Chapter 3 AGSC ECON
14) A) complements. B) substitutes. C) unrelated goods. D) perfect substitutes.
B
11) Refer to Figure 3.3. As your income increased, the demand for X shifted from D1 to D2. Good X is A) an inferior good. B) a normal good. C) a luxury good. D) an income-neutral good.
A
13) Refer to Figure 3.15. A decrease in the price of mushrooms (an input for gardenburgers) will cause a movement from Point B on supply curve S2 to A) supply curve S3. B) supply curve S1. C) Point A on supply curve S2. D) Point C on supply curve S2.
A
15) Refer to Table 3.2. If the price per cheeseburger is $7, the price will A) remain constant because the market is in equilibrium. B) increase because there is an excess demand in the market. C) increase because there is an excess supply in the market. D) decrease because there is an excess supply in the market.
A
15) The change in the price of a good leads to a change in , which leads to a . A) quantity supplied; movement along a supply curve B) quantity supplied; shift of the supply curve C) supply; movement along a supply curve D) supply; shift of the supply curve
A
18) Refer to Figure 3.17. At a price of $30, there is an excess A) demand of 450 sunglasses. B) demand of 750 sunglasses. C) demand of 300 sunglasses. D) supply of 300 sunglasses.
A
21) When there is a shortage of a product in an unregulated market, there is a tendency for A) price to rise. B) price to fall. C) quantity demanded to increase. D) quantity supplied to decrease.
A
26) When Hurricane Andrew passed through Louisiana in the summer of 1992, approximately a quarter of the sugar cane crop was destroyed. Ceteris paribus, A) the supply of sugar decreased and the price of sugar increased. B) the supply of sugar decreased and the price of sugar decreased. C) the demand for sugar increased and the price of sugar increased. D) the demand for sugar decreased and the price of sugar decreased.
A
28) Refer to Figure 3.7. Assume the market is initially at Point B and that pizza is a normal good. A decrease in income would cause the market to move from Point B on demand curve D2 to A) demand curve D1. B) demand curve D3. C) Point A on demand curve D2. D) Point C on demand curve D2.
A
3) In an output market A) consumers purchase products. B) firms purchase resources. C) households earn income. D) land, labor and capital may be exchanged.
A
32) Refer to Figure 3.7. A decrease in demand is represented by the movement A) from D2 to D1. B) from D2 to D3. C) along D2 from Point B to Point A. D) along D2 from Point B to Point C.
A
32) Which of the following will definitely occur when there is an increase in demand for and a decrease in supply of milk? A) an increase in equilibrium price B) a decrease in equilibrium price C) an increase in equilibrium quantity D) a decrease in equilibrium quantity
A
34) Papayas and grapefruit are substitute goods. A drought in California destroyed a good portion of the grapefruit crop. Ceteris paribus, A) the price of both papayas and grapefruit will increase. B) the price of both papayas and grapefruit will fall. C) the price of grapefruit will increase and the price of papayas will fall. D) the price of grapefruit will fall and the price of papayas will increase.
A
13) Refer to Table 3.2. In this market there will be an excess demand of 500 cheeseburgers at a price of A) $5. B) $6. C) $7. D) $8.
B
36) Refer to Figure 3.19. When the economy moves from Point A to Point C, there has been A) a decrease in supply and a decrease in quantity demanded. B) a decrease in quantity supplied and a decrease in demand. C) a decrease in supply and an increase in quantity demanded. D) an increase in supply and a decrease in quantity demanded.
A
36) Refer to Figure 3.9. Assume that there are only two people in the market for coconuts: Sasha and Kyle. Along the market demand curve for coconuts, at a price of , quantity demanded would be . A) $14; 7 B) $14; 9 C) $10; 9 D) $10; 8
A
38) Refer to Figure 3.19. When the economy moves from Point E to Point B, there has been A) an increase in supply and an increase in quantity demanded. B) an increase in both supply and demand. C) a decrease in supply and an increase in demand. D) a decrease in supply and an increase in quantity demanded.
