microeconomics practice questions for test 1

When a market is in equilibrium ? a. producers earn economic profits. b. production exhibits diminishing returns to scale. c. market forces exert no pressure for price to change d. industry output is maximized

C. market forces exert no pressure for price to change

The federal government is concerned about the negative effects of cigarette smoking in the united states. Suppose congress is considering two plans. One plan would limit the production of cigarettes. The other would require manufacturers to include graphic photos on cigarette of people suffering cancers effects. Which of the following statements is true? a. both programs would increase the price of cigarettes b. both programs would reduce the quantity of cigarettes sold. c. both programs would decrease revenues for cigarette manufacturers. d. all the above are correct

a. both programs would increase the price of cigarettes

suppose the market for coffee is initially in equilibrium. if the tea harvest is bad in a particular year, then identify the most likely impact on the equilibrium . price and quantity of coffee.

both the equilibrium price and the equilibrium quantity of coffee will increase.

studies show that the demand curve for peas has shifted over time. Which of the following explanations would you reject first? a. The price of string beans has changed. b. The demand for corn has changed. c. The demand for string bean has changed. d.The income of consumers has changed. e. The Price of peas has changed.

e. The price of peas has changed

which of the following statements about demand curve is true? a. the demands curve for a good will not shift when the money income of consumers increases. b. if price increases, the demand curve will shift to the right c. the demand curve for a good will not shift when price changes d. if a supply curve shifts, thereby changing price, the demand curve will shift.

c. the demand curve for a good will not shift to the right

if we say that the demand for a good has increased, we mean there has been _______ a. an upward movement along the demand curve b. a downward movement along the demand curve c. a leftward shift of the demand curve d. a rightward shift of the demand curve e. an increase in the slope of the demand curve

d. a rightward shift of the demand curve

If a good is inferior, then an increase in income will result in

demand curve leftward

two goods are considered substitutes only if a _______

increase in the price of one goods leads to and increase in the demand for the other

the effect of a decrease in the price of personal computers on consumer demand, other things constant, is most likely to be represented by a _________ a. leftward shift of the demand curve for personal computers b.upward movement along the demand curve for personal computers c. rightward shift of the demand curve for personal computers d. downward movement along the demand curve for personal computers e. decrease in the slope of the demand curve for personal computers.

e. decrease in the slope of the demand curve for personal computers.

producers supply larger quantities of any good at higher prices because _________

higher prices attract resources from other uses