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Suppose a factory recently removed robots from its production line, decreasing productivity. This will likely cause a:


A) rightward shift of the supply curve.
B) leftward shift of the supply curve.
C) downward shift of the supply curve.
D) movement up along the supply curve.

E) None of the above
F) B) and C)

Correct Answer

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Suppose the price of gasoline has recently increased. How will this affect the market for hybrid cars?


A) The demand for hybrid cars will increase, increasing the equilibrium price and quantity of hybrid cars.
B) The supply of hybrid cars will increase, decreasing the equilibrium price and increasing the equilibrium quantity of hybrid cars.
C) The demand for hybrid cars will increase, decreasing the equilibrium price and increasing the equilibrium quantity of hybrid cars.
D) The demand for and supply of hybrid cars will increase, decreasing the equilibrium quantity, but the effect on price cannot be determined without more information.

E) A) and C)
F) B) and C)

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Junie is shopping for dinner. She notices that hamburgers are on sale, so she puts the hamburgers in her cart instead of the hot dogs she originally came to the store to buy. She then heads over to the bread aisle to pick up hamburger buns. The change in Junie's demand for hamburger buns is due to a change in:


A) the price of related goods.
B) Junie's income.
C) Junie's preferences.
D) Junie's expectation of future prices.

E) B) and C)
F) None of the above

Correct Answer

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The demand curve is a(n) _____ line that reflects the _____ relationship between price and quantity.


A) downward-sloping; inverse
B) upward-sloping; inverse
C) downward-sloping; positive
D) upward-sloping; direct

E) A) and B)
F) A) and C)

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For almost all goods, the:


A) lower the price goes, the higher the quantity demanded.
B) higher the price goes, the more luxurious it is.
C) lower the price goes, the higher demand is.
D) higher the price goes, the higher the quantity demanded.

E) None of the above
F) B) and C)

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Assume the market in the graph shown was originally at equilibrium where demand (D) and supply (S) intersect. However, something causes the demand to shift to D<sub>2</sub>. What could have caused such a shift? A) The good became more popular with consumers. B) Consumers expected the price of the good to drop in the near future. C) The good became cheaper to produce. D) Substitutes for this good became less expensive. Assume the market in the graph shown was originally at equilibrium where demand (D) and supply (S) intersect. However, something causes the demand to shift to D2. What could have caused such a shift?


A) The good became more popular with consumers.
B) Consumers expected the price of the good to drop in the near future.
C) The good became cheaper to produce.
D) Substitutes for this good became less expensive.

E) None of the above
F) A) and B)

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Oliver just brought home a new kitten. We could expect Oliver's demand for:


A) cat toys, a complementary good, to increase.
B) cat toys, a complementary good, to decrease.
C) dog toys, a substitute good, to increase.
D) dog toys, a substitute good, to decrease.

E) All of the above
F) A) and B)

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Suppose the advancement of computers has decreased the productivity of a paper mill. This will likely cause _______ the supply curve for paper.


A) a rightward shift of
B) a leftward shift of
C) a shift straight up of
D) a movement along

E) A) and D)
F) None of the above

Correct Answer

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The best example of a perfectly competitive market would be the market for:


A) grain.
B) shoes.
C) computers.
D) cameras.

E) B) and D)
F) None of the above

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Assume the graph shown represents the market for button-up shirts and was originally in equilibrium where demand (D) and supply (S) intersect. What type of shock might cause the demand curve to shift to D<sub>2</sub>? A) An increase in the price of buttons B) An increase in the price of ties C) An increase in the price of sweatshirts D) An increase in consumers' incomes Assume the graph shown represents the market for button-up shirts and was originally in equilibrium where demand (D) and supply (S) intersect. What type of shock might cause the demand curve to shift to D2?


A) An increase in the price of buttons
B) An increase in the price of ties
C) An increase in the price of sweatshirts
D) An increase in consumers' incomes

E) A) and B)
F) A) and C)

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Which of the following is the best example of a standardized good?


A) Corn
B) A handbag
C) An autographed baseball
D) Breakfast cereal

E) All of the above
F) A) and B)

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The table shown depicts the demand and supply schedules of a good. At a price of $1.00: A) a shortage (excess demand) will exist. B) a surplus (excess supply) will exist. C) more is being supplied than demanded. D) the market is in equilibrium. The table shown depicts the demand and supply schedules of a good. At a price of $1.00:


A) a shortage (excess demand) will exist.
B) a surplus (excess supply) will exist.
C) more is being supplied than demanded.
D) the market is in equilibrium.

E) B) and C)
F) A) and D)

Correct Answer

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Consider a market that is in equilibrium. If the market experiences both a decrease in demand and a decrease in supply:


A) the equilibrium price and quantity will fall.
B) the equilibrium quantity will fall, but the change in the equilibrium price cannot be predicted.
C) the equilibrium price will fall, but the change in the equilibrium quantity cannot be predicted.
D) the equilibrium price and quantity will rise.

E) B) and C)
F) All of the above

Correct Answer

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Consider a market that is in equilibrium. If the market experiences a decrease in supply:


A) the equilibrium price and quantity will rise.
B) the equilibrium price will rise and the equilibrium quantity will fall.
C) the equilibrium price and quantity will fall.
D) the equilibrium price will fall and the equilibrium quantity will rise.

E) None of the above
F) A) and D)

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A change in a non-price factor of demand will cause:


A) a movement along the demand curve.
B) a shift of the demand curve.
C) the demand curve to rotate inward.
D) the demand curve to rotate outward.

E) None of the above
F) All of the above

Correct Answer

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A price taker is a buyer or seller who:


A) cannot affect the market price.
B) takes the market price and chooses to increase or decrease it.
C) takes prices in the area and averages them together to set the price for his or her good.
D) can affect the market price only when collaborating with other buyers or sellers.

E) A) and B)
F) A) and C)

Correct Answer

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Suppose John just won the Mega Millions lottery jackpot. What can we assume about his demand?


A) His demand for normal goods will increase.
B) His demand for inferior goods will increase.
C) His demand for normal goods will decrease.
D) His demand for normal goods will stay the same.

E) None of the above
F) All of the above

Correct Answer

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Suppose there is an unusually large crop of apples this year. How might this affect the market for apples?


A) The demand would increase, increasing both equilibrium price and quantity.
B) The supply would increase, decreasing equilibrium price and increasing equilibrium quantity.
C) The demand would decrease, decreasing both equilibrium price and quantity.
D) The supply would decrease, increasing equilibrium price and decreasing equilibrium quantity.

E) None of the above
F) A) and D)

Correct Answer

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The city of Provincetown is a very popular spot for tourism during the summer months. What would we expect to occur in this town?


A) The demand for normal goods would increase each summer.
B) The demand for normal goods would decrease each summer.
C) The prices of all normal goods would decrease each summer.
D) The demand curve for normal goods would shift to the left.

E) B) and D)
F) All of the above

Correct Answer

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The graph shown depicts the market for a good. At a price of $12, there is: A) a surplus (excess supply) of 10,000 units. B) a shortage (excess demand) of 10,000 units. C) a shortage (excess demand) of 7,000 units. D) a surplus (excess supply) of 3,000 units. The graph shown depicts the market for a good. At a price of $12, there is:


A) a surplus (excess supply) of 10,000 units.
B) a shortage (excess demand) of 10,000 units.
C) a shortage (excess demand) of 7,000 units.
D) a surplus (excess supply) of 3,000 units.

E) A) and B)
F) None of the above

Correct Answer

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