12. What is the difference between an "increase in demand" and an "increase in quantity demanded"?

A) There is no difference between the two terms; they both refer to a shift of the demand curve.

B) There is no difference between the two terms; they both refer to a movement downward along a given demand curve.

C) An "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve.

D) An "increase in demand" is represented by a movement along a given demand curve, while an "increase in quantity demanded" is represented by a rightward shift of the demand curve.

13. A change in which of the following alters buying plans for cars but does NOT shift the demand curve for cars?

A) a 5 percent increase in people's income

B) a 10 percent decrease in the price of car insurance

C) a 20 percent increase in the price of a car

D) an increased preference for walking rather than driving

14.An increase in the number of suppliers in a market results in a

A) movement up along the supply curve.

B) rightward shift in the supply curve.

C) leftward shift in the supply curve.

D) Both answers A and C are correct.

15. Shanaz decreased her consumption of nuts when the price of peanut butter increased. For Shanaz, peanut butter and nuts are

A) substitutes in consumption.

B) both inferior goods.

C) complements in consumption.

D) both luxury goods.

16. Which of the following decreases the supply of popcorn?

A) a decrease in the price of popcorn

B) an increase in the price of popcorn

C) a technological advance in the production of popcorn

D) a decrease in the number of popcorn producers

17. Which of the following results in a movement along the supply curve of spinach but does NOT shift the supply curve of spinach?

A) disastrous weather that destroys half of this year's spinach crop

B) a rise in the price of spinach

C) an increase in wages for workers in spinach fields

D) great weather that produces a bumper spinach crop this year

18. Last year the price of corn was $3 per bushel and the quantity of corn demanded was 8 million bushels. This year the price of corn is $4 per bushel and the quantity of corn demanded is 7 million bushels. Assuming that the demand curve has not shifted, what is the price elasticity of demand for corn? (Use the midpoint formula.)

A) 1

B) 0.47

C) 2.14

D) 0.29

19. The price elasticity of demand is defined as the magnitude of the

A) change in quantity demanded divided by the change in price.

B) change in price divided by the change in quantity demanded.

C) percentage change in quantity demanded divided by the percentage change in price.

D) percentage change in price divided by the percentage change in quantity demanded.

20. Business people often speak about price elasticity without actually using the term. Which statement describes a good with an elastic demand?

A) "A price cut won't help me. It won't increase my sales, and I'll just get less money for each unit."

B) "I don't think a price cut will help my bottom line any. Sure, I'll sell a bit more, but I'll more than lose because the price will be lower."

C) "My customers are real shoppers. After I cut my prices just a few cents below those my competitors charge, customers have been flocking to my store and sales are booming."

D) "The economic expansion has done wonders for my sales. With more people back at work, my sales are taking off!"