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| 1 | |
A market |
| | A) | reflects upward sloping demand and downward sloping supply curves. |
| | B) | involves the exchange of goods but not services. |
| | C) | brings together buyers and sellers for the purpose of exchange. |
| | D) | always involves face-to-face contact between buyer and seller. |
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| 2 | |
The downward slope of the demand curve can best be explained in terms of |
| | A) | supply |
| | B) | complementary goods |
| | C) | equilibrium price |
| | D) | diminishing marginal utility |
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| 3 | |
A schedule which shows the various amounts of a product consumers are willing and able to purchase at each of a series of possible prices is called |
| | A) | supply |
| | B) | demand |
| | C) | quantity supplied |
| | D) | quantity demanded |
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| 4 | |
A rightward shift in the demand curve for product C might be caused by: |
| | A) | an increase in income if C is an inferior good. |
| | B) | a decrease in income if C is a normal good. |
| | C) | a decrease in the price of a product that is a close substitute for C. |
| | D) | a decrease in the price of a product that is complementary to C. |
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| 5 | |
Which of the following will decrease demand for product X? |
| | A) | consumer tastes change in favour of the product |
| | B) | an increase in the price of a substitute good |
| | C) | a decrease in the price of a complementary good |
| | D) | a decrease in the number of buyers |
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| 6 | |
An inferior good is |
| | A) | one whose demand curve will shift rightward as incomes rise. |
| | B) | one whose price and quantity demanded vary directly. |
| | C) | one which has a low price. |
| | D) | one whose consumption falls as income rises, and vice versa. |
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| 7 | |
The law of supply states that, other things equal, as price increases |
| | A) | supply increases |
| | B) | supply decreases |
| | C) | quantity supplied increases |
| | D) | quantity supplied decreases |
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| 8 | |
One reason for the direct relationship between price and quantity supplied is that: |
| | A) | price is an obstacle from a supplier's point of view. |
| | B) | lower price shifts the demand curve to the left. |
| | C) | lower price shifts the demand curve to the right. |
| | D) | a higher price increases the incentive to supply a product, and vice versa. |
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| 9 | |
When an economist says that the supply of a product has increased, it means that: |
| | A) | suppliers are now willing to supply more of this product at each possible price. |
| | B) | the price of the product has increased, making it more profitable to produce. |
| | C) | the price of the product has fallen, so producers must sell more to maintain profit levels. |
| | D) | the supply curve has shifted to the left. |
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| 10 | |
Which of the following would NOT cause an increase in the supply of cotton? |
| | A) | an increase in the price of cotton |
| | B) | improvements in the art of producing cotton |
| | C) | a decrease in the price of the machinery and tools employed in cotton production |
| | D) | several new cotton mills are built |
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| 11 | |
The price at which quantity demanded is equal to quantity supplied is called: |
| | A) | equilibrium price. |
| | B) | a surplus. |
| | C) | a shortage. |
| | D) | equality price. |
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| 12 | |
When government sets the price of a good below equilibrium price, the result will be |
| | A) | a surplus of the good. |
| | B) | a shortage of the good. |
| | C) | a decrease in quantity demanded. |
| | D) | an increase in the quantity supplied. |
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| 13 | |
A society where products are produced in the least costly way is said to have: |
| | A) | price ceilings. |
| | B) | allocative efficiency. |
| | C) | productive efficiency. |
| | D) | equilibrium prices. |
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| 14 | |
If the supply of a product decreases and the demand for that product simultaneously increases, then equilibrium: |
| | A) | price must rise, but equilibrium quantity may rise, fall, or remain unchanged. |
| | B) | price must rise and equilibrium quantity must fall. |
| | C) | price and equilibrium quantity must both increase. |
| | D) | price and equilibrium quantity must both decline. |
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| 15 | |
Black markets, in which goods are traded at prices higher than the legally established limit, can be a result of |
| | A) | excess supply. |
| | B) | equilibrium prices. |
| | C) | price floors. |
| | D) | price ceilings. |
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