Download Unit 1 Practice

#1
•
The law of demand states that:
A. as the price of a good increases, more units are
demanded.
B. there is a direct relationship between the price of
a good and the quantity of the good produced.
C. there is a negative relationship between the price
of a good and the quantity of the good
demanded.
D. there is an increase in the need for a good as the
price of the good increases.
#2
•
A decrease in quantity demanded is
given by a(n):
A. downward shift of the demand curve.
B. upward shift of the demand curve.
C. downward movement to the right along the
demand curve.
D. upward movement to the left along the demand
curve.
E. downward shift of both demand and supply
curves
#3
•
At a price of $5, Sam buys 10 units of a
product; when the price increases to $6, Sam
buys 8 units. Martha says Sam’s demand has
decreased. Is Martha correct?
A. Yes, Martha is correct. Sam’s demand has decreased.
B. No, Martha is incorrect. Sam’s demand has increased.
C. No, Martha is incorrect. Sam’s quantity demanded has
decreased, and his demand has not changed.
D. No, Martha is incorrect. Sam’s quantity demanded has
increased, and his demand
has increased.
E. No, Martha is incorrect. Sam’s demand has increased, and
his quantity demanded
has decreased.
#4
•
Which of the following best represents the
effects of a decrease in the price of tomato
juice, other things being equal?
A. An upward movement along the demand curve for
tomato juice.
B. A downward movement along the demand curve for
tomato juice.
C. A rightward shift in the demand curve for tomato
juice.
D. A leftward shift in the demand curve for tomato
juice.
#5
Price
per unit
(dollars)
D2
D1
Quantity
• In the graph, the shift in the line from D1 to
D2 could have been caused by which of
the following?
– Decrease in price.
– Decrease in expected future prices.
– Increase in the price of a substitute.
– Increase in the price of a complement.
– Decrease in income if it is a normal good.
#6
Price
per unit
(dollars)
D2
D1
Quantity
•
In Exhibit 2, which of the following could
not have caused the shift in the line from
D1 to D2?
–
–
–
–
–
Decrease in the number of consumers.
Increase in expected future prices.
Increase in the price of a substitute.
Decrease in the price of a complement.
Increase in income.
#7
•
A.
B.
C.
D.
E.
Which of the following pairs of goods
would be considered substitutes?
Milk and cookies.
Tires and automobiles.
Ink and pens.
Coca-Cola and Pepsi.
Computers and computer software.
#8
If two goods are substitutes in consumption,
a(n):
A. decrease in the price of one product will cause an increase in the demand
for the
other product.
B. decrease in the price of one product will cause a decrease in the demand
for the
other product.
C. increase in the price of one product will cause an increase in the supply of
the
other product.
D. increase in the price of one product will cause a decrease in the supply of
the
other product.
E. increase in the price of one product will cause a decrease in the demand for
the
other product.
#9
Which of the following must be true if good X is a normal
good and income increases?
A. The demand for X will increase, and thus the price and
quantity sold and bought will decrease.
B. The demand for X will decrease, and thus the price and
quantity sold and bought will decrease.
C. The demand for X will increase, and thus the price and
quantity sold and bought will increase.
D. The demand for X will decrease, and thus the price and
quantity sold and bought will increase.
E. The demand for X will increase, and thus the price and
quantity sold and bought will remain the same.
#10
•
A.
B.
C.
D.
E.
Tasha decides that when homes in her
neighborhood are selling for $150,000 she will
not sell her home. When average prices rise to
$175,000, she decides that she will put her
home on the market. This is an example of:
market demand.
market-day supply.
an excess supply of homes.
a positively-sloped supply curve.
a negatively-sloped supply curve.
#11
•
Bill has $10 to spend on a Superman,
Batman, or an X-Men T-shirt. Bill buys
the Superman T-shirt and the Batman
shirt was a close second choice. What is
the opportunity cost?
A.
B.
C.
D.
The amount he spend, $10.
Nothing, since he got his preferred choice.
The Batman T-shirt.
The X-Men T-shirt.
#12
Any point on the production possibilities
curve illustrates:
A.
B.
C.
D.
minimum production combinations.
maximum production combinations.
economic growth.
a non-feasible production combination.
