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5 Oct 2018

1.Brian receives more utility from two apples than from one apple. However, the amount of extra utility provided decreases with each additional apple. This example illustrates which of the following:

a. Scarcity

b. Utility maximization

c. Inelastic demand

d. Diminishing marginal utility

2.A listeria outbreak recently hit the US cantaloupe industry, resulting in decreased consumer demand for cantaloupe. How is this demand decrease reflected on the demand curve?

a.Inward shift of the demand curve

b.Outward shift of the demand curve

c.Upward movement along the demand curve

d.No change in the demand curve

3.The price of beef increases, resulting in decreased consumer demand for beef. How is this demand decrease reflected on the demand curve?

a.Inward shift of the demand curve

b.Outward shift of the demand curve

c.Upward movement along the demand curve

d.No change in the demand curve

4.A 1% increase in the price of cereal leads to a 2% decrease in consumer demand for cereal. Which of the following best describes the own-price elasticity of cereal?

a.Inelastic

b.Unitary elastic

c.Elastic

5.The slope of the demand curve for salt is ________the demand curve for steak.

a.Steeper than

b.The same as

c.Flatter than

6.The price of butter decreases from $3/lb to $2/lb. The quantity demanded of butter increases from 2lbs to 3.5lbs. What is the own-price elasticity of butter?

a.-1.27

b.-2.25

c.-2.50

d.-1.49

7.The price of crackers increase from $2/box to $2.5/box. Demand for cheese decreases from 1.5/lbs to 1/lb. Which of the following best describes the relationship between crackers and cheese?

a.Complements

b.Unitary

c.Substitutes

d.Inelastic

8.A household’s income decreases from $50,000/year to $40,000/year. The household’s demand for steak decreases from 20/lbs to 15/lbs per year. What is the income elasticity of demand for steak?

a.1.25

b.0.76

c.0.25

d.1.00

9.Morton decides to increase the price of its salt from $1/lb to $1.5/lb. How will this price increase affect sales?

a.Sales of salt will increase

b.Sales of salt will remain the same

c.Sales of salt will decrease

10.Haagen Dazs decides to increase the price of its ice cream from $5/pint to $7/pint. How will this price increase affect sales?

a.Sales of Haagen Dazs ice cream will increase

b.Sales of Haagen Dazs ice cream will remain the same

c.Sales of Haagen Dazs ice cream will decrease

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Elin Hessel
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6 Oct 2018

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Related questions

Demand and Supply of Product X (per week)

price quantiy demanded quanity supplies surplus/shortage pressure on price
1 20 0
2 15 5
3 10 10
4 5 15
5 0 20

True or False?

1) The law of demand implies that an increase in the price of good will decrease the demand for that good.

2) The law of supply implies that an increase in the price of a good will increase the quantity supplied of that good.

3) A change in a non-price determinant of demand will result in the movement along a given demand curve.

4) An increase in supply is reflected graphically as a leftward shift of the supply curve.

5) There is no difference between changes in quantity demanded of beef and change in demand for beef. Justify your answer.

6) Because the price of milk was very high, my mother bought less cereal than usual.

7) Now that my uncle Thomas has an increase in income his household consumes less potatoes and cabbages.

8) Because the price of Pepsi cola fell, price of coca cola remaining the same, we bought many cans of coca cola last month.

The primary difference between a change in supply and a change in the quantity supplied is:
Choose one answer.
a. a change in quantity supplied is a shift in the supply curve, and a change in supply is a movement along the supply curve.
b. both a change in quantity supplied and a change in supply are movements along the supply curve, only in different directions.
c. a change in quantity supplied is a movement along the supply curve, and a change in supply is a shift of the supply curve.
d. a change in supply is a movement to the left along the supply curve and a change in quantity supplied is a movement to the right along the supply curve.

Question 2
What is the difference between a shortage and scarcity?
Choose one answer.
a. Scarcity will always exist because choices must be made, but a shortage will only exist if the price is kept below the equilibrium level.
b. Scarcity is a result of two or more alternative uses and will always exist, and quantities of supply and demand adjusting to flexible prices will create shortages.
c. A surplus will exist when a good is scarce; a shortage merely implies that there isn't as much of something as people would like, which is nearly always the case.
d. There is no distinction between the two. They are the same thing.

