1. Which of the following will, ceteris paribus, will cause an increase in the supply of whole wheat cereal?

a. an increase in the price of cereal
b. a decrease in the price of wheat
c. poor weather that reduces the wheat crop
d. an increase in consumer preferences for whole wheat cereal

2. Fern's Floral Shop found that when they offered a free vase with every bouquet of flowers, they sold more flowers.