Indicate the answer choice that best completes the statement or answers the question 1 The most important tools in economics, according to the textbook, are supply, demand, and the a idea of equilibrium b opportunity to barter c quantity of sales d level of prices 2 Quantity demanded a shows how much buyers are willing and able to buy at different prices b is the amount that buyers are willing and able to buy at a particular price c shows how much sellers are willing and able to sell at different prices d is the amount that sellers are willing and able to sell at a particular price 3 If the demand curve for a normal good shifts downward and to the left a willingness to pay has increased b the population has increased c the price of a substitute has increased d income has decreased 4 In the week before Hurricane Katrina, the price of flashlights rose in New Orleans because of a an increase in supply b an increase in demand c a decrease in supply d a decrease in demand 5 If, for any given amount of a good or service, willingness to pay increases, then a supply has increased b supply has decreased c demand has increased d demand has decreased 6 What are factors that shift the demand curve a costs of production, price of the product, subsidies b income, population, tastes, input prices c expectations, opportunity costs, price of the product d price of substitutes, tastes, price of complements 7 The demand curve for oil shows a the quantity demanded of oil at different income levels b the quantity demanded of oil at different oil prices c thedemand for oil at different prices of other goods d the demand for oil when there is a surplus or shortage 8 A supply and or demand graph typically shows a the price of the good on the horizontal axis and the quantity of the good on the vertical axis b the quantity of the good on the horizontal axis and the price of the good on the vertical axis c supply or demand of the good on the horizontal axis and price of the good on the vertical axis d the price of the good on the horizontal axis and supply or demand of the good on the vertical axis 9 Which of the following is TRUE about demand curves a Demand curves are negatively sloped b Demand curves are U shaped c Demand curves are positively sloped d Demand curves are vertical 10 What does the law of demand state a As incomes increase, people consume more of all goods b The demand for a good increases with the number of consumers in the market c As the price of a good increases, consumers purchase less of that good d The supply of a good increases in proportion to the demand for it 11 When the price of wood is high a consumers will be more likely to use wood in its lower valued uses b Consumers will be more likely to use wood in its higher valued uses c the quantity demanded of wood will also rise d the quantity demanded of wood will be unaffected 12 Which statement about consumer surplus is TRUE a Consumer surplus is the gross benefit to consumers from the exchange that occurs in a market b Consumer surplus is the gains from trade on the part of the consumer that result from a market transaction c Total consumer surplus is equal to the price the consumers paid multiplied by the quantity they purchased d Consumer surplus is the difference between the minimum price the consumer is willing to pay and the market price 13 The difference between the maximum price a consumer is willing to pay for a given quantity of a good and its market price is a producer shortage b consumer shortage c producer surplus d consumer surplus 14 Consumer surplus is the amount that consumers a are willing to pay for a good minus what they actually pay for it b are willing to pay for a good c actually pay for a good d are willing to pay for a good plus the amount that they actually pay for it 15 A decrease in demand refers to a a rightward shift of the demand curve b a leftward shift of the demand curve c an upward movement along the demand curve d a downward movement along the demand curve 16 A decrease in income causes demand for a normal good to , and an increase in income causes demand for an inferior good to a decrease decrease b increase increase c decrease increase d increase decrease 17 Michael graduates from college, and his income increases by $40,000 a year Other things held constant, he decreases the quantity of pizza he buys For Michael, pizza is a an inferior good b a complement c a substitute d a normal good 18 Zoey receives a big raise at work and decides to buy additional porcelain figurines Which of the following statements is TRUE a Zoey considers porcelain figurines to be a normal good b Zoey considers porcelain figurines to be an inferior good c Zoey's demand for porcelain figurines decreased d Zoey's willingness to pay for porcelain figures has decreased 19 The average age in the United States is , causing the demand for prescription drugs to a increasing decrease b increasing increase c decreasing increase d decreasing decrease 20 As the population of elderly in the United States increases, which service will likely see the biggest increase in demand a skateboard repair b home medical care c career training d child day care 21 The current demand for parking in a city's downtown district is such that all the parking garages are full If there is an increase in the city's population, there will be a an