1. Which of the following is an example
of a market
a. The exchange of votes and benefits by voters and politicians
b. The exchange of shares of stock
c. Sales and purchases of illegal drugs
d. The exchange of a particular good at many different locations
e. All of these
2. According to the law of demand, if the
price of compact disks decreased, ceteris paribus ,
a. the demand for compact disks would increase.
b. the quantity demanded of compact disks would decrease.
c. the quantity demanded of compact disks would increase.
d. the demand for compact disks would decrease.
e. the quantity demanded of compact disks would not change.
3. The market demand curve, with price on
the vertical axis and quantity on the horizontal axis, is determined by
a. adding individual demand curves in a horizontal direction.
b. adding individual demand curves in a vertical direction.
c. subtracting the demand for the product from the supply of the product.
d. adding the demand for the product and the supply of the product.
e. subtracting supply from demand at each price.
4. If everyone expects the price of almonds
to rise in the near future, what will happen to the market for almonds?
a. People will buy the same amount now.
b. People will buy less now, causing a decrease in demand.
c. The amount bought and sold today will increase.
d. The supply will increase today.
e. The amount bought and sold today will decrease.
5. Assume the demand for watermelons is
downward-sloping. An increase in price from $2 per pound to $3 per pound
a. could have been caused by an increase in supply.
b. will cause a larger quantity of watermelons to be demanded.
c. will cause demand to decrease.
d. could have been caused by a bumper crop (extra large crop).
e. will cause a smaller quantity of watermelons to be demanded.
6. If the demand curve for product J shifts
to the left as the price of product K increases, then
a. the number of consumers of product K has increased.
b. the income of consumers of product K has increased.
c. J and K are substitute goods.
d. J and K are complementary goods.
e. goods J and K are not related.
7. Every Friday night Elizabeth either goes
bowling or goes to themovies. Because the price of bowling went up, Elizabeth
saw more movies. Elizabeth's behavior would be best described as a change
in which determinant of demand?
a. The price of complementary goods
d. The number of buyers
e. The price of substitute goods
8. According to the law of supply, if the
price of electric ranges increased, everything else held constant,
a. the supply of electric ranges would decrease.
b. the demand for gas ranges would decrease.
c. the demand for electric ranges would increase.
d. the supply of electric ranges would increase.
e. the quantity supplied of electric ranges would increase.
9. Suppose all blue-collar workers have
received a substantial pay increase. What would happen in those markets
in which the workers are employed?
a. Demand would decrease.
b. Output would rise.
c. Price would fall.
d. Supply would increase.
e. Supply would decrease.
10. At the equilibrium price,
a. there is a tendency for the price to rise.
b. there is no pressure upon price to rise or fall.
c. quantity demanded exceeds quantity supplied.
d. quantity supplied exceeds quantity demanded.
e. there is a tendency for the price to fall.
11. Price per Loaf Quantity Demanded Quantity
$5 30 102
4 48 84
3 66 66
2 84 48
1 102 30
Beginning with equilibrium in the table
above, an increase in price of $1 would
a. cause a shortage of 36.
b. cause a surplus of 36.
c. cause a shortage of 72.
d. cause a surplus of 72.
e. lead to an increase in demand.
12. If price is below equilibrium,
a. demand is too low for equilibrium.
b. the income and substitution effects will cause the price to rise.
c. quantity demanded exceeds quantity supplied, and a shortage exists.
d. demand will increase.
e. quantity supplied exceeds quantity demanded, and a shortage exists.
13. Price Quantity Demanded Quantity Supplied
$1 1,500 500
2 1,000 700
3 900 900
4 600 1,100
5 400 1,300
Consider the market represented by the schedules
in the table above. At equilibrium,
a. the market price is $5 per unit.
b. there is a surplus of 900 units.
c. there is a shortage of 900 units.
d. 900 units are traded at a price of $3 per unit.
e. the market is $1 per unit and the quantity traded is 500 units.
14. Assume that at the current market price
of $4 per unit of a good, you are willing and able to buy 20 units. Last
year at a price of $4 per unit, you would have purchased 30 units. What
has most likely happened over the last year?
a. Demand has increased.
b. Demand has decreased.
c. Supply has increased.
d. Supply has decreased.
e. Quantity supplied has decreased.
15. Last year a firm made 1,000 units of
its good available at a price of $5 per unit. This year the firm will still
make 1,000 units available but only if the price is $7 per unit. What has
most likely happened?
a. Supply has increased.
b. Supply has decreased.
c. Demand has decreased.
d. Demand has increased.
e. Quantity supplied has decreased.
16. Quantity Quantity Demanded Price/Unit
10 $5 50
20 4 40
30 3 30
40 2 20
50 1 10
Referring to the table above, if government imposes a price of $2,
a. the price will be above equilibrium.
b. the price will fall to $1 because producers will be forced to incur losses.
c. demand will increase.
d. a surplus will result equal to 20 units.
e. a shortage will result equal to 20 units.
17. If producers must obtain a higher price to produce any given quantity, we can conclude that demand has increased.
18. The interaction of demand and supply determines the price and quantity in that market.
19. More television sets are being sold today than one year ago, and the selling price has increased. This could have been caused by increase in demand.
20. If a technological improvement took
place in the computer industry, we would expect to see the equilibrium
price of computers decrease and the quantity of computers sold increase.