A
4) Among the factors of production are A) capital. B) wages. C) income. D) all of the above
A
40) Refer to Scenario 3.1. A) demand for rented DVDs is higher in the winter than in the summer. B) the quantity demanded of rented DVDs is higher in the winter than in the summer. C) there are more DVDs released into the rental market in the winter than in the summer. D) consumer income tends to fall in the winter and increase in the summer.
A
44) Refer to Figure 3.10. In the Rollerblade market, which is not government controlled, you accurately predict that price will A) increase, the quantity demanded will fall, and the quantity supplied will rise. B) increase, the quantity demanded will rise, and the quantity supplied will fall. C) decrease, the quantity demanded will fall, and the quantity supplied will fall. D) decrease, the quantity demanded will rise, and the quantity supplied will fall.
A
46) Refer to Figure 3.12 The market is initially in equilibrium at Point B. If demand shifts from D2 to D1 and the price of burritos remains constant at $4.00, there will be A) an excess supply of 200 million pounds of burritos. B) an excess demand of 200 million pounds of burritos. C) an excess supply of 100 million pounds of burritos. D) an excess demand of 100 million pounds of burritos.
A
5) Refer to Table 3.1. If the price per pizza is $6, there is an excess A) demand of 300 pizzas. B) demand of 600 pizzas. C) supply of 700 pizzas. D) supply of 1,000 pizzas.
A
52) Related to the Economics in Practice on p. 67: Bad weather that reduces the supply of oranges would most likely shift the supply curve for oranges to the and lead to a(n) in the price of producing orange juice. A) left; increase B) left; decrease C) right; increase D) right; decrease
A
53) Related to the Economics in Practice on p. 67: The freezing weather in California decreased the supply of oranges. This would increase the demand for apple juice, assuming apple juice is considered A) a substitute for orange juice. B) a complement to orange juice. C) a normal good. D) an inferior good.
A
6) As an individual consumes more of a product within a given period of time, it is likely that each additional unit consumed will yield A) successively less satisfaction. B) successively more satisfaction. C) the same amount of satisfaction. D) less satisfaction for a while and then start to add more satisfaction.
A
6) Refer to Figure 3.14. An increase in supply is represented by the movement from A) S2 to S3. B) S2 to S1. C) Point B to Point A along supply curve S2. D) Point B to Point C along supply curve S2.
A
6) Refer to Table 3.1. In this market there will be an excess demand of 300 pizzas at a price of A) $6. B) $9. C) $12. D) $15.
A
7) Refer to Figure 3.1. Which of the following would be most likely to cause the demand for Dr. Pepper to shift from D0 to D1? A) a decrease in income, assuming that Dr. Pepper is a normal good B) an increase in the price of 7-UP, assuming 7-UP is a substitute for Dr. Pepper C) a decrease in the price of Dr. Pepper D) a reduction in the price of sugar used to make Dr. Pepper
A
9) If the demand for coffee decreases as income decreases, coffee is a(n) A) normal good. B) inferior good. C) substitute good. D) complementary good.
A
1) According to the law of supply, there is a A) negative relationship between price and the quantity of a good supplied. B) positive relationship between price and the quantity of a good supplied. C) negative relationship between price and the change in supply. D) positive relationship between price and the change in supply.
B
10) If the demand for sardines increases as income decreases, sardines are a(n) A) normal good. B) inferior good. C) substitute good. D) complementary good.
B
11) Refer to Figure 3.15. A decrease in supply is represented by the movement from A) S2 to S3. B) S2 to S1. C) Point B to Point A along supply curve S2. D) Point B to Point C along supply curve S2.
B
12) Refer to Figure 3.4. If consumer income falls, the demand for tuna fish sandwiches shifts from D0 to D1. This implies that tuna fish sandwiches are a(n) A) normal good. B) inferior good. C) substitute good. D) complementary good.
B
13) Refer to Figure 3.5. If consumer income increases, the demand for chili peppers shifts from D0 to D1. This implies that chili peppers are a(n) A) normal good. B) inferior good. C) substitute good. D) complementary good.