increase in the willingness to pay for parking b a decrease in the quantity of parking spaces demanded across all prices c a decrease in demand for parking d no increase in demand, since the parking garages are already at capacity 22 If romaine lettuce and iceberg lettuce are substitutes, a(n) in the price of romaine lettuce will the demand for iceberg lettuce a increase decrease b increase increase c decrease increase d decrease not change 23 The supply curve for oil shows a the quantity of oil supplied at different income levels b the quantity of oil supplied at different prices of oil c the supply of oil at different prices of other goods d the supply of oil when there is a surplus or shortage 24 The supply curve a shows how much buyers are willing and able to buy at different prices b is the amount that buyers are willing and able to buy at a particular price c shows how much sellers are willing and able to sell at different prices d is the amount that sellers are willing and able to sell at a particular price 25 Producer surplus is a the difference between the market price and the minimum price at which producers are willing to sell a good b the amount at which producers are willing to sell a good c the amount at which producers sell a good d the amount at which producers are willing to sell a good plus the amount at which they sell it 26 Which of the following choices contains only factors that cause the supply curve to shift to the right a a fall in production costs, a rise in technology, an increase in taxes on output b a fall in tastes and preferences for the product, economic growth, a rise in technology c a decrease in taxes on production, a fall in subsidies on production, a rise in costs of production d a rise in technology, a fall in the costs of production, a fall in taxes on output 27 A decrease in supply refers to a a rightward shift of the supply curve b a leftward shift of the supply curve c an upward movement along the supply curve d a downward movement along the supply curve 28 New production technology in the manufacture of 4K ultra high definition television screens has reduced the cost of production What effect will this have in the market for televisions a The demand curve will shift to the right b The supply curve will shift to the right c The demand and supply curves will both shift to the right d The demand curve will shift to the left 29 As world coal prices rise due to increasing scarcity and coal based energy costs rise, the demand for wind energy will a increase b decrease c remain the same d change in random patterns 30 Cell phone data plans are most useful when used with a smartphone, and smartphones are most useful when used with a data plan As the price of data plans falls, the demand for smartphones will a decrease because smartphones and data plans are substitutes b increase because smartphones and data plans are complements c decrease because smartphones and data plans are complements d increase because smartphones and data plans are substitutes 31 New research indicates that running marathons is actually bad for the heart (it increases inflammatory markers associated with heart attacks) This news will a lead to a decrease in the demand for running shoes b have no effect on the demand for or supply of running shoes c increase the supply of running shoes d lead to an increase in the demand for running shoes 32 In the worldwide coronavirus epidemic a current demand for medical grade face masks decreased b future demand for medical grade face masks increased c current demand for medical grade face masks was unchanged d current demand for medical grade face masks increased 33 Why does supply slope up a At higher prices, suppliers can profitably produce using more expensive techniques and inputs b The cost of producing a given good is the same, no matter how many are produced c Producers charge the maximum price that they can get d If supply did not slope up, it would not intersect with demand 34 As the price of lead falls (a key input in the production of automobile batteries), the cost of producing batteries decreases, shifting the supply curve of batteries a down and to the left b up and to the right c down and to the right d up and to the left 35 A subsidy is a a reverse tax b means of shifting the supply curve left c form of tax increase d movement along the supply curve 36 Which of the following factors causes a decrease in supply a a decrease in demand b a decrease in the price of the product c an increase in the price of the product d new taxes on output 37 An increase in a per unit production tax a increases supply b decreases supply c doesnot change supply d changes supply in an indeterminate direction 38 If producers expect the price of a good to fall in the future, they might a raise the price of the good today b hoard goods to save them for when the price is lower c increase their supply of goods out of storage today d increase the demand for their goods today 39 An increase in the expected price of a storable good a increases supply today b decreases supply today c does not change supply today d changes supply today in an indeterminate direction 40 NAFTA made it for Canadian lumber producers to sell lumber in the United States, shifting the supply curve of lumber to the a easier right b difficult left c difficult right d easier left

