1) The law of demand states that as the price of a good rises, _____. A. buyers purchase more of the good, because the price of a substitute has risen B. buyers purchase less of the good, because their real income decreases with an increase in price C. buyers purchase more of the good, because they expect prices to be even higher in the future D. buyers purchase less of the good, because they expect prices to fall in the future
2) A movement along a demand curve can be attributed to a change in: A. the quantity demanded of a good. B. the demand for a good. C. the substitution effect of consuming a good. D. the opportunity cost of producing a good.
3) If we say that demand for a good has increased, we mean that there has been: A. a leftward shift of the demand curve. B. a rightward shift of the demand curve. C. a leftward movement along the demand curve. D. a rightward movement along the demand curve.
4) Which of the following will cause the demand curve for a normal good to shift to the right? A. An increase in the price of a complementary good B. A decrease in income C. A decrease in the price of the good D. An increase in the price of a substitute good
5) Which of the following best defines supply? A. The amount of a good that is produced at the least possible cost, other things constant B. The amount of a good that producers are willing and able to sell at each possible price, other things constant C. The amount of a good that consumers want to buy at different income levels D. The amount of a good that producers want to sell at a fixed price
6) The market supply curve of a particular product indicates the total quantities: A. that are actually sold during a given time period. B. that sellers are willing to offer for sale at a fixed price. C. that buyers are willing to purchase at alternative prices. D. that sellers are willing and able to offer at alternative prices.
7) When quantity demanded of a good exceeds the quantity supplied at the prevailing market price, _____. A. the demand curve shifts rightward until the surplus is eliminated B. the market is in equilibrium C. the price of the good will tend to increase D. the price of the good will decrease
8) A shortage of textbooks is most likely to cause: A. an increase in the price of textbooks. B. a decrease in the supply of textbooks. C. a decrease in the price of paper. D. an increase in the cost of printing.
9) The most important characteristic of the equilibrium price is that it: A. maximizes the quantity demanded. B. clears the market, leaving neither a surplus nor a shortage. C. minimizes the quantity demanded. D. guarantees that producers earn profit.
10) If both demand and supply increases in a market that is initially in equilibrium, price will: A. increase only if demand increases more than supply. B. increase only if supply increases more than demand. C. remain unchanged while quantity will increase. D. remain unchanged while quantity will decrease.