B
14) Refer to Figure 3.15. A movement from Point C to Point B on supply curve S2 would be caused by a(n) A) decrease in the price of gardenburgers. B) increase in the demand for gardenburgers. C) decrease in the price of mushrooms. D) decrease in the price of hamburgers, assuming hamburgers are a substitute for pizza.
B
16) A good whose demand is inversely related to income is a(n) A) normal good. B) inferior good. C) regular good. D) new good.
B
16) Refer to Figure 3.16. caused by A) an decrease in the price of hula hoops. B) a decrease in the number of firms selling hula hoops. C) a decrease in the demand for hula hoops. D) either B or C
B
16) When there is an excess supply of a product in an unregulated market, the tendency is for A) price to rise. B) price to decrease. C) quantity supplied to increase. D) quantity demanded to decrease.
B
2) A factor market is A) where goods are exchanged. B) where resources are exchanged. C) where goods are made. D) organized by government.
B
2) Firms are organizations that A) take advantage of the public. B) transform resources into products. C) transform outputs into inputs. D) consumer outputs.
B
2) Refer to Table 3.1. This market will be in equilibrium if the price per pizza is A) $6. B) $9. C) $12. D) $15.
B
2) The price of hard drives used in the manufacturing of laptop computers has risen. This will lead to laptop computers. A) an increase in the supply of B) a decrease in the supply of C) an increase in the quantity supplied of D) a decrease in the quantity supplied of
B
20) Refer to Figure 3.17. At a price of $90, there is an excess A) demand of 150 sunglasses. B) supply of 450 sunglasses. C) demand of 600 sunglasses. D) supply of 600 sunglasses.
B
21) Demand for one item goes down when the price of another item goes up. These items must be A) substitutes. B) complements. C) normal goods. D) inferior goods.
B
23) DVDs and DVD players are complements. An increase in the price of DVD players would cause which of the following in the market for DVDs? A) The equilibrium price and quantity of DVDs would increase. B) The equilibrium price and quantity of DVDs would decrease. C) The equilibrium price of DVDs would increase and the equilibrium quantity would decrease. D) The equilibrium price of DVDs would decrease and the equilibrium quantity would increase.
B
24) Suppose that video game discs are a normal good. If the income of video game players increases, you predict that in the market for video games A) both equilibrium price and quantity will fall. B) both equilibrium price and quantity will increase. C) equilibrium price will increase and quantity will decrease. D) equilibrium price will fall but quantity will increase.
B
26) A change in the price of a good or service leads to a that leads to a . A) change in demand; movement along the demand curve B) change in quantity demanded; movement along the demand curve C) change in demand; shift in the demand curve D) change in quantity demanded; shift of the demand curve
B
28) If improvements in technology have reduced the cost of producing personal computers, you accurately predict that in the market for personal computers, there will be a(n) A) increase in the quantity supplied of personal computers, a reduction in the price, and an increase in the quantity demanded. B) increase in the supply of personal computers, a decrease in the price, and an increase in the quantity demanded. C) increase in the supply of personal computers, a reduction in the price, and an increase in the demand. D) decrease in the supply of personal computers, an increase in the price, and a decrease in the demand.
B
29) Refer to Figure 3.7. If pizza and beer are complementary goods, a decrease in the price of beer will cause a movement from Point B on demand curve D2 to A) demand curve D1. B) demand curve D3. C) Point A on demand curve D2. D) Point C on demand curve D2.
B
3) A) an increase in the supply B) a decrease in the supply C) an increase in the quantity supplied D) a decrease in the quantity supplied
B
30) A movement along the demand curve to the left may be caused by a A) rise in income. B) decrease in supply. C) fall in the number of substitute goods. D) fall in the price of inputs.
B
30) Refer to Figure 3.7. If pizza and hamburgers are substitutes, an increase in the price of hamburgers will cause a movement from Point B on demand curve D2 to A) demand curve D1. B) demand curve D3. C) Point A on demand curve D2. D) Point C on demand curve D2.
