Economics Chapter 2 Practice Exam

Shifts in the market demand curve occur:

because of all the factors that shift individual demand curves, along with changes in the types and number of buyers.

You're a management consultant hired by Sunco Lighting, Inc., to estimate the demand for high-efficiency LED light bulbs. The table shows the results of a survey you conducted of four representative consumers in a market of 40,000 consumers overall. You asked the four buyers how many high-efficiency LED light bulbs they would buy in a year at different prices.

240000

The demand curve for meals at a local Chick-fil-A will shift to the left if:

Chick-fil-A offers a free sandwich to people who sign up for their new rewards app.

Which statement BEST illustrates the law of demand?

Consumers buy more iPhones because prices have fallen.

Which of these scenarios depicts a rational buyer?

Damien buys a sandwich for $5 when the marginal benefit of the sandwich to him is $7.

If the price of paint rises, we can expect the:

The demand for paintbrushes to decrease

Why might you underestimate the increase in market quantity demanded when you lower your price?

You may not take into account potential new customers attracted by the lower price.

You're the manager of an independent coffee bar with a loyal customer base, and you have accurate information about your current customers' demand curves. You lower the price on your lattes, but the new total quantity demanded for your lattes far exceeds your estimate. What is the MOST likely explanation?

You neglected to factor in new customers entering your market due to the lower price.

Dental services are:

a normal good

(Figure: Netflix subscriptions) The graph represents monthly Netflix subscriptions. If Hulu, another streaming service, raises its price, what is MOST likely to happen to the demand curve for Netflix?

a shift from Old demand to New demand 1

Over the past several years, sushi has become increasingly popular among consumers. This means that the _____ has _____.

demand for sushi; increased

(Figure: Four sample demands) A hotel in Cape Cod, Massachusetts, is completely booked during August. However, in September, tourism drops significantly, and some hotel rooms remain empty. Which of the graphs depicts this scenario?

graph A

Facebook is subject to network effects because:

its value to an individual increases when the number of other people using it increases.

(Figure: Graph) Refer to the graph to answer the question. A decrease in the price of an item will cause the movement from:

point Q to point P

Recent research suggests that certain refillable plastic water bottles may leech cancer-causing particles into the containers with repeated usage. As a result of this research being made public, one would expect:

the demand for such containers to decrease.

Which of these items is a normal good?

steak

Antonio has a cell phone, and his service provider is AT&T. When he calls his wife, Erika, who is also an AT&T customer, he does not have to pay for those minutes. The more AT&T customers there are in the market, the greater the benefit Antonio receives. This is:

the network effect

(Figure: Leo's marginal benefit) The graph depicts Leo's marginal benefit curve for ride-shares per week. If the price is $4, how many rides will he order this week?

three rides

In a typical week, Cheyenne buys four lattes at Starbucks. If the price of lattes doubles, what is the MOST likely number of lattes she will buy?

two

On a hot sweltering day, you feel thirsty and buy an ice-cold soft drink, which you gulp down. Whether you buy a second drink or not will depend on:

whether the marginal benefit of the second soft drink exceeds the price of the drink.