#13
As production of a good increases,
opportunity costs tend to rise because:
A.
B.
C.
D.
there will be more inefficiency.
people always prefer having more goods.
of inflationary pressures.
workers are not equally suited to all tasks.
Exhibit 6 Production possibilities curve
C
400
#14
A
Cars
(millions
per year)
300
B
200
D
100
0
100
200
300
400
Grain
(millions of tons per year)
•
For the economy shown in Exhibit 6, which of the
following is true when the economy is at point A?
A.
B.
C.
D.
More cars are being produced than are needed.
There must be resources that are not being used fully.
Some car production must be foregone in order to produce
more grain in the same period.
Increased grain production would be impossible.
Exhibit 6 Production possibilities curve
C
400
#15
A
Cars
(millions
per year)
300
B
200
D
100
0
100
200
300
400
Grain
(millions of tons per year)
For the economy shown in Exhibit 6 to operate at
point C, it must:
A. be willing to lower the price of grain.
B. use its given resources more efficiently than it would
at point A.
C. experience resource unemployment.
D. experience an increase in its resources and/or an
improvement in its technology.
Exhibit 6 Production possibilities curve
C
400
#16
A
Cars
(millions
per year)
300
B
200
D
100
0
100
200
300
400
Grain
(millions of tons per year)
For the economy shown in Exhibit 6 to operate at
point B, it must:
A. be willing to lower the price of grain.
B. use its given resources more efficiently than it would
at point A.
C. experience resource unemployment.
D. experience an increase in its resources and/or an
improvement in its technology.
#1
•
The law of demand states that:
A. as the price of a good increases, more units are
demanded.
B. there is a direct relationship between the price of
a good and the quantity of the good produced.
C. there is a negative relationship between the price
of a good and the quantity of the good
demanded.
D. there is an increase in the need for a good as the
price of the good increases.
#2
•
A decrease in quantity demanded is
given by a(n):
A. downward shift of the demand curve.
B. upward shift of the demand curve.
C. downward movement to the right along the
demand curve.
D. upward movement to the left along the demand
curve.
E. downward shift of both demand and supply
curves
#3
•
At a price of $5, Sam buys 10 units of a product; when
the price increases to $6, Sam buys 8 units. Martha
says Sam’s demand has decreased. Is Martha
correct?
A.
B.
Yes, Martha is correct. Sam’s demand has decreased.
No, Martha is incorrect. Sam’s demand has increased.
C. No, Martha is incorrect. Sam’s quantity demanded has
decreased, and his demand has not changed.
D.
E.
No, Martha is incorrect. Sam’s quantity demanded has increased,
and his demand
has increased.
No, Martha is incorrect. Sam’s demand has increased, and his
quantity demanded
has decreased.
#4
•
Which of the following best represents the
effects of a decrease in the price of tomato
juice, other things being equal?
A. An upward movement along the demand curve for
tomato juice.
B. A downward movement along the demand curve for
tomato juice.
C. A rightward shift in the demand curve for tomato
juice.
D. A leftward shift in the demand curve for tomato
juice.
#5
Price
per unit
(dollars)
D2
D1
Quantity
•
In the graph, the shift in the line from D1
to D2 could have been caused by which
of the following?
A.
B.
C.
D.
E.
Decrease in price.
Decrease in expected future prices.
Increase in the price of a substitute.
Increase in the price of a complement.
Decrease in income if it is a normal good.
#6
Price
per unit
(dollars)
D2
D1
Quantity
•
In Exhibit 2, which of the following could
not have caused the shift in the line from
D1 to D2?
A.
B.
C.
D.
E.
Decrease in the number of consumers.
Increase in expected future prices.
Increase in the price of a substitute.
Decrease in the price of a complement.
Increase in income.
#7
•
A.
B.
C.
D.
E.
Which of the following pairs of goods
would be considered substitutes?
Milk and cookies.
Tires and automobiles.
Ink and pens.
Coca-Cola and Pepsi.
Computers and computer software.
#8
If two goods are substitutes in
consumption, a(n):
A. decrease in the price of one product will cause an increase in the
demand for the other product.