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Indicate the answer choice that best completes the statement or answers the question. 1.The most important tools in economics, according to the textbook, are supply,

Indicate the answer choice that best completes the statement or answers the question.

1.The most important tools in economics, according to the textbook, are supply, demand, and the:

	a.	idea of equilibrium.
	b.	opportunity to barter.
	c.	quantity of sales.
	d.	level of prices.

2.Quantity demanded:

	a.	shows how much buyers are willing and able to buy at different prices.
	b.	is the amount that buyers are willing and able to buy at a particular price.
	c.	shows how much sellers are willing and able to sell at different prices.
	d.	is the amount that sellers are willing and able to sell at a particular price.

3.If the demand curve for a normal good shifts downward and to the left:

	a.	willingness to pay has increased.
	b.	the population has increased.
	c.	the price of a substitute has increased.
	d.	income has decreased.

4.In the week before Hurricane Katrina, the price of flashlights rose in New Orleans because of:

	a.	an increase in supply.
	b.	an increase in demand.
	c.	a decrease in supply.
	d.	a decrease in demand.

5.If, for any given amount of a good or service, willingness to pay increases, then:

	a.	supply has increased.
	b.	supply has decreased.
	c.	demand has increased.
	d.	demand has decreased.

6.What are factors that shift the demand curve?

	a.	costs of production, price of the product, subsidies
	b.	income, population, tastes, input prices
	c.	expectations, opportunity costs, price of the product
	d.	price of substitutes, tastes, price of complements

7.The demand curve for oil shows:

	a.	the quantity demanded of oil at different income levels.
	b.	the quantity demanded of oil at different oil prices.
	c.	thedemand for oil at different prices of other goods.
	d.	the demand for oil when there is a surplus or shortage.

8.A supply and/or demand graph typically shows:

	a.	the price of the good on the horizontal axis and the quantity of the good on the vertical axis.
	b.	the quantity of the good on the horizontal axis and the price of the good on the vertical axis.
	c.	supply or demand of the good on the horizontal axis and price of the good on the vertical axis.
	d.	the price of the good on the horizontal axis and supply or demand of the good on the vertical axis.

9.Which of the following is TRUE about demand curves?

	a.	Demand curves are negatively sloped.
	b.	Demand curves are U-shaped.
	c.	Demand curves are positively sloped.
	d.	Demand curves are vertical.

10.What does the law of demand state?

	a.	As incomes increase, people consume more of all goods.
	b.	The demand for a good increases with the number of consumers in the market.
	c.	As the price of a good increases, consumers purchase less of that good.
	d.	The supply of a good increases in proportion to the demand for it.

11.When the price of wood is high:

	a.	consumers will be more likely to use wood in its lower-valued uses.
	b.	Consumers will be more likely to use wood in its higher-valued uses.
	c.	the quantity demanded of wood will also rise.
	d.	the quantity demanded of wood will be unaffected.

12.Which statement about consumer surplus is TRUE?

	a.	Consumer surplus is the gross benefit to consumers from the exchange that occurs in a market.
	b.	Consumer surplus is the gains from trade on the part of the consumer that result from a market transaction.
	c.	Total consumer surplus is equal to the price the consumers paid multiplied by the quantity they purchased.
	d.	Consumer surplus is the difference between the minimum price the consumer is willing to pay and the market price.

13.The difference between the maximum price a consumer is willing to pay for a given quantity of a good and its market price is:

	a.	producer shortage.
	b.	consumer shortage.
	c.	producer surplus.
	d.	consumer surplus.

14.Consumer surplus is the amount that consumers:

	a.	are willing to pay for a good minus what they actually pay for it.
	b.	are willing to pay for a good.
	c.	actually pay for a good.
	d.	are willing to pay for a good plus the amount that they actually pay for it.

15.A decrease in demand refers to:

	a.	a rightward shift of the demand curve.
	b.	a leftward shift of the demand curve.
	c.	an upward movement along the demand curve.
	d.	a downward movement along the demand curve.

16.A decrease in income causes demand for a normal good to _____, and an increase in income causes demand for an inferior good to _____.

	a.	decrease; decrease
	b.	increase; increase
	c.	decrease; increase
	d.	increase; decrease

17.Michael graduates from college, and his income increases by $40,000 a year. Other things held constant, he decreases the quantity of pizza he buys. For Michael, pizza is:

	a.	an inferior good.
	b.	a complement.
	c.	a substitute.
	d.	a normal good.

18.Zoey receives a big raise at work and decides to buy additional porcelain figurines. Which of the following statements is TRUE?

	a.	Zoey considers porcelain figurines to be a normal good.
	b.	Zoey considers porcelain figurines to be an inferior good.
	c.	Zoey's demand for porcelain figurines decreased.
	d.	Zoey's willingness to pay for porcelain figures has decreased.

19.The average age in the United States is _____, causing the demand for prescription drugs to _____.

	a.	increasing; decrease
	b.	increasing; increase
	c.	decreasing; increase
	d.	decreasing; decrease

20.As the population of elderly in the United States increases, which service will likely see the biggest increase in demand?

	a.	skateboard repair
	b.	home medical care
	c.	career training
	d.	child day care

21.The current demand for parking in a city's downtown district is such that all the parking garages are full. If there is an increase in the city's population, there will be:

	a.	an increase in the willingness to pay for parking.
	b.	a decrease in the quantity of parking spaces demanded across all prices.
	c.	a decrease in demand for parking.
	d.	no increase in demand, since the parking garages are already at capacity.

