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題 目 卷
I. Demand & Supply
1. The law of demand illustrates that as
A.
price decreases, demand increases.
C.
price decreases, quantity supplied increases.
B. price increases, quantity demanded increases.
D. price decreases, quantity demanded increases.
2. A change in demand means that
A. more will be bought at a lower price.
B. a changed amount will be bought at the same given prices.
C. less will be purchased at a higher price.
D. the quantity demanded changes as the price changes.
3. In accordance with the law of supply, if the price doubled, the quantity supplied would generally
A.
rise.
B.
fall.
C.
double.
D. drop by half.
4. The point where quantity demanded and quantity supplied are equal is known as the
A.
ceiling price.
B.
minimum price.
C.
D. administered price.
equilibrium price.
5. If the market price is below the equilibrium price, forces will come into play to
A.
move the price lower.
B.
move it to the equilibrium price.
C.
move it above the equilibrium price.
D.
decrease the supply.
6. As price is lowered from a point higher than the equilibrium price, it will bring about
A.
an increase in demand
B.
a decrease in supply
C.
an increase in quantity demanded
D.
an increase in supply
7. A surplus quantity will occur when
A.
quantity demanded is greater than quantity supplied.
B.
price is above equilibrium.
C.
demand is elastic.
D.
price is below equilibrium.
8. When the supply of a product increases but the demand for the product remains unchanged, the equilibrium price of the product will
A.
fall, and equilibrium quantity will decrease.
B.
be unaffected.
C.
first rise and then return to the original price level.
D.
fall, and equilibrium quantity will increase.
9. If a price ceiling of $3 is imposed on gasoline and the market price is $2,
A.
the price of gasoline will rise.
B.
the price of gasoline will fall.
C.
the price of gasoline will remain unchanged.
D.
the demand for gasoline will increase.
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( A )
10. If demand increases and supply decreases, but supply decreases more than demand increases,
A. equilibrium price will rise.
B. equilibrium price will fall.
C. quantity sold will increase.
D. the quantities of both demand and supply will increase.
11. Whenever the supply of a product increases and the demand for the product decreases,
A. the quantity exchanged in the market will increase.
B. equilibrium price will rise.
C. the quantity exchanged in the market will decrease.
D. equilibrium price will fall.
12. Which of the following would not lead to a change in demand for coffee?
A. a change in the price of coffee
B. a change in consumer preferences for coffee
C. a change in the price of tea
D. a change in consumers’ disposable incomes
13. The law of supply states that
A. as prices increase, quantity supplied decreases.
B. price changes are always in the same direction as supply changes.
C. a change in price causes a change in supply.
D. price and quantity supplied are positively or directly related.
14. A price floor will result in
A. a decrease in price if the price floor is below the market price.
B. a decrease in price if the price floor is above the market price.
C. an increase in price if the price floor is above the market price.
D. the same price as the market price.
15. To maintain a price above the equilibrium price,
A. demand must increase.
B. supply must increase.
C. price must be regulated.
D. demand must decrease.
16. When demand for a product increases but the supply of the product remains unchanged, the equilibrium price of the product will
A. rise and equilibrium quantity will decrease.
B. rise, and equilibrium quantity will increase.
C. first fall and then return to the original level.
D. fall.
17. Which of the following is not a determinant of demand?
A. production costs
B. consumer expectations
C. prices of related goods
D. tastes and preferences of consumers
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II. Price Elasticity
18. Other things equal, the demand for a good tends to be more inelastic, the
A.
fewer the available substitutes.
C.
more the good is considered a luxury good.
B. longer the time period considered.
D. more narrowly defined is the market for the good.
19. The price elasticity of demand measures the
A.
magnitude of the response in quantity demanded to a change in price.
B.
direction of the shift in the demand curve in response to a market event.
C.
size of the shortage created by the increase in demand.
D.
responsiveness of quantity demanded to a change in income.
20. Suppose the price of a bag of tortilla chips decreases from $3.00 to $2.50 and, as a result, the quantity of tortilla chips demanded increases from 200 bags to
300 bags. Using the midpoint method, the price elasticity of demand for tortilla chips in the given price range is
A.
0.33.
B.
0.45.