Question 3
A decrease in supply means:
Choose one answer.
a. a shift to the left of the entire supply curve.
b. moving downward (to the left) along the supply curve with lower prices.
c. less will be demanded at every price.
d. more will be supplied at every price.

Question 4
A decrease in demand, with no change in supply, will lead to ________ in equilibrium quantity and ________ in equilibrium price.
Choose one answer.
a. an increase; an increase
b. an increase; a decrease
c. a decrease; an increase
d. a decrease; a decrease

Question 5
After graduation from college you will receive a substantial increase in your income from a new job. If you decide that you will purchase more T-bone steak and less hamburger, then for you hamburger would be considered a( n ):
Choose one answer.
a. normal good.
b. substitute good.
c. complementary good.
d. inferior good.

Question 6
There is equilibrium in the market when:
Choose one answer.
a. there is no shortage.
b. there is no surplus.
c. price is established where the supply curve and the demand curve intersect.
d. all of the above are true.

Question 7
Which would not cause the supply curve to shift?
Choose one answer.
a. a change in technology
b. a change in factor costs
c. a change in the price of the good
d. a change in the prices of related goods

Question 8
Given that meat and potatoes are complementary goods, if the price of meat decreases substantially, there would be:
Choose one answer.
a. an increase in the demand for potatoes.
b. an increase in the quantity of potatoes demanded.
c. a decrease in the demand for potatoes.
d. no change in the demand for potatoes.

Question 9
Given that milk and cookies are complements, suppose the price of flour (an ingredient in cookies) rises. What happens in the market for milk?
Choose one answer.
a. The equilibrium price and quantity rise.
b. The equilibrium price rises and the equilibrium quantity falls.
c. The equilibrium price and quantity fall.
d. The equilibrium price falls and the equilibrium quantity rises.

Question 10



A temporary price of $2 in this market would result in:
Choose one answer.
a. a surplus of 8,000 bushels.
b. a shortage of 8,000 bushels.
c. a shortage of 10,000 bushels.
d. a surplus of 10,000 bushels.

Question 11
The price of oranges rises. What happens in the market for apples, which are a substitute for oranges?
Choose one answer.
a. The equilibrium price falls, and the equilibrium quantity rises.
b. The equilibrium price rises, and the equilibrium quantity falls.
c. The equilibrium price and quantity rise.
d. The equilibrium price and quantity fall.

Question 12
A market surplus occurs if the:
Choose one answer.
a. price is below the equilibrium price.
b. price is equal to the equilibrium price.
c. equilibrium price is above the actual price.
d. equilibrium price is below the actual price.

13. If the price of gasoline increases and car dealers experience a decrease in demand for sport utility vehicles, then gasoline and sport utility vehicles are:

Select one:

a. substitutes.

b. unrelated goods.

c. inferior goods.

d. complements.

14. Specifically, a change in the quantity supplied is referring to:

Select one:

a. A movement along a given supply curve resulting from a change in price

b. A shift in the supply curve either up or down

c. A change in the minimum price sellers are willing to sell for resulting from a change in a determinant of supply (like input prices, technology, or taxes)

d. A shift in the supply curve either left or right

15. Which of the following would be classified as an intermediate good?

Select one:

a. The fabric purchased by a jean manufacturer to make their pants.

b. The wood purchased by a homeowner to build his own deck.

c. The book purchased by a student for their economics class.

d. The bottling machine purchased by Coca Cola to use in one of the bottling plants.

16. The single best indicator of a recession is:

Select one:

a. negative nominal GDP growth.

b. increasing unemployment.

c. falling prices.

d. negative real GDP growth.

17. A leftward shift of a product supply curve might be caused by:

Select one:

a. a decline in the prices of needed inputs.

b. some firms leaving an industry.

c. an improvement in the relevant technique of production.

d. an increase in consumer incomes.

18. The law of supply predicts that when price increases, holding all else constant, the quantity supplied by firms increases.

Select one:

True

False

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