22.If romaine lettuce and iceberg lettuce are substitutes, a(n) _____ in the price of romaine lettuce will _____ the demand for iceberg lettuce.

	a.	increase; decrease
	b.	increase; increase
	c.	decrease; increase
	d.	decrease; not change

23.The supply curve for oil shows:

	a.	the quantity of oil supplied at different income levels.
	b.	the quantity of oil supplied at different prices of oil.
	c.	the supply of oil at different prices of other goods.
	d.	the supply of oil when there is a surplus or shortage.

24.The supply curve:

	a.	shows how much buyers are willing and able to buy at different prices.
	b.	is the amount that buyers are willing and able to buy at a particular price.
	c.	shows how much sellers are willing and able to sell at different prices.
	d.	is the amount that sellers are willing and able to sell at a particular price.

25.Producer surplus is:

	a.	the difference between the market price and the minimum price at which producers are willing to sell a good.
	b.	the amount at which producers are willing to sell a good.
	c.	the amount at which producers sell a good.
	d.	the amount at which producers are willing to sell a good plus the amount at which they sell it.

26.Which of the following choices contains only factors that cause the supply curve to shift to the right?

	a.	a fall in production costs, a rise in technology, an increase in taxes on output
	b.	a fall in tastes and preferences for the product, economic growth, a rise in technology
	c.	a decrease in taxes on production, a fall in subsidies on production, a rise in costs of production
	d.	a rise in technology, a fall in the costs of production, a fall in taxes on output

27.A decrease in supply refers to:

	a.	a rightward shift of the supply curve.
	b.	a leftward shift of the supply curve.
	c.	an upward movement along the supply curve.
	d.	a downward movement along the supply curve.

28.New production technology in the manufacture of 4K ultra-high-definition television screens has reduced the cost of production. What effect will this have in the market for televisions?

	a.	The demand curve will shift to the right.
	b.	The supply curve will shift to the right.
	c.	The demand and supply curves will both shift to the right.
	d.	The demand curve will shift to the left.

29.As world coal prices rise due to increasing scarcity and coal-based energy costs rise, the demand for wind energy will:

	a.	increase.
	b.	decrease.
	c.	remain the same.
	d.	change in random patterns.

30.Cell phone data plans are most useful when used with a smartphone, and smartphones are most useful when used with a data plan. As the price of data plans falls, the demand for smartphones will:

	a.	decrease because smartphones and data plans are substitutes.
	b.	increase because smartphones and data plans are complements.
	c.	decrease because smartphones and data plans are complements.
	d.	increase because smartphones and data plans are substitutes.

31.New research indicates that running marathons is actually bad for the heart (it increases inflammatory markers associated with heart attacks). This news will:

	a.	lead to a decrease in the demand for running shoes.
	b.	have no effect on the demand for or supply of running shoes.
	c.	increase the supply of running shoes.
	d.	lead to an increase in the demand for running shoes.

32.In the worldwide coronavirus epidemic:

	a.	current demand for medical-grade face masks decreased.
	b.	future demand for medical-grade face masks increased.
	c.	current demand for medical-grade face masks was unchanged.
	d.	current demand for medical-grade face masks increased.

33.Why does supply slope up?

	a.	At higher prices, suppliers can profitably produce using more expensive techniques and inputs.
	b.	The cost of producing a given good is the same, no matter how many are produced.
	c.	Producers charge the maximum price that they can get.
	d.	If supply did not slope up, it would not intersect with demand.

34.As the price of lead falls (a key input in the production of automobile batteries), the cost of producing batteries decreases, shifting the supply curve of batteries:

	a.	down and to the left.
	b.	up and to the right.
	c.	down and to the right.
	d.	up and to the left.

35.A subsidy is a:

	a.	reverse tax.
	b.	means of shifting the supply curve left.
	c.	form of tax increase.
	d.	movement along the supply curve.

36.Which of the following factors causes a decrease in supply?

	a.	a decrease in demand
	b.	a decrease in the price of the product
	c.	an increase in the price of the product
	d.	new taxes on output

37.An increase in a per unit production tax:

	a.	increases supply.
	b.	decreases supply.
	c.	doesnot change supply.
	d.	changes supply in an indeterminate direction.

38.If producers expect the price of a good to fall in the future, they might:

	a.	raise the price of the good today.
	b.	hoard goods to save them for when the price is lower.
	c.	increase their supply of goods out of storage today.
	d.	increase the demand for their goods today.