CH 4. Name: Class: Date: Multiple Choice Identify the choice that best completes the statement or answers the question.

Transcription

1 Class: Date: CH 4 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. A market is defined as a. a physical place where people buy only goods. b. a physical place where people buy both goods and services. c. a store where people buy physical goods. d. any arrangement that brings buyers and sellers together. e. a place where one good is bartered for another. 2. Which of the following statements is true about a competitive market? A competitive market a. must have a physical location. b. includes markets for goods and services but not for inputs. c. has so many buyers and sellers that no one can influence the price. d. has one seller competing to sell his or her product. e. has a handful of sellers but always has many buyers. 3. The market demand curve for mangos is a. the same as the demand curve of one buyer. b. upward sloping because rich people can afford more mangos than poor people can buy. c. the horizontal sum of the individual demand curves of all the buyers. d. the vertical sum of the individual demand curves of all the buyers. e. the horizontal average of the individual demand curves of all the buyers. 4. The market demand curve for mousetraps is a. found by summing the quantities of mousetraps demanded at each income level by each buyer. b. found by summing the prices of mousetraps at each quantity of mousetraps demanded by each buyer. c. the horizontal sum of the individual demand curves for mousetraps of all the buyers. d. Both answers B and C are correct. e. Both answers A and C are correct. 5. Which of the following increases the demand for a good or service? a. a fall in the price of the good or service b. a smaller number of consumers wanting to buy the good or service c. a rise in the price of the good or service d. a rise in the price of a substitute good or service e. a rise in the price of a complement 6. Consider the market for cellular phones. Which of the following shifts the demand curve rightward? a. an increase in the price of cellular phones b. a decrease in the price of cellular phones c. an increase in the price of regular phone service, a substitute for cellular phones d. a decrease in the number of cellular phone buyers e. an increase in the supply of cellular phones. 1

2 7. Car insurance and cars are complements. If the price of car insurance increases, the a. demand for cars decreases. b. demand for cars increases. c. quantity of cars demanded decreases. d. quantity of cars demanded increases. e. More information is needed to determine if the demand increases or decreases. 8. Consider the market for cellular phones. Which of the following shifts the demand curve leftward? a. studies showing using cellular phones can cause brain cancer b. a decrease in the price of cellular phones c. a decrease in the quantity demanded of cellular phones d. an increase in the services provided by cellular phones, such as text messaging e. an increase in the price of cellular phones 9. Scooters are a normal good and buyers' incomes decrease. Which of the figures above best illustrates how this change affects the demand curve for scooters? a. Figure A b. Figure B c. Figure C d. Figure D e. None of the above answers is correct because the decrease in income will affect the supply curve not the demand curve. 2

3 10. In the above figure, will shift in the demand curve from D to D1. a. an increase in income if pizza is an inferior good b. a decrease in the price of a sub sandwich, a substitute for pizza c. buyers' expectation that pizza will be less expensive next week d. a scientific article published that demonstrates eating pizza is good for one's health e. a fall in the cost of producing pizza 11. If the demand for digital cameras increases when consumers' incomes rise, then digital cameras are a. a normal good. b. an inferior good. c. a substitute for film cameras. d. a complement to film cameras. e. made using advanced technology. 12. The quantity supplied of a good or service is the a. list of all quantities at different prices, as illustrated by a supply schedule and a supply curve. b. list of all quantities at different prices, as illustrated by a demand schedule and a demand curve. c. one quantity produced at a variety of prices. d. quantity produced at one price. 13. A supply curve differs from a supply schedule because a supply curve a. holds the number of suppliers constant, whereas the supply schedule allows the number to vary. b. holds resource prices constant, whereas the supply schedule allows them to vary. c. is a graph and the supply schedule is a table. d. represents one firm, whereas the supply schedule represents all firms in the market. e. represents all firms in the market, whereas the supply schedule represents one firm. 14. Which of the following results in an increase in the supply of a good or service? a. a fall in the price of the good or service b. a smaller number of sellers producing the good or service c. an increase in foreign imports of the good or service d. higher taxes imposed upon producers of the good or service e. a rise in the price of the good or service 3

4 15. Suppose over the next several years the productivity of firms producing electric cars improves dramatically. The advance in productivity leads to a. a decrease in the supply of electric cars so that the supply curve shifts leftward. b. a decrease in the supply of electric cars so that the supply curve shifts rightward. c. an increase in the supply of electric cars so that the supply curve shifts leftward. d. an increase in the supply electric cars so that the supply curve shifts rightward. e. no change in the supply of electric cars, only a change in the quantity supplied of electric cars. 16. In the above figure, the movement from point a to point b reflects a. an increase in the price of pizza. b. an increase in the supply of pizza. c. an increase in the number of producers of pizza. d. a decrease in the cost of the tomato sauce used to produce pizza. e. a decrease in income if pizza is a normal good. 17. In the above figure, the shift in the supply curve from S to S2 might reflect a. a decrease in the cost of the tomato sauce used to produce pizza. b. a decrease in the number of pizza producers. c. an increase in the price of a pizza. d. an increase in income if pizza is a normal good. e. an increase in the price of a good that is a substitute for consumers. 18. When there is a surplus of snowboards, the a. demand for snowboards is greater than the supply of snowboards. b. supply of snowboards is greater than the demand for snowboards. c. quantity of snowboards demanded is greater than the quantity of snowboards supplied. d. quantity of snowboards supplied is greater than the quantity of snowboards demanded. e. the price rises to restore the equilibrium. 19. Suppose the market price of a pound of steak is $12 per pound and the equilibrium price is $9 per pound. In this case, there is a a. shortage, so the price falls and quantity demanded increases. b. surplus, so the price falls and quantity demanded increases. c. shortage, so the price rises and quantity demanded decreases. d. surplus, so the price rises and quantity demanded increases. e. surplus, so the price falls and quantity supplied increases. 4

