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1 | |
The law of demand states that, other things constant, there is: |
| | A) | an inverse relation between price and the quantity demanded. |
| | B) | an inverse relation between price and demand. |
| | C) | a direct relation between price and the quantity demanded. |
| | D) | a direct relation between price and demand. |
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2 | |
Which of the following would likely result in an increase in the demand for beef? |
| | A) | A decrease in the supply of beef. |
| | B) | An increase in the price of feed grains. |
| | C) | An increase in family incomes. |
| | D) | A decrease in the price of pork. |
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3 | |
We would speak of a movement along the demand curve, rather than of a shift in demand, if: |
| | A) | the price of that good rose. |
| | B) | expectations changed. |
| | C) | income rose. |
| | D) | the prices of other goods changed. |
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4 | |
To be consistent with the law of supply, a graph depicting price and quantity supplied will be: |
| | A) | horizontal. |
| | B) | vertical. |
| | C) | positively sloped. |
| | D) | negatively sloped. |
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5 | |
According to the law of supply, the quantity of an item supplied will fall as a result of: |
| | A) | an increase in the number of firms producing the item. |
| | B) | decreases in the prices of inputs used to produce the item. |
| | C) | an increase in the price of the item. |
| | D) | a decrease in the price of the item. |
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6 | |
Which of the following events can be expected to cause an increase in the supply of milk? |
| | A) | A decrease in the price of feed for cows. |
| | B) | A decrease in the number of dairy farmers of a given size. |
| | C) | An increase in the price of milk. |
| | D) | An increase in the demand for milk. |
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7 | |
If current quantity demanded is 2,000 and current quantity supplied is 1,000, this is an indication that: |
| | A) | the current price is below the equilibrium price. |
| | B) | producers are not responsive to price changes. |
| | C) | the current price is above the equilibrium. |
| | D) | consumers of this particular item do not buy less of it when its price increases. |
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8 | |
If there is excess demand in the market, we can expect that: |
| | A) | prices will rise because some suppliers will be able to sell their goods at higher prices. |
| | B) | prices will fall because suppliers will find it in their interest to increase supply. |
| | C) | prices will rise because firms will exploit consumers by decreasing supply. |
| | D) | the supply curve will shift to the right to restore equilibrium. |
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9 | |
The most general description of the term equilibrium is that it is a: |
| | A) | description of a state of the world in which supply equals demand. |
| | B) | description of a state of the world in which the quantity supplied equals the quantity demanded. |
| | C) | characteristic of models in which the market outcome is best for everyone in the economy. |
| | D) | characteristic of models in which the opposing dynamic forces being considered cancel each other out. |
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10 | |
For many years, the price of personal computers has fallen and the quantity sold has risen. This can best be attributed to: |
| | A) | improved technology which has caused supply to shift rightward. |
| | B) | improved technology which has caused supply to shift leftward. |
| | C) | greater popularity which has caused demand to shift rightward. |
| | D) | an increase in the number of computer users, which has caused demand to shift rightward. |
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