The demand curve for a normal good slope down for which of the

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AP Microeconomics
Unit 2: Supply, Demand and Consumer Choice
Practice Questions
1. The demand curve for a normal good slopes down for which of the following reasons?
I.
An increase in the price of the good induces consumers to purchase substitute
products.
II.
An increase in the price of the good reduces consumer’ purchasing power.
III.
An increase in the price of the good increases consumers’ utility from consuming
that good.
A. I only
B. II only
C. III only
D. I and II only
E. I and III only
2. Which of the following will NOT change the demand for oranges?
A. A change in consumers’ incomes.
B. A change in the price of grapefruits, a substitute for oranges.
C. A change in the price of oranges.
D. A change in the consumers’ taste for oranges.
E. An expectation that the price of oranges will increase in the future.
3. If there is an increase in demand for a good, what will most likely happen to the price and
quantity of the good exchanged?
Price
Quantity
A. No Change
No Change
B. Increase
Increase
C. Increase
Decrease
D. Decrease
Increase
E. Decrease
Decrease
4. If hot dogs are an inferior good, an increase in income will result in:
A. An increase in the quantity demanded for hot dogs.
B. An increase in the demand for hot dogs.
C. A decrease in the quantity demanded for hot dogs.
D. A decrease in the demand for hot dogs.
E. No change in the quantity demanded for hot dogs.
AP Microeconomics Test
Unit 2: Supply, Demand and Consumer Choice
Page 1
5. An increase in the price of gasoline will cause the demand curve for tires to shift in which
direction?
A. To the left, because gasoline and tires are substitutes.
B. To the left, because gasoline and tires are complements.
C. To the right, because gasoline and tires are substitutes.
D. To the right, because gasoline and tires are complements.
E. To the right, because an increase in the price of gasoline makes consumers poorer and thus
not willing to pay as much for tires.
6. Which of the following situations best illustrates the law of demand?
A. As real incomes of the Unites States citizens have decrease over the past year, the demand
for housing has also decreased.
B. Recent decreases in the price of imported wine have led to an increase in the consumption
of domestic wine.
C. In the past several months, as the price of compact disc players has decreased, the quantity
of compact disc players sold has increased.
D. The increase in the price of quality health foods has increased the revenues of firms
producing these goods.
E. As the demand for computers has increased, the number of workers in the computer
industry has increased.
7. If the cost of producing automobiles increases, the price, equilibrium quantity and consumer
surplus will most likely change in which of the following ways?
A.
B.
C.
D.
E.
Price
Increase
Increase
Increase
Decrease
Decrease
Quantity
Increase
Increase
Decrease
Increase
Decrease
Consumer Surplus
Increase
Decrease
Decrease
Decrease
Decrease
8. Producer surplus is the:
A. Area under the supply curve to the left of the amount sold.
B. Area under the supply curve to the right of the amount sold.
C. Amount the seller is paid plus the cost of production.
D. Amount the seller is paid less the cost of production.
E. Cost to sellers of participating in a market.
9. During the 1990’s, the price of VCR’s fell by about 30 percent, and quantity sold decreased by
the same amount. The demand for VCR’s must:
A. Be inelastic.
B. Be elastic.
C. Be unit elastic.
D. Have shifted to the right.
E. Have shifted to the left.
AP Microeconomics Test
Unit 2: Supply, Demand and Consumer Choice
Page 2
10. Which of the following will occur if a legal price floor is placed on a good below its free
market equilibrium?
A. Surpluses will develop.
B. Shortages will develop.
C. Underground markets will develop.
D. The equilibrium price will ration the good.
E. The quantity sold will increase.
11. The substitution effect causes a consumer to buy less of a product when the price increases
because the:
A. Production is now less expensive compared to similar products.
B. Product is now more expensive compared to similar products.
C. Consumer’s real income has decreased.
D. Consumer’s real income has decreased.
E. Consumers will buy more inferior goods and fewer normal goods.
12. If the price of a good decreased by 3 percent and the total revenue increases, the demand for
the product would be:
A. Inelastic
B. Elastic
C. Unit Elastic
D. Perfectly Inelastic
13. Which is true of the following is true in the elastic range of a firms demand curve?
A. The firm should expand output to increase economic profits.
B. An increase in price will also lead to an increase in total cost.
C. Decrease in price will likely lead to an increase in total revenue.
D. Marginal revenue is negative.
E. The firm is maximizing total revenue.
14. During a football game, it starts to rain and the temperature drops. The senior class, which
runs the concession stand and is studying economics, raises the price of coffee from 50 cents to
75 cents a cup. They sell more quantity than ever before. Which answer explains this?
A. The supply of coffee increased.
B. The demand curve for coffee was elastic.
C. The supply for coffee decreased.
D. The demand for coffee increased.
E. The demand curve for coffee was inelastic.
AP Microeconomics Test
Unit 2: Supply, Demand and Consumer Choice
Page 3
15. The supply curve for automobiles will shift to the left in response to:
A. An increase in the efficiency of robot technology.
B. An increase in wages in the automobile industry.
C. A decrease in the number of consumers purchasing automobiles.
D. A decrease in the interest rates for automobile loans.
E. A decrease in consumers’ income.
16. In a perfectly competitive market which off the following shits in the supply and demand
curves will definitely cause both of the equilibrium price and quantity to decrease?
A.
B.
C.
D.
E.
Supply Curve
Shifts to the left
Shifts to the left
Shifts to the right
No shifts
No shift
Demand Curve
Shifts to the left
No shift
Shifts to the right
Shifts to the right
Shifts to the left
17. Which of the following events will cause the demand curve for hamburgers to shift to the
right?
A. An increase in the price of pizza, a substitute for hamburgers.
B. An increase in the price of french fries, a complement to burgers.
C. An increase in the price of hamburgers.
D. A decrease in the price of hamburgers.
E. A decrease in the cost of producing hamburgers.
18. Assume that the demand for apples is down ward sloping. If the price of apples falls from
$.80 per pound to $.65 per pound, which of the following will occur?
A. A smaller quantity of apples will be demanded.
B. A larger quantity of apples will be demanded.
C. Demand for apples will decrease.
D. Demand for apples will increase.
E. Supply of apples will decrease.
19. Which of the following statements about price control is true?
A. A price ceiling cases a shortage if the ceiling price is above the equilibrium price.
B. A price floor causes a surplus if the price floor is below the equilibrium price.
C. A price ceiling causes an increase in demand if the ceiling causes a decrease in demand if
the price floor is set above the equilibrium price.
D. A price ceiling causes a decrease in demand if the price floor is set above the equilibrium
price.
E. Price ceilings and price floors result in a misallocation of resources.
20. A country can consume beyond its present production possibilities curve when it:
A. Trades with other countries, thus taking advantage of different opportunity costs.
B. Reduces unemployment, thus increasing output.
C. Experiences decreasing opportunity costs.
D. Faces an upward-sloping production possibilities curve.
E. Faces a downward-sloping production possibilities curve.
AP Microeconomics Test
Unit 2: Supply, Demand and Consumer Choice
Page 4
Check your answers AFTER you finish
1.D
2.C
3.B
4.D
5.B
6.C
7.C
8.D
9. E
10.D
11.B
12.B
13.C
14.D
15.B
.16.E
17.A
18.B
19.E
20.A
AP Microeconomics Test
Unit 2: Supply, Demand and Consumer Choice
Page 5
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