Multiple Choice
Identify the choice that best completes the
statement or answers the question.
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1.
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Which of the following is an example of lower production costs brought about by
the use of technology?
a. | the delivery costs of gasoline to the consumer by diesel trucks | b. | the use of e-mail to
replace slower surface mail | c. | the making of breads and pastries in local
shops rather than large bakeries | d. | the importing of fresh vegetables from South
America rather than using canned vegetables |
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2.
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What is the effect of import restrictions on prices?
a. | They cause prices to drop. | b. | They cause prices to rise. | c. | They often cause
prices to rise steeply and then drop. | d. | They usually do not have any lasting effect on
price. |
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3.
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What do sellers do if they expect the price of goods they have for sale to
increase dramatically in the near future?
a. | sell the goods now and try to invest the money instead of
resupplying | b. | sell the goods now but try to get the higher price for them | c. | store the goods
until the price rises | d. | store the goods indefinitely regardless of when
the price rises |
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4.
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Which of the following is the best example of the law of supply?
a. | A sandwich shop increases the number of sandwiches they supply every day when the
price is increased. | b. | A food producer increases the number of acres
of wheat he grows to supply a milling company. | c. | A catering company buys a new dishwasher to
make their work easier. | d. | A milling company builds a new factory to
process flour to export. |
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5.
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Which of the following is an example of a good with an inelastic supply?
a. | beanbags | c. | apples | b. | toothbrushes | d. | hats |
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6.
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Which of the following receives government subsidies that are in place to
protect the population rather than for economic reasons?
a. | a national car company in Indonesia | c. | tobacco growers in the United
States | b. | small farmers in France | d. | national airlines in Western Europe |
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7.
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When the selling price of a good goes up, what is the relationship to the
quantity supplied?
a. | The cost of production goes down. | b. | The profit made on each item goes
down. | c. | It becomes practical to produce more goods. | d. | There is no
relationship between the two. |
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8.
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What factor has the greatest influence on elasticity and inelasticity of
supply?
a. | profit | c. | labor | b. | time | d. | financing |
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9.
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Which of the following is a fixed cost for a store?
a. | short-term workers | c. | advertising | b. | rent | d. | inventory |
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10.
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Which of these events would indicate a movement along a supply curve for
batteries?
a. | Workers at a major battery factory go on strike and stop
production. | b. | A new law requires battery manufacturers to spend more money on environmentally-sound
trash disposal. | c. | Battery manufacturers raise the price of eight AA batteries from $3.50 to $3.95 a
set. | d. | A new trade agreement enables stores to import foreign
batteries. |
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11.
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Which of these is an example of a good with elastic supply?
a. | large hand-made rugs | c. | sandwiches | b. | plums | d. | passenger
airplanes |
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12.
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If the supply of a good is inelastic,
a. | producers will not change their quantity supplied by much if the market price
doubles. | b. | a small increase in price will lead producers to sharply increase their quantity
supplied. | c. | producers have diminishing marginal returns of labor. | d. | producers will
increase their quantity supplied in response to sharp drops in the market
price. |
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13.
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An entrepreneur knits sweaters for sale. The entrepreneur has fixed costs of
$100. When he makes 10 sweaters in one month, he must spend $15 on wool. To make eleven sweaters in
one month, he must spend $17 on wool. If he has no other costs, what is the marginal cost of the
eleventh sweater?
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14.
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A baker calculates that by spending $16 on labor and materials, she can bake 10
cakes a day. $24 will allow her to bake 12 cakes, while $36 spent on labor and materials produces 14
cakes. In terms of capital and labor, the baker has
a. | increasing marginal returns. | c. | decreasing marginal
returns. | b. | constant marginal returns. | d. | negative marginal returns. |
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15.
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A shoe factory has an elasticity of supply of .5 as the price of shoes rises
from $50 to $75. If the factory produced 100,000 shoes at a market price of $50, how many will be
produced at the new price?
a. | 75,000 | c. | 200,000 | b. | 125,000 | d. | 400,000 |
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16.
