Econ 1B- Unit 2 Test
23. Refer to Figure 4-9. In this market, equilibrium price and quantity, respectively, are: a.) $10 and 30. b.) $10 and 50. c.) $10 and 70. d.) $4 and 50.
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33. Refer to Figure 5-1. The demand curve representing the demand for a luxury good with several close substitutes is: a.) A. b.) B. c.) C. d.) D.
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2. An increase in quantity demanded: a.) results in a movement downward and to the right along a fixed demand curve. b.) results in a movement upward and to the left along a fixed demand curve. c.) shifts the demand curve to the left. d.) shifts the demand curve to the right.
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1. A decrease in demand is represented by: a.) a movement downward and to the right along a demand curve. b.) a movement upward and to the left along a demand curve. c.) a rightward shift of a demand curve. d.)a leftward shift of a demand curve.
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10. Refer to Figure 4-3. The shift from D to D' is called a.) an increase in demand. b.) a decrease in demand. c.) a decrease in quantity demanded. d.) an increase in quantity demanded.
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34. Refer to Figure 5-1. Atog says he would buy one cup of coffee per day regardless of the price. If this is true, then Atog's demand for coffee is represented by demand curve: a.) A. b.) B. c.) C. d.) D.
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13. Refer to Figure 4-3. If the demand curve shifts from D to D', then: a.) firms would be willing to supply less of the good than before at each possible price. b.) people are willing to buy less of the good than before at each possible price. c.) people's incomes evidently have decreased. d.) the price of the product has increased, causing consumers to buy less of the product.
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14. The law of supply states that, other things equal, a.) an increase in price causes quantity supplied to increase. b.) an increase in price causes quantity supplied to decrease. c.) an increase in quantity supplied causes price to increase. d.) an increase in quantity supplied causes price to decrease.
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15. Wheat is the main input in the production of flour. If the price of wheat decreases, then we would expect the: a.) demand for flour to increase. b.) demand for flour to decrease. c.) supply of flour to increase. d.) supply of flour to decrease.
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16. A technological advance will shift the: a.) supply curve to the right. b.) supply curve to the left. c.) demand curve to the right. d.) demand curve to the left.
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17. An advance in production technology will: a.) increase a firm's costs and increase its supply. b.) increase a firm's costs and decrease its supply. c.) decrease a firm's costs and increase its supply. d.) decrease a firm's costs and decrease its supply.
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18. Refer to Figure 4-6. The movement from point A to point B on the graph is called: a.) a decrease in supply. b.) an increase in supply. c.) an increase in the quantity supplied. d.) a decrease in the quantity supplied.
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19. Refer to Figure 4-6. The movement from point A to point B on the graph is caused by: a.) a decrease in the price of the good. b.) an increase in the price of the good. c.) an advance in technology. d.) a decrease in input prices.
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20. Refer to Figure 4-7. The shift from S to S' is called: a.) a decrease in supply. b.) a decrease in quantity supplied. c.) an increase in supply. d.) an increase in quantity supplied.
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21. Refer to Figure 4-7. The movement from S to S' could be caused by: a.) an increase in the price of the good. b.) an improvement in technology. c.) an increase in income. d.) an increase in input prices.
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22. When a surplus exists in a market, sellers: a.) raise price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated. b.) raise price, which decreases quantity demanded and increases quantity supplied, until the surplus is eliminated. c.) lower price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated. d.) lower price, which decreases quantity demanded and increases quantity supplied, until the surplus is eliminated.
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24. Refer to Figure 4-14. Panel (a) shows which of the following? a.) an increase in demand and an increase in quantity supplied b.) an increase in demand and an increase in supply c.) an increase in quantity demanded and an increase in quantity supplied d.) an increase in quantity demanded and an increase in supply
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25. Refer to Figure 4-14. Panel (b) shows which of the following? a.) a decrease in demand and a decrease in quantity supplied b.) a decrease in demand and a decrease in supply c.) a decrease in quantity demanded and a decrease in quantity supplied d.) a decrease in quantity demanded and a decrease in supply
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26. Refer to Figure 4-14. Panel (c) shows which of the following? a.) an increase in demand and an increase in quantity supplied b.) an increase in demand and an increase in supply c.) an increase in quantity demanded and an increase in quantity supplied d.) an increase in quantity demanded and an increase in supply
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27. What will happen to the equilibrium price and quantity of new cars if the price of gasoline rises, the price of steel rises, public transportation becomes cheaper and more comfortable, and auto-workers negotiate higher wages? a.) Price will fall and the effect on quantity is ambiguous. b.) Price will rise and the effect on quantity is ambiguous. c.) Quantity will fall and the effect on price is ambiguous. d.) Quantity will rise and the effect on price is ambiguous.
