Download Practice Problems Answers

1. An increase in demand will shift the demand curve in which direction? Explain and graph.
Up and to the right
2. A decrease in demand will shift the demand curve in which direction? Explain and graph.
Down & to the left
3. Which of the following represents a trade-off faced by every day society?
A. How should we produce?
B. Which goods and services
should be produced?
C. Who gets the goods and
services?
D. All of the above.
4. If the government decides to cut domestic spending in order to spend on rebuilding Iraq, this is
an example of:
A. A positive economic
C. A tax surplus in the economy.
statement.
D. How to maximize the GDP.
B. Tradeoffs faced by the U.S.
5. A garage sale is an example of a market because:
A. There is no sales tax.
B. It brings interested buyers together with the sellers to trade.
C. It is in your neighborhood.
D. It is easy to set up.
6. Taxes on food items will:
A. Provide little revenue to the government.
B. Be deemed unconstitutional.
C. Make people want to consume more food.
D. Give consumers an incentive to switch to less expensive and untaxed
commodities.
7. Society faces trade-offs because of:
A. Greedy corporations.
B. Scarcity.
C. Faceless bureaucrats.
D. Government regulations.
8. Demand for a good is NOT influenced by:
A. The price of other goods.
B. The income of the consumer.
C. The number of sellers in the market.
D. Consumer tastes and preferences.
9. The demand curve will NOT shift if:
A. The number of buyers
decreases.
B. Consumers prefer less of the
product.
C. A substitute product is
available for a lower cost.
D. The price of the product
decreases by 20%.
10. A ban on foreign firms from selling in the domestic market will:
A. Cause the supply curve to shift to the right.
B. Cause the supply curve to shift to the left.
C. Have no effect on the domestic market.
D. Cause domestic producers competing with the imports to face huge losses.
11. A ban on steel imports will:
A. Increase sales of domestic steel.
B. Decrease demand for domestic steel.
C. Force layoffs in the domestic steel industry
D. Cause a shortage of steel.
12. Imposing minimum wage requirements in a less developed country that are the same as in the
United States would result in:
A. A decrease in employment and a reduction in output in the less developed country.
B. An increase in employment opportunities.
C. No changes.
D. An increase in the out put produced.
13. As the price of a good increases, the change in the quantity demanded can be shown by? Explain
and graph. Moving up along the same demand curve.
14. As the price of a good decreases, the change in the quantity demanded can be shown by? Explain
and graph. Moving down along the same demand curve.
15. Equilibrium is defined as a situation in which:
A. Neither buyers nor sellers want to change their behavior.
B. Suppliers will supply any amount that buyers wish to buy.
C. Demand curves are perfectly horizontal.
D. No government regulations exist.
16. Suppose the demand curve for a good shifts rightward, causing the price to increase. This increase
in the price of the good results in:
A. An increase in quantity supplied.
B. A rightward shirt of the supply curve.
C. A leftward movement along the supply curve.
D. A leftward shirt of the supply curve.
17. An increase in supply will shift the supply curve in which direction? Explain and graph. Down &
to the right
18. A decrease in supply will shift the supply curve in which direction? Explain and graph. Up & to
the left
19. A rightward shift of the supply curve will lead to a(n):
A. Decrease in equilibrium price.
B. Increase in quantity demanded.
C. Excess supply at the old equilibrium price.
D. All of the above.
20. If pizza and tacos are substitutes, a decrease in the price of tacos would lead to a:
A. Decrease in the price of pizza.
B. Decrease in the demand curve for pizza.
C. Decrease in the quantity demanded of pizza.
D. All of the above.