MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

1) The law of demand implies that, other things remaining the same, 1)

A) as income increases, the quantity of cheeseburgers demanded will increase. B) as the demand for cheeseburgers increases, the price of a cheeseburger will fall. C) as the price of a cheeseburger rises, the quantity of cheeseburgers demanded will decrease.

D) as the price of a cheeseburger rises, the quantity of cheeseburgers demanded will increase.

2) The law of demand implies that demand curves A) shift leftward whenever the price rises. C) slope down.

2) B) shift rightward whenever the price rises.

D) slope up.

3) Each point on the demand curve reflects A) the highest price sellers will accept for all units they are producing.

B) all the wants of a given household. C) the lowest-cost technology available to produce a good. D) the highest price consumers are willing and able to pay for that particular unit of a good.

3)

4) People buy more of good 1 when the price of good 2 rises. These goods are 4) A) substitutes. B) normal goods. C) complements. D) inferior goods.

5) The demand curve for a normal good shifts leftward if income ________ or the expected future 5) price ________.

A) decreases; falls B) increases; rises C) increases; falls D) decreases; rises

6) 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.

6)

7) A change in which of the following alters buying plans for cars but does NOT shift the demand 7) curve for cars?

A) A 20 percent increase in the price of a car. B) A 10 percent decrease in the price of car insurance. C) A 5 percent increase in people's income.

D) An increased preference for walking rather than driving.

8) The law of demand concludes that a rise in the price of a golf ball ________ the quantity demanded 8) and ________.

A) increases; creates a movement down along the demand curve for golf balls. B) increases; shifts the demand curve for golf balls rightward. C) decreases; creates a movement up along the demand curve for golf balls.

D) decreases; shifts the demand curve for golf balls leftward.

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9) Demand is the 9)

A) willingness to pay for a good if income is large enough. B) entire relationship between the quantity demanded and the price of a good. C) unlimited wants of consumers.

D) ability to pay for a good.

10) The quantity supplied of a good or service is the quantity that a producer ________ at a particular 10)

price during a given time period. A) needs to sell B) actually sells C) should sell

11) Each point on a supply curve represents A) the lowest price for which a supplier can profitably sell another unit.

B) the highest price buyers will pay for the good. C) the lowest price buyers will accept per unit of the good. D) the highest price sellers can get for each unit over time.

12) Which of the following shifts the supply curve for gasoline rightward? A) an increase in the price of gasoline

B) a situation in which the quantity demanded exceeds the quantity supplied C) an increase in the demand for gas-guzzling, sport utility vehicles D) a decrease in the price of a resource used to produce gasoline, such as crude oil

D) is willing to sell 11)

12)

13) Autoworkers negotiate a wage increase; how does this change affect the supply of cars? 13) A) It has no effect.

B) It decreases the supply. C) It increase the supply. D) There is not enough information to tell if the change increases, decreases, or has no effect on

the supply of cars

14) Which of the following does NOT shift the supply curve? 14) A) a technological advance

B) a fall in the price of a substitute in production C) a decrease in the wages of labor used in production of the good D) an increase in the price of the good

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15) The above figure represents the market for french fries at fast food joints. If the price of potatoes 15) rises and simultaneously people become concerned that french fries can cause heart attacks the

A) demand curve for french fries shifts from D2 to D1 and the supply curve of french fries shifts from S2 to S1.

B) demand curve for french fries does not shift, and the supply curve of french fries shifts from S1 to S2.

C) demand curve for french fries shifts from D2 to D1 and the supply curve of french fries shifts from S1 to S2.

D) demand curve for french fries shifts from D2 to D1 and the supply curve of french fries does not shift.

Price (dollars per disc) 4 8 12 16 20 24 28 32 36

Quantity demanded

36,000 32,000 28,000 24,000 20,000 16,000 12,000 8,000 4,000

Price (dollars per disc) 4 8 12 16 20 24 28 32 36

Quantity supplied

4,000

8,000 12,000 16,000 20,000 24,000 28,000 32,000 36,000

16) The above table gives the demand and supply schedules for compact discs. If the price of a compact 16) disc is $28, there is a ________ and the price of a compact disc will ________.

A) shortage; rise B) surplus; fall

C) shortage; fall D) surplus; rise

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17) When the demand for a good decreases, its equilibrium price ________ and equilibrium quantity 17) ________.

A) rises; increases B) falls; decreases C) rises; decreases D) falls; increases

18) If both demand and supply increase, what will be the effect on the equilibrium price and quantity? 18) A) Both the price and the quantity will increase.

B) The price will fall but the quantity will increase. C) The quantity will increase but the price could either rise, fall, or remain the same. D) The price will rise but the quantity could either increase, decrease, or remain the same.

19) The price of compact disc players fell over the past decade because a combination of improving 19) technology, rising incomes, and falling prices of compact discs caused the

A) supply curve of compact disc players to shift rightward faster than the demand curve for compact disc players shifted rightward.

B) demand curve for compact disc players to shift leftward and the supply curve of compact disc players to shift leftward.

C) supply curve of compact disc players to shift rightward and the demand curve for compact disc players to shift leftward.

D) demand curve for compact disc players to shift rightward faster than the supply curve of compact disc players shifted rightward.

The Market for Wapanzo Beans

Quantity Demanded (millions of pounds per year)

Case Case Case 123

Price (dollars per pound)

Quantity Supplied (millions of pounds per year)

Case A Case B Case C

15 10 15 $1 1 2 3 12 8 4 $2 2 4 6 9 6 3 $3 3 6 9

6 3 2 $4 4 8 12 3 2 1 $5 5 10 15

20) Refer to the table above. Suppose that in normal years demand is represented by Case 2 and supply 20) is represented by Case B. In a normal year the price of wapanzo beans will be

A) $3 per pound. B) $4 per pound.

C) $1 per pound. D) $2 per pound.

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