Eco201, Fall 2007, Quiz 3
Prof. Bill Even
Name___________________________________
MULTIPLE CHOICE. Place all answers in the table at the end of the quiz.
Assigned seat _______
1) The law of demand states that
A) a decrease in the price of a good shifts the demand curve leftward.
B) other things remaining the same, the higher the price of a good, the smaller is the quantity demanded.
C) an increase in the price of a good shifts the demand curve leftward.
D) other thing remaining the same, the higher the price of a good, the larger is the quantity demanded.
2) Which of the following pairs of goods are most likely substitutes in consumption?
A) lettuce and salad dressing
B) cola and lemon lime soda
C) DVDs and DVD players
D) peanut butter and gasoline
3) If income increases or the price of a complement falls, the
A) demand curve for a normal good shifts rightward.
B) supply curve of a normal good shifts rightward.
C) supply curve of a normal good shifts leftward.
D) demand curve for a normal good shifts leftward.
4) Inferior goods are those for which demand increases as
A) income decreases.
C) the price of a substitute falls.
B) income increases.
D) the price of a substitute rises.
5) A change in the price of a good
A) shifts the goodʹs demand curve but does not cause a movement along it.
B) shifts the goodʹs demand curve and also causes a movement along it.
C) neither shifts the goodʹs demand curve nor causes a movement along it.
D) does not shift the goodʹs demand curve but does cause a movement along it.
6) Which of the following explains why supply curves slope upward?
A) increasing marginal cost
B) prices and income
C) resources and technology
D) substitutes in production and complements in production
7) Good A and good B are substitutes in production. The demand for good A decreases, which lowers the price of
good A. The decrease in the price of good A
A) increases the demand for good B.
B) decreases the supply of good B.
C) decreases the demand for good B.
D) increases the supply of good B.
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8) The above figure represents the market for oil. Because of the development of a new deep sea drilling
technology the
A) demand curve does not shift, and the supply curve shifts from S2 to S1 .
B) demand curve shifts from D1 to D2 and the supply curve shifts from S1 to S2 .
C) demand curve does not shift, and the supply curve shifts from S1 to S2 .
D) demand curve shifts from D1 to D2 and the supply curve does not shift.
9) If the price is above the equilibrium price, then there is a
A) shortage, and market forces will operate to lower price.
B) shortage, and market forces will operate to raise price.
C) surplus, and market forces will operate to raise price.
D) surplus, and market forces will operate to lower price.
10) Assume that beef and pork are substitutes for consumers. There is a drought in the cattle grazing areas. The
drought will shift the
A) demand curve for pork rightward.
B) demand curve for pork leftward.
C) supply curve of pork rightward.
D) supply curve of pork leftward.
11) Leather belts and leather shoes are substitutes in production. If style changes increase the demand for leather
belts, the supply curve of leather shoes will shift
A) rightward and the equilibrium price of leather shoes will rise.
B) rightward and the equilibrium price of leather shoes will fall.
C) leftward and the equilibrium price of leather shoes will fall.
D) leftward and the equilibrium price of leather shoes will rise.
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Answer Key
Testname: Q3F1F07
12) Using the above figure, suppose that roses are a normal good. If incomes decrease while simultaneously there
is an increase in the price of the resources used to produce roses, then
A) the price will definitely increase above $25 per dozen roses.
B) the price will definitely decrease below $25 per dozen roses.
C) the quantity will definitely decrease below 10 dozen roses.
D) we cannot tell what will happen to equilibrium quantity.
1) B
2) B
3) A
4) A
5) D
6) A
7) D
8) C
9) D
10) A
11) D
12) C
13) B
14) D
15) D
16)
13) Using the above figure, suppose that roses are a normal good. If there is an increase in income,
A) we cannot predict what will happen to the equilibrium quantity.
B) the equilibrium price will rise above $25 per dozen roses.
C) we cannot predict what will happen to the equilibrium price.
D) the equilibrium quantity will decrease below 10 dozen roses.
14) You notice that the price and quantity of wheat both decrease. This observation can be the result of the
A) supply curve of wheat shifting rightward.
B) demand curve for wheat shifting rightward.
C) supply curve of wheat shifting leftward.
D) demand curve for wheat shifting leftward.
15) An increase in the price of jet fuel will ________ air flights and the equilibrium quantity of air flights will
________.
A) increase the demand for; increase
B) decrease the demand for; decrease
C) decrease the supply of; increase
D) decrease the supply of; decrease
Put all answers in the space below.
16)
1_________ 2_______
3________
4_______ 5________ 6 ________7________ 8_______
9_________ 10_______
11________ 12_______ 13________ 14 ________15________
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