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1. Michelle is shopping for shirts. She chooses one, then notices that the shirts are on sale, and gets
another two shirts. How can you explain this with a graph?
2. Jenn's parents increase her allowance, so she spends more money on candy every week. How can you
explain this with a graph?
3. Kris and Tim's demand curves for playing cards looks like this:
Who wants more when the price is $3 a pack?
4. Which of the following are complementary goods, and which are substitute goods?
Right and left shoes?
Sweaters and sweatshirts?
Hot dogs and ketchup?
Chips and salsa?
5. In a competitive market for corn, the law of demand indicates that, other things equal, as:
A)
the demand for corn decreases, the price will increase.
B)
income decreases, the quantity of corn demanded will increase.
C)
the price of corn decreases, the quantity of corn demanded will increase.
D)
the price of corn decreases, the quantity of corn demanded will decrease.
6. Which is most consistent with the law of demand?
A)
A decrease in the price of pizza causes a decrease in the quantity of pizza demanded.
B)
A decrease in the price of automobiles causes no change in the quantity of tires demanded.
C)
An increase in the price of heating oil causes a decrease in the quantity of heating oil
demanded.
D)
An increase in the price of gasoline causes a decrease in the quantity of sport utility vehicles
demanded.
7. When the price of one fruit increases, consumers buy more of another fruit. This situation is an
illustration of:
A)
the income effect.
B)
the substitution effect.
C)
diminishing marginal utility.
D)
the rationing function of prices.
8. A point on a demand curve indicates:
A)
the ratio of the selling price to the buying price.
B)
a particular price and the corresponding quantity demanded by consumers.
C)
a combination of two consumer goods which buyers will choose at given prices.
D)
a situation where the buying and selling decisions of consumers and producers are consistent.
9. Which will not cause the supply curve to shift?
A)
a change in resource costs
B)
a technological change
C)
a change in the price of the good
D)
a change in the prices of other goods
10. If average income increases, then there will be:
A)
a shift of the demand curve.
B)
a movement along the demand curve.
C)
a movement along and a shift in the demand curve.
D)
no effect on the demand curve
11. Which would be a likely cause of an increase in the price of pizza?
A)
a decreased interest in take-out and fast-food dining
B)
a decrease in the price of hamburgers, a substitute food
C)
an increase in the price of cheese, a complement
D)
a health report showing eating pizza reduces stress
12. Which will not cause the demand curve for good A to shift?
A)
a change in the price of A
B)
a change in the price of B, a complement
C)
a change in the price of C, a substitute
D)
an increase in average income
P
Price (per pound)
$5
4
a
3
b
2
1
D2
D3
2
8 10 12 14 16 18 20
Quantity demanded
(thousands of bushels per week)
4
6
D1
Q
13.
Refer to the above diagram, which shows three demand curves for coffee. Which would cause the change
in the demand for coffee illustrated by the shift from D1 to D2?
A)
a decrease in the price of tea
B)
an increase in consumer incomes
C)
an increase in the price of sugar
D)
a technological improvement in the production of coffee
14. Refer to the above diagram, which shows three demand curves for coffee. Which would cause the
change in the demand for coffee illustrated by the shift from D1 to D3?
A)
a decrease in the price of tea
B)
an increase in consumer incomes
C)
a decrease in the price of sugar
D)
a technological improvement in the production of coffee
15. Suppose that goods A and B are close substitutes and the price of good B falls. We would then expect
an:
A)
increase in the demand for good A and the quantity demanded for good B.
B)
increase in the demand for good A and a decrease in the quantity demanded for good B.
C)
increase in the quantity demanded of good B and a decrease in the demand for good A.
D)
increase in the demand for goods A and B.
16. Which factor will increase the demand for a product?
A)
an unfavorable report on the value of the product
B)
an increase in the price of a substitute product
C)
an increase in the price of a complementary product
D)
a decrease in the number of buyers
17. If service stations raise the price of gasoline and experience a decrease in demand for automobile tires,
then gasoline and tires are:
A)
substitute goods.
B)
economic goods.
C)
inferior goods.
D)
complementary goods.
18. If the price of hamburger buns increases, the demand for ground beef is predicted to:
A)
increase.
B)
decrease.
C)
remain constant.
D)
shift to the right.
19. If a change in tastes is in favor of a commodity, that will mean a:
A)
shift in the whole demand curve to the right.
B)
shift in the whole demand curve to the left.
C)
movement down the demand curve.
D)
movement up the demand curve.
20. Which would cause a decrease in the quantity of computers supplied?
A)
an increase in the demand for computers
B)
a decrease in the demand for computers
C)
an increase in the incomes of consumers
D)
a decrease in the price of parts for making computers