1. The impact of a $200 increase in income on quantity
demanded would be called the income effect.
2. If the price of gloves increases, the substitution
effect says that
a. demand for gloves will decrease
b. demand for scarves will decrease
c. demand for gloves will increase
d. quantity demanded of gloves will increase
e. quantity demanded of gloves will decrease
3. A demand curve usually has a
a. negative slope because price and quantity demanded
are inversely related
b. negative slope because as price rises, demand falls
c. positive slope because price and quantity demanded
are positively related
d. positive slope because price and quantity demanded
are inversely related
e. slope of zero because there is no change along a demand
curve when everything else is held constant
4. If a decrease in the price of a good causes
a rightward shift in the demand curve for that good, then it is an inferior
a. the demand for gasoline increases
5. If the price of gasoline (a normal good) decreases,
other things constant,
b. the demand for gasoline decreases
c. the quantity demanded of gasoline increases
d. the quantity demanded of gasoline decreases
e. neither the demand for gasoline nor the quantity demanded
of gasoline changes because everything is held constant along a demand
6. If the price of vanilla ice cream decreases, it is
a. demand for vanilla ice cream will increase
b. demand for vanilla ice cream will decrease
c. demand for chocolate ice cream will increase
d. demand for chocolate ice cream will decrease
e. the quantity demanded of vanilla ice cream will decrease
a. It does not change because only quantity demanded
changes when price changes.
7. Jennifer learns that the price of CDs will be
going up 10 percent next week. She usually buys three CDs per week. What
happens to Jennifer's demand for CDs this week?
b. It increases because the price will be lower next
c. It decreases because the price will be higher next
d. It increases because the price will be higher next
e. It decreases because the price will be lower next
a. a rise in rents for off-campus housing
8. Which of the following events is likely to reduce
the demand for on-campus student housing?
b. more students enrolling at the university
c. it becomes less fashionable to live "on campus"
d. a rise in dorm fees
e. a rise in the incomes of students
a. Producers are willing to offer more of a good at
9. Supply curves generally slope upward because
of all of the following except one. Which is the exception?
b. A higher price attracts resources from less-valued
c. Producers must be compensated for the rising opportunity
cost of additional output.
d. Producers have a greater incentive to sell more as
the price increases.
e. The price of a good usually must fall to induce an
increase in quantity supplied.
10. An improvement in technology shifts the supply
a. an increase in the price of vanilla beans (an ingredient
in ice cream)
11. Which of the following will increase the supply
of vanilla ice cream?
b. a decrease in the sales tax on restaurant bills
c. an increase in the price of chocolate ice cream
d. a decrease in the price of milk (an ingredient in
e. an increase in the price of hot fudge
12. Studies show that the supply curve for oranges has
shifted. Which of the following could not explain the shift in the
a. Weather conditions have changed.
b. The price of fertilizer has changed.
c. The wage paid to orange pickers has changed.
d. The price of oranges has changed.
e. The demand for grapefruit has changed.
a. the price of swimwear will rise
13. If a surplus exists in the market for swimwear,
an economist would predict that
b. producers will increase the production of swimwear
c. the supply of swimwear will increase
d. the price of swimwear at retail outlets will begin
e. buyers will react to the surplus by increasing their
demand for swimwear