B
31) Which of the following will definitely occur when there is an increase in the supply of and decrease in demand for MP3 players? A) an increase in equilibrium price B) a decrease in equilibrium price C) an increase in equilibrium quantity D) a decrease in equilibrium quantity
B
34) Refer to Figure 3.8. A) $10; 7 B) $10; 11 C) $8; 12 D) $8; 13
B
35) Refer to Figure 3.19. When the economy moves from Point A to Point B, there has been A) an increase in demand and an increase in supply. B) an increase in demand and an increase in quantity supplied. C) an increase in quantity demanded and an increase in quantity supplied. D) an increase in quantity demanded and an increase in supply.
B
37) Refer to Figure 3.9. Assume there are only two people in the market for coconuts: Sasha and Kyle. Along the market demand curve for coconuts, at a price of , quantity demanded would be . A) $10; 9 B) $10; 10 C) $14; 9 D) $14; 8
B
39) Refer to Scenario 3.1. A) an increase in the price of movie tickets, but no change in the rental price of DVDs. B) an increase in the price of movie tickets and the rental price of DVDs. C) an increase in the price of a movie ticket and a decrease in the rental price of DVDs. D) no change in the price of a movie ticket and an increase in the rental price of DVDs.
B
19) Refer to Figure 3.11. Assume hamburgers and french fries are complements. A decrease in the price of french fries will cause a movement from: A) Point A to Point B. B) Point G to Point F. C) D1 to D2. D) S2 to S1 .
C
39) Refer to Scenario 3.2. As a result of the flooding during the winter, you would expect that A) the price of lettuce would increase, the supply of lettuce would increase, and the quantity demanded of lettuce would decrease. B) the supply of lettuce would decrease, the price of lettuce would increase, and the quantity demanded of lettuce would decrease. C) the price of lettuce would increase and both the quantity of lettuce supplied and the quantity of lettuce demanded would increase. D) the supply of lettuce would decrease, the price of lettuce would increase, and the demand for lettuce would decrease.
B
41) Refer to Scenario 3.2. The floods that destroyed part of the lettuce crop would have caused A) an increase in the demand for tomatoes. B) a decrease in the demand for tomatoes. C) an increase in the quantity demanded of tomatoes. D) a decrease in the quantity demanded of tomatoes.
B
43) Refer to Scenario 3.2. The government wants to protect consumers from rising food prices. Therefore, price restrictions are imposed on lettuce growers prohibiting them from raising the price of lettuce. This will cause A) an excess supply of lettuce. B) an excess demand for lettuce. C) an increase in the demand for lettuce. D) a decrease in the supply of lettuce.
B
45) Refer to Figure 3.12. The market is initially in equilibrium at Point A. If demand shifts from D1 to D2 and the price of burritos remains constant at $3.00, there will be A) an excess supply of 150 million pounds of burritos. B) an excess demand of 150 million pounds of burritos. C) an excess supply of 50 million pounds of burritos. D) an excess demand of 100 million pounds of burritos.
B
48) Refer to Figure 3.12. The market is initially in equilibrium at Point B. If demand shifts from D2 to D1, the new equilibrium price will be and the new equilibrium quantity will be . A) $4.00; 350 B) $3.00; 250 C) $3.00; 400 D) $4.00; 150
B
49) Refer to Figure 3.13. The market is initially in equilibrium at Point A. If supply shifts from S1 to S2 and the price of cheeseburgers remains constant at $5.00, there will be A) an excess supply of 6 cheeseburgers. B) an excess demand of 6 cheeseburgers. C) an excess supply of 3 cheeseburgers. D) an excess demand of 4 cheeseburgers.
