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Multiple Choice Quiz
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1.
In order to understand how the price of a good is determined in the free market, one must account for:
A)the desires of demanders exclusively.
B)the desires of suppliers exclusively.
C)the desires of governmental agencies exclusively.
D)the desires of lobbyists exclusively.
E)the desires of demanders and suppliers.
2.
As the price of bread increases, firms that produce bread will:
A)increase the supply of bread.
B)increase the quantity of bread supplied.
C)decrease the supply of bread.
D)decrease the quantity of bread supplied.
E)leave their production unchanged.
3.
The statment, "Holding all other relevant factors constant, consumers will purchase more of a good as its price falls" reflects the behavior underlying:
A)the demand curve.
B)an increase in demand.
C)the supply curve.
D)a decrease in the demand curve.
E)the production possibilities curve.
4.
Suppose that both the equilibrium price and quantity of mustard rise. The most consistent explanation for these observations is:
A)a decrease in demand for mustard with no change in supply.
B)a decrease in the supply of mustard with no change in demand.
C)a decrease in demand for mustard and a decrease in the supply of mustard.
D)an increase in demand for mustard with no change in supply.
E)an increase in the supply of mustard with no change in demand.
5.
Which of the following would not shift the world supply curve for Intel Pentium processors?
A)A decrease in the price of silicon wafers.
B)An increase in the demand for Pentium processors.
C)An improvement in the technology used to make processors.
D)An increase in the wage rate paid to "clean room" workers.
E)An earthquake centered in Silicon Valley.
6.
A market is comprised of:
A)just demanders.
B)just suppliers.
C)both suppliers and demanders.
D)workers.
E)owners.
7.
If the full marginal costs of producing a certain good are greater than the seller's marginal costs, then:
A)the market will produce the socially optimal outcome.
B)the equilibrium price will reflect the true cost of production.
C)too little of the good will be produced.
D)too much of the good will be produced.
E)the total economic surplus will be maximized.
8.
When the demand for a good increases, firms respond by:
A)raising their supply curve.
B)decreasing their costs.
C)increasing their price and holding output unchanged.
D)increasing their quantity supplied.
E)decreasing their quantity supplied.
9.
A market in equilibrium would feature:
A)excess supply.
B)unexploited opportunities.
C)excess demand.
D)wild variation in price.
E)no tendency to change.
10.
Suppose we know two facts: first, the market for hair restoring tonics experiences chronic shortages and second, government sets the price of hair restoring tonics. We can conclude:
A)government has set the price above the equilibrium price.
B)government has set the price at the equilibrium price.
C)government has set the price below the equilibrium price.
D)government has set the price appropriately to aid the rich.
E)firms are not manufacturing enough hair restoring tonics.





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