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Indicate the answer choice that best completes the statement or answers the question.
1. Take a look at McDanold Burgers' supply curve for burgers. How many burgers will they supply at a market
price of $1.50 per burger?
a. 200 burgers
b. 300 burgers
c. 400 burgers
d. 500 burgers
2. IBM produces laptops and desktop computers. Which graph shows what will happen in the market for IBM
desktops if the demand for laptops increases?
a. Graph A
b. Graph B
c. Graph C
d. Graph D
3. Which factor would cause a DECREASE in the supply of chocolate cake?
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a. a rise in the price of chocolate
b. a fall in the price of chocolate cake
c. an increase in the number of chocolate cake manufacturers
d. expectations of a decline in price of chocolate cake
4. Which graph illustrates what will happen in the market for processed industrial steel bars when the price of
raw steel falls?
a. Graph A
b. Graph B
c. Graph C
d. Graph D
5. In the graph, the movement from point L to point H represents a(n):
a. decrease in supply.
b. decrease in quantity supplied.
c. increase in quantity supplied.
d. increase in supply.
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6. Husnu who runs a breakfast kitchen, notices that his business has declined by 25% in recent months and
decides to cut his staff accordingly. Husnu can continue to serve his clientele with the same quality of service
while reducing his staff by as much as possible if he were to cut his staff:
a. by less than 25%.
b. by 25%.
c. by more than 25%.
d. to zero and start over.
7. Mustafa is a barley farmer in a perfectly competitive market. The market price of barley is 250TL per ton. If
Mustafa charges 245TL per ton, he will:
a. not sell any barley.
b. raise his profitability by 5TL per ton.
c. sell less barley than other farmers.
d. lower his profitability by 5TL per ton.
8. As an analyst with an investment management company, you monitor market conditions in the dairy sector.
Which of these would shift the market supply curve you've modeled for milk?
a. the rising popularity of milk
b. an increase in population
c. expectations of a future decline in the price of milk
d. an increase in the incomes of consumers
9. Suzan is a milk farmer in a perfectly competitive market. The market price of milk is 20TL per liter, which is
also the marginal cost. If Suzan charges 30TL per liter, she will:
a. not sell any milk.
b. sell more milk than the other farmers.
c. sell the same amount of milk as she did when she charged 20 TL per gallon.
d. increase her profitability by 10 TL per liter.
10. If wood sticks and toothpicks are substitutes in production, a producer (with her fixed set of resources) will
need to reduce the production of wood sticks when she:
a. produces less of the other good.
b. produces more of the other good.
c. obtains more resources.
d. produces more of the other good and obtains more resources.
11. In employing the marginal principle, a seller may:
a. decide whether to supply one more unit of a good or service.
b. compare production of a good or service to the next best alternative.
c. consider the choices made by other sellers in the market.
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d. decide whether to charge the perfectly competitive price.
12. If small size SUVs (like Audi Q2) and big size SUVs (like Range Rovers) are substitutes in production,
then a rise in the price of big size SUVs will lead to a(n):
a. increase in the quantity of SUVs supplied.
b. decrease in the quantity of SUVs supplied.
c. increase in the supply of SUVs.
d. decrease in the supply of SUVs.
13. An input whose quantity CANNOT be changed in the short run is:
a. marginal.
b. fixed.
c. incremental.
d. variable.
14. A fixed cost is one:
a. that is limited in supply.
b. that only has one use in production.
c. that cannot be used to produce more or less output in any period.
d. whose quantity cannot be changed in the short run.
15. Metformin, a diabetes drug, is produced as a generic by Glumetza. The marginal cost of producing a bottle
of Metformin is indicated in the table below in 1,000 unit increments per day.
