Question 1

Kariuki decreases his consumption of grapes after his income goes up. For Kariuki

Accepted Answer

A) grapes and income are substitute goods. 
B) grapes and income are complementary goods. 
C) grapes are an inferior good. 
D) grapes are a superior good. 
A) grapes and income are substitute goods. 
B) grapes and income are complementary goods. 
C) grapes are an inferior good. 
D) grapes are a superior good.

Question 2

When the price of a good rises, there is

Accepted Answer

A) an increase in supply. 
B) a decrease in supply. 
C) a decrease in quantity supplied. 
D) an increase in quantity supplied. 
A) an increase in supply. 
B) a decrease in supply. 
C) a decrease in quantity supplied. 
D) an increase in quantity supplied.

Question 3

Ceteris paribus, as the price of a good or service increases,

Accepted Answer

A) people will buy more of it. 
B) people will buy less of it. 
C) people will want less of it. 
D) people will want more of it. 
A) people will buy more of it. 
B) people will buy less of it. 
C) people will want less of it. 
D) people will want more of it.

Question 4

The money price of a good is that price

Accepted Answer

A) expressed in constant 2005 dollars. 
B) expressed in purchasing power against a common item like bread. 
C) expressed in today's dollars. 
D) that would clear the market. 
A) expressed in constant 2005 dollars. 
B) expressed in purchasing power against a common item like bread. 
C) expressed in today's dollars. 
D) that would clear the market.

Question 5

The imposition of a per unit tax on a product

Accepted Answer

A) will cause the supply curve to shift downward and to the right. 
B) will cause the supply curve to shift upward and to the left. 
C) will reduce the quantity supplied of the product. 
D) will encourage producers to increase the quantity supplied of the product. 
A) will cause the supply curve to shift downward and to the right. 
B) will cause the supply curve to shift upward and to the left. 
C) will reduce the quantity supplied of the product. 
D) will encourage producers to increase the quantity supplied of the product.

Question 6

Which of the following statements is FALSE?

Accepted Answer

A) If there is an increase in the demand for a product, consumers want to buy more of the product at each and every possible price. 
B) A decrease in demand shifts the demand curve leftward toward the origin, while a decrease in quantity demanded involves a movement upward along a particular demand curve. 
C) If the price of a good rises, quantity demanded of the good decreases and the demand curve shifts toward the origin as long as supply is static. 
D) A change in the demand for a product is caused by factors other than changes in the product's price. 
A) If there is an increase in the demand for a product, consumers want to buy more of the product at each and every possible price. 
B) A decrease in demand shifts the demand curve leftward toward the origin, while a decrease in quantity demanded involves a movement upward along a particular demand curve. 
C) If the price of a good rises, quantity demanded of the good decreases and the demand curve shifts toward the origin as long as supply is static. 
D) A change in the demand for a product is caused by factors other than changes in the product's price.

Question 7

Last year there were 6 pizza shops in town. This year there are only 4. Other things being equal, the decrease in the number of suppliers will

Accepted Answer

A) cause the market supply curve to shift to the right. 
B) increase the market demand for pizza. 
C) cause a decrease in the quantity supplied at each price. 
D) have no impact on market supply as long as the demand for pizza remains strong. 
A) cause the market supply curve to shift to the right. 
B) increase the market demand for pizza. 
C) cause a decrease in the quantity supplied at each price. 
D) have no impact on market supply as long as the demand for pizza remains strong.

Question 8

A decrease in quantity demanded of a good is caused by

Accepted Answer

A) a decrease in income. 
B) a decrease in the price of a substitute. 
C) an increase in the price of the good. 
D) a change of tastes. 
A) a decrease in income. 
B) a decrease in the price of a substitute. 
C) an increase in the price of the good. 
D) a change of tastes.

Question 9

Which of the following causes an increase in demand for a normal good?

Accepted Answer

A) Increase in the price of a substitute 
B) Increase in the price of a complement 
C) Decrease in price 
D) Decrease in income 
A) Increase in the price of a substitute 
B) Increase in the price of a complement 
C) Decrease in price 
D) Decrease in income

Question 10

Consider the following:   The relative price of hamburgers this year has

Accepted Answer

A) increased. 
B) decreased. 
C) stayed the same. 
D) Not enough information has been given to calculate an answer. 
A) increased. 
B) decreased. 
C) stayed the same. 
D) Not enough information has been given to calculate an answer.

Question 11

An increase in the number of consumers in a market would cause

Accepted Answer

A) an increase in quantity demanded. 
B) an increase in quantity supplied. 
C) an increase in demand. 
D) an increase in supply. 
A) an increase in quantity demanded. 
B) an increase in quantity supplied. 
C) an increase in demand. 
D) an increase in supply.