B
5) According to the law of demand there is relationship between price and quantity demanded. A) a positive B) a negative C) either a positive or negative D) a constantly changing
B
51) Refer to Figure 3.13. The market is initially in equilibrium at Point B. If supply shifts from S2 to S1, the new equilibrium price will be and the new equilibrium quantity will be . A) $5.00; 4 B) $5.00; 10 C) $7.00; 6 D) $7.00; 7
B
8) Refer to Figure 3.14. An increase in the price of pizza sauce will cause a movement from Point B on supply curve S2 to A) supply curve S3. B) supply curve S1. C) Point A on supply curve S2. D) Point C on supply curve S2.
B
8) Refer to Table 3.1. If the price per pizza is $3, the price will A) remain constant because the market is in equilibrium. B) increase because there is an excess demand in the market. C) increase because there is an excess supply in the market. D) decrease because there is an excess supply in the market.
B
9) Refer to Figure 3.14. by a(n) A) increase in the price of pizza. B) decrease in the demand for pizza. C) increase in the price of pizza dough. D) increase in the price of hamburgers, assuming hamburgers are a substitute for pizza.
B
1) Equilibrium is the condition that exists A) whenever there is no government intervention in the market. B) when the demand curve intersects the price axis. C) when quantity demanded equals quantity supplied. D) when the demand curve intersects the quantity axis.
C
1) In input or factor markets A) consumers purchase products. B) firms supply goods. C) households supply resources D) households demand goods.
C
1) Which of the following is held constant along the demand curve? A) price of the good B) quantity C) income D) both A and B
C
10) Refer to Table 3.2. If the price per cheeseburger is $6, the price will A) remain constant because the market is in equilibrium. B) decrease because there is an excess demand in the market. C) increase because there is an excess demand in the market. D) decrease because there is an excess supply in the market.
C
12) Refer to Figure 3.15. An increase in quantity supplied is represented by a movement from A) S2 to S1. B) S2 to S3. C) Point B to Point A along supply curve S2. D) Point B to Point C along supply curve S2.
C
12) Refer to Table 3.2. If the price per cheeseburger is $5, there is an excess A) demand of 300 cheeseburgers. B) supply of 500 cheeseburgers. C) demand of 1,000 cheeseburgers. D) supply of 2,000 cheeseburgers.
C
14) Refer to Table 3.2. In this market there will be an excess supply of 500 cheeseburgers at a price of A) $5. B) $6. C) $8. D) $9.
C
15) During an economic downturn when consumer income falls, the demand for tacos increases and the demand for sushi decreases. This implies that tacos A) and sushi are complements. B) are a normal good and sushi is an inferior good. C) are an inferior good and sushi is a normal good. D) are an economic bad and sushi is an economic good.
C
17) Refer to Figure 3.11. Assume hamburgers are a normal good. An increase in income will cause a movement from: A) Point A to Point B. B) Point G to Point F. C) D1 to D2. D) S1 to S2.
C
17) Refer to Figure 3.17. The market for sunglasses is in equilibrium at a price of and a quantity of sunglasses. A) $30; 300 B) $30; 600 C) $60; 450 D) $90; 300
C
18) For inferior goods, an increase in income will cause the A) quantity demanded to fall. B) demand to increase. C) demand to fall. D) quantity demanded to increase.
C
18) Refer to Figure 3.11. Assume hamburgers and hot dogs are substitutes. A decrease in the price of hot dogs will cause a movement from: A) Point A to Point B. B) Point F to Point G. C) D2 to D1. D) D1 to D2.
C
19) A decrease in demand for cameras would likely be caused by A) an increase in the price of a substitute good. B) an increase in the price of cameras. C) an increase in the price of a complementary good. D) a decrease in the price of cameras.
C
19) Refer to Figure 3.17. A) of sunglasses would remain at $90, because firms would not want to reduce the price. B) of sunglasses would fall to $30, so the firm could sell its excess supply. C) of sunglasses would fall to $60, where quantity demanded equals quantity supplied. D) of sunglasses would fall, but the new price is indeterminate from the information provided.
C
20) When the decrease in the price of one good causes the demand for another good to decrease, the goods are A) normal. B) inferior. C) substitutes. D) complements.
