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宏观经济学chap03习题

宏观经济学chap03习题
宏观经济学chap03习题

Macroeconomics, 8e (Parkin) Testbank 1

Chapter 3 Demand and Supply

3.1 Markets and Prices

1) A relative price is the

A) s lope of the demand curve.

B) d ifference between one money price and another.

C) s lope of the supply curve.

D) r atio of one money price to another.

Answer: D

Topic: P rice and Opportunity Cost

Skill: C onceptual

2) I f the price of a candy bar is $1 and the price of a fast food meal is $5, then the

A) r elative price of a candy bar is 5 fast food meals.

B) m oney price of a candy bar is 1/5 of a fast food meal.

C) r elative price of a fast food meal is 5 candy bars.

D) m oney price of a fast food meal is 1/5 of a candy bar.

Answer: C

Topic: P rice and Opportunity Cost

Skill: C onceptual

3) I f the price of a hot dog is $2 and the price of a hamburger is $4, then the

A) r elative price of a hot dog is 1/2 of a hamburger.

B) m oney price of a hot dog is 2 hamburgers.

C) r elative price of a hamburger is 1/2 of a hot dog.

D) m oney price of a hamburger is 2 hot dogs.

Answer: A

Topic: P rice and Opportunity Cost

Skill: C onceptual

4) T he opportunity cost of good A in terms of good B is equal to the

A) m oney price of good A minus the money price of good B.

B) m oney price of good B minus the money price of good A.

C) r atio of the money price of good A to the money price of good B.

D) r atio of the money price of good B to the money price of good A.

Answer: C

Topic: P rice and Opportunity Cost

Skill: A nalytical

5) T he opportunity cost of a hot dog in terms of hamburgers is the

A) r atio of the slope of the demand curve for hot dogs to the slope of the demand curve for

hamburgers.

B) r atio of the slope of the supply curve for hot dogs to the slope of the supply curve for

hamburgers.

C) m oney price of a hot dog minus the money price of a hamburger.

D) r atio of the money price of a hot dog to the money price of a hamburger.

Answer: D

Topic: P rice and Opportunity Cost

Skill: A nalytical

6) T he opportunity cost of a good is the same as its

A) m oney price.

B) r elative price.

C) p rice index.

D) n one of the above

Answer: B

Topic: S tudy Guide Question, Price and Opportunity Cost

Skill: C onceptual

7) T he money price of a pizza is $12 per pizza and the money price of a taco is $2 per taco. The

relative price of a pizza is

A) $12 per pizza.

B) $24 per pizza.

C) 6 tacos per pizza.

D) 1/6 pizza.

Answer: C

Topic: S tudy Guide Question, Price and Opportunity Cost

Skill: A nalytical

8) A relative price is

A) a price expressed in terms of money.

B) w hat you get paid for babysitting your cousin.

C) t he ratio of one money price to another.

D) e qual to a money price.

Answer: C

Topic: P rice and Opportunity Cost

Skill: R ecognition

9) A n ice cream cone costs $1.50. A can of soda costs $0.75. The relative price of an ice cream

cone is

A) 1/2 can of soda, the opportunity cost of an ice cream cone.

B) $1.50, the opportunity cost of a can of soda.

C) 2 cans of soda, the opportunity cost of an ice cream cone.

D) $0.75, the opportunity cost of a can of soda.

Answer: C

Topic: P rice and Opportunity Cost

Skill: A nalytical

3.2 Demand

1) W ants, as opposed to demands,

A) a re the unlimited desires of the consumer

B) a re the goods the consumer plans to acquire.

C) a re the goods the consumer has acquired.

D) d epend on the price.

Answer: A

Topic: D emand

Skill: R ecognition

2) D emands differ from wants because

A) d emands are unlimited, whereas wants are limited by income.

B) w ants require a plan to acquire a good but demands require no such plan.

C) w ants imply a decision about which demands to satisfy, while demands involve no

specific plan to acquire the good.

D) d emands reflect a decision about which wants to satisfy and a plan to buy the good,

while wants are unlimited and involve no specific plan to acquire the good.

Answer: D

Topic: D emand

Skill: C onceptual

3) S carcity guarantees that

A) d emands will exceed wants.

B) w ants will exceed demands.

C) d emands will be equal to wants.

D) m ost demands will be satisfied.

