a result, consumers want to purchase more of it. c) the price of A has increased and, as a result, consumers want to purchase less of it. d) consumer incomes have declined, and consumers now want to buy less of A at each possible price.

a

If Z is an inferior good, an increase in money income will shift the: a) supply curve for Z to the right. b) demand curve for Z to the left. c) supply curve for Z to the left. d) demand curve for Z to the right.

b

In 2007, the price of oil increased, which in turn caused the price of natural gas to rise. This can best be explained by saying that oil and natural gas are: a) complementary goods and the higher price for oil decreased the supply of natural gas. b) substitute goods and the higher price for oil increased the demand for natural gas. c) complementary goods and the higher price for oil increased the demand for natural gas. d) substitute goods and the higher price for oil decreased the supply of natural gas.

b

The income and substitution effects account for: a) shifts in the demand curve. b) the downward sloping demand curve. c) movements along a given supply curve. d) the upward sloping supply curve.

b

Which of the following would most likely increase the demand for gasoline? a) a decrease in the price of public transportation. b) the expectation by consumers that gasoline prices will be higher in the future. c) the expectation by consumers that gasoline prices will be lower in the future. d) a widespread shift in car ownership from SUVs to hybrid sedans.

b

Assume that the demand curve for product C is downsloping. If the price of C falls from $2.00 to $1.75: a) a smaller quantity of C will be demanded. b) the demand for C will increase. c) a larger quantity of C will be demanded. d) the demand for C will decrease.

c

Assume the demand curve for product X shifts to the right. This might be caused by: a) an increase in the price of Y if X and Y are complementary goods. b) a decline in the price of Z if X and Z are substitute goods. c) a decline in income if X is an inferior good. d) a change in consumer tastes which is unfavorable to X.

c

If two goods are complements: a) they are necessarily inferior goods. b) an increase in the price of one will increase the demand for the other. c) a decrease in the price of one will increase the demand for the other. d) they are consumed independently.

c