C
22) If the market for tires is unregulated and is presently characterized by excess supply, you can accurately predict that price will A) increase, the quantity demanded will fall, and the quantity supplied will rise. B) increase, the quantity demanded will rise, and the quantity supplied will fall. C) decrease, the quantity demanded will rise, and the quantity supplied will fall. D) decrease, the quantity demanded will fall, and the quantity supplied will rise.
C
22) In response to news reports that taking aspirin daily can reduce an individualʹs risk of a heart attack, there will most likely be a(n) A) increase in the supply of aspirin. B) decrease in the supply of aspirin. C) increase in the demand for aspirin. D) increase in the quantity demanded of aspirin.
C
23) Demand curves are derived while holding constant A) income, tastes, and the price of the good. B) only income and tastes. C) income, tastes, and the prices of other goods. D) only tastes and the price of other goods.
C
24) The quantity demanded of Pepsi has decreased. The best explanation for this is that A) the price of Coca-Cola has increased. B) Pepsiʹs advertising is not as effective as in the past. C) the price of Pepsi has increased. D) Pepsi consumers had an increase in income.
C
25) Refer to Figure 3.6. The number of DVDs Isabel rents per week increases from 4 to 7. This is caused by A) an increase in income if DVDs are a normal good. B) a decrease in the price of popcorn which is a complement to DVDs. C) a decrease in the rental price of DVDs. D) either A or B
C
27) A change in income, preferences, or prices of other goods or services leads to a that causes a . A) change in demand; movement along the demand curve B) change in quantity demanded; movement along the demand curve C) change in demand; shift of the demand curve D) change in quantity demanded; shift of the demand curve
C
27) The price of mozzarella cheese, which is used in making pizza, increases. In the market for pizza you would expect that A) the demand for pizza would increase and the price of pizza would increase. B) the demand for pizza would decrease and the price of pizza would fall. C) the supply of pizza would decrease and the price of pizza would increase. D) the supply of pizza would increase and the price of pizza would decrease.
C
3) The ʺlaw of demandʺ implies that A) as prices fall, demand increases. B) as prices rise, demand increases. C) as prices fall, quantity demanded increases. D) as prices rise, quantity demanded increases.
C
33) An insect that is resistant to currently used pesticides has infested the cotton crop, and this yearʹs crop is only half of what was produced last year. You accurately predict that this A) will shift the supply curve of cotton to the right, the equilibrium price of cotton will increase, and the demand for cotton will fall. B) will shift the supply curve of cotton to the right, the equilibrium price of cotton will increase, and the quantity demanded of cotton will decrease. C) will shift the supply curve of cotton to the left, the equilibrium price of cotton will increase, and the quantity demanded of cotton will decrease. D) will shift the supply curve of cotton to the left, the equilibrium price of cotton will increase, and the demand for cotton will fall.
C
35) Refer to Figure 3.8. Assume there are only two people in the market for baseball caps: Alex and Ryan. Along the market demand curve for baseball caps, at a price of , quantity demanded would be . A) $10; 6 B) $10; 12 C) $8; 14 D) $8; 25
C
37) Refer to Figure 3.19. When the economy moves from Point A to Point E, there has been A) an increase in demand and an increase in supply. B) a decrease in demand and a decrease in supply. C) an increase in demand and a decrease in supply. D) an increase in quantity demanded and an increase in quantity supplied.
C
38) Refer to Scenario 3.1. Most plasma TVs sold in the United States are imported from Japan. If the United States government reduces the number of plasma TVs that can be imported into the United States, ceteris paribus, what would happen? A) The price of plasma TVs and the rental price of DVDs would decrease. B) The price of plasma TVs would decrease and the rental price of DVDs would increase. C) The price of plasma TVs would increase and the rental price of DVDs would decrease. D) The price of plasma TVs and the rental price of DVDs would increase.
C
4) A frozen food manufacturer can produce either A) the supply of calzones increased and the supply of pizzas decreased. B) there has been an increase in the quantity supplied of calzones and a decrease in the quantity supplied of pizzas. C) there has been an increase in the quantity supplied of calzones and a decrease in the supply of pizza. D) the supply of calzones increased and the quantity supplied of pizza decreased.
