Multiple Choice Questions Chapter 3 Demand and Supply PDF

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Chapter 3 Demand & Supply MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A relative price is 1) _______ A) the slope of the demand curve. B) the slope of the supply curve. C) the difference between one price and another. D) the ratio of one price to another. 2) If the price of a candy bar is £0.50 and the price of a fast food meal is £2.50, A) the money price of a fast food meal is 1/5 of a candy bar. B) the relative price of a fast food meal is 5 candy bars. C) the relative price of a candy bar is 5 fast food meals. D) the money price of a candy bar is 1/5 of a fast food meal.

2) _______

3) If the price of a hot dog is 2 and the price of a hamburger is 4, A) the relative price of a hamburger is 1/2 of a hot dog. B) the relative price of a hot dog is 1/2 of a hamburger. C) the money price of a hamburger is 2 hot dogs. D) the money price of a hot dog is 2 hamburgers.

3) _______

4) The opportunity cost of good A in terms of good B is equal to the A) price of good B minus the price of good A. B) ratio of the price of good A to the price of good B. C) price of good A minus the price of good B. D) ratio of the price of good B to the price of good A.

4) _______

5) The opportunity cost of a hot dog in terms of hamburgers is the A) ratio of the slope of the demand curve for hot dogs to the slope of the demand curve for hamburgers. B) ratio of the price of a hot dog to the price of a hamburger. C) price of a hot dog minus the price of a hamburger. D) ratio of the slope of the supply curve for hot dogs to the slope of the supply curve for hamburgers.

5) _______

6) Wants, as opposed to demands, A) are the unlimited desires of the consumer. B) depend on the price. C) are the goods the consumer has acquired. D) are the goods the consumer plans to acquire.

6) _______

7) Demands differ from wants in that A) wants require a plan to acquire a good but demands require no such plan. B) demands reflect a decision about which wants to satisfy and a plan to buy the good, while wants are unlimited and involve no specific plan to acquire the good. C) demands are unlimited, whereas wants are limited by income.

7) _______

D) wants imply a decision about which demands to satisfy, while demands involve no specific plan to acquire the good. 8) Scarcity guarantees that A) demands will be equal to wants. B) wants will exceed demands. C) most demands will be satisfied. D) demands will exceed wants.

8) _______

9) The quantity demanded is A) the amount of a good that consumers plan to purchase at a particular price. B) independent of the price of the good. C) always equal to the equilibrium quantity. D) independent of consumers' buying plans.

9) _______

10) The law of demand states that, other things remaining the same, the higher the price of a good, the A) larger is the quantity of the good demanded. B) smaller is the demand for the good. C) smaller is the quantity of the good demanded. D) larger is the demand for the good.

10) ______

11) The law of demand implies that, other things remaining the same, as A) the price of a cheeseburger rises, the quantity of cheeseburgers demanded will increase. B) the price of a cheeseburger rises, the quantity of cheeseburgers demanded will decrease. C) the demand for cheeseburgers increases, the price of a cheeseburger will fall. D) income increases, the quantity of cheeseburgers demanded will increase.

11) ______

12) The law of demand states that the quantity of a good demanded varies A) directly with income. B) inversely with the price of substitute goods. C) directly with population. D) inversely with its price.

12) ______

13) Which of the following is consistent with the law of demand? A) An increase in the price of a soda decreases the quantity of soda demanded. B) An increase in the price of a tape increases the quantity of tapes demanded. C) A decrease in the price of a gallon of milk decreases the quantity of milk demanded. D) A decrease in the price of juice does not change the quantity of juice demanded.

13) ______

14) The law of demand implies that if nothing else changes, there is A) a negative relationship between the price of a good and the quantity demanded.

14) ______

B) a positive relationship between the price of a good and the quantity demanded. C) an exponential relationship between the price of a good and the quantity demanded. D) a linear relationship between the price of a good and the quantity demanded. 15) Which of the following influences people's buying plans and does not shift the demand curve when it changes? A) Preferences. B) Income. C) The price of the good. D) The prices of related goods.