Answer: B

Topic: D emand

Skill: C onceptual

4) T he quantity demanded is

A) a lways equal to the equilibrium quantity.

B) i ndependent of the price of the good.

C) t he amount of a good that consumers plan to purchase at a particular price.

D) i ndependent of consumers' buying plans.

Answer: C

Topic: D emand

Skill: R ecognition

5) T he law of demand states that, other things remaining the same, the higher the price of a

good, the

A) s maller is the demand for the good.

B) l arger is the demand for the good.

C) s maller is the quantity of the good demanded.

D) l arger is the quantity of the good demanded..

Answer: C

Topic: L aw of Demand

Skill: C onceptual

6) T he law of demand implies that, other things remaining the same,

A) a s the price of a cheeseburger rises, the quantity of cheeseburgers demanded will

increase.

B) a s the price of a cheeseburger rises, the quantity of cheeseburgers demanded will

decrease.

C) a s income increases, the quantity of cheeseburgers demanded will increase.

D) a s the demand for cheeseburgers increases, the price of a cheeseburger will fall.

Answer: B

Topic: L aw of Demand

Skill: C onceptual

7) T he law of demand states that the quantity of a good demanded varies

A) i nversely with its price.

B) i nversely with the price of substitute goods.

C) d irectly with income.

D) d irectly with population.

Answer: A

Topic: L aw of Demand

Skill: C onceptual

8) W hich of the following is consistent with the law of demand?

A) A n increase in the price of a DVD causes an increase in the quantity of DVDs demanded.

B) A n increase in the price of a soda causes a decrease in the quantity of soda demanded.

C) A decrease in the price of a gallon of milk causes a decrease in the quantity of milk

demanded.

D) A decrease in the price of juice causes no change in the quantity of juice demanded.

Answer: B

Topic: L aw of Demand

Skill: C onceptual

9) T he law of demand implies that if nothing else changes, there is

A) a positive relationship between the price of a good and the quantity demanded.

B) a negative relationship between the price of a good and the quantity demanded.

C) a linear relationship between price of a good and the quantity demanded.

D) a n exponential relationship between price of a good and the quantity demanded.

Answer: B

Topic: L aw of Demand

Skill: A nalytical

10) W hich of the following influences people's buying plans and does not shift the demand curve?

A) t he price of the good

B) t he prices of related goods

C) i ncome

D) p references

Answer: A

Topic: D emand Curve and Demand Schedule

Skill: R ecognition

11) T he law of demand states that

A) a n increase in the price of a good shifts the demand curve leftward.

B) a decrease in the price of a good shifts the demand curve leftward.

C) o ther thing remaining the same, the higher the price of a good, the larger is the quantity

demanded.

D) o ther things remaining the same, the higher the price of a good, the smaller is the

quantity demanded.

Answer: D

Topic: D emand Curve and Demand Schedule

Skill: R ecognition

12) T he law of demand implies that demand curves

A) s lope down.

B) s lope up.

C) s hift rightward whenever the price rises.

D) s hift leftward whenever the price rises.

Answer: A

Topic: D emand Curve and Demand Schedule

Skill: C onceptual

13) E ach point on the demand curve reflects

A) a ll the wants of a given household.

B) t he highest price consumers are willing and able to pay for that particular unit of a good.

C) t he highest price sellers will accept for all units they are producing.

D) t he lowest-cost technology available to produce a good.

Answer: B

Topic: W illingness and Ability To Pay

Skill: C onceptual

14) A drop in the price of a DVD shifts the demand curve for prerecorded video tapes leftward.

From that you know DVDs and prerecorded tapes are

A) c omplements.

B) s ubstitutes.

C) i nferior goods.

D) n ormal goods.

Answer: B

Topic: C hange in Demand, Prices of Related Goods

Skill: A nalytical

15) A substitute is a good

A) t hat can be used in place of another good.

B) t hat is not used in place of another good.

C) o f lower quality than another good.

D) o f higher quality than another good.

Answer: A

Topic: C hange in Demand, Prices of Related Goods

Skill: R ecognition

16) P eople buy more of good 1 when the price of good 2 rises. These goods are

A) c omplements.

B) s ubstitutes.

C) n ormal goods.

D) i nferior goods.

Answer: B

Topic: C hange in Demand, Prices of Related Goods

Skill: C onceptual

17) W hich of the following pairs of goods are most likely substitutes?