5 20. The table above shows the situation in the gasoline market in Tulsa, Oklahoma. If the price of a gallon of gasoline is $1.73, then a. there is a surplus of gasoline in Tulsa. b. there is a shortage of gasoline in Tulsa. c. the gasoline market in Tulsa is in equilibrium. d. without more information we cannot determine if there is a surplus, a shortage, or an equilibrium in the gasoline market in Tulsa. e. there is neither a surplus nor a shortage but the market is NOT in equilibrium. 21. Some experts have suggested that of the total electricity consumed in the United States, 8 percent is used up by the Internet. Thus an increased demand by consumers to surf the Internet will the equilibrium price of electricity and the equilibrium quantity of electricity. a. raise; increase b. raise; decrease c. lower; increase d. lower; decrease e. not change; increase 22. Bagels and cream cheese are complementary goods. Suppose that the price for flour, which is used to produce bagels, increases. The equilibrium price of cream cheese and the equilibrium quantity of cream cheese. a. rises; decreases b. rises; increases c. falls; decreases d. does not change; does not change e. falls; increases 23. Suppose that the price of flour used to produce bagels increases. Hence the equilibrium price of a bagel and the equilibrium quantity. a. rises; increases b. rises; decreases c. falls; increases d. falls; decreases e. does not change; does not change 5

6 24. A construction boom occurs and many of the new buildings need plywood for their framing. Which of the figures above best illustrates this change? a. Figure A b. Figure B c. Figure C d. Figure D e. Figure A or Figure C 25. Contractors can use plywood or brick to construct walls. Suppose the price of bricks increases. Which of the figures above best illustrates the effect of this change on the market for plywood? a. Figure A b. Figure B c. Figure C d. Figure D e. Figure A or Figure C depending on how contractors react to the higher price of bricks. 26. Both the demand for and supply of cars changes in France. You observe that the quantity of cars does not change but the price rises. Thus, which of the following occurred? a. Demand and supply increased by an equal amount. b. Demand and supply decreased by an equal amount. c. Demand increased and supply decreased by an equal amount. d. Demand decreased and supply increased by an equal amount. e. Demand increased by a larger magnitude than supply decreased. 6

7 27. If the demand curve for desktop computers shifts rightward and at the same time the supply curve shifts leftward, then a. the equilibrium quantity definitely increases. b. the equilibrium quantity definitely decreases. c. the equilibrium quantity definitely remains the same. d. More information is needed to determine the effect on the equilibrium quantity. e. the equilibrium price definitely falls. 28. Consider the market for wheat. If there is an improvement in harvesting technology, a. the supply curve for wheat shifts rightward. b. the demand curve for wheat shifts rightward. c. there is a movement up along the demand curve. d. the equilibrium price rises. e. the demand curve for wheat shifts leftward. 29. A change in the demand for apples could result from any of the following EXCEPT a. a change in the number of buyers. b. increased preferences for fresh fruit consumption for health reasons. c. a change in the price of an apple. d. a change in the price of a banana. e. a change in income. 30. Which of the following statements is correct? a. The term "inferior good" means the good is substandard. b. The quantity demanded of an inferior good increases as its price increases. c. Inferior goods are complements to higher priced goods. d. As buyers' incomes decrease, the demand for inferior goods increases. e. Inferior goods are defined to be substitutes for higher priced goods. 31. Suppose that scooters gained immense popularity with older people as well as school-age children. This gain in popularity best reflects which of the following influences on buying plans? a. the price of a substitute good b. income c. expectations d. preferences e. the price of a complement good 32. The table above gives the demand schedule for lattes at the Bottomless Cup. If the price of a latte is $3, then the quantity of lattes demanded is an hour. a. 90 b. 30 c. 80 d. 60 e