15) ______

16) The law of demand states that A) a decrease in the price of a good shifts the demand curve leftward. B) other things remaining the same, the higher the price of a good, the smaller is the quantity demanded. C) an increase in the price of a good shifts the demand curve leftward. D) other thing remaining the same, the higher the price of a good, the larger is the quantity demanded.

16) ______

17) The law of demand implies that demand curves A) slope down. B) shift rightward whenever the price rises. C) slope up. D) shift leftward whenever the price rises.

17) ______

18) Each point on the demand curve reflects A) the lowest cost technology available to produce a good. B) the highest price consumers are willing and able to pay for that particular unit of a good. C) all the wants of a given household. D) the highest price sellers will accept for all units they are producing.

18) ______

19) A fall in the price of a compact disc shifts the demand curve for prerecorded tapes leftward. From that you know compact discs and prerecorded tapes are A) substitutes. B) normal goods. C) inferior goods. D) complements.

19) ______

20) A substitute is a good A) that can be used in place of another good. B) of higher quality than another good. C) of lower quality than another good. D) that is not used in place of another good.

20) ______

21) People buy more of good 1 when the price of good 2 rises. These goods are A) inferior goods. B) complements. C) substitutes. D) normal goods.

21) ______

22) Which of the following pairs of goods are most likely substitutes?

22) ______

A) Compact discs and compact disc players. B) Peanut butter and gasoline. C) Cola and lemon lime soda. D) Lettuce and salad dressing. 23) The demand for a good increases when the price of a substitute ________ and also increases when the price of a complement ________. A) falls; rises B) falls; falls C) rises; falls D) rises; rises

23) ______

24) A complement is a good A) of higher quality than another good. B) of lower quality than another good. C) used instead of another good. D) used in conjunction with another good.

24) ______

25) Suppose people buy more of good 1 when the price of good 2 falls. These goods are A) complements. B) normal. C) substitutes. D) inferior.

25) ______

26) As the opportunity cost of a good decreases, people buy A) less of that good but more of its complements. B) more of that good and also more of its complements. C) more of that good but less of its complements. D) less of that good and also less of its complements.

26) ______

27) People come to expect that the price of a gallon of gasoline will rise next week. As a result, A) the price of a gallon of gasoline falls today. B) next week's supply of gasoline decreases. C) today's supply of gasoline increases. D) today's demand for gasoline increases.

27) ______

28) The demand curve for a normal good shifts leftward if income ________ or the expected future price ________. A) decreases; rises B) decreases; falls C) increases; rises D) increases; falls

28) ______

29) If income increases or the price of a complement falls, the A) demand curve for a normal good shifts rightward. B) demand curve for a normal good shifts leftward. C) supply curve of a normal good shifts leftward. D) supply curve of a normal good shifts rightward.

29) ______

30) If income decreases or the price of a complement rises, A) there is a downward movement along the demand curve for the good. B) the demand curve for a normal good shifts leftward. C) there is an upward movement along the demand curve for the good. D) the demand curve for a normal good shifts rightward.

30) ______

31) A consumer might consider inline skates and elbowpads to be A) complements. B) unrelated goods. C) substitutes. D) products with upward sloping demand curves.

31) ______

32) A decrease in the price of a game of bowling shifts the A) supply curve of bowling balls leftward. B) supply curve of bowling balls rightward. C) demand curve for bowling balls rightward. D) demand curve for bowling balls leftward.

32) ______

33) Normal goods are those for which demand decreases as A) income decreases. B) the good's own price rises. C) the price of a complement falls. D) the price of a substitute falls.

33) ______

34) A normal good is a good for which A) demand decreases when income increases. B) there are few substitutes. C) there are very few complements. D) demand increases when income increases.