A) D VDs and DVD players

B) c ola and lemon lime soda

C) l ettuce and salad dressing

D) p eanut butter and gasoline

Answer: B

Topic: C hange in Demand, Prices of Related Goods

Skill: R ecognition

18) T he demand for a good increases when the price of a substitute ________ and also increases

when the price of a complement ________.

A) r ises; rises

B) r ises; falls

C) f alls; rises

D) f alls; falls

Answer: B

Topic: C hange in Demand, Prices of Related Goods

Skill: A nalytical

19) A complement is a good

A) o f lower quality than another good.

B) u sed in conjunction with another good.

C) u sed instead of another good.

D) o f higher quality than another good.

Answer: B

Topic: C hange in Demand, Prices of Related Goods

Skill: R ecognition

20) S uppose people buy more of good 1 when the price of good 2 falls. These goods are

A) c omplements.

B) s ubstitutes.

C) n ormal.

D) i nferior.

Answer: A

Topic: C hange in Demand, Prices of Related Goods

Skill: C onceptual

21) A s the opportunity cost of a good decreases, people buy

A) l ess of that good and also less of its complements.

B) l ess of that good but more of its complements.

C) m ore of that good but less of its complements.

D) m ore of that good and also more of its complements.

Answer: D

Topic: C hange in Demand, Prices of Related Goods

Skill: A nalytical

22) P eople come to expect that the price of a gallon of gasoline will rise next week. As a result,

A) t oday's supply of gasoline increases.

B) t oday's demand for gasoline increases.

C) t he price of a gallon of gasoline falls today.

D) n ext week's supply of gasoline decreases.

Answer: B

Topic: C hange in Demand, Expected Future Prices

Skill: C onceptual

23) T he demand curve for a normal good shifts leftward if income ________ or the expected

future price ________.

A) d ecreases; falls

B) d ecreases; rises

C) i ncreases; falls

D) i ncreases; rises

Answer: A

Topic: C hange in Demand

Skill: A nalytical

24) I f income increases or the price of a complement falls, the

A) d emand curve for a normal good shifts leftward.

B) d emand curve for a normal good shifts rightward.

C) s upply curve of a normal good shifts leftward.

D) s upply curve of a normal good shifts rightward.

Answer: B

Topic: C hange in Demand

Skill: A nalytical

25) I f income decreases or the price of a complement rises,

A) t he demand curve for a normal good shifts leftward.

B) t he demand curve for a normal good shifts rightward.

C) t here is an upward movement along the demand curve for the good.

D) t here is a downward movement along the demand curve for the good.

Answer: A

Topic: C hange in Demand

Skill: A nalytical

26) A consumer might consider in-line skates and elbow-pads to be

A) p roducts with upward sloping demand curves.

B) u nrelated goods.

C) c omplements.

D) s ubstitutes.

Answer: C

Topic: C hange in Demand, Prices of Related Goods

Skill: C onceptual

27) A decrease in the price of a game of bowling shifts the

A) d emand curve for bowling balls leftward.

B) d emand curve for bowling balls rightward.

C) s upply curve of bowling balls leftward.

D) s upply curve of bowling balls rightward.

Answer: B

Topic: S tudy Guide Question, Change in Demand, Prices of Related Goods Skill: A nalytical

28) N ormal goods are those for which demand decreases as

A) t he price of a complement falls.

B) t he price of a substitute falls.

C) i ncome decreases.

D) t he good's own price rises.

Answer: C

Topic: C hange in Demand, Income

Skill: C onceptual

29) A normal good is a good for which

A) t here are very few complements.

B) d emand increases when income increases.

C) t here are few substitutes.

D) d emand decreases when income increases.

Answer: B

Topic: C hange in Demand, Income

Skill: R ecognition

30) A normal good is a good for which demand

A) d ecreases when income increases.

B) i ncreases when income increases.

C) d ecreases when population increases.

D) i ncreases when population increases.

Answer: B

Topic: C hange in Demand, Income

Skill: R ecognition

31) I nferior goods are those for which demand increases as

A) t he price of a substitute falls.

B) t he price of a substitute rises.

C) i ncome decreases.

D) i ncome increases.

Answer: C

Topic: C hange in Demand, Income

Skill: C onceptual

32) B y definition, an inferior good is a

A) w ant that is not expressed by demand.

B) n ormal substitute good.

C) g ood for which demand decreases when its price rises.