B. decrease in the price of one product will cause a
decrease in the demand for the other product.
C. increase in the price of one product will cause an increase in the
supply of the other product.
D. increase in the price of one product will cause a decrease in the
supply of the other product.
E. increase in the price of one product will cause a decrease in the
demand for the other product.
#9
Which of the following must be true if good X is a normal
good and income increases?
A. The demand for X will increase, and thus the price and
quantity sold and bought will decrease.
B. The demand for X will decrease, and thus the price and
quantity sold and bought will decrease.
C. The demand for X will increase, and thus the
price and quantity sold and bought will increase.
D. The demand for X will decrease, and thus the price and
quantity sold and bought will increase.
E. The demand for X will increase, and thus the price and
quantity sold and bought will remain the same.
#10
•
A.
B.
C.
D.
E.
Tasha decides that when homes in her
neighborhood are selling for $150,000 she will
not sell her home. When average prices rise to
$175,000, she decides that she will put her
home on the market. This is an example of:
market demand.
market-day supply.
an excess supply of homes.
a positively-sloped supply curve.
a negatively-sloped supply curve.
#11
•
Bill has $10 to spend on a Superman,
Batman, or an X-Men T-shirt. Bill buys
the Superman T-shirt and the Batman
shirt was a close second choice. What is
the opportunity cost?
A.
B.
C.
D.
The amount he spend, $10.
Nothing, since he got his preferred choice.
The Batman T-shirt.
The X-Men T-shirt.
#12
Any point on the production possibilities
curve illustrates:
A.
B.
C.
D.
minimum production combinations.
maximum production combinations.
economic growth.
a non-feasible production combination.
#13
As production of a good increases,
opportunity costs tend to rise because:
A.
B.
C.
D.
there will be more inefficiency.
people always prefer having more goods.
of inflationary pressures.
workers are not equally suited to all tasks.
Exhibit 6 Production possibilities curve
C
400
#14
A
Cars
(millions
per year)
300
B
200
D
100
0
100
200
300
400
Grain
(millions of tons per year)
•
For the economy shown in Exhibit 6, which of the
following is true when the economy is at point A?
A.
B.
C.
D.
More cars are being produced than are needed.
There must be resources that are not being used fully.
Some car production must be foregone in order to produce
more grain in the same period.
Increased grain production would be impossible.
Exhibit 6 Production possibilities curve
C
400
#15
A
Cars
(millions
per year)
300
B
200
D
100
0
100
200
300
400
Grain
(millions of tons per year)
For the economy shown in Exhibit 6 to operate at
point C, it must:
A. be willing to lower the price of grain.
B. use its given resources more efficiently than it would
at point A.
C. experience resource unemployment.
D. experience an increase in its resources and/or an
improvement in its technology.
Exhibit 6 Production possibilities curve
C
400
#16
A
Cars
(millions
per year)
300
B
200
D
100
0
100
200
300
400
Grain
(millions of tons per year)
For the economy shown in Exhibit 6 to operate at
point B, it must:
A. be willing to lower the price of grain.
B. use its given resources more efficiently than it would
at point A.
C. experience resource unemployment.
D. experience an increase in its resources and/or an
improvement in its technology.
Free Response 1
• Last year a very severe ice storm hit the north
counties of New York state, and the states of
Vermont and Maine. Electric poles were down
and no one had power for days. It was reported
that the price of kerosene heaters skyrocketed
and the number purchased increased during this
time. Using a supply and demand diagram,
show the impact of the ice storm on the market
for kerosene heaters.
•
Free Response 2
• Consumers can use either natural gas or
heating oil to warm their houses. Suppose
the price of natural gas increases. Use a
demand and supply diagram to show the
impact of the higher price of natural gas on
the market for home heating oil.
•
• The diagram above illustrates the market for apartments in Victoria,
British Columbia.
• a. If the current rent is $300 per month, is there a shortage or
surplus in the apartment market and how much is the shortage or
surplus?
• b.
What is the equilibrium rent and quantity of apartments?
Answers:
a. If the rent is $300 per month, there is a
shortage of 30,000 apartments.
b. The equilibrium rent is $400 per month
and the equilibrium quantity is 40,000
apartments.