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1

The law of demand states that:
A)sellers supply less of a good when its price increases.
B)consumers buy less of a good when its price increases only if their income increases at the same time.
C)consumers buy less of a good when its price increases even if other demand determinants change at the same time.
D)consumers buy less of a good when its price increases, provided all shift factors of demand are fixed.
2

The use of the phrase "other things equal" in supply and demand analysis indicates that:
A)an equilibrium price has been reached.
B)an equilibrium quantity has been reached.
C)factors other than the one under consideration are kept constant.
D)we are considering all the changes which might take place in actual markets.
3

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Refer to the graph above. Which arrow shows the effect on the demand for CDs of a decrease in the number of consumers in the market?
A)A
B)B
C)C
D)D
4

According to the law of supply:
A)price and quantity supplied are positively related.
B)quantity supplied tends to increase when there is an improvement in technology.
C)quantity supplied tends to decrease as consumers' incomes increase.
D)price and quantity supplied are inversely related.
5

Use the following to answer questions 5-6:

<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=gif::::/olc/dl/107057/Image33.gif','popWin', 'width=497,height=266,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (3.0K)</a>

Refer to the above graphs. The effect of a decrease in supply is shown by arrow:
A)A.
B)B.
C)C.
D)D.
6

Refer to the graphs above. The effect of an increase in the price of this product is shown by arrow:
A)A.
B)B.
C)C.
D)D.
7

<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=gif::::/olc/dl/107057/Image34.gif','popWin', 'width=320,height=292,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (2.0K)</a>

Refer to the graph above. The quantity that would be associated with the price of $3 in a supply table would be:
A)2
B)4
C)6
D)8
8

The existence of a market surplus implies that price is:
A)above equilibrium and must fall to restore equilibrium.
B)above equilibrium and must rise to restore equilibrium.
C)below equilibrium and must fall to restore equilibrium.
D)below equilibrium and must rise to restore equilibrium.
9

<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=gif::::/olc/dl/107057/Image35.gif','popWin', 'width=263,height=266,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (2.0K)</a>

Refer to the graph above. The agreement by OPEC members collectively to reduce their supply of oil is best described by:
A)a shift in the supply curve for OPEC oil from S1 to S0
B)a shift in the supply curve for OPEC oil from S0 to S1.
C)a movement along the supply curve, S0, from A to B.
D)a movement along the supply curve, S0, from B to A.
10

For which of the following markets would the fallacy of composition most likely apply?
A)Labor market
B)Orange market in Florida
C)Gasoline market
D)Poultry market