D) g ood for which demand decreases when income increases.

Answer: D

Topic: C hange in Demand, Income

Skill: R ecognition

33) I f a good is an inferior good, then purchases of that good will decrease when

A) i ncome increases.

B) t he price of a substitute rises.

C) p opulation increases.

D) t he demand for it increases.

Answer: A

Topic: C hange in Demand, Income

Skill: C onceptual

34) A n inferior good is a good for which demand

A) d ecreases when income increases.

B) i ncreases when income increases.

C) d ecreases when population increases.

D) i ncreases when population increases.

Answer: A

Topic: C hange in Demand, Income

Skill: C onceptual

35) G ruel is an inferior good. Hence, a decrease in people's incomes

A) s hifts the supply curve of gruel leftward.

B) d ecreases the quantity of gruel supplied.

C) s hifts the demand curve for gruel rightward.

D) s hifts the demand curve for gruel leftward.

Answer: C

Topic: C hange in Demand, Income

Skill: R ecognition

36) W hen economists speak of preferences as influencing demand, they are referring to

A) d irectly observable changes in prices and income.

B) a n individual's attitudes toward goods and services.

C) t he excess of wants over the available supplies.

D) t he availability of a good to all income classes.

Answer: B

Topic: C hange in Demand, Preferences

Skill: C onceptual

37) A n unusually warm winter shifts the

A) s upply curve of gloves rightward.

B) s upply curve of gloves leftward.

C) d emand curve for gloves rightward.

D) d emand curve for gloves leftward.

Answer: D

Topic: C hange in Demand, Preferences

Skill: A nalytical

38) I n 2006 there were 200,000 gas grills demanded at a price of $500. In 2007 there were more

than 200,000 gas grills demanded at the same price. This increase could be the result any of the following EXCEPT

A) a n increase in the supply of gas grills.

B) a n increase in income if gas grills are a normal good.

C) a fall in the price of natural gas, a complement for a gas grill.

D) a n increase in population.

Answer: A

Topic: A Change in Quantity Demanded Versus a Change in Demand

Skill: C onceptual

39) A change in the price of a good

A) s hifts the good's demand curve and also causes a movement along it.

B) s hifts the good's demand curve but does not cause a movement along it.

C) d oes not shift the good's demand curve but does cause a movement along it.

D) n either shifts the good's demand curve nor causes a movement along it.

Answer: C

Topic: A Change in Quantity Demanded Versus a Change in Demand

Skill: R ecognition

40) I f shoes rise in price, the demand curve for shoes ________ and the quantity of shoes

demanded ________.

A) s hifts leftward; decreases

B) s hifts leftward; does not change

C) d oes not shift; decreases

D) d oes not shift; does not change

Answer: C

Topic: A Change in Quantity Demanded Versus a Change in Demand

Skill: A nalytical

41) A decrease in quantity demanded because of an increase in price is represented by a

A) r ightward shift of the demand curve.

B) l eftward shift of the demand curve.

C) m ovement up and to the left along the demand curve.

D) m ovement down and to the right along the demand curve.

Answer: C

Topic: A Change in Quantity Demanded Versus a Change in Demand

Skill: C onceptual

42) A change in which of the following alters buying plans for cars but does NOT shift the

demand curve for cars?

A) A 5 percent increase in people's income.

B) A 10 percent decrease in the price of car insurance.

C) A 20 percent increase in the price of a car.

D) A n increased preference for walking rather than driving.

Answer: C

Topic: A Change in Quantity Demanded Versus a Change in Demand

Skill: A nalytical

43) W hich of the following would NOT shift the demand curve for turkey?

A) a n increase in income

B) a decrease in the price of ham

C) a change in tastes for turkey

D) a change in the price of a turkey

Answer: D

Topic: A Change in Quantity Demanded Versus a Change in Demand

Skill: C onceptual

44) W hen we say demand increases, we mean that there is a

A) m ovement to the right along a demand curve.

B) m ovement to the left along a demand curve.

C) r ightward shift of the demand curve.

D) l eftward shift of the demand curve.

Answer: C

Topic: A Change in Quantity Demanded Versus a Change in Demand

Skill: A nalytical

45) I n the figure above, which movement reflects an increase in demand?

A) f rom point a to point e

B) f rom point a to point b

C) f rom point a to point c

D) f rom point a to point d

Answer: D

Topic: A Change in Quantity Demanded Versus a Change in Demand

Skill: C onceptual

46) I n the figure above, which movement reflects a decrease in demand?

