econ

Question 1

In a typical market, the demand curve is composed of ___ and slopes ____.
a) sellers; downwards
b) buyers; downwards
c) buyers; upwards
d) sellers; upwards
e) buyers; horizonta

Answer 1

b. buyers; downwards

Question 2

Along a typical downward sloping demand curve, what is NOT held constant?
a. price of related
b. number of buyers
c. preferences/tastes
d. price of the good itself
e. income

Answer 2

d. price on the good itself

Question 3

Along a typical downward sloping demand curve, what is held constant?
a) income
b) tastes/preferences
c) prices of related goods
d) future price expectations
e) All of the above are held constant

Answer 3

e. all of the above are held constant

Question 4

Which of the following would shift the demand curve?
a) a change in the incomes of consumers
b) a change in the tastes or preferences of consumers
c) a change in the price of the good or service
d) All of the above are demand shifters.
e) Only a and b are correct

Answer 4

e. only a and b are correct

Question 5

When referring to a graph, a decrease in demand means that
a) the demand curve has shifted left.
b) the demand curve has shifted right.
c) there has been a movement down along the demand curve.
d) there has been a movement up along the demand curve.
e) Both a and c are correct

Answer 5

a) the demand curve has shifted left

Question 6

When referring to a graph, a decrease in quantity demanded means that
a) the demand curve has shifted left.
b) the demand curve has shifted right.
c) there has been a movement down along the demand curve.
d) there has been a movement up along the demand curve.
e) Both b and c are correct

Answer 6

c. there has been a movement up along the demand curve

Question 7

All of the following will cause an increase in demand EXCEPT
a) an increase in consumer income
b) a decrease in the price of the good
c) a decrease in the price of a complement good
d) an increase in the number of buyers in the markete) All of the above will cause an increase in demand

Answer 7

b. a decrease in the price of the good

Question 8

In a typical market, the supply curve is made up of ___ and slopes ___.
a) sellers; upwards
b) sellers; downwards
c) sellers; vertical
d) buyers; upwards
e) buyers; downwards

Answer 8

a. sellers; upwards

Question 9

Which of the following is a supply shifter?
a) expected price (what sellers believe the price will do in the future)
b) price of the good itself
c) price of inputs
d) All of the above are supply shifters.
e) Only a and c are supply shifters

Answer 9

e) Only a and c are supply shifters

Question 10

Which of the following would cause a movement along the supply curve?
a. a change in supplier price expectations
b. a change in the technology of production
c. a change in the price of the good itself
d. a change in the number of sellers
e. All of the above could cause a movement along the supply curve.

Answer 10

c. a change in the price of the good itself

Question 11

When referring to a graph, an increase in supply means that
a) the supply curve has shifted right.
b) the supply curve has shifted left.
c) there has been a movement down along the supply curve.
d) there has been a movement up along the supply curve.
e) Both b and d are correct

Answer 11

a) the supply curve has shifted right

Question 12

When referring to a graph, an increase in quantity supplied means that
a) the supply curve has shifted right.
b) the supply curve has shifted left.
c) there has been a movement down along the supply curve.
d) there has been a movement up along the supply curve.
e) Both b and d are correct.

Answer 12

d. there has been a movement up along the supply curve

Question 13

What does P* stand for?
a) the government mandated price
b) the market clearing price
c) the equilibrium price
d) the price buyers pay and the price that sellers receive
e) b, c and d are correct

Answer 13

e) b, c and d are correct

Question 14

in competitive markets, who controls P*?
a) buyers always control price
b) buyers mostly control price
c) sellers always control price
d) sellers mostly control price
e) combination of buyers and sellers – neither side “controls” the price

Answer 14

e) combination of buyers and sellers – neither side “controls” the price

Question 15

When a market for a good/service is in equilibrium,
a. buyers can buy as much of the product they want, if they pay price P.
b. sellers can produce as much of the product they want, if they receive price P.
c. there are no forces on price to rise or fall.
d. the amount of the good demanded by consumers exactly equals the amount of the good supplied by
sellers.
e. All of the above are true

Answer 15

e. all of the above are true

Question 16

When the price of a good/service is above the market clearing price (P*), then
a) The amount supplied of the good will exceed the amount demanded.
b) Market forces will begin to push the price downwards.
c) There will be a surplus of the good.
d) Some sellers will not sell all that they have produced.
e) All of the above are correct.

Answer 16

e. all of the above are correct

Question 17

Who controls the price of gasoline in the U.S.?
a) The buyers – we can buy as much or as little as we want!
b) The sellers – since we need it they can charge as much as they want
c) The President – he/she has a large influence on whether gas prices are high or low
d) No one (buyers, sellers or President) sets or controls gas prices in the U.S., they are determined by the market

Answer 17

d) No one (buyers, sellers or President) sets or controls gas prices in the U.S., they are determined by the market

Question 18

According to the model of supply and demand, in general what happens when consumers want more
of the good or service?
a) it causes the price to fall
b) it causes the price to rise
c) it has no effect on price

Answer 18

b. it causes the price to rise

Question 19

According to the model of supply and demand, in general what happens when buyers want less of the
good or service?
a) it causes the price to fall
b) it causes the price to rise
c) it has no effect on price

Answer 19

a. it causes the price to fall

Question 20

Generally, anytime there is an increase in demand, the model of supply and demand would predict
equilibrium price to ____ and quantity to ____.
a) rise; fall
b) fall; rise
c) rise; remain unchanged
d) rise; rise
e) remain unchanged; rise

Answer 20

b. rise rise