C.
2.20.
D. 3.00.
21. If the price elasticity of demand for a good is 2, then a 10 percent decrease in the quantity demanded must be the result of
A.
C.
a 0.2 percent increase in the price.
a 5 percent increase in the price.
B. a 2.5 percent increase in the price.
D. a 20 percent increase in the price.
22. When we move upward and to the left along a linear, downward-sloping demand curve, price elasticity of demand
A.
first becomes smaller, then larger.
B. always becomes larger.
C.
always becomes smaller.
D. first becomes larger, then smaller.
23. The local bakery makes such great cinnamon rolls that consumers do not respond much at all to a change in the price. If the owner is only interested in
increasing revenue, she should
A.
C.
lower the price of the cinnamon rolls.
raise the price of the cinnamon rolls.
B. leave the price of the cinnamon rolls unchanged.
D. reduce costs.
24. For which of the following goods is the income elasticity of demand likely highest?
A.
natural gas
B.
doctor’s visits
C.
hamburgers
D. boats
25. For which pairs of goods is the cross-price elasticity most likely to be positive?
A.
C.
peanut butter and jelly
pens and pencils
26. A key determinant of the price elasticity of supply is
A.
the ability of sellers to change the price of the good they produce.
C.
how responsive buyers are to changes in sellers' prices.
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B.
D.
bicycle frames and bicycle tires
college textbooks and iPods
B.
D.
the ability of sellers to change the amount of the good they produce.
the slope of the demand curve.
27. Holding all other factors constant and using the midpoint method, if a candy manufacturer increases production by 20 percent when the market price of
candy increases from $0.50 to $0.60, then supply is
A.
C.
inelastic, since the price elasticity of supply is equal to 0.91.
elastic, since the price elasticity of supply is equal to 0.91.
B.
D.
inelastic, since the price elasticity of supply is equal to 1.1.
elastic, since the price elasticity of supply is equal to 1.1.
28. Because the demand for wheat tends to be inelastic, the development of a new, more productive hybrid wheat would tend to
A.
C.
increase the total revenue of wheat farmers.
decrease the demand for wheat.
B.
D.
decrease the total revenue of wheat farmers.
decrease the supply of wheat.
29. Marcus says that he would smoke one pack of cigarettes each day regardless of the price. If he is telling the truth, Marcus’s
A. demand for cigarettes is perfectly inelastic.
B. price elasticity of demand for cigarettes is infinite.
C. income elasticity of demand for cigarettes is 0.
D. More than one of the above is correct.
30. Suppose the point (Q = 3,400, P = $20) is the midpoint on a certain downward-sloping, linear demand curve. Then
A. a decrease in price from $18 to $16 will increase total revenue.
B. a decrease in price from $24 to $22 will decrease total revenue.
C. a decrease in the price from $21 to $19 will decrease total revenue.
D. the maximum value of total revenue is $68,000.
31. Suppose good X has a positive income elasticity of demand. This implies that good X could be
(i) a normal good.
(iii) an inferior good.
(ii) a necessity.
(iv) a luxury.
A. (i) only
B. (i) and (ii) only
C. (i), (ii), and (iv) only
D. (iii) only
32. Suppose that when the price of good X increases from $800 to $850, the quantity demanded of good Y increases from 65 to 70. Using the midpoint
method, the cross price elasticity of demand is about
A. -1.2, and X and Y are complements.
B. -0.1, and X and Y are complements.
C. 0.1, and X and Y are substitutes.
D. 1.2, and X and Y are substitutes.
33. Which of the following statements is valid when supply is perfectly elastic at a price of $4?
A.
The elasticity of supply approaches infinity.
B. The supply curve is vertical.
C.
At a price below $4, quantity supplied is infinite.
D.
At a price above $4, quantity supplied is zero.
34. A drug interdiction program that successfully reduces the supply of illegal drugs in the United States likely will
A.
raise the price, reduce the quantity, decrease total revenues, and decrease crime.
B.
lower the price, increase the quantity, increase total revenues, and increase crime.
C.
raise the price, increase the quantity, decrease total revenues, and increase crime.
D.
raise the price, reduce the quantity, increase total revenues, and increase crime.
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