A) f rom point a to point e

B) f rom point a to point b

C) f rom point a to point c

D) f rom point a to point d

Answer: C

Topic: A Change in Quantity Demanded Versus a Change in Demand

Skill: C onceptual

47) I n the figure above, which movement reflects a decrease in quantity demanded but NOT a

decrease in demand?

A) f rom point a to point e

B) f rom point a to point b

C) f rom point a to point c

D) f rom point a to point d

Answer: A

Topic: A Change in Quantity Demanded Versus a Change in Demand

Skill: C onceptual

48) I n the figure above, which movement reflects how consumers would react to an increase in

the price of a non-fruit snack?

A) f rom point a to point e

B) f rom point a to point b

C) f rom point a to point c

D) f rom point a to point d

Answer: D

Topic: C hange in Demand, Prices of Related Goods

Skill: A nalytical

49) I n the figure above, which movement reflects an increase in the price of a substitute for fruit

snacks?

A) f rom point a to point e

B) f rom point a to point b

C) f rom point a to point c

D) f rom point a to point d

Answer: D

Topic: C hange in Demand, Prices of Related Goods

Skill: A nalytical

50) I n the figure above, which movement reflects an increase in the price of a complement for

fruit snacks?

A) f rom point a to point e

B) f rom point a to point b

C) f rom point a to point c

D) f rom point a to point d

Answer: C

Topic: C hange in Demand, Prices of Related Goods

Skill: A nalytical

51) I n the figure above, which movement reflects how consumers would react to an increase in

the price of a fruit snack that is expected to occur in the future?

A) f rom point a to point e

B) f rom point a to point b

C) f rom point a to point c

D) f rom point a to point d

Answer: D

Topic: C hange in Demand, Expected Future Prices

Skill: C onceptual

52) I n the figure above, which movement reflects an increase in income if fruit snacks are an

inferior good?

A) f rom point a to point e

B) f rom point a to point b

C) f rom point a to point c

D) f rom point a to point d

Answer: C

Topic: C hange in Demand, Income

Skill: A nalytical

53) I n the figure above, which movement reflects an increase in income if fruit snacks are a

normal good?

A) f rom point a to point e

B) f rom point a to point b

C) f rom point a to point c

D) f rom point a to point d

Answer: D

Topic: C hange in Demand, Income

Skill: A nalytical

54) I n the figure above, which movement reflects a decrease in population?

A) f rom point a to point e

B) f rom point a to point b

C) f rom point a to point c

D) f rom point a to point d

Answer: C

Topic: C hange in Demand, Population

Skill: A nalytical

55) T he law of demand concludes that a rise in the price of a golf ball ________ the quantity

demanded and ________.

A) i ncreases; shifts the demand curve for golf balls rightward.

B) d ecreases; shifts the demand curve for golf balls leftward.

C) d ecreases; creates a movement up along the demand curve for golf balls.

D) i ncreases; creates a movement down along the demand curve for golf balls.

Answer: C

Topic: S tudy Guide Question, Law of Demand

Skill: C onceptual

56) I f a decrease in the price of gasoline increases the demand for large cars, then

A) g asoline and large cars are substitutes in consumption.

B) g asoline and large cars are complements in consumption.

C) g asoline is an inferior good.

D) l arge cars are an inferior good.

Answer: B

Topic: S tudy Guide Question, Change in Demand, Prices of Related Goods

Skill: C onceptual

57) A normal good is one

A) w ith a downward sloping demand curve.

B) f or which demand increases when the price of a substitute rises.

C) f or which demand increases when income increases.

D) n one of the above

Answer: C

Topic: S tudy Guide Question, Change in Demand, Income

Skill: R ecognition

58) S ome sales managers are talking shop. Which of the following quotations refers to a

movement along the demand curve?

A) "Since our competitors raised their prices our sales have doubled."

B) "It has been an unusually mild winter; our sales of wool scarves are down from last

year."

C) "We decided to cut our prices, and the increase in our sales has been remarkable."

D) n one of the above

Answer: C

Topic: S tudy Guide Question, Change in Quantity Demanded

Skill: C onceptual

59) i Pods rise in price while CDs fall in price. The combined effect of these two changes is to

create a

A) r ightward shift of the demand curve for portable CD players.

