Question 1

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The law of demand implies that:
Select one:
a. consumers are not responsive to price changes.
b. consumers will, all other things unchanged, buy more at lower prices.
c. sellers will, all other things unchanged, offer more on the market at higher prices.
d. sellers will, all other things unchanged, offer less on the market at lower prices.

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The correct answer is: consumers will, all other things unchanged, buy more at lower prices.
Question 2

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A decrease in the price of eggs, all other things unchanged, will result in a/an:
Select one:
a. increase in the demand for eggs.
b. increase in the supply of eggs.
c. greater quantity of eggs supplied.
d. greater quantity of eggs demanded.

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The correct answer is: greater quantity of eggs demanded.
Question 3
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The price of oranges falls. What happens in the market for apples, which are a
substitute for oranges?
Select one:
a. The equilibrium price falls and the equilibrium quantity rises.
b. The equilibrium price rises and the equilibrium quantity falls.

c. The equilibrium price and quantity rise.

d. The equilibrium price and quantity fall.

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The correct answer is: The equilibrium price and quantity fall.
Question 4
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After graduation from college you will receive a substantial increase in your income from a
new job. If you decide that you will purchase more T-bone steak and less hamburger, then for
you hamburger would be considered a/an:
Select one:
a. normal good.
b. substitute good.
c. complementary good.
d. inferior good.

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The correct answer is: inferior good.
Question 5
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The primary difference between a change in supply and a change in the quantity supplied is:
Select one:
a. a change in quantity supplied is a shift in the supply curve, and a change in supply is a
movement along the supply curve.
b. both a change in quantity supplied and a change in supply are movements along the supply
curve, only in different directions.
c. a change in quantity supplied is a movement along the supply curve, and a change in supply is
a shift of the supply curve.
d. a change in supply is a movement to the left along the supply curve and a change in quantity
supplied is a movement to the right along the supply curve.
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The correct answer is: a change in quantity supplied is a movement along the supply curve,
and a change in supply is a shift of the supply curve.
Question 6
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If the price of a commodity increases as the result of increased demand, you would expect the:
Select one:
a. supply to increase.

b. quantity supplied to increase.

c. quantity supplied to decrease.
d. supply curve to shift to the right.

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The correct answer is: quantity supplied to increase.
Question 7
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In this exhibit (demand and supply curves), the highest price per unit that buyers would be
willing to pay for 250 units is:
Select one:
a. $0.

b. $5.
c. $10.
d. $15.

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The correct answer is: $10.
Question 8
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In this exhibit (demand and supply curves), a price of $25 per unit will result in:
Select one:
a. a surplus of 50 units.
b. a surplus of 200 units.

c. a surplus of 250 units.

d. quantity demanded exceeding quantity supplied.

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The correct answer is: a surplus of 200 units.
Question 9
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If the price in the market for a commodity is above the market equilibrium price, the:
Select one:
a. price will remain unchanged.
b. price will rise to clear the market.
c. quantity supplied exceeds the quantity demanded.
d. quantity demanded exceeds the quantity supplied.

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The correct answer is: quantity supplied exceeds the quantity demanded.
Question 10
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A market shortage occurs if the:
Select one:
a. price is above the equilibrium price.
b. price is equal to the equilibrium price.
c. equilibrium price is above the market price.
d. equilibrium price is below the market price.

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The correct answer is: equilibrium price is above the market price.