Economics

12. A movement along a demand curve from one price-quantity combination to another is called a: A. Change in demand B. Change in quantity demanded C. Shift in the demand curve D. Change in quantity supplied

B

14. As coffee becomes more expensive, Joe starts drinking tea instead of coffee. This is called: A. The substitution effect of a price changes B. A decrease in demand C. A decrease in reservation price D. The income effect of a price change

A.

2. Office workers and word processing programs are complements if: A. A decrease in the wage paid to office workers leads to a leftward shift in the demand for word processing programs. B. An increase in the price of word processing programs leads to an increase in the demand for office workers. C. They perform similar functions. D. A decrease in the wage paid to office workers leads to an increase in the demand for word processing programs.

A.

3. When the current price of a good is below the equilibrium price: A. The price will tend to stay below the equilibrium price. B. Buyers have an incentive to offer to pay sellers more than the current price. C. Sellers will notice their inventories are growing. D. There will be excess supply.

A.

25. Suppose that the technology used to manufacture laptops has improved. The likely result would be: A. An increase in quantity supplied of laptops B. A decrease in quantity supplied of laptops C. An increase in supply of laptops D. A decrease in supply of laptops

A. An increase with supply of laptops

5. Refer to the figure below. Suppose the solid line shows the current demand curve for coffee. In response to an announcement that much of next year's coffee crop has been destroyed by a storm in Brazil, you should expect: A. The demand curve to shift to D(B) in anticipation of higher future prices. B. The demand curve to shift to D(A) in anticipation of higher future prices. C. An increase in the quantity of coffee demanded, but no shift in the demand curve. D. Neither a change in quantity demanded nor a shift in demand because next year's coffee crop will not affect the current demand for coffee.

A. The demand curve to shift to D(B) in anticipation of higher future prices.

13. Economics is the study of: A. the role of government is limiting the choices people make B. Choices in the face of limited resources C. The financial concerns of business and individuals D. Whether we will have enough resources in the future

B.

23. Suppose the cost to Tim of a third glass of soda is zero because he's at a restaurant that gives free refills. According to the Cost-Benefit Principle, Tim should: A. Drink a third glass of soda if his benefit from drinking his second glass of soda was positive. B. Drink a third glass of soda if the benefit from doing so is positive. C. Not drink a third glass of soda D. Drink a third glass of soda

B. Drink a third glass of soda if the benefit from doing so is positive.

15. An increase in the demand for GM automobiles result in: A. A lower equilibrium quantity of GM automobiles B. An increase in the supply of GM automobiles C. A lower equilibrium price for GM automobiles D. An increase in the quantity supplied of GM automobiles

B. Increase in supply

4. The demand curve illustrates the fact that consumers tend to purchase: A. More of a good as it becomes more popular B. More of a good as its price falls C. More of a good as their income rises D. Name-brand products more frequently than generic products

B. More of a good as its price falls

11. If the supply curve and the demand curve both shift to the left, then the new equilibrium: A. Price will be higher, but the direction of the change in quantity is uncertain. B. Quantity will be lower, but the direction of the price change will be uncertain. C. Price will be lower, but the direction of the change in quantity is uncertain. D. Quantity will be higher, but the direction of the price change is uncertain.

B. Quantity will be lower, buy the direction of the price change will be uncertain.

31. If pencils and paper are complements for most consumers, then if the price increases, you would expect: A. The equilibrium price and quantity of pencils to rise B. The equilibrium price and quantity of pencils to fall C. The equilibrium price of pencils to fall and the equilibrium quantity of pencils to rise D. The equilibrium price of pencils to rise and the equilibrium quantity of pencils to fall.

B. The equilibrium price and quantity of pencils to fall (Inverse)

24. A seller's reservation price is generally equal to: A. The market price B. The seller's average cost C. The buyer's reservation price D. The seller's marginal cost

B. The seller's average cost

27. The market equilibrium quantity: A. is sometimes the socially optimal quantity. B. maximizes total economic surplus. C. Is the socially optimal quantity. D. Is not the socially optimal quantity.

C.

28. If the demand curve for bologna shifts to the right as income falls, then bologna is a(n): A. Inferior good B. Normal good C. Substitute good D. Complementary good

C.

7. A decrease in both the equilibrium price and the equilibrium quantity of rice is best explained by a(n): A. Increase in the supply of rice B. Decrease in the demand for rice C. Decrease in the supply of rice D. Increase in the demand for rice

C.

1. The supply curve illustrates that firms: A. Decrease the supply of a good when its price rises. B. Decrease the quantity supplied of a good when input prices rise. C. Increase the quantity supplied of a good when its price rises. D. Increases the supply of a good when its price rises

C. Increase the quantity supplied (quantity supplied at a price) of a good when its price rises

29. If there is an excess supply of of sport utility vehicles, then: A. Quantity demanded is greater than quantity supplied B. Demand is greater than supply C. Supply is greater than demand D. Quantity supplied is greater than quantity demanded

C.?

6. At the beginning of the fall semester, college towns experience large increases in their populations, causing a(n): A. Decrease in the quantity of apartments demanded B. Decrease in the quantity of apartments supplied C. Decrease in the supply of apartments D. Increase in the demand for apartments

D. Increase in demand for apartments

17. A decrease in the price of pizza will lead to a(n): A. Decrease in the number of consumers B. Increase in the demand for pizza C. Decrease in the quantity of pizza demanded D. Increase in the quantity of pizza demanded

D. Increase in the quantity of pizza demanded

16. When a slice of pizza at the student union sold for $2, Moe did not purchase any. When the price fell to $1.75, Moe purchased a slice each day for lunch. Thus, we can infer that Moe's reservation price for a slice of pizza is: A. At least $1.75, but less than $2 B. Exactly $2.00 C. Exactly $1.75 D. Less than $1.75

D. Less than $1.75

32. If the price of doughnuts decreases, then one would expect the: A. Quantity of doughnuts supplied to increase B. Supply of doughnuts to increase C. Supply of doughnuts to decrease D. Quantity of doughnuts supplied to decrease

D. Quantity of doughnuts supplied to decrease (A raise in supply = a raise in price)