C
4) According to the law of demand, as prices rise, ceteris paribus A) demand increases. B) demand decreases. C) quantity demanded decreases. D) quantity demanded increases.
C
4) Why do firms engage in the activity of production? A) to help society advance technologically B) to participate in the circular flow C) to acquire profits D) to develop a supply schedule
C
40) Refer to Scenario 3.2. The floods that destroyed part of the lettuce crop would have caused the equilibrium price of spinach to and the equilibrium quantity of spinach to . A) decrease; decrease B) decrease; increase C) increase; increase D) increase; decrease
C
47) Refer to Figure 3.12 The market is initially in equilibrium at Point A. If demand shifts from D1 to D2, the new equilibrium price will be and the new equilibrium quantity will be . A) $3.00; 250 B) $6.00; 250 C) $4.00; 350 D) $4.00; 150
C
5) Refer to Figure 3.14. A decrease in the wage rate of pizza makers will cause a movement from Point B on supply curve S2 to A) Point A on supply curve S2. B) Point B on supply curve S2. C) supply curve S3. D) supply curve S1.
C
54) Related to the Economics in Practice on p. 69: One explanation for the increase in the price of the Baltimore newspaper is the increase in the cost of newsprint. This would cause the of Baltimore newspapers to . A) supply; increase B) quantity supplied; increase C) supply; decrease D) quantity supplied; decrease
C
55) Related to the Economics in Practice on p. 69: Assuming the demand for Baltimore newspapers while the supply of Baltimore newspapers , the equilibrium price will definitely increase. A) increases; increases B) decreases; increases C) increases; decreases D) decreases; decreases
C
7) Refer to Table 3.1. In this market there will be an excess supply of 300 pizzas at a price of A) $6. B) $9. C) $12. D) $15.
C
8) Refer to Figure 3.2. Which of the following would be most likely to cause the demand for macaroni and cheese to shift from D1 to D0? A) an increase in the price of macaroni and cheese B) an increase in the price of flour used to make macaroni and cheese C) an increase in income, assuming macaroni and cheese is a normal good D) an increase in the quantity demanded for macaroni and cheese
C
9) Refer to Table 3.2. This market will be in equilibrium if the price per cheeseburger is A) $5. B) $6. C) $7. D) $8.
C
10) Refer to Figure 3.15. An increase in the wage rate of gardenburger makers will cause a movement from Point B on supply curve A) Point A on supply curve S2. B) Point B on supply curve S2. C) supply curve S3. D) supply curve S1.
D
11) Refer to Table 3.2. If the price per cheeseburger is $9, there is a(n) A) market equilibrium. B) excess demand of 500 units. C) excess demand of 300 units. D) excess supply of 1,000 units.
D
17) In college you practically existed on instant noodles, but now you earn $95,000 a year. You never want to see instant noodles again. We can safely conclude that you consider instant noodles to be a(n) A) normal good. B) complementary good. C) luxury. D) inferior good.
D
2) Which of the following will NOT cause a shift in the demand curve for compact discs? A) a change in income B) a change in wealth C) a change in the price of downloadable online music D) a change in the price of compact discs
D
20) Refer to Figure 3.11. An increase in the number of cattle ranchers will cause a movement from: A) Point B to Point A. B) Point G to Point F. C) D2 to D1. D) S2 to S1.
D
25) Refer to Figure 3.18. The current price of a bag of pretzels is $1.10. You accurately predict that in this market A) price tends to remain constant and quantity supplied increases. B) price, quantity demanded, and quantity supplied decrease. C) price and quantity demanded increase and quantity supplied decreases. D) price and quantity supplied decrease and quantity demanded increases.
