1 Other things remaining the same, a left shift in the supply curve will lead to:
A. a decrease in the equilibrium price and the equilibrium quantity.
B. an increase in the equilibrium price and the equilibrium quantity.
C. an increase in the equilibrium price and a decrease in the equilibrium quantity.
D. a decrease in the equilibrium price and an increase in the equilibrium quantity.
2 Two goods are said to be complements when a fall in the price of one good:
A. leads to a fall in price of the other good.
B. leads to a left shift in the demand for the other good.
C. leads to a right shift in the demand for the other good.
D. doesn't affect the demand for the other good.
3 In a competitive free market:
A. all exchanges take place involuntarily.
B. there is no provision for the protection of property rights.
C. there is only one seller and many buyers.
D. the government does not impose price controls.
4 Which of the following correctly explains the role of economic agents in a free market?
A. Economic agents allocate goods to those buyers who value the goods the most.
B. Economic agents allocate goods to those buyers who need the goods the most.
C. Economic agents set production quotas for sellers in the market.
D. Economic agents set prices according to the production cost of each good.
5 Which of the following was an effect of the price ceiling placed on gasoline in the U.S. in the 1970s?
A. Gas stations ran out of gas as the quantity of gas demanded exceeded the quantity supplied.
B. Car owners started buying luxury cars that were less fuel-efficient as the price of gas was very low.
C. Those who valued gas the most were able to buy gas under the price ceiling.
D. The inventory of unsold gas increased and gas stations incurred losses.
6 Willingness to accept is:
A. the highest price that a producer is willing to receive to sell an extra unit of a good.
B. always higher than the marginal cost of production.
C. always lower than the marginal cost of production.
D. the lowest price that a producer is willing to receive to sell an extra unit of a good.
7 Assume that the economy is in a recession and consumers are expecting a fall in their income levels. This will cause a(n):
A. right shift in the market demand for all goods.
B. left shift in the market demand for all goods.
C. an increase in the total quantity demanded of all goods.
D. decrease in the total quantity demanded of all goods.
8 Which of the following factors is expected to cause the demand curve for coffee to shift to the right?
A. A higher personal tax on the income of all consumers
B. An increase in the supply of coffee due to better weather
C. A higher tax on the sale of tea, a substitute for coffee
D. A fall in the manufacturing cost of coffee
9 If the demand and supply curves for a commodity shift to the right and the shift in demand is greater than the shift in supply, then in comparison to the initial equilibrium, the new equilibrium will be characterized by:
A. the same price and quantity.
B. a lower price and quantity.
C. a higher price and a lower quantity.
D. a higher price and quantity.
10 Which of the following statements correctly describes a perfectly competitive market?
A. Haggling and bargaining are commonly observed in a perfectly competitive market.
B. Buyers in a perfectly competitive market pay different prices according to their individual demand.
C. In a perfectly competitive market, individual sellers and buyers can influence the market price.
D. All participants in a perfectly competitive market are price-takers.
