Micro Chapter 3

A decrease in income causes demand for a normal good to ________, and an increase in income causes demand for an inferior good to ________. a) decrease; decrease b) increase; increase c) decrease; increase d) increase; decrease

a) decrease; decrease

A decrease in production costs at any given quantity ______ supply. a) increases b) decreases c) does not change d) may increase or decrease

a) increases

A good is considered normal if demand for it ______ when income ______. a) increases; increases b) decreases; increases c) stays the same; decreases d) increases; decreases

a) increases; increases

A government subsidy to producers causes the: a) supply of the product to increase. b) supply of the product to decrease. c) supply curve to change slope. d) supply curve to shift up and to the left.

a) supply of the product to increase

A change in price is reflected by a movement along the same demand curve while a change in demand refers to a shift of the entire demand curve. a) true b) false

a) true

A change in quantity supplied is reflected by a movement along the same supply curve while a change in supply refers to a shift in the entire supply curve. a) true b) false

a) true

A decrease in the cost of inputs will shift the supply curve down and to the right. a) true b) false

a) true

A decrease in demand refers to: a) a rightward shift of the demand curve. b) a leftward shift of the demand curve. c) an upward movement along the demand curve. d) a downward movement along the demand curve.

b) a leftward shift of the demand curve

An increase in a per unit production tax ______ supply. a) increases b) decreases c) does not change d) changes in an indeterminate direction

b) decreases

A higher opportunity cost of producing a good increases the supply of that good. a) true b) false

b) false

Advances in technology such as personal computers and cellular telecommunications are indicated in the supply graph by a movement along the supply curve. a) true b) false

b) false

Advertising, fads, and fashion are examples of influences on demand that are generally referred to as altering expectations about products. a) true b) false

b) false

A farmer can grow soy or sorghum. If the price of soy increases, the opportunity cost of growing sorghum ______, shifting the supply curve of sorghum ______. a) decreases; up and to the left b) increases; up and to the left c) decreases; down and to the right d) increases; down and to the right

b) increases; up and to the left

A demand curve indicates that: a) the quantity demanded of a good is higher when its price is higher. b) the quantity demanded of a good is higher when its price is lower. c) the demand for a good is higher when its price is lower. d) the demand for a good is higher when its price is higher.

b) the quantity demanded of a good is higher when its price is lower

A firm produces volleyballs and soccer balls. What happens to the supply of soccer balls if the market price of volleyballs increases? a) The opportunity cost of producing soccer balls rises, so the supply curve of soccer balls increases. b) The opportunity cost of producing soccer balls falls, so the supply curve of soccer balls decreases. c) The opportunity cost of producing soccer balls rises, so the supply curve of soccer balls decreases. d) The opportunity cost of producing soccer balls falls, so the supply curve of soccer balls increases.

c) The opportunity cost of producing soccer balls rises, so the supply curve of soccer balls decreases

A decrease in expected future supply of a good will lead to: a) a change in the demand for the good, but not until the supply actually goes down. b) a change in the price of the good, but not until the supply actually goes down. c) a change in the demand for the good even before the supply actually decreases. d) no change in the demand for the good.

c) a change in the demand for the good even before the supply actually decreases

A decrease in the opportunity cost of steel production will: a) increase the price of steel. b) make suppliers more likely to produce steel, thus shifting the supply curve up and to the left. c) make suppliers more likely to produce steel, thus shifting the supply curve down and to the right. d) entice producers to produce more substitute goods.

c) make suppliers more likely to produce steel, thus shifting the supply curve down and to the right

A change in which factor would shift the supply curve? a) the price of the good being sold b) the demand for the product c) production technology d) the willingness of consumers to pay

c) production technology

A decrease in the price of one substitute good causes: a) an upward movement along the demand curve for the other substitute good. b) a downward movement along the demand curve for the other substitute good. c) a rightward shift in the demand curve for the other substitute good. d) a leftward shift in the demand curve for the other substitute good.

d) a leftward shift in the demand curve for the other substitute good

A farmer can grow either apples or oranges. An increase in the price of apples ______ the opportunity cost of growing oranges so that the supply curve of oranges shifts ______. a) decreases; down and to the right b) increases; down and to the right c) decreases; up and to the left d) increases; up and to the left

d) increases; up and to the left