Ch. 4-6 Economics Question Preview (ID: 35668)

Spring 2017.

If prices rise and income stays the same, what is the effect on demand?
a) More is bought of some goods and less of others.
b) Fewer goods are bought.
c) More goods are bought.
d) Demand stays the same.

Why does an economist create a market demand schedule?
a) Why does an economist create a market demand schedule?
b) to have an idea of how a market would change if conditions in an area changed
c) to predict how all people will change their buying habits when prices change
d) to show how various conditions can change an individual’s demand for a good

How can expectations about the future change consumer behavior?
a) Immediate demand for a good will drop if the price is expected to stay the same.
b) Immediate demand for a good will rise if the good is expected to be plentiful.
c) Immediate demand for a good will rise if its price is expected to rise.
d) Immediate demand for a good will drop if there are no substitutes available.

Which of the following will happen if the price of butter goes up?
a) The demand for butter increases.
b) The demand for margarine increases.
c) The demand curve for butter moves to the right.
d) The demand curve for margarine moves to the left.

A music store holds a half-price sale on all CDs. During the sale, people buy more CDs than usual. What does this event show?
a) inelasticity of demand
b) the substitution effect
c) the law of demand
d) the income effect

The price of home computers rises. According to the law of supply, what will computer makers do?
a) make more computers
b) make fewer computers
c) stop making computers
d) make the same number of computers

Owners of digital cameras have to buy memory cards in order to use the cameras. Cameras and memory cards are
a) substitutes.
b) complements
c) unrelated.
d) elastic

Businesses multiply the price they charge for a good by the quantity sold to calculate
a) profit shares.
b) elastic demand.
c) total revenue.
d) market demand.

A demand curve is accurate only as long as ceteris paribus is true. What does this Latin phrase mean?
a) Goods are used in place of one another.
b) All things other than price stay constant.
c) Demand for goods remains elastic.
d) Supply can keep up with prices.

Which of these must consumers have in order to have demand for a good?
a) desire for the good and money to buy it.
b) ability to sell the good to others
c) ability to predict price changes
d) knowledge of all similar products

Which of these statements is an example of the “bandwagon” advertising approach?
a) This hair gel will make you beautiful.
b) Famous movie star says: “I buy only this hair gel.”
c) Be like other cool people and use this hair gel.
d) Other brands of hair gel will damage your hair.

If a seller expects the price of a good to rise in the future, the seller will
a) place these goods on the market immediately.
b) increase production of the good.
c) store these goods until the price goes up.
d) increase the price of the good now.

What does technology generally do to production?
a) It lowers cost and decreases supply.
b) It lowers cost and increases supply.
c) It increases cost and decreases supply.
d) It has very little effect on production.

Which of the following actions by the government constitutes a subsidy?
a) a price floor on wages
b) a payment to farmers for not cultivating land
c) an excise tax on cigarettes
d) a requirement to use lead-free fuel

What is the effect of import restrictions on supply?
a) They cause the available supply of goods to drop.
b) They cause the available supply of goods to rise.
c) They often cause supply to rise steeply and then drop.
d) They usually do not have any lasting effect on supply.

Which most affects a supplier’s decision to make more or fewer goods?
a) the availability of natural resources
b) government laws and rules
c) people’s need for better goods
d) the wish to make the most profit

Farmer Brown has ten dairy cows. The cost of feed goes up, but milk production stays the same. What does Farmer Brown do?
a) She raises milk prices.
b) She lowers milk prices.
c) She sells less milk.
d) She sells more milk.

A factory makes pencils. New machines in the factory make it faster and cheaper to make pencils. What will happen next?
a) Costs will drop, but supply will remain the same.
b) Supply and costs will both decrease.
c) Costs will go down and supply will go up.
d) At first, supply will rise, but then it will decrease.

Which is a government subsidy?
a) a minimum wage for farm workers
b) a minimum price for soybeans
c) an excise tax on soybeans
d) a law on which crops can be grown

What does a low price tell suppliers?
a) Not enough of a product is being produced.
b) Too much of a product is being produced.
c) Demand for a product will go up.
d) Demand for a product will go down.

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