Question 12

Another term for the equilibrium price is

Accepted Answer

A) excess demand. 
B) nominal price. 
C) law of demand. 
D) market clearing price. 
A) excess demand. 
B) nominal price. 
C) law of demand. 
D) market clearing price.

Question 13

A decrease in supply will occur when

Accepted Answer

A) the supply curve shifts downward to the right. 
B) the supply curve shifts upward to the left. 
C) the demand curve shifts downward to the left. 
D) the demand curve shifts upward to the right. 
A) the supply curve shifts downward to the right. 
B) the supply curve shifts upward to the left. 
C) the demand curve shifts downward to the left. 
D) the demand curve shifts upward to the right.

Question 14

John increases his consumption of Good X and Good Y when his income increases. For John

Accepted Answer

A) Good X and Good Y are substitute goods. 
B) Good X and Good Y are complement goods. 
C) Good X is an inferior good. 
D) Good X and Y are normal goods 
A) Good X and Good Y are substitute goods. 
B) Good X and Good Y are complement goods. 
C) Good X is an inferior good. 
D) Good X and Y are normal goods

Question 15

The price of one product in terms of another commodity is called its

Accepted Answer

A) relative price. 
B) money price. 
C) financial price. 
D) converse price. 
A) relative price. 
B) money price. 
C) financial price. 
D) converse price.

Question 16

The direct relationship between changes in price and changes in quantity supplied is

Accepted Answer

A) a change in supply. 
B) shown by a shift in the supply curve. 
C) the law of supply. 
D) the law of relative production. 
A) a change in supply. 
B) shown by a shift in the supply curve. 
C) the law of supply. 
D) the law of relative production.

Question 17

After the price of milk increases, David buys more eggs and less cereal. For David,

Accepted Answer

A) milk, eggs, and cereal are all complements. 
B) milk and eggs are complements, and milk and cereal are substitutes. 
C) milk and eggs are substitutes, and milk and cereal are complements. 
D) milk, eggs, and cereal are all substitutes. 
A) milk, eggs, and cereal are all complements. 
B) milk and eggs are complements, and milk and cereal are substitutes. 
C) milk and eggs are substitutes, and milk and cereal are complements. 
D) milk, eggs, and cereal are all substitutes.

Question 18

A shift in the demand curve to the right represents

Accepted Answer

A) an increase in demand. 
B) a decrease in demand. 
C) an increase in quantity demanded. 
D) a decrease in quantity demanded. 
A) an increase in demand. 
B) a decrease in demand. 
C) an increase in quantity demanded. 
D) a decrease in quantity demanded.

Question 19

Briefly discuss the determinants of demand other than price.

Accepted Answer

An increase in income causes demand of a

Question 20

The price of a new textbook increased from $60 to $75 in one year, while the price of a used textbook increased by 25 percent. What happened to the relative price of a used textbook?

Accepted Answer

A) It increased by 25 percent. 
B) It increased by 10 percent. 
C) It remained constant. 
D) It can't be determined without knowing the nominal price of the used textbook in at least one of the years. 
A) It increased by 25 percent. 
B) It increased by 10 percent. 
C) It remained constant. 
D) It can't be determined without knowing the nominal price of the used textbook in at least one of the years.

Exam 3: Demand and Supply

Kariuki decreases his consumption of grapes after his income goes up. For Kariuki

When the price of a good rises, there is

Ceteris paribus, as the price of a good or service increases,

The money price of a good is that price

The imposition of a per unit tax on a product

Which of the following statements is FALSE?

Last year there were 6 pizza shops in town. This year there are only 4. Other things being equal, the decrease in the number of suppliers will

A decrease in quantity demanded of a good is caused by

Which of the following causes an increase in demand for a normal good?

Consider the following: The relative price of hamburgers this year has

An increase in the number of consumers in a market would cause

Another term for the equilibrium price is

A decrease in supply will occur when

John increases his consumption of Good X and Good Y when his income increases. For John

The price of one product in terms of another commodity is called its

The direct relationship between changes in price and changes in quantity supplied is

After the price of milk increases, David buys more eggs and less cereal. For David,

A shift in the demand curve to the right represents

Briefly discuss the determinants of demand other than price.

The price of a new textbook increased from $60 to $75 in one year, while the price of a used textbook increased by 25 percent. What happened to the relative price of a used textbook?

The Nature of Economics

Scarcity and the World of Trade-Offs

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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