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28. Consider the market for new DVDs. If DVD players became cheaper, buyers expected DVD prices to fall next year, used DVDs became more expensive, and DVD production technology improved, then we could safely conclude that the equilibrium price of a new DVD would: a.) rise. b.) fall. c.) stay the same. d.) We couldn't be sure what it might do.
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3. If a good is inferior, then an increase in income will result in: a.) an increase in the demand for the good. b.) a decrease in the demand for the good. c.) a movement down and to the right along the demand curve for the good. d.) a movement up and to the left along the demand curve for the good.
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30. Which of the following events would unambiguously cause a decrease in the equilibrium price of cotton shirts? a.) an increase in the price of wool shirts and a decrease in the price of raw cotton b.) a decrease in the price of wool shirts and a decrease in the price of raw cotton c.) an increase in the price of wool shirts and an increase in the price of raw cotton d.) a decrease in the price of wool shirts and an increase in the price of raw cotton
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31.) The price elasticity of demand measures how much: a.) quantity demanded responds to a change in price. b.) quantity demanded responds to a change in income. c.) price responds to a change in demand. d.) demand responds to a change in supply.
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32. Other things equal, the demand for a good tends to be more inelastic, the: a.) fewer the available substitutes. b.) longer the time period considered. c.) more the good is considered a luxury good. d.) more narrowly defined is the market for the good.
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4. Currently you purchase 6 packages of hot dogs a month. You will graduate from college in December, and you will start a new job in January. You have no plans to purchase hot dogs in January. For you, hot dogs are: a.) a substitute good. b.) a normal good. c.) an inferior good. d.) a complementary good.
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5. Soup is an inferior good if: a.) the demand for soup falls when the price of a substitute for soup rises. b.) the demand for soup rises when the price of soup falls. c.) the demand curve for soup slopes upward. d.) the demand for soup falls when income rises.
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6. If goods A and B are complements, then an increase in the price of good A will result in: a.) more of good A being sold. b.) more of good B being sold. c.) less of good B being sold. d.) no difference in the quantity sold of either good.
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7. A higher price for batteries would result in a(n): a.) increase in the demand for flashlights. b.) decrease in the demand for flashlights. c.) increase in the demand for batteries. d.) decrease in the demand for batteries.
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8. Suppose you like to make, from scratch, pies filled with banana cream and vanilla pudding. You notice that the price of bananas has increased. How would this price increase affect your demand for vanilla pudding? a.) It would decrease. b.) It would increase. c.) It would be unaffected. d.) There is insufficient information given to answer the question.
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9. Holding all other things constant, a higher price for ski lift tickets would a.) increase the number of skiers. b.) increase the price of skis. c.) decrease the number of skis sold. d.) decrease the demand for other winter recreational activities.
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11. Refer to Figure 4-3. The movement from D to D' could be caused by: a.) an increase in price. b.) a decrease in the price of a complement. c.) a technological advance. d.) a decrease in the price of a substitute.
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12. Refer to Figure 4-3. The movement from D' to D could be caused by: a.) a decrease in price. b.) a decrease in income, assuming the good is inferior. c.) buyers expecting the price of the good to fall in the near future. d.) an increase in the price of a complement.
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29. During the last few decades in the United States, health officials have argued that eating too much beef might be harmful to human health. As a result, there has been a significant decrease in the amount of beef produced. Which of the following best explains the decrease in production? a.) Beef producers, concerned about the health of their customers, decided to produce relatively less beef. b.) Government officials, concerned about consumer health, ordered beef producers to produce relatively less beef. c.) Individual consumers, concerned about their own health, decreased their demand for beef, which lowered the equilibrium price of beef, making it less attractive to produce. d.) Anti-beef protesters have made it difficult for both buyers and sellers of beef to meet in the marketplace.
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35. A perfectly inelastic demand implies that buyers: a.) decrease their purchases when the price rises. b.) purchase the same amount as before when the price rises or falls. c.) increase their purchases only slightly when the price falls. d.) respond substantially to an increase in price.
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