34) ______

35) A normal good is a good for which demand A) decreases when income increases. B) decreases when population increases. C) increases when income increases. D) increases when population increases.

35) ______

36) Most goods A) have vertical supply curves. B) are complements to each other. C) have vertical demand curves. D) are normal goods.

36) ______

37) Inferior goods are those for which demand increases as A) income decreases. B) the price of a substitute falls. C) income increases. D) the price of a substitute rises.

37) ______

38) By definition, an inferior good is a A) normal substitute good. B) good for which demand decreases when income increases. C) good for which demand decreases when its price rises. D) want that is not expressed by demand.

38) ______

39) If a good is an inferior good, then purchases of that good will decrease when A) income increases. B) the price of a substitute rises.

39) ______

C) the demand for it increases.

D) population increases.

40) An inferior good is a good for which demand A) increases when income increases. B) increases when population increases. C) decreases when income increases. D) decreases when population increases.

40) ______

41) Gruel is an inferior good. Hence, a decrease in people's incomes A) shifts the supply curve of gruel leftward. B) shifts the demand curve for gruel leftward. C) shifts the demand curve for gruel rightward. D) decreases the quantity of gruel supplied.

41) ______

42) When economists speak of preferences as influencing demand, they are referring to A) directly observable changes in prices and income. B) the availability of a good to all income classes. C) the excess of wants over the available supplies. D) an individual's attitudes toward goods and services. 43) An unusually warm winter shifts the A) demand curve for gloves rightward. B) supply curve of gloves rightward. C) supply curve of gloves leftward. D) demand curve for gloves leftward.

42) ______

43) ______

44) In 2005 there were 200,000 gas grills demanded at a price of 500. In 2006 there were more than 200,000 gas grills demanded at the same price. This increase could be the result any of the following EXCEPT A) an increase in income if gas grills are a normal good. B) an increase in the supply of gas grills. C) a fall in the price of natural gas, a complement for a gas grill. D) an increase in population.

44) ______

45) A change in the price of a good A) does not shift the good's demand curve but does cause a movement along it. B) shifts the good's demand curve but does not cause a movement along it. C) neither shifts the good's demand curve nor causes a movement along it. D) shifts the good's demand curve and also causes a movement along it.

45) ______

46) If shoes rise in price, the demand curve for shoes ________ and the quantity of shoes demanded ________. A) does not shift; decreases B) shifts leftward; does not change C) shifts leftward; decreases D) does not shift; does not change

46) ______

47) A decrease in quantity demanded caused by an increase in price is represented by a A) movement up and to the left along the demand curve. B) leftward shift of the demand curve. C) movement down and to the right along the demand curve. D) rightward shift of the demand curve.

47) ______

48) A change in which of the following alters buying plans for cars but does NOT shift the demand curve for cars? A) A 20 percent increase in the price of a car. B) A 5 percent increase in people's income. C) A 10 percent decrease in the price of car insurance. D) An increased preference for walking rather than driving.

48) ______

49) Which of the following would NOT shift the demand curve for turkey? A) A change in the price of a turkey. B) A decrease in the price of ham. C) A change in tastes for turkey. D) An increase in income.

49) ______

50) When we say demand increases, we mean that there is a A) movement to the right along a demand curve. B) leftward shift of the demand curve. C) rightward shift of the demand curve. D) movement to the left along a demand curve.

50) ______

51) In the figure above, which movement reflects an increase in demand? A) From point a to point e. B) From point a to point b. C) From point a to point c. D) From point a to point d.

51) ______

52) In the figure above, which movement reflects a decrease in demand? A) From point a to point e. B) From point a to point b. C) From point a to point c. D) From point a to point d.

52) ______

53) In the figure above, which movement reflects a decrease in quantity demanded but NOT a decrease in demand? A) From point a to point e. B) From point a to point b. C) From point a to point c. D) From point a to point d.