D
29) Which of the following will definitely occur when there is a simultaneous decrease in demand and a decrease in supply? A) an increase in equilibrium price B) a decrease in equilibrium price C) an increase in equilibrium quantity D) a decrease in equilibrium quantity
D
3) An entrepreneur is a person who does all of the following EXCEPT A) assumes the risk of a firm. B) organizes and manages a firm. C) turns a new idea or product into a business. D) always makes a profit.
D
3) Refer to Table 3.1. If the price per pizza is $12, the price will A) remain constant because the market is in equilibrium. B) increase because there is an excess demand in the market. C) decrease because there is an excess demand in the market. D) decrease because there is an excess supply in the market.
D
31) Refer to Figure 3.7. A movement from Point C to Point B on demand curve D2 would be caused by a(n) A) decrease in income, assuming pizza is a normal good. B) decrease in the price of hamburgers, assuming that pizza and hamburgers are substitutes. C) decrease in the price of pizza. D) increase in the price of pizza.
D
33) Refer to Figure 3.7. An increase in quantity demanded is represented by movement A) from D2 to D1. B) from D2 to D3. C) along D2 from Point B to point A. D) along D2 from Point B to point C.
D
4) Refer to Table 3.1. If the price per pizza is $15, there is a(n) A) market equilibrium. B) excess demand of 400 units. C) excess demand of 900 units. D) excess supply of 600 units.
D
41) Refer to Scenario 3.1. The number of stores renting DVDs is reduced by 25%, reducing the number of DVDs available. Which of the following would occur? A) The rental price of DVDs would increase, and the price of plasma TVs and movie tickets would decrease. B) The rental price of DVDs would increase, but the price of plasma TVs and movie tickets would be unaffected. C) The rental price of DVDs and movie tickets would decrease, but the price of plasma TVs would increase. D) The rental price of DVDs and the price of movie tickets would increase, but the price of plasma TVs would decrease.
D
42) Refer to Scenario 3.2. A) both the equilibrium price and quantity to decrease. B) the equilibrium price to increase and the equilibrium quantity to decrease. C) the equilibrium price to decrease. The equilibrium quantity could have increased, decreased, or remained the same. D)
D
50) Refer to Figure 3.13. The market is initially in equilibrium at Point A. If supply shifts from S1 to S2, the new equilibrium price will be and the new equilibrium quantity will be . A) $5.00; 4 B) $5.00; 10 C) $7.00; 6 D) $7.00; 7
D
7) Refer to Figure 3.14. A decrease in quantity supplied is represented by a movement from A) S2 to S3. B) S2 to S1. C) Point B to Point A along supply curve S2. D) Point B to Point C along supply curve S2.
D
1) Wealth is a flow measure.
FALSE
21) A shift of the supply curve is caused by a change in a goodʹs own price.
FALSE
22) A technological advance in the production of MP3 players will cause the equilibrium selling price to increase.
FALSE
3) Entrepreneurs are unnecessary in a market economy and their profit is unearned.
FALSE
3) Quantity demanded of a product is determined only by how much of that product consumers desire.
FALSE
4) Inferior goods are always substandard.
FALSE
5) Factors of production are traded in the product market.
FALSE
5) If iPods and iTunes are complements, then a decrease in the price of iPods will result in a decrease in the demand for iTunes.
FALSE
56) A decrease in demand for a product will cause the price of the product to fall and supply of the product to decrease.
FALSE
7) Labor is demanded by firms in an output market.
FALSE
1) Economists would classify the Boston Symphony Orchestra as a firm.
TRUE
2) A change in the price of a good or service leads to a change in quantity demanded of the good.
TRUE
2) Households are the consuming units of the economy.
TRUE
23) An increase in the wage rate of steel workers will reduce the supply of steel.
TRUE
24) Quantity supplied is determined by how much producers are willing and able to produce.
TRUE
57) A simultaneous decrease in both the supply of and the demand for silk boxer shorts would cause a decrease in the equilibrium quantity of silk boxer shorts.
TRUE
58) If price is above the equilibrium, then quantity supplied will be greater than quantity demanded putting downward pressure on price.
TRUE
6) Households are paid income for the resources they supply in an input market.
TRUE