Quantity of Metformin (bottles)
Marginal cost per bottle
1,000
$9.00
2,000
$10.50
3,000
$11.60
4,000
$12.30
5,000
$13.50
6,000
$14.25
If the market price of Metformin is $11.65, how many bottles of Metformin should Glumetza produce per day
to maximize its profits?
a. 2,000
b. 3,000
c. 4,000
d. 5,000
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16. How will this year's supply of pants change if pant prices are expected to fall next year?
a. It will increase.
b. It will remain unchanged.
c. It will decrease.
d. Suppliers will stop producing pants and switch to an alternative item.
17. A new law mandates reductions in the prices of most health care services offered by hospitals in Turkey. As
a result, the _____ will _____.
a. quantity of health care services supplied; rise
b. supply of health care services; increase
c. quantity of health care services supplied; fall
d. supply of health care services; decrease
18. A beach resort in Bodrum builds 24 villas with private pools and two restaurants that use state-of-the-art
equipment, such as multipurpose ovens, freezers, and food processors. Meals are prepared using organic, locally
sourced vegetables and meat. The hotel also uses water from the town supplier. Based on this scenario, what are
the beach resort's variable costs?
a. the costs of the organic vegetables and water
b. the costs of the multipurpose ovens and freezers
c. the costs of the food processors
d. the costs of the villas
19. If the price of jet fuel rises, the:
a. supply of airline flights will decrease.
b. supply of jet fuel will decrease.
c. supply of jet fuel will increase.
d. quantity of jet fuel supplied will decrease.
20. "Diminishing marginal product" means that:
a. each additional unit of an input will decrease output.
b. each additional unit of an input will increase output but by a smaller amount than the previous unit of
the input.
c. each additional unit of an input will increase output but by a larger amount than the previous unit of
the input.
d. the firm is maximizing profit.
21. Turgut, a market analyst for Vakko, is analyzing data to determine what price Vakko should charge for
cotton t-shirts, a product sold in a perfectly competitive market. Turgut finds that Beymen, Prada, and Gucci, all
price cotton t-shirts at 600TL, the same price Vakko currently charges. If Tugut recommends that Vakko price
cotton t-shirts at 650TL, and Vakko accepts this recommendation, Vakko's profits from selling cotton t-shirts
will:
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a. rise.
b. remain unchanged.
c. fall dramatically, perhaps to zero.
d. fall somewhat.
22. As the production strategist of a home construction company, you observe that competitors are increasingly
adopting additive manufacturing, or 3D printing, enabling them to more quickly develop scale models and so
offer a broader selection of homes to homebuyers. You also note that the cost of 3D printers is falling rapidly
from year to year. You therefore face a dilemma: while you want your company to adopt 3D printing quickly to
compete more effectively in the market, you also want to minimize the cost of acquiring this new technology
and may therefore want to delay purchasing it until its price has fallen somewhat. You can BEST resolve this
issue by:
a. comparing the projected opportunity costs of the two courses of action.
b. delaying the adoption of the technology until its cost is near zero.
c. taking no action, since the two initiatives will cancel each other out.
d. adopting the new technology now, since adoption of the technology will ultimately be unavoidable in
any case.
23. The market supply curve is upward-sloping because, at higher prices:
(i) individual sellers have an incentive to increase the output they supply.
(ii) more sellers have an incentive to supply output to the market.
(iii) the government has an incentive to supply output to the market.
a. (i) and (ii)
b. (i) and (iii)
c. only (iii)
d. (ii) and (iii)
24. (Figure: Graph 1) In the graph, the movement from point H to point G represents a(n):
a. decrease in supply.
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b. decrease in quantity supplied.
c. increase in quantity supplied.
d. increase in supply.
25. Which of these scenarios depicts a seller who is following the Rational Rule for Sellers?
a. Turkish Airlidetermines the marginal cost of an extra passenger to be 750TL and sells a discount
seat for 3000TL.
b. Husnunun Yeri finds that the marginal cost of a fish and chips meal is 70TL and lists the item for
sale at 65TL
c. An auto-rickshaw driver in New Delhi, India, calculates that a trip has a marginal cost of 350 rupees
and accepts a ride request for 315 rupees.
d. Sevda, who runs a lemonade stand, calculates the cost of an additional cup of lemonade at 50TL and
sells it for 25TL.