53) ______

54) In the figure above, which movement reflects how consumers would react to an increase in the price of a nonfruit snack? A) From point a to point e. B) From point a to point b. C) From point a to point c. D) From point a to point d.

54) ______

55) In the figure above, which movement reflects an increase in the price of a substitute for fruit snacks? A) From point a to point e. B) From point a to point b. C) From point a to point c. D) From point a to point d.

55) ______

56) In the figure above, which movement reflects an increase in the price of a complement for fruit snacks? A) From point a to point e. B) From point a to point b. C) From point a to point c. D) From point a to point d.

56) ______

57) In the figure above, which movement reflects how consumers would react to an increase in the price of a fruit snack that is expected to occur in the future? A) From point a to point e. B) From point a to point b. C) From point a to point c. D) From point a to point d.

57) ______

58) In the figure above, which movement reflects an increase in income if fruit snacks are an inferior good? A) From point a to point e. B) From point a to point b. C) From point a to point c. D) From point a to point d.

58) ______

59) In the figure above, which movement reflects an increase in income if fruit snacks are a normal good? A) From point a to point e. B) From point a to point b. C) From point a to point c. D) From point a to point d.

59) ______

60) In the figure above, which movement reflects a decrease in population? A) From point a to point e. B) From point a to point b. C) From point a to point c. D) From point a to point d.

60) ______

61) Which of the following is NOT one of the factors that influences the supply of a product? A) Expected future prices. B) Number of suppliers. C) Income. D) Technology.

61) ______

62) The "law of supply" is illustrated when A) the demand curve and supply curve are both stationary. B) the demand curve shifts along a stationary supply curve. C) the supply curve shifts along a stationary demand curve. D) the supply curve and demand curve both shift in the same direction.

62) ______

63) Which of the following explains why supply curves slope upward? A) Resources and technology. B) Prices and income. C) Increasing marginal cost. D) Substitutes in production and complements in production.

63) ______

64) The supply curve slopes upward when graphed against ________, because of ________. A) income; increasing marginal cost B) income; decreasing marginal cost C) the price of the good; increasing marginal cost D) the price of the good; decreasing marginal cost

64) ______

65) The quantity supplied of a good is A) the same thing as the quantity demanded at each price. B) equal to the difference between the quantity available and the quantity desired by all consumers and producers. C) the amount the firm would sell if it faced no resource constraints. D) the amount that the producers are planning to sell at a particular price during a given time period.

65) ______

66) The quantity supplied of a good or service is the quantity that a producer ________ at a particular price during a given time period. A) should sell B) needs to sell C) actually sells D) is willing to sell

66) ______

67) A fall in the price of a good leads producers to reduce the quantity of the good they are willing to produce. This fact illustrates A) the law of demand. B) a change in supply. C) the law of supply. D) the nature of an inferior good.

67) ______

68) Each point on a supply curve represents the A) lowest price for which a supplier can profitably sell another unit. B) highest price sellers can get for each unit over time. C) lowest price buyers will accept per unit of the good. D) highest price buyers will pay for the good.

68) ______

69) Because of increasing marginal cost, most supply curves A) have a negative slope. B) are horizontal. C) have a positive slope. D) are vertical.

69) ______

70) A supply curve shows the relation between the quantity of a good supplied and A) income. Usually a supply curve has negative slope. B) the price of the good. Usually a supply curve has positive slope. C) the price of the good. Usually a supply curve has negative slope. D) income. Usually a supply curve has positive slope. 71) A supply curve differs from a supply schedule because a supply curve A) is a graph and the supply schedule is a table.

70) ______

71) ______

B) holds costs of factors of production constant, whereas the supply schedule allows them to vary. C) represents one firm, whereas the supply schedule represents all firms in the market. D) holds the number of suppliers constant, whereas the supply schedule allows the number to vary. 72) Which of the following is NOT held constant while moving along a supply curve? A) Prices of factors of production. B...