AP Microeconomics - Unit 2 Test

Suppose that a family buys all its clothing from a discount store and treats these items as inferior goods. Under such circumstances the is family's consumption of discount store clothing will necessarily

decrease when a family member experiences an increase in income

Which of the following would necessarily cause a fall in the price of a Product?

A decrease in the price of a substitute product and an improvement in production technology

An increase in which of the following will most likely result in a long-run surplus of a product?

A price that is set by law above the equilibrium price

If bologna is an inferior good, which of the following must be true?

An increase in consumer income will decrease the demand for bologna.

If a normal good is produced in a competitive market, which of the following combinations of events could cause the price of the good to increase and the quantity to decrease?

An increase in the average income of consumers and an increase in the price of a variable input

Which of the following events will cause the demand curve for hamburgers to shift to the right?

An increase in the price of pizza, a substitute for hamburgers

Which of the following will decrease the demand for beef?

An increase in the price of potatoes, if potatoes and beef are complementary goods

The graph below shows the supply and demand curves for a particular brand of computers. In 1988, 10,000 computers were sold for $1,000 each, but in 1989, 9,000 computers were sold for $1,000 each. Which of the following changes in the supply and demand curves could most likely have caused this change?

Demand Curve: Shift left; Supply Curve: Shift left

Which of the following changes in the demand for and the supply of a good will necessarily result in an increase in both the equilibrium price and quantity of the good in a market?

Demand: Increase; Supply: No change

The demand curve for a normal good slopes down for which of the following reasons? I. An increase in the price of the good induces consumers to purchases substitute products. II. An increase in the price of the good reduces consumers' purchasing power. III. An increase in the price of the good increases consumers' utility from consuming that good.

I and II only

Which of the following situations best illustrates the law of demand?

In the past several months, as the price of compact disc players has decreased the quantity of compact disc players sold has increased.

Assume that consumers consider potatoes to be an inferior good, but consider rice to be a normal good. An increase in consumers' incomes will most likely affect the equilibrium price and quantity of potatoes and rice in which of the following ways?

Row (A)

The American Heart Association has just issued a report warning consumers about the negative health effects of eating beef. Which of the following changes in the beef market is most likely to occur as a result?

The demand curve will shift to the left, decreasing the price of beef.

Which of the following is true of a price floor?

The intention of the government in creating the price floor is to assist the producers of the good.

Reducing the tariff on Canadian beer sold in the United States will most likely have which of the following effects on the market for beer produced and sold in the United States?

The price of United States beer will decrease.

The graph below shows the supply and demand curves for artichokes. The surgeon general announces that eating an artichoke a day dramatically reduces one's likelihood of developing cancer. Simultaneously an infestation of the artichoke weevil severely damages the crop. Which of the following will definitely occur as a result?

The price of artichokes will increase.

If the minimum wage for teen-agers increased to a rate higher than their market equilibrium age, what would be the effect on their wage and employment?

Wage: Increase; Employment: Decrease

An improvement in production technology for a certain good leads to

an increase in the supply of the-good

The supply curve for automobiles will shift to the left in response to

an increase in wages in the automobile industry

The demand curve for cars is downward sloping because an increase in the price of cars leads to

the increased use of other modes of transportation

A country can consume beyond its present production possibilities curve when it

trades with other countries, thus taking advantage of different opportunity costs