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100
Suppose that, following a decrease in the supply of good X, we observe that the price of good Y decreases. If no other curves have shifted, which of the following can we infer?
a. Good X is an inferior good.
b. Goods X and Y are complements.
c. Goods X and Y are substitutes.
d. None of the above.
b. Goods X and Y are complements.
100
In recent years there have been a couple of high profile cases of contamination of baby formula produced in China. As a result, many Chinese parents buy baby formula that is produced outside China. Which of the following accurately describes the likely effect of this on baby formula prices?
a. An increase in the price of baby formula produced in China and a decrease in the price of baby formula produced outside China.
b. A decrease in the price of baby formula produced in China and an increase in the price of baby formula produced outside China.
c. A decrease in the price of both baby formula produced in China and baby formula produced outside China.
d. An increase in the price of both baby formula produced in China and baby formula produced outside China.
b. A decrease in the price of baby formula produced in China and an increase in the price of baby formula produced outside China.
100
What is the equilibrium price?
$6 per a unit
100
A price ceiling leads to a increase in the quantity supplied.
TRUE OR FALSE
FALSE
A price ceiling leads to a decrease in the quantity supplied.
100
A supply curve shows the relation between the quantity of a good supplied and
A. the price of the good. Usually a supply curve has negative slope.
B. income. Usually a supply curve has positive slope.
C. income. Usually a supply curve has negative slope.
D. the price of the good. Usually a supply curve has positive slope.
D. the price of the good. Usually a supply curve has positive slope.
200
Assume that people like onions on their hamburgers. If the supply of hamburgers decreases, the demand for onions will most likely
a. remain unchanged because hamburgers are different goods
b. increase because hamburgers and onions are substitutes
c. increase because hamburgers and onions are complements
d. decrease because hamburgers and onions are complements
e. decrease because hamburgers and onions are substitutes
d. decrease because hamburgers and onions are complements
200
Which of the following definitely causes a fall in the equilibrium price?
A. a decrease in both demand and supply
B. an increase in demand combined with a decrease in supply
C. a decrease in demand combined with an increase in supply
D. an increase in both demand and supply
C. a decrease in demand combined with an increase in supply
200
Which of the following will lead to an decrease in the equilibrium price of product “X”? A(n)
a. increase in consumer incomes if product “X” is an inferior good
b. increase in the price of machinery used to produce product “X”
c. the production of good “X” is found to be bad for the environment
d. decrease in the price of good “Y” (a substitute for good “X”)
e. expectation by consumers that the price of good “X” is going to fall
c. the production of good “X” is found to be bad for the environment
200
A change in the price of a good
A. shifts the good's demand curve but does not cause a movement along it.
B. does not shift the good's demand curve but does cause a movement along it.
C.shifts the good's demand curve and also causes a movement along it.
D. neither shifts the good's demand curve nor causes a movement along it.
B. does not shift the good's demand curve but does cause a movement along it.
200
Which of the following CANNOT reduce the equilibrium quantity sold in a market?
a) A price ceiling.
b) A price floor.
c) A quota.
d) All of the above can decrease equilibrium quantity sold.
d) All of the above can decrease equilibrium quantity sold.
300
The law of demand says that a higher price for a good or service leads people to demand a greater quantity of that good or service.
TRUE OR FALSE
False
A higher price for a good or service leads people to demand a smaller quantity of that good or service
300
At a price of $8, there is:
a) Excess demand (a shortage) of 25 units.
b) Excess demand (a shortage) of 15 units.
c) Excess supply (a surplus) of 15 units.
d) Excess supply (a surplus) of 25 units.
d) Excess supply (a surplus) of 25 units.
300
If the government introduces a minimum wage law set at $9 per hour, then, in the new equilibrium, which of the following statements is TRUE?
I. There will be 11,000 workers willing to work who cannot find work, given the wage.
II. The number of workers employed will decrease by 11,000.
III. The number of workers that employers are prepared to hire will decrease by 5,000.
a. I only.
b. I and II only.
c. I, II, and III.
d. I and III only.
d. I and III only.
300
When a price floor is imposed, it has an impact on a market if it is set
a. below the equilibrium price
b. at the equilibrium price
c. above the equilibrium price because quantity demanded exceeds quantity supplied
d. above the equilibrium price because quantity supplied exceeds quantity demanded
e. below the equilibrium price because quantity demanded exceeds quantity supplied
d. above the equilibrium price because quantity supplied exceeds quantity demanded
300
Producers of Walkmans will be able to lower the wage rate that they pay to their workers. Walkman Watch asks you to predict the effects on the supply of Walkmans, and the price of a Walkman. You predict that the supply curve shifts
A. leftward, and the price is constant.
B. rightward, and the price falls.
C. leftward, and the price rises.
D. rightward, and the price is constant.
C. leftward, and the price rises.
400
If cookies are a normal good and incomes increase, we would expect:
a. An increase in equilibrium price and a decrease in equilibrium quantity.
b. A decrease in equilibrium price and an increase in equilibrium quantity.
c. A decrease in equilibrium price and equilibrium quantity.
d. An increase in equilibrium price and equilibrium quantity.
d. An increase in equilibrium price and equilibrium quantity.
400
The quantity supplied of a good or service is the quantity that a producer
A. actually sells at a particular price during a given time period.
B. should sell at a particular price during a given time period.
C. is willing to sell at a particular price during a given time period.
D. needs to sell at a particular price during a given time period.
C. is willing to sell at a particular price during a given time period.
400
Which of the following will result in a DECREASE in demand (i.e., a leftward shift of the demand curve)?
a. An increase in income, if the good is normal.
b. A decrease in the price of a complement to the good.
c. An increase in the price of a substitute for the good.
d. None of the above
d. None of the above
400
If the government imposes a price ceiling of $1 per gallon on gas, which of the following will result?
a. a surplus of 6 billion gallons
b. a shortage of 6 billion gallons
c. a surpluss of 12 billion gallons
d. a shortage of 12 billion gallons
e. neither a surplus nor a shortage because the price ceiling would not be effective
b. a shortage of 6 billion gallons
400
Following a prolonged power outage, the price of flashlights normally increases significantly. If cities passed laws prohibiting price increases for flashlights, during power outages such laws would most likely
a. make flashlights more available
b. create a shortage of flashlights
c. shift the demand curve for flashlights to the left
d. shift the supply curve for flashlights to the left
e. have no effect on the availability of flashlights
b. create a shortage of flashlights