............DEMAND...........

Question 1

The Law Of Demand states that:

1. The lower the price, ceteris paribus, the more units a consumer will demand.

2. The higher the price, ceteris paribus, the less the consumer will demand.

Both 1 and 2

Don’t know

Question 2

When the price of chicken rises, people will tend to eat more beef. This is an example of:

The Income Effect

The Substitution Effect

Both

Don’t know

Question 3

Why does quantity demanded tend to fall as price rises?

The Substitution Effect

The Income Effect

Both 1 and 2

Don’t know

Question 4

Ceteris Paribus is a Latin phrase meaning:

Following prices in the market

Holding other things constant

Matching pairs of goods

Don’t know

Question 5

The assumption of ceteris paribus is useful because it allows economists to draw their graphs in:

Two dimensions

Three dimensions

Both 1 and 2

Don’t know

Question 6

Common shift factors used in the analysis of demand include:

1. Income and tastes

2. The prices of other products

Both 1 and 2

Don’t know

Question 7

Suppose the price of chicken rises. Which way do you think the beef demand curve will shift?

Inward and leftward

Outward and rightward

It won’t shift

Don’t know

Question 8

If the demand of one product like corn flakes rises when the demand for another product like oatmeal rises, oatmeal and corn flakes are:

Complements

Substitutes

Elastic goods

Don’t know

Question 9

Which statement is true?

1. A shift in the demand curve represents a change in demand

2. A movement along the demand curve represents a change in the quantity demanded

Both 1 and 2

Don’t know

Question 10

The Law Of Supply states that:

1. The lower the price, ceteris paribus, the less units firms will produce.

2. The higher the price, ceteris paribus, the more the consumer will demand.

Both 1 and 2

Don’t know

Question 11

The Law of Supply implies that the supply curve:

Slopes downward

Slopes upward

Is usually vertical

Don’t know

Question 12

Which of these is NOT an important shift factor for the supply curve:

Tastes

The prices of labor and raw materials

Technology

Don’t know

Question 13

A set of regulations imposed upon a manufacturer to clean up air and water pollution is likely to:

Shift the supply curve inward and leftward and decrease prices

Shift the supply curve outward and rightward and increase prices

Shift the supply curve inward and leftward and increase prices

Don’t know

Question 14

To say something is in equilibrium in economics is to say that:

1. The dynamic forces pushing on it cancel each other out.

2. The upward pressure on price is exactly offset by the downward pressure on price.

Both 1 and 2

Don’t know

Question 15

Suppose you go to the store and see that the price of bread has doubled. Has the demand for bread risen or has bread become more expensive to produce?

Demand for has risen

Bread had become more expensive to produce

Need more information to determine why the price doubled

Don’t know

Question 16

In the 1930s, United States President Franklin Delano Roosevelt’s New Deal began a program of price supports for many of America’s agricultural products. This program led to:

Shortages

Surpluses

An economically efficient market equilibrium

Don’t know

Question 17

During the Arab Oil Embargo of 1974, the OPEC cartel put an embargo on oil sales to the United States. The U.S. government responded with a price ceiling. This led to:

1. Gas lines as a form of rationing

2. An efficient market outcome

Both 1 and 2

Don’t know

Question 18

Suppose, you believe that the coming winter is going to be unusually warm and rainy because of an El Nino condition and you are a stock market investor. What actions might you take?

1. Sell your heating oil stocks

2. Buy companies that provide things like pest control and allergy medicines.

Both 1 and 2

Don’t know

Question 19

Suppose a drought in Brazil significantly reduces the coffee crop in Brazil? What is likely to happen to the price of coffee and Starbucks and what is likely to happen to the profits for the Starbucks company?

Prices rise because of an increase in costs and profits rise because of an increase in the quantity demanded.

Prices rise because of an increase in costs and profits fall because of a decrease in the quantity demanded.

No effect on prices or profits

Don’t know