8 33. The graph illustrates the demand for peanuts. Peanuts are a normal good because the a. demand curve for peanuts slopes downward. b. demand for peanuts increases when income increases. c. demand for peanuts increases when the price of one of its substitutes rises. d. peanuts have both substitutes and complements. e. demand curve shows that if the price of peanuts rises, there is a movement along the demand curve to a lower quantity demanded. 34. One reason the demand for laptop computers might increase is a a. decrease in the price of a laptop computers. b. decrease in price of desktop computers. c. a change in preferences as laptops have become more portable, with faster processors and larger hard drives. d. poor quality performance record for laptop computers. e. a decrease in income if laptops are a normal good. 35. When moving along a demand curve, which of the following changes? a. the consumers' incomes b. the prices of other goods c. the number of buyers d. the price of the good e. the consumers' preferences 36. Pizza and tacos are substitutes, and the price of a pizza increases. Which of the following correctly indicates what happens? a. The demand for pizzas decreases, and the demand for tacos increases. b. The demand for both goods decreases. c. The quantity of tacos demanded increases and the quantity of pizza demanded decreases. d. The quantity of pizza demanded decreases and the demand for tacos increases. e. The demand for each decreases because both are normal goods. 8

9 37. Which of the following results in a rightward shift of the supply curve of rutabagas? (A rutabaga is a potato-like vegetable.) a. an increase in the price of a rutabaga b. an exceptionally cold summer that killed much of the rutabaga crop c. a fall in the price of fertilizer used to grow rutabagas d. Both answers A and C result in a rightward shift in the supply curve of rutabagas. e. Both answers A and B result in a rightward shift in the supply curve of rutabagas. 38. One reason supply curves have an upward slope is because a. increased supply will require increased technology. b. people will pay a higher price when less is supplied. c. a higher price brings a greater profit, so firms want to sell more of that good. d. to have more of the good supplied requires more firms to open. e. None of the above answers is correct because supply curves have a downward slope. 39. The graph illustrates the supply of sweaters. Which of the following events will increase the supply of sweaters? a. a rise in the price of a sweater b. a rise in the wage rate paid to the workers who make sweaters c. a rise in the expected future price of a sweater d. an increase in the number of sellers of sweaters e. an increase in income if sweaters are a normal good 9

10 40. The graph illustrates the supply of sweaters. A fall in the price of sweaters brings a. a movement along the supply curve. b. a decrease in the quantity supplied of sweaters. c. a shift of the supply curve. d. Both answers A and B are correct. e. Both answers B and C are correct. 41. Market equilibrium occurs when a. the quantity demanded equals the quantity supplied. b. the market is changing rapidly. c. other things remain the same. d. buyers get the lowest possible price. e. everyone who wants the good gets the quantity he or she wants. 42. For consumers, taco chips and salsa are complements. If the price of salsa rises, what is the effect on the equilibrium price and quantity of taco chips? a. The equilibrium price of taco chips falls and the equilibrium quantity decreases. b. The equilibrium price of taco chips rises and the equilibrium quantity decreases. c. There is no change in the equilibrium price of taco chips and the equilibrium quantity increases. d. The equilibrium price of taco chips could rise, fall, or stay the same and the equilibrium quantity increases. e. The equilibrium price of taco chips rises and the equilibrium quantity increases. 10

11 43. If a freeze destroys oranges before they are harvested, the equilibrium price of an orange and the equilibrium quantity. a. rises; increases b. rises; decreases c. falls; increases d. falls; decreases e. does not change; decreases 44. The number of buyers of ceiling fans increases. This increase leads to an increase in the a. quantity of ceiling fans demanded and a surplus of ceiling fans. b. demand for ceiling fans and a rise in the price of a ceiling fan. c. demand for ceiling fans and a surplus of ceiling fans. d. supply of ceiling fans and no change in the price of a ceiling fan. e. demand for ceiling fans and in the supply of ceiling fans. 45. The technology associated with manufacturing computers has advanced enormously. This change has led to the price of a computer and the quantity. a. rising; increasing b. rising; decreasing c. falling; increasing d. falling; decreasing e. falling; not changing 46. The graph illustrates the market for bottled water. If the producers of bottled water switch to using improved technology, then the a. supply of bottled water decreases. b. quantity demanded of bottled water increases. c. quantity demanded of bottled water does not change. d. price of bottled water rises. e. supply curve shifts leftward. 11

12 47. Suppose that the price of lettuce used to produce tacos increases. As a result, the equilibrium price of a taco and the equilibrium quantity. a. rises; increases b. rises; decreases c. falls; increases d. falls; decreases e. does not change; decreases 48. Candy makers accurately anticipate the increase in demand for candy for Halloween so that the supply and demand for candy increase the same amount. As a result, the price of candy and the quantity. a. rises; does not change b. falls; increases c. does not change; increases d. does not change; does not change e. rises; increases 49. The graph illustrates the market for British pounds, the currency of the United Kingdom. As the number of buyers of pounds increases and the number of sellers of pounds increases, the equilibrium price of a pound a. will rise. b. will fall. c. will remain the same. d. might rise, fall, or remain the same depending on whether the effect on buyers is larger than, less than, or the same as the effect on sellers. e. None of the above answers is correct. 12

13 50. During 2003 the supply of petroleum decreased while at the same time the demand for petroleum increased. If the magnitude of the increase in demand was greater than the magnitude of the decrease in supply, then the equilibrium price of gasoline and the equilibrium quantity. a. increased; increased b. increased; decreased c. increased; did not change d. decreased; did not change e. did not change; increased 13