B) r ightward shift of the supply curve of portable CD players.

C) l eftward shift of the demand curve for portable CD players.

D) l eftward shift of the supply curve of portable CD players.

Answer: A

Topic: P arallel MyEconLab Questions, Change in Demand

Skill: A nalytical

60) W alkman Watch expects a recession to occur. Knowing that a Walkman is a normal good,

you predict that the demand for a Walkman

A) w ill increase.

B) w ill decrease.

C) m ight increase or decrease.

D) w ill remain unchanged.

Answer: B

Topic: P arallel MyEconLab Questions, Change in Demand, Income

Skill: A nalytical

61) T he quantity demanded of a good or service is the amount that

A) a consumer would like to buy but might not be able to afford.

B) i s actually bought during a given time period at a given price.

C) c onsumers plan to buy during a given time period at a given price.

D) f irms are willing to sell during a given time period at a given price.

Answer: C

Topic: Q uantity Demanded

Skill: R ecognition

62) D emand is the

A) w illingness to pay for a good if income is large enough.

B) e ntire relationship between the quantity demanded and the price of a good.

C) a bility to pay for a good.

D) u nlimited wants of consumers.

Answer: B

Topic: D emand

Skill: R ecognition

63) I f, as people's incomes increase, the demand for a good increases, the good is called

A) a n inferior good.

B) a complement.

C) a substitute.

D) a normal good.

Answer: D

Topic: C hange in Demand, Income

Skill: R ecognition

64) T he quantity of iPods that people plan to buy this month depends on all of the following

except the

A) p rice of CD players.

B) p rice of an iPod.

C) t he technology used to produce an iPod.

D) p rice of a music download from iTunes.

Answer: C

Topic: D emand

Skill: R ecognition

65) H am and eggs are complements. If the price of ham rises, the demand for eggs will

A) i ncrease or decrease but the demand curve for ham will not change.

B) d ecrease and the demand curve for ham will shift rightward.

C) n ot change but there will be a movement along the demand curve for eggs.

D) d ecrease and the demand curve for eggs will shift leftward.

Answer: D

Topic: C hange in Demand, Prices of Related Goods

Skill: C onceptual

66) A n increase in the number of sellers of bikes will increase the

A) d emand for inline skates, a substitute for bikes.

B) p rice of a bike.

C) d emand for bikes.

D) d emand for knee pads, a complement for bikes.

Answer: D

Topic: C hange in Demand, Prices of Related Goods

Skill: C onceptual

3.3 Supply

1) W hich of the following is NOT one of the factors that influences the supply of a product?

A) t echnology

B) i ncome

C) n umber of suppliers

D) e xpected future prices

Answer: B

Topic: W hat Determines Selling Plans?

Skill: R ecognition

2) W hich of the following explains why supply curves slope upward?

A) p rices and income

B) i ncreasing marginal cost

C) r esources and technology

D) s ubstitutes in production and complements in production

Answer: B

Topic: T he Law of Supply

Skill: C onceptual

3) T he supply curve slopes upward when graphed against ________, because of ________.

A) t he price of the good; increasing marginal cost

B) t he price of the good; decreasing marginal cost

C) i ncome; increasing marginal cost

D) i ncome; decreasing marginal cost

Answer: A

Topic: T he Law of Supply

Skill: R ecognition

4) T he quantity supplied of a good is

A) t he same thing as the quantity demanded at each price.

B) t he amount that the producers are planning to sell at a particular price during a given

time period.

C) e qual to the difference between the quantity available and the quantity desired by all

consumers and producers.

D) t he amount the firm would sell if it faced no resource constraints.

Answer: B

Topic: S upply

Skill: R ecognition

5) T he quantity supplied of a good or service is the quantity that a producer ________ at a

particular price during a given time period.

A) i s willing to sell

B) a ctually sells

C) n eeds to sell

D) s hould sell

Answer: A

Topic: S upply

Skill: R ecognition

6) A fall in the price of a good causes producers to reduce the quantity of the good they are

willing to produce. This fact illustrates

A) t he law of supply.

B) t he law of demand.

C) a change in supply.

D) t he nature of an inferior good.

Answer: A

Topic: T he Law of Supply

Skill: C onceptual

7) E ach point on a supply curve represents

A) t he highest price buyers will pay for the good.

B) t he lowest price for which a supplier can profitably sell another unit.

