Students Again

Question 1 (Multiple Choice)
According to the law of supply,

A) as the price of personal computers rises, producers of personal computers are willing and able to offer for sale a greater quantity of personal computers during a period of time.
B) as the price of personal computers rises, producers of personal computers are willing and able to offer for sale a lesser quantity of personal computers during a period of time.
C) as the price of personal computers rises, producers of personal computers will naturally hoard their supply of personal computers until prices stabilize.
D) as the price of personal computers declines, producers of personal computers are willing and able to offer for sale a greater quantity supply of personal computers during a period of time.
E) it would be too difficult to predict what suppliers of personal computers might do in response to an increase in the price of the good they sell.

Correct Answer: A

Question 2 (True/False)
An example of the term double coincidence of wants is a gardener who would like legal services and a lawyer who likes to do her own gardening in order to relax.

True
False

Correct Answer: false

Question 3 (Multiple Choice)
Barter refers to exchanges made

A) only with the use of money.
B) without the use of money.
C) barter does not exist in the U.S. economy.
D) only in underdeveloped countries.
E) within countries who are experiencing foreign currency exchange problems.

Correct Answer: B

Question 4 (True/False)
If there is a change in the price of a good, then the supply of that good will change.

True
False

Correct Answer: false

Question 5 (True/False)
If the demand curve for product J shifts to the left as the price of product K increases, then J and K are complementary goods.

True
False

Correct Answer: true

Question 6 (True/False)
A change in the quantity supplied is reflected by a shift of the supply curve.

True
False

Correct Answer: false

Question 7 (True/False)
According to the law of demand, when the price of a BMW or a Gucci purse increases, the quantity demanded for these goods will also increase because the goods have become more prestigious.

True
False

Correct Answer: false

Question 8 (Multiple Choice)
A market is in equilibrium when

A) equilibrium price equals equilibrium quantity.
B) the price is high.
C) the price is low.
D) government imposes price controls.
E) the demand and supply curves intersect.

Correct Answer: E

Question 9 (Multiple Choice)
Which of the following statements is true?

A) An increase in demand always means the same as an increase in quantity demanded.
B) Price and quantity demanded are positively related.
C) An increase in quantity demanded means a movement along a given demand curve.
D) An increase in demand means a movement along a given demand curve.
E) An increase in demand means that consumers will purchase less of a product at each possible price.

Correct Answer: C

Question 10 (Multiple Choice)
A demand schedule is

A) posted regularly outside of major supermarket chains.
B) posted regularly outside of New York Stock Exchange.
C) a table or list of the prices and the corresponding quantities demanded of a particular good or service.
D) not important when constructing a demand curve.
E) shows how the price of one good is inversely related to the price of another good.

Correct Answer: C

Question 11 (Multiple Choice)
If supply and demand for a good both decrease, which of the following is true?

A) Equilibrium price will rise, but we cannot say for sure what will happen to equilibrium quantity.
B) Equilibrium price will fall, but we cannot say for sure what will happen to equilibrium quantity.
C) Equilibrium quantity will rise, but we cannot say for sure what will happen to equilibrium price.
D) Equilibrium quantity will fall, but we cannot say for sure what will happen to equilibrium price.
E) Equilibrium price and equilibrium quantity will both fall.

Correct Answer: D

Question 12 (Multiple Choice)
Which of the following is not a determinant of demand?

A) Incomes
B) Tastes and Preferences
C) Prices of resources
D) Prices of complements
E) Consumers' expectations about future prices

Correct Answer: C

Question 13 (Multiple Choice)
The market demand curve, with price on the vertical axis and quantity on the horizontal axis, is determined by

A) adding individual demand curves in a horizontal direction.
B) adding individual demand curves in a vertical direction.
C) subtracting the demand for the product from the supply of the product.
D) adding the demand for the product and the supply of the product.
E) subtracting supply from demand at each price.

Correct Answer: A

Question 14 (Multiple Choice)
Markets

A) must be specialized.
B) must be general.
C) must consist of one buyer and one seller.
D) must consist of many buyers and many sellers.
E) can be organized either loosely or formally.

Correct Answer: E

Question 15 (Multiple Choice)
If the price of a cassette recorder is $36 and the price of a home computer is $1,800, then the relative price of a home computer is

A) .02 cassette recorders.
B) 50 cassette recorders.
C) .02 home computers.
D) 50 home computers.
E) $1,800.

