QUESTION 1

What is the equilibrium price?

1. The price at which there is no surplus, but there may be a shortage.
2. The price at which there is no shortage, but there may be a surplus.
3. The price at which everyone is able to buy the quantities they desire.
4. The price at which the quantity demanded equals the quantity supplied.

QUESTION 2

What is the term for the sale of a product abroad for a lower price than is being charged in the domestic market?

1. Price control.
2. Producers' preference.
3. Dumping.
4. Subsidy.

QUESTION 3

Which of the following is explained by the combination of the substitution effect and the income effect?

1. Ceteris paribus.
2. Downward sloping demand curves.
3. Market demand.
4. Equilibrium price.

QUESTION 4

What is the term for those products whose demand will decrease as a result of an increase in income and will increase as a result of a decrease in income?

1. Normal products.
2. Complementary products.
3. Substitute products.
4. Inferior products.

QUESTION 5

What is the effect of a shortage?

1. It will cause a decrease in the price, leading to an increase in the quantity supplied and a decrease in the quantity demanded.
2. It will cause a decrease in the price, leading to a decrease in the quantity supplied and an increase in the quantity demanded.
3. It will cause an increase in the price, leading to an increase in the quantity supplied and a decrease in the quantity demanded.
4. It will cause an increase in the price, leading to a decrease in the quantity supplied and an increase in the quantity demanded.

QUESTION 6

What will happen if both the demand for and supply of a product increase simultaneously?

1. The effect on the price is indeterminate.
2. The price will increase.
3. The price will decrease.
4. The effect on quantity traded is indeterminate.

QUESTION 7

What term is used to describe certain goods whose demand curve is upward-sloping?

1. Inferior goods.
2. Giffen goods.
3. Complementary goods.
4. Substitute goods.

QUESTION 8

A leftward shift in the supply curve of computers is caused by.

1. An increase in the price of microchips
2. A decrease in the tax on computers
3. An expectation (of producers) of a substantial rise in future computers' prices
4. Both A and C.

QUESTION 9

All of the following, except one, would cause a decrease in the supply of product A. Which is the exception?

1. An increase in the price of resources used to make product A.
2. An increase in business taxes.
3. An improvement in technology.
4. The expectation by suppliers that future prices of product A will be higher.

QUESTION 10

Rent control is an example of _____.

1. An illegal market
2. A price ceiling
3. Rationing
4. A price floor