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What is an example of a variable cost in a major league baseball
franchise?
a. | stadium rent | c. | stadium maintenance | b. | manager’s salary | d. | ticket-takers’
salaries |
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17.
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Complete the following sentence: At the most profitable level of production, a
firm’s marginal cost will be _____ the market price.
a. | equal to | c. | less than | b. | set by | d. | greater than |
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18.
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Which of the following is an example of government influence on supply?
a. | law of supply | c. | marginal costs | b. | subsidies | d. | market supply
curve |
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19.
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If the market price for pizza is $2.00 a slice, how many slices will be supplied
by all producers in the market, according to Figure 5.4?
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20.
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According to Figure 5.4, how many slices of pizza will one pizzeria be willing
to supply at a market price of $1.50 a slice?
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21.
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According to Figure 5.4, what term describes elasticity of supply in this market
as the price increases from $1.00 to $2.00 a slice?
a. | Elastic | c. | Unitary elastic | b. | Inelastic | d. | Extremely
elastic |
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22.
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A shortage of tomato sauce and mozzarella cheese causes the market supply curve
for pizza slices to shift. Based on Figure 5.4 Supply Curves, which of the following combinations of
quantity supplied and price would you expect to find on the new curve?
a. | 2,500 slices at $2.50 each | c. | 3,500 slices at $2.50
each | b. | 1,500 slices at $1.00 each | d. | 3,000 slices at $1.50 each |
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23.
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The market price of a slice of pizza has risen from $1.50 to $2.00. Based on
Figure 5.4, the average pizzeria will respond by
a. | making 50 fewer slices a day. | c. | making 500 fewer slices a
day. | b. | making 50 more slices a day. | d. | making 500 more slices a
day. |
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24.
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According to Figure 5.4, what is the elasticity of supply as the price decreases
from $3.00 to $1.50 a slice?
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Matching
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Identifying Key Terms
Match each term with the correct
statement below. a. | subsidy | h. | increasing marginal
returns | b. | supply schedule | i. | diminishing marginal returns | c. | supply curve | j. | marginal revenue | d. | elasticity of
supply | k. | marginal product of
labor | e. | excise tax | l. | marginal cost | f. | law of supply | m. | market supply schedule | g. | variable
cost |
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25.
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the tendency of suppliers to offer more of a good at a higher price
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26.
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a payment to the government on the production or sale of a good
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27.
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a measure of the way a quantity supplied reacts to a change in price
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28.
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a chart that lists how much of a good a supplier will offer at various
prices
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29.
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a government payment that supports a business or market
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30.
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a level of production in which the marginal production decreases with new
investment
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31.
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the cost of producing one more unit of a good
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32.
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a chart that lists how much of a good all suppliers will offer at different
prices
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33.
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the additional income from selling one more unit of a good
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34.
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the change in output from hiring one additional unit of labor
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Identifying Key Terms
Match each term with the correct
statement below. a. | increasing marginal returns | h. | market supply
curve | b. | diminishing marginal returns | i. | total cost | c. | marginal
revenue | j. | law of
supply | d. | marginal product of labor | k. | variable | e. | marginal cost | l. | elasticity of supply | f. | supply
schedule | m. | regulation | g. | quantity
supplied |
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35.
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the change in output from hiring one additional unit of labor
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36.
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a chart that lists how much of a good a supplier will offer at different
prices
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37.
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the cost of producing one more unit of a good
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38.
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the additional income from selling one more unit of a good
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39.
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a level at which the marginal production goes up with new investment
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40.
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government intervention in a market that affects the production of a
good
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41.
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a factor that can change
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42.
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fixed costs plus variable costs
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43.
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the amount a supplier is willing and able to supply at a certain price
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44.
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a graph of the quantity supplied of a good by all suppliers at different
prices
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