26. A supply curve:
(i) plots the quantities a seller is willing to sell at different prices.
(ii) shows the total cost to the seller.
(iii) shows rising marginal costs.
(iv) shows rising fixed costs.
a. only (i)
b. (i) and (iii)
c. (i), (ii), (iii), and (iv)
d. (i), (ii), and (iii)
27. The market for wheat in Konya is considered to be competitive. This means there are _____ buyers and
_____ sellers of wheat in Konya.
a. many; few
b. few; many
c. many; many
d. few; few
28. Which of these would cause a decrease in the supply of gym membership services?
a. a fall in gym membership fees, as restrictions associated with the COVID-19 pandemic go into effect
b. a fall in projected future gym membership fees, as plans to impose restrictions associated with the
COVID-19 pandemic are announced
c. a new fad in home exercise equipment that leads many people to stop going to gyms
d. the development of a new generation of exercise machines, leading to an equipment buying spree
among gyms across the country
29. Which of these would result in a movement along the supply curve, rather than a shift in the supply curve?
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a. a government infrastructure project that includes laying new plumbing pipes in many cities, pushing
up the prices plumbers charge
b. an increase in the number of plumbing apprenticeship programs
c. the development of high-definition cameras used to locate obstructions in plumbing systems
d. an influx of people, including some who are plumbers, into a region
30. The increased use of robotics has made the production of naval vessels more efficient. This represents a(n):
a. increase in supply.
b. decrease in supply.
c. increase in quantity supplied.
d. decrease in quantity supplied.
31. In employing the cost-benefit principle, a seller may:
a. decide whether to supply one more unit of an item.
b. compare production of a good or service to the next best alternative.
c. consider the choices made by other sellers in the market.
d. compare the marginal cost of producing an item with the price it can get for that item.
32. (Figure: Graph 2) In the graph, the movement from point H to point L represents a(n):
a. decrease in supply.
b. decrease in quantity supplied.
c. increase in quantity supplied.
d. increase in supply.
33. Three gas stations make up the market for gasoline in your town. The number of gallons of gasoline that
each gas station is willing to supply per week at various prices is indicated in the accompanying table.
Price per gallon
Shell
Arco
Chevron
$2.50
0
3,000
0
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$3.00
0
3,500
3,000
$3.50
3,000
4,000
3,500
$4.00
3,500
4,500
4,000
$4.50
4,000
5,000
4,500
If the price of gasoline rises from $3.00 to $3.50 per gallon, the quantity supplied by the market:
a. rises by 2,500 gallons.
b. rises by 4,000 gallons.
c. falls by 2,000 gallons.
d. falls by 3,500 gallons.
34. Turkish firms import machinery from the United Kingdom. What would happen to the supply of Turkish
goods manufactured using machinery from the United Kingdom if the TL were to fall in value against the
British pound?
a. The quantity supplied would rise.
b. The supply curve would shift to the left.
c. The supply curve would shift to the right.
d. There would be no effect on the supply.
35. You run a successful designer clothing boutique but expect that demand for your products will decline in the
next six months as the economy falls into a recession. As a result, the opportunity cost of supplying designer
clothing today will:
a. rise, causing your supply curve to shift to the left.
b. fall, causing your supply curve to shift to the right.
c. rise, causing your supply curve to shift to the right.
d. fall, causing your supply curve to shift to the right.
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Answer Key
1. a
2. c
3. a
4. a
5. a
6. c
7. d
8. c
9. a
10. b
11. a
12. d
13. b
14. d
15. b
16. a
17. c
18. a
19. a
20. b
21. c
22. a
23. a
24. b
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25. a
26. b
27. c
28. b
29. a
30. a
31. d
32. d
33. b
34. b
35. b
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