Correct Answer: B

Question 16 (Multiple Choice)
Which of the following examples deals with the allocation of goods and services, with price, and with demand and supply?

A) Lodging in Phoenix may cost twice as much in the winter as in the summer.
B) Lodging in Colorado may cost much more in the winter than in the summer.
C) People will pay scalpers many times the face value of a ticket to a popular show.
D) Customers in a crowded restaurant may slip the headwaiter some money in order to be seated more quickly.
E) All of these.

Correct Answer: E

Question 17 (True/False)
At the equilibrium price, there is no pressure on price to rise or fall.

True
False

Correct Answer: true

Question 18 (Multiple Choice)
Which of the following goods are bought and sold in a market?

A) Food
B) Stocks
C) Foreign Goods
D) Drugs
E) All of the above

Correct Answer: E

Question 19 (Multiple Choice)
Suppose sales of a product depend directly on economic growth. If producers of that product expect an economic recession in the near future, there is likely to be

A) a rightward shift of the supply curve.
B) a movement to the left along the supply curve.
C) a leftward shift of the supply curve.
D) a movement to the right along the supply curve.
E) None of these.

Correct Answer: C

Question 20 (Multiple Choice)
New federal laws requiring that margarine producers change their labeling practices have driven up the price of margarine. The laws do not affect butter producers. Which of the following will happen?

A) The quantity demanded of margarine will decrease, and the demand for butter will increase.
B) The quantity demanded of margarine will increase, and the quantity demanded of butter will increase.
C) The quantity demanded of margarine will increase, and the demand for butter will increase.
D) The demand for margarine will increase, and the quantity demanded of butter will increase.
E) The demand for margarine will increase, and the demand for butter will increase.

Correct Answer: A

Question 21 (True/False)
If a basketball is priced at $12.00 and a sleeve of 3 golf balls is priced at $6.00, the relative price of one golf ball in terms of a basketball is 1/6 of a basketball.

True
False

Correct Answer: true

Question 22 (Multiple Choice)
When a shortage exists in a market,

A) the actual price is lower than the equilibrium price.
B) there is an excess quantity supplied.
C) consumers decrease the quantities they are willing and able to purchase.
D) suppliers will quit producing until the shortage disappears.
E) the actual price is greater than the equilibrium price.

Correct Answer: A

Question 23 (Multiple Choice)
Which of the following is a determinant of supply?

A) Incomes
B) Tastes and Preferences
C) Prices of complements
D) Prices of resources
E) Number of buyers

Correct Answer: D

Question 24 (Multiple Choice)
If farmers believe that it is more profitable to produce wheat than corn, we can expect

A) the price of wheat to rise.
B) the supply of corn to increase.
C) the quantity demanded of wheat to decrease.
D) the demand for wheat to increase.
E) the supply of corn to decrease.

Correct Answer: E

Question 25 (Multiple Choice)
Medical research from South Africa indicates that vitamin A may be useful in treating measles. If the research can be substantiated,

A) the supply of vitamin A will increase, causing equilibrium price and quantity to increase.
B) the supply of vitamin A will increase, causing equilibrium price to fall and quantity to increase.
C) the demand for vitamin A will increase, causing equilibrium price and quantity to increase.
D) the demand for vitamin A will increase, causing equilibrium price to rise and quantity to fall.
E) the supply of vitamin A will increase, causing equilibrium price to rise and quantity to fall.

Correct Answer: C

Question 26 (True/False)
Economists use the term supply to refer to the quantity of a good that is supplied at various price levels, that is, a set of price and quantity supplied combinations, everything else held constant.

True
False

Correct Answer: true

Question 27 (Multiple Choice)
Assume an increase in the profitability of firms in a product market. Over time we can expect

A) market supply to decrease.
B) the demand for resources to increase.
C) the equilibrium price of the product to rise.
D) firms to leave this market.
E) the equilibrium price of the product to rise.

Correct Answer: B

Question 28 (True/False)
The market demand curve is determined by adding the individual demand curves in a vertical direction.

True
False

Correct Answer: false

Question 29 (True/False)
When barter takes place, at least one party must have money.

True
False

Correct Answer: false

Question 30 (Multiple Choice)
The development of a low-cost synthetic fuel is expected to affect the market for crude oil in which of the following ways?

A) Decrease the demand for oil
B) Decrease the price of oil
C) Decrease the quantity demanded and quantity supplied of oil
D) Decrease the equilibrium quantity for oil
E) All of these

Correct Answer: E