Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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How is future price related to
current demand?
a. | If the price is expected to fall,
current demand will rise. | b. | If the price is expected to rise, current demand will
drop. | c. | Future price is not related to current
demand. | d. | If the price is expected to rise, current demand will
rise. |
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2.
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What kind of system is the
United States economy based on?
a. | cause and
effect | c. | production | b. | market | d. | centralized |
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3.
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Which of the following is a
good that might not be bought when prices rise?
a. | substitute | c. | luxury | b. | complement | d. | inferior good |
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4.
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A slice of pizza costs $4.00.
Based on Ashley’s demand curve in Figure 4.4, what is her quantity demanded of pizza at this
price?
a. | five | b. | one | c. | There is not enough information to answer the
question. | d. | zero |
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5.
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What term describes demand with
an elasticity of less than 1?
a. | unitary
elastic | c. | inelastic | b. | elastic | d. | low |
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6.
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What determines the price and
the quantity produced of most goods?
a. | the interaction of supply and
demand | b. | the availability of substitutes for the
goods | c. | the quality of the goods that are produced | d. | the consumer’s perception of
necessity |
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7.
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What does it mean when the
demand for a product is inelastic?
a. | People will not buy any of the
product when the price goes up. | b. | A price increase does not have a significant impact on buying
habits. | c. | Customers are sensitive to the price of the
product. | d. | There are very few satisfactory substitutes for the
product. |
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8.
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What is a company’s total
revenue?
a. | the price of a company’s
goods | b. | the amount a company receives for selling its
goods | c. | the amount of profit a company can expect to
make | d. | the amount of goods a company can expect to
sell |
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9.
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Which of these events could
permanently shift a individual’s demand curve for umbrellas to the right?
a. | He buys a car so he no longer needs
to walk to and wait at a bus stop every morning to get to work. | b. | He moves from a desert community to a rainy city by the
ocean. | c. | The price of umbrellas decreases significantly as inexpensive umbrellas are
imported from China. | d. | Weather forecasters predict that a major hurricane will hit his city the
following week. |
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10.
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How is the current demand for a
good related to its future price?
a. | If the price is expected to drop,
current demand will fall. | b. | If the price is expected to drop, current demand will
rise. | c. | Current demand is not related to future
price. | d. | If the price is expected to rise, current demand will
fall. |
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11.
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When prices rise, which of the
following happens to income?
a. | It goes
down. | c. | It rises to meet
prices. | b. | It buys less. | d. | It is used to buy different
things. |
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12.
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Ceteris
paribus, or “all other
things held constant,” is an assumption that has which of the following effects on a demand
schedule?
a. | It takes only prices into
account. | b. | It is accurate only at one price level. | c. | It considers the effects of all possible changes on
demand. | d. | It is accurate no matter what changes
occur. |
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13.
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What shows the quantities of
products demanded at each price by all consumers in a market?
a. | a market demand
schedule | c. | a market pricing
list | b. | an elasticity and consumption list | d. | a schedule of consumer prices |
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14.
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When a consumer is able and
willing to buy a good or service, he or she creates which of the following?
a. | allocation | c. | demand | b. | consumption | d. | elasticity |
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15.
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The price of movie tickets in a
town has risen from $7 to $9. What is the most likely effect of the change in
price?
a. | The demand curve for movie tickets
will move left. | b. | The quantity demanded of movie tickets will
increase. | c. | The quantity demanded of movie tickets will
decrease. | d. | The demand curve for movie tickets will move
right. |
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16.
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A shift in the demand curve
means which of the following?
a. | a rise in
prices | b. | a change in consumer income | c. | a change in demand at every
price | d. | a decrease in both price and quantity
demanded |
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17.
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What are inferior
goods?
a. | goods for which the demand falls
when income rises | b. | goods for which the demand rises when income
falls | c. | goods that no one wants to buy | d. | goods that are not well
produced |
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18.
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What is a basic principle of
the law of demand?
a. | Services are of interest in the same
way that goods are. | b. | Everyone has a limited income that they will
spend. | c. | When a good’s price is lower, people will buy more of
it. | d. | The higher the price, the more people will want the
good. |
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Matching
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a. | total
revenue | f. | elasticity of
demand | b. | income effect | g. | demand curve | c. | elastic | h. | substitute | d. | inferior good | i. | ceteris paribus | e. | normal good | j. | complement |
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19.
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a measure of how consumers
react to a change in the price of a good
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20.
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the change in consumption
resulting from a change in real income
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21.
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demand that is very sensitive
to a change in price
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22.
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a graphic representation of
the quantities of a good that will be bought at each price
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23.
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a good that is bought and used
along with another good
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24.
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a good consumed instead of one
whose price has risen
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25.
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the assumption that nothing
but the price of a good will change
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26.
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a good for which the demand
falls when income rises
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