ECON TESTBANK - ALL Answers
Test Bank: I Topic: Demand
A normal good is one
whose amount demanded will increase as its price decreases.
whose amount demanded will increase as its price increases.
whose demandcurve will shift leftwardas incomes rise.
D. for which the consumption varies directlywith income.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
If the demandforsteak (a normal good) shifts to the left, the most likelyreason is that
A. consumer incomes have fallen.
cattle production hasdeclined.
the price of steak has risen.
the price ofcattle feed has gone up.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
If consumer incomes increase,thedemand for productX
A. will necessarily remain unchanged.
B. may shift either totheright or left.
will necessarily shift totheright.
will necessarily shift to the left.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
If products A and B are complements andthe price of B decreases, the
demand curves for both A and B will shift to the left.
amount of B purchased will increase,but the demand curve for A will not shift.
C. demandforA will increase andthequantity of B demanded will increase.
D. demandforA will declineand the demand for B will increase.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
If products C and D are closesubstitutes, an increase in theprice of C will
tend tocause the price of D to fall.
shift the demand curve for C to the left and the demand curve for D to the right.
C. shift the demand curve for D to the right.
D. shift the demand curves of both productsto the right.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
In constructing a demand curve for product X,
A. consumer preferences are allowed to vary.
B. the prices of other goods are assumed constant.
money incomes areallowed to vary.
the supply curve of product X is assumedconstant.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
An inferior good is
one whose demand curve will shift rightward as incomes rise.
one whose price and quantity demanded vary directly.
one that has not been approved by the FederalFood and Drug Administration.
D. not accurately defined by any of these statements.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
Suppose an excise tax is imposedon product X. We expect this tax to
A. increase thedemand for complementary good Y and decrease thedemand for substitute product Z.
B. decrease the demand for complementary good Y and increase the demand for substitute product Z.
increase the demands for both complementary good Y and substitute product Z.
decrease the demands for both complementary good Y and substitute product Z.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
An increase in the price ofproduct A will
reduce the demand for resources used in the production of A.
increase the demand for complementary product C.
C. increase thedemand for substitute product B.
D. reduce thedemand for substitute product B.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
Which of the followingwould most likely increase the demandforgasoline?
A. the expectation by consumersthat gasoline prices will be higher in the future
the expectation by consumersthat gasoline prices will be lower in the future
a widespread shift in car ownership from SUVs to hybrid sedans
a decrease in theprice of public transportation
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
Suppose that tacos and pizza are substitutes, and that soda and pizza are complements. We would expect an increasein the price ofpizza to
A. reduce thedemand for tacos andincrease the demand for soda.
B. reduce the demandforsoda and increase the demandfortacos.
increase the demand for both soda andtacos.
reduce thedemand for both soda and tacos.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
54.
Refer tothe diagram. A decrease in demandis depicted by a
move from point x to point y.
shift from D1 toD2.
C. shift from D2 to D1.
D. movefrom point y to point x.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
55.
Refer tothe diagram. A decrease in quantity demanded is depictedby a
move from point x to point y.
shift from D1 toD2.
shift from D2 toD1.
D. movefrom point y to point x.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
When an economistsays that the demand for a producthas increased, this means that
A. consumers are now willingto purchase more of this product at each possible price.
the producthas become particularly scarce for some reason.
product price has fallen and, as a consequence,consumers are buying a larger quantity of the product.
the demand curve has shifted to the left.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
"In the corn market,demand often exceeds supplyand supply sometimesexceeds demand." "The price of corn risesandfalls in response to changes in supplyand demand." In which of these two statements are theterms demand and supply being used correctly?
A. In neither statement.
B. In the secondstatement.
In the first statement.
In both statements.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
By an "increase in demand," economists mean that
A. product pricehasfallen, so consumersmove down to a new point on thedemand curve.
B. the quantity demanded at each priceina set of prices is greater.
the quantity demanded at each priceina set of prices is smaller.
a leftward shift of thedemand curve has occurred.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
The term "quantity demanded"
refers to the entire series ofprices and quantities that comprise thedemand schedule.
refers to a situation in which theincome and substitution effects do not apply.
