Multiple Choice:
1. If you observed the price of a good decreasing and the quantity exchanged increasing, it would be most likely caused by
a. An increase in demand.
b. A decrease in demand.
c. An increase in supply.
d. A decrease in supply.
2. If you observed the price of a good decreasing and the quantity exchanged decreasing, it would be most likely caused by
a. An increase in demand.
b. A decrease in demand.
c. An increase in supply.
d. A decrease in supply.
3. If many cooks consider butter and margarine to be substitutes, and the price of butter rises, then in the market for margarine
a. The equilibrium price will rise, while the change to equilibrium quantity is indeterminate.
b. The equilibrium price will rise, and the equilibrium quantity will fall.
c. Both the equilibrium price and equilibrium quantity will rise.
d. Both the equilibrium price and equilibrium quantity will fall.
e. The equilibrium price will fall, and the equilibrium quantity will rise.
4. If you observed that the market price of a good rose while the quantity exchanged fell, which of the following could have caused the change?
a. An increase in supply
b. A decrease in supply
c. An increase in demand
d. A decrease in demand
e. None of the above
5. If both supply and demand decreased, but supply decreased more than demand, the result would be
a. A higher price and a lower equilibrium quantity.
b. A lower price and a lower equilibrium quantity.
c. No change in the price and a lower equilibrium quantity.
d. A higher price and a greater equilibrium quantity.
e. A lower price and a greater equilibrium quantity.
6. If the equilibrium price of wheat is $3 per bushel and then a price floor of $2.50 per bushel is imposed by the government,
a. There will be no effect on the wheat market.
b. There will be a shortage of wheat.
c. There will be a surplus of wheat.
d. The price of wheat will decrease.
7. If both supply and demand for a good shifted the same amount to the right, then we would expect that
a. Both the price and quantity exchanged would increase.
b. Price would not change and quantity exchanged would increase.
c. The price would increase and quantity exchanged would not change.
d. Neither the price nor the quantity exchanged would change.