ECON 705 - Module 1

If the price of K declines, the demand curve for the complementary product J will: A. shift to the left. B. decrease. C. shift to the right. D. remain unchanged.

c

If the cost of making bicycles falls, the price goes down, causing the demand curve to shift to the right.: True False

F

If the demand curve shifts to the right, then we move up and to the right along our supply curve. TrueFalse

T

Which of the following will not cause the demand for product K to change? A. a change in the price of close-substitute product J B. an increase in consumer incomes C. a change in the price of K D. a change in consumer tastes

c

Which of the following would not shift the demand curve for beef? A. a widely publicized study which indicates beef increases one's cholesterol B. a reduction in the price of cattle feed C. an effective advertising campaign by pork producers D. a change in the incomes of beef consumers

B

What happens in the market for airline travel when the price of traveling by rail decreases? a. The demand curve shifts left. b. The demand curve shifts right. c. The supply curve shifts left. d. The supply curve shifts right. e. We move along the supply curve.

a

All the following shift the demand curve for automobiles to the right except: a. the local factory gives a big raise to its employees. b. a brand new automobile dealership opens in town. c. the price of gasoline falls. d. None of the Above

b

An effective ceiling price will: A. induce new firms to enter the industry. B. result in a product surplus. C. result in a product shortage. D. clear the market.

c

An increase in the price of a product will reduce the amount of it purchased because: A. supply curves are upsloping. B. the higher price means that real incomes have risen. C. consumers will substitute other products for the one whose price has risen. D. consumers substitute relatively high-priced for relatively low-priced products.

c

If a sin tax is placed on sales of alcohol, a. the demand curve shifts to the left. b. the demand curve shifts to the right. c. the supply curve shifts to the left. d. the supply curve shifts to the right.

c

If the cost of computer components falls, then a. the demand curve for computers shifts to the right. b. the demand curve for computers shifts to the left. c. the supply curve for computers shifts to the right d. the supply curve for computers shifts to the left

c

The Supply Curve is upward-sloping because: a. As the price increases, so do costs. b. As the price increases, consumers demand less. c. As the price increases, suppliers can earn higher levels of profit or justify higher marginal costs to produce more. d. None of the Above

c

When a price ceiling is imposed above the equilibrium price, a. a shortage results. b. a surplus results. c. the equilibrium outcome prevails. there is not enough information to determine the outcome

c

When college students leave town for the summer, the demand for meals at the local restaurants declines. This results in a. a decrease in equilibrium price and an increase in quantity. b. an increase in equilibrium price and quantity. c. a decrease in equilibrium price and quantity. d. an increase in equilibrium price, and a decrease in quantity. e. None of the Above

c

A firm's supply curve is upsloping because: A. the expansion of production necessitates the use of qualitatively inferior inputs. B. mass production economies are associated with larger levels of output. C. consumers envision a positive relationship between price and quality. D. beyond some point the production costs of additional units of output will rise.

d

Part of the reason that Michael Jordan earns millions of dollars each year while school teachers may earn $30,000 is because a. The supply of superstar basketball players is very low, while the supply of competent teachers is much larger. b. Demand for Michael Jordan's talents is very high since he can generate so much revenue for a firm. c. Consumers enjoy basketball to the point that they are willing to spend lots of money and time attending games and watching commercials. d. All of the Above

d