C. refers to the amount of a product that will be purchased at some specific price.
D. means the same thing as demand.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
A decrease in thedemand for recreational fishing boats might be causedbyan increase in the
A. income of sports fishers.
B. price of outboard motors.
size and number of fish available.
price of sailingboats.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
Assume that the demand curveforproduct C is downsloping.Ifthe price of C falls from $2.00 to$1.75,
A. a smallerquantity of C will be demanded.
B. alarger quantity of C will be demanded.
the demand for C will increase.
the demand for C will decrease.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
An increase in the quantity demanded means that
A. given supply,theprice of the product can be expected to decline.
B. price has declined and consumers thereforewantto purchase more of theproduct.
the demand curve has shifted totheright.
the demand curve has shifted to the left.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
An increase in product price will cause
A. quantity demanded to decrease.
quantity suppliedtodecrease.
quantity demanded to increase.
the supply curve to shift to the left.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
In moving along a demand curve, whichof the following isnot held constant?
A. the price ofthe product itself.
price expectations
consumer incomes
prices of complementary goods
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
In which of the following statements are the terms "demand" and "quantity demanded" used correctly?
A. When theprice of ice cream rose, the demand for both ice cream andice cream toppings fell.
B. When the price ofice cream rose,the quantity demanded of ice cream fell, and thedemand for ice cream toppings fell.
When the price ofice cream rose,the demand for ice cream fell, and thequantity demanded of ice cream toppings fell.
None of these statementsuse the terms correctly.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
66.
Refer tothe diagram. A decrease in supply is depicted by a
move from point x to point y.
Shift from S1 toS2.
C. shift from S2 to S1.
D. movefrom point y to point x.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-03 Describesupply and explain how it can change.
Test Bank: I Topic: Supply
67.
Refer tothe diagram. An increase in quantity suppliedis depicted by a
A. movefrom point y to point x.
shift from S1 to S2.
shift from S2 to S1.
move from point x to point y.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-03 Describesupply and explain how it can change.
Test Bank: I Topic: Supply
The law of supply indicates that,other things equal,
A. producers will offer more of a productat high prices than at low prices.
the productsupply curve is downsloping.
consumers will purchase less ofa good at high prices than at low prices.
producers will offer more of a productat low prices than at high prices.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-03 Describesupply and explain how it can change.
Test Bank: I Topic: Supply
The upward slope of thesupply curve reflects the
A. principleof specialization in production.
B. law of supply.
fact that price and quantity supplied are inversely related.
law of diminishing marginal utility.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-03 Describesupply and explain how it can change.
Test Bank: I Topic: Supply
70.
(Advanced analysis) The equationfor the supplycurve in the below diagram is approximately
A. P = 4 + 0.3Q. B. P = 4 + 2Q. C. P = 4 + 0.5Q. D. P = 4 - 3Q.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-03 Describesupply and explain how it can change.
Test Bank: I Topic: Supply
The supply curve shows the relationship between
A. priceandquantity supplied.
production costs and the amount demanded.
total business revenues and quantity supplied.
physical inputs of resourcesand the resulting units of output.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-03 Describesupply and explain how it can change.
Test Bank: I Topic: Supply
A firm's supplycurve is upsloping because
the expansion of production necessitates theuse of qualitatively inferior inputs.
mass production economies are associated with larger levels of output.
consumers envisiona positive relationship between price and quality.
D. beyondsomepoint, the production costs of additional units of output will rise.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-03 Describesupply and explain how it can change.
Test Bank: I Topic: Supply
Increasing marginal cost of production explains
the law of demand.
the income effect.
C. why thesupply curve is upsloping.
D. why thedemand curve is downsloping.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-03 Describesupply and explain how it can change.
Test Bank: I Topic: Supply
A leftward shift of a productsupply curve might be caused by
an improvement in the relevant technique of production.
a decline in the prices of needed inputs.
an increasein consumer incomes.
D. some firms leavingan industry.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-03 Describesupply and explain how it can change.
Test Bank: I Topic: Supply
The locationof the productsupply curve depends on
A. production technology.
the number of buyers in the market.
the tastes of buyers.
the locationof the demand curve.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-03 Describesupply and explain how it can change.
Test Bank: I Topic: Supply
An improvement in production technology will
increase equilibrium price.
shift the supply curve totheleft.
C. shift the supplycurve to the right.
D. shift the demand curve totheleft.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-03 Describesupply and explain how it can change.
Test Bank: I Topic: Supply
Because of unseasonably cold weather,the supply of oranges hassubstantially decreased. This statementindicates the
demand for orangeswill necessarily rise.
equilibrium quantity of orangeswill rise.
C. amount of orangesthat will be available at various prices has declined.
D. price of oranges will fall.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-03 Describesupply and explain how it can change.
Test Bank: I Topic: Supply
If producers must obtainhigher prices than before to produce a given level of output, then thefollowing has occurred.
a decrease in demand
an increasein demand
C. adecrease in supply
D. an increase in supply
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-03 Describesupply and explain how it can change.