C) t he lowest price buyers will accept per unit of the good.

D) t he highest price sellers can get for each unit over time.

Answer: B

Topic: M inimum Supply Price

Skill: A nalytical

8) B ecause of increasing marginal cost, most supply curves

A) a re horizontal.

B) a re vertical.

C) h ave a negative slope.

D) h ave a positive slope.

Answer: D

Topic: S upply Curve and Supply Schedule

Skill: A nalytical

9) A supply curve shows the relation between the quantity of a good supplied and

A) i ncome. Usually a supply curve has negative slope.

B) i ncome. Usually a supply curve has positive slope.

C) t he price of the good. Usually a supply curve has negative slope.

D) t he price of the good. Usually a supply curve has positive slope.

Answer: D

Topic: S upply Curve and Supply Schedule

Skill: C onceptual

10) W hich of the following is NOT held constant while moving along a supply curve?

A) e xpected future prices

B) t he number of sellers

C) t he price of the good itself

D) p rices of resources used in production

Answer: C

Topic: S upply Curve and Supply Schedule

Skill: R ecognition

11) T he supply curve is graphed with the

A) q uantity of one good on the vertical axis and the quantity of another good on the

horizontal axis.

B) q uantity of one good on the vertical axis and the price of another good on the horizontal

axis.

C) q uantity of a good on the vertical axis and its price on the horizontal axis.

D) q uantity of a good on the horizontal axis and its price on the vertical axis.

Answer: D

Topic: S upply Curve and Supply Schedule

Skill: R ecognition

12) I n the above figure, what is the minimum supply price for the fourth gallon of ice cream?

A) $2.00

B) $3.00

C) $4.00

D) $5.00

Answer: D

Topic: M inimum Supply Price

Skill: C onceptual

13) W hich of the following shifts the supply curve for gasoline rightward?

A) a situation in which the quantity demanded exceeds the quantity supplied

B) a n increase in the price of gasoline

C) a decrease in the price of a resource used to produce gasoline, such as crude oil

D) a n increase in the demand for gas-guzzling, sport utility vehicles

Answer: C

Topic: C hange in Supply, Prices of Resources

Skill: C onceptual

14) W hich of the following shifts the supply curve rightward?

A) a n increase in the population

B) a positive change in preferences for the good

C) a decrease in the price of the good

D) a decrease in the price of the resources used to produce the good

Answer: D

Topic: C hange in Supply, Prices of Resources

Skill: R ecognition

15) A utoworkers negotiate a wage increase; how does this change affect the supply of cars?

A) I t decreases the supply.

B) I t increase the supply.

C) I t has no effect.

D) T here is not enough information to tell if the change increases, decreases, or has no

effect on the supply of cars

Answer: A

Topic: C hange in Supply, Prices of Resources

Skill: A nalytical

16) I f a producer can use resources to produce either good A or good B, then A and B are

A) c omplements in production.

B) s ubstitutes in production.

C) s ubstitutes in consumption.

D) c omplements in consumption.

Answer: B

Topic: C hange in Supply, Prices of Related Goods Produced

Skill: R ecognition

17) G ood A and good B are substitutes in production. The demand for good A increases so that

the price of good A rises. The increase in the price of good A shifts the

A) d emand curve for good B leftward.

B) d emand curve for good B rightward.

C) s upply curve of good B leftward.

D) s upply curve of good B rightward.

Answer: C

Topic: C hange in Supply, Prices of Related Goods Produced

Skill: C onceptual

18) B lank tapes and prerecorded tapes are substitutes in production. An increase in the price of a

blank tape will lead to

A) a n increase in the supply of prerecorded tapes.

B) a decrease in the supply of prerecorded tapes.

C) a n increase in the quantity supplied of prerecorded tapes but not in the supply of

prerecorded tapes.

D) a decrease in the quantity supplied of prerecorded tapes but not in the supply of

prerecorded tapes.

Answer: B

Topic: C hange in Supply, Prices of Related Goods Produced

Skill: C onceptual

19) G ood A and good B are substitutes in production. The demand for good A decreases, which

lowers the price of good A. The decrease in the price of good A

A) d ecreases the supply of good B.

B) i ncreases the supply of good B.

C) d ecreases the demand for good B.

D) i ncreases the demand for good B.

Answer: B

Topic: C hange in Supply, Prices of Related Goods Produced

Skill: C onceptual

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