Chapter 3 - Demand and Supply - Sample Questions MULTIPLE ...

1 Chapter 3 - Demand and Supply - Sample QuestionsAnswers are at the end fo this fileMULTIPLE choice . Choose the one alternative that best completes the statement or answers the ) A relative price isA) the ratio of one price to ) the difference between one price and ) the slope of the Supply ) the slope of the Demand )2) If the price of a candy bar is $1 and the price of a fast food meal is $5,A) the money price of a fast food meal is 1/5 of a candy ) the money price of a candy bar is 1/5 of a fast food ) the relative price of a fast food meal is 5 candy ) the relative price of a candy bar is 5 fast food )3) If the price of a hot dog is $2 and the price of a hamburger is $4,A) the money price of a hamburger is 2 hot ) the money price of a hot dog is 2 ) the relative price of a hot dog is 1/2 of a ) the relative price of a hamburger is 1/2 of a hot )4) The opportunity cost of good A in terms of good B is equal to theA) ratio of the price of good B to the price of good )

2 Ratio of the price of good A to the price of good ) price of good A minus the price of good ) price of good B minus the price of good )5) The opportunity cost of a hot dog in terms of hamburgers isA) the price of a hot dog minus the price of a ) the ratio of the slope of the Supply curve for hot dogs to the slope of the Supply curve ) the ratio of the slope of the Demand curve for hot dogs to the slope of the Demand curve ) the ratio of the price of a hot dog to the price of a )6) Wants, as opposed to demands,A) depend on the ) are the goods the consumer plans to ) are the unlimited desires of the consumerD) are the goods the consumer has )17) Demands differ from wants in thatA) wants require a plan to acquire a good but demands require no such ) demands are unlimited, whereas wants are limited by ) wants imply a decision about which demands to satisfy, while demands involve no specificplan to acquire the ) demands reflect a decision about which wants to satisfy and a plan to buy the good, whilewants are unlimited and involve no specific plan to acquire the )8) Scarcity guarantees thatA) wants will exceed ) demands will be equal to ) demands will exceed ) most demands will be )9) The quantity demanded isA) the amount of a good that consumers plan to purchase at a particular ) independent of the price of the ) independent of consumers' buying ) always equal to the equilibrium )10) The law of Demand states that, other things remaining the same, the higher the price of a good, theA) smaller is the Demand for the ) smaller is the quantity of the good ) larger is the quantity of the good ) larger is the Demand for the )11) The law of Demand implies that, other things remaining the same,A) as the Demand for cheeseburgers increases, the price of a cheeseburger will )

3 As the price of a cheeseburger rises, the quantity of cheeseburgers demanded will ) as income increases, the quantity of cheeseburgers demanded will ) as the price of a cheeseburger rises, the quantity of cheeseburgers demanded will )12) The law of Demand states that the quantity of a good demanded variesA) inversely with its ) directly with ) directly with ) inversely with the price of substitute )13) Which of the following is consistent with the law of Demand ?A) A decrease in the price of a gallon of milk causes a decrease in the quantity of milk ) An increase in the price of a soda causes a decrease in the quantity of soda ) An increase in the price of a tape causes an increase in the quantity of tapes ) A decrease in the price of juice causes no change in the quantity of juice )214) The law of Demand implies that if nothing else changes, there isA) a linear relationship between price of a good and the quantity ) a positive relationship between the price of a good and the quantity ) a negative relationship between the price of a good and the quantity ) an exponential relationship between price of a good and the quantity )15) Which of the following influences people's buying plans andvaries moving along a Demand curve?

4 A) preferencesB) the price of the goodC) incomeD) the prices of related goods15)16) The law of Demand states thatA) a decrease in the price of a good shifts the Demand curve ) other things remaining the same, the higher the price of a good, the smaller is the ) other thing remaining the same, the higher the price of a good, the larger is the ) an increase in the price of a good shifts the Demand curve )17) The law of Demand implies that Demand curvesA) shift leftward whenever the price ) shift rightward whenever the price ) slope ) slope )18) Each point on the Demand curve reflectsA) the highest price consumers are willing and able to pay for that particular unit of a ) the highest price sellers will accept for all units they are ) the lowest-cost technology available to produce a ) all the wants of a given )19) A drop in the price of a compact disc shifts the Demand curve for prerecorded tapes leftward. Fromthat you know compact discs and prerecorded tapes areA) normal ) ) inferior ) )20) A substitute is a goodA) of higher quality than another ) that is not used in place of another ) that can be used in place of another ) of lower quality than another )21) People buy more of good 1 when the price of good 2 rises.

5 These goods areA) normal ) ) ) inferior )22) Which of the following pairs of goods are most likely substitutes?A) compact discs and compact disc playersB) lettuce and salad dressingC) cola and lemon lime sodaD) peanut butter and gasoline22)323) The Demand for a good increases when the price of a substitute _____ and also increases whenthe price of a complement ) falls; fallsB) rises; fallsC) rises; risesD) falls; rises23)24) A complement is a goodA) used in conjunction with another ) used instead of another ) of lower quality than another ) of higher quality than another )25) Suppose people buy more of good 1 when the price of good 2 falls. These goods areA) ) ) ) )26) As the opportunity cost of a good decreases, people buyA) more of that good but less of its ) less of that good and also less of its ) less of that good but more of its ) more of that good and also more of its )27) People come to expect that the price of a gallon of gasoline will rise next week.

6 As a result,A) next week's Supply of gasoline ) the price of a gallon of gasoline falls ) today's Supply of gasoline ) today's Demand for gasoline )28) The Demand curve for a normal good shifts leftward if income _____ or the expected futureprice ) decreases; fallsB) increases; risesC) increases; fallsD) decreases; rises28)29) If income increases or the price of a complement falls,A) the Supply curve of a normal good shifts ) the Supply curve of a normal good shifts ) the Demand curve for a normal good shifts ) the Demand curve for a normal good shifts )30) If income decreases or the price of a complement rises,A) there is an upward movement along the Demand curve for the ) there is a downward movement along the Demand curve for the ) the Demand curve for a normal good shifts ) the Demand curve for a normal good shifts )31) Normal goods are those for which Demand decreases asA) the price of a substitute ) the price of a complement ) the good's own price ) income )432) A normal good is a good for whichA) there are very few ) Demand decreases when income ) Demand increases when income ) there are few )33) Most goodsA) have vertical Demand ) have vertical Supply ) are normal ) are complements to each )34)

7 A normal good is a good for which demandA) increases when income ) decreases when population ) increases when population ) decreases when income )35) Inferior goods are those for which Demand increases asA) income ) income ) the price of a substitute ) the price of a substitute )36) By definition, an inferior good is aA) normal substitute ) good for which Demand decreases when its price ) want that is not expressed by ) good for which Demand decreases when income )37) If a good is an inferior good, then purchases of that good will decrease whenA) the Demand for it ) population ) income ) the price of a substitute )38) An inferior good is a good for which demandA) increases when population ) decreases when income ) decreases when population ) increases when income )39) When economists speak of preferences as influencing Demand , they are referring toA) the availability of a good to all income ) directly observable changes in prices and ) the excess of wants over the available ) an individual's attitudes toward goods and )40) In 2000 there were 200,000 gas grills demanded at a price of $500.

8 In 2001 there were more than200,000 gas grills demanded at the same price. This increase could be the result any of thefollowing EXCEPTA) an increase in the Supply of gas ) an increase in ) an increase in income if gas grills are a normal ) a fall in the price of natural gas, a complement for a gas )541) A change in the price of a goodA) shifts the good's Demand curve but does not cause a movement along ) does not shift the good's Demand curve but does cause a movement along ) shifts the good's Demand curve and also causes a movement along ) neither shifts the good's Demand curve nor causes a movement along )42) A reduction in the price of a goodA) does not shift the good's Demand curve leftward but does decrease the quantity ) shifts the good's Demand curve leftward but does not decrease the quantity ) shifts the good's Demand curve leftward and also decreases the quantity ) neither shifts the good's Demand curve leftward nor decreases the quantity )43)

9 A decrease in quantity demanded caused by an increase in price is represented by aA) movement up and to the left along the Demand ) movement down and to the right along the Demand ) leftward shift of the Demand ) rightward shift of the Demand )44) A change in which of the following alters buying plans for cars but does NOTshift the demandcurve for cars?A) a 10 percent decrease in the price of car insuranceB) a 20 percent increase in the price of a carC) a 5 percent increase in people's incomeD) an increased preference for walking rather than driving44)45) Which of the following would NOT shift the Demand curve for turkey?A) a change in tastes for turkeyB) a decrease in the price of hamC) an increase in incomeD) a change in the price of a turkey45)46) When we say Demand increases, we mean that there is aA) movement to the right along a Demand ) movement to the left along a Demand ) leftward shift of the Demand ) rightward shift of the Demand )647) In the figure above, which movement reflects an increase in Demand ?

10 A) from point a to point eB) from point ato point cC) from point a to point bD) from point ato point d47)48) In the figure above, which movement reflects a decrease in Demand ?A) from point a to point dB) from point ato point eC) from point a to point cD) from point ato point b48)49) In the figure above, which movement reflects a decrease in quantity demanded but NOT adecrease in Demand ?A) from point a to point cB) from point ato point eC) from point a to point dD) from point ato point b49)50) In the figure above, which movement reflects how consumers would react to an increase in theprice of a non-fruit snack?A) from point a to point bB) from point ato point dC) from point a to point cD) from point ato point e50)51) In the figure above, which movement reflects an increase in the price of a substitute for fruitsnacks?A) from point a to point dB) from point ato point eC) from point a to point bD) from point ato point c51)52) In the figure above, which movement reflects an increase in the price of a complement for fruitsnacks?