Test Bank: I Topic: Supply
In moving along a supplycurve, which of the followingis not held constant?
the number of firms producingthis good
expectations about the future price of the product
techniques used in producing this product
D. the price ofthe product itself.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-03 Describesupply and explain how it can change.
Test Bank: I Topic: Supply
Assume product A is an input in the production of product B.Inturn, product B is a complement to productC. We can expect a decrease in the priceofA to
A. increase thesupply of B and increasethe demand for C.
decrease the supply of B and increase the demand for C.
decrease the supply of B and decrease thedemand for C.
increase thesupply of B and decreasethe demand for C.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change. LearningObjective: 03-03 Describesupply and explain how it can change.
Test Bank: I Topic: Demand Topic: Supply
Assume a drought in theGreat Plains reduces thesupply of wheat. Noting that wheat is a basic ingredient in the production of bread, andpotatoes are a consumer substitute for bread, we would expect the price of wheat to
A. rise,the supply of bread toincrease, and the demand for potatoes to increase.
B. rise, the supply of bread to decrease, and the demand for potatoes to increase.
rise, the supply of bread to decrease, and the demand for potatoes to decrease.
fall, the supplyof bread to increase, and the demand for potatoes toincrease.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change. LearningObjective: 03-03 Describesupply and explain how it can change.
Test Bank: I Topic: Demand Topic: Supply
Suppose product X is an input in theproduction of productY. Product Y in turn is a substitute for product Z. An increase in the price of X can be expectedto
A. decreasethe demand for Z.
B. increase the demand for Z.
have no effect on the demand for Z.
decrease the supply of Z.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change. LearningObjective: 03-03 Describesupply and explain how it can change.
Test Bank: I Topic: Demand Topic: Supply
Other things equal,if the price of a key resourceusedto produce product X falls, the
A. supply curve of productX will shift to the right.
demand curve of productX will shift to the right.
supply curve of productX will shift to the left.
supply curve of productX will not shift.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-03 Describesupply and explain how it can change.
Test Bank: I Topic: Supply
When the price ofoil declines significantly, the price ofgasoline also declines. Thelatter occurs because of a(n)
increase in the demand for gasoline.
decrease in the demand for gasoline.
C. increase in the supply of gasoline.
D. decreasein the supplyof gasoline.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-03 Describesupply and explain how it can change.
Test Bank: I Topic: Supply
An increase in the excise tax on cigarettesraises the price of cigarettes by shiftingthe
demand curve for cigarettes rightward.
demand curve for cigarettes leftward.
supply curve for cigarettes rightward.
D. supply curve for cigarettes leftward.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-03 Describesupply and explain how it can change.
Test Bank: I Topic: Supply
A governmentsubsidy to the producers of a product
A. reduces product supply.
B. increases product supply.
reduces product demand.
increases productdemand.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-03 Describesupply and explain how it can change.
Test Bank: I Topic: Supply
Suppose that at prices of $1, $2, $3, $4, and $5 for product Z, the corresponding quantities suppliedare 3, 4, 5, 6, and 7 units,respectively. Which of the following would increase the quantities supplied of Z to, say, 6, 8, 10, 12, and 14 units at these prices?
A. improved technology for producing Z
an increasein the prices of the resources used to make Z
an increasein the excise tax on product Z
increases in the incomes of the buyers of Z
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-03 Describesupply and explain how it can change.
Test Bank: I Topic: Supply
Suppose that corn prices rise significantly.Iffarmers expect the price of corn to continue risingrelative to other crops, then we would expect
the supply of ethanol, a corn-based product, to increase.
consumer demandforwheat to fall.
C. the supply to increaseas farmers plant more corn.
D. the supply to fall as farmers plant more of other crops.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-03 Describesupply and explain how it can change.
Test Bank: I Topic: Supply
(1) Qd(2) Qd(3) Price(4) Qs(5) Qs5040$1070806050960708060850609070740501008063040 89.
Refer tothe table. If demandis represented by columns (3) and (1)and supply is represented by columns (3) and (4),equilibrium price and quantitywill be
A. $10 and 60units.
B. $9and 60 units.
$8 and 80 units.
$8 and 60units.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-04 Relate how supply and demand interactto determine market equilibrium.
Test Bank: I Topic: Market Equilibrium
(1) Qd(2) Qd(3) Price(4) Qs(5) Qs5040$1070806050960708060850609070740501008063040 90.
Refer tothe table. In relationto column (3), a change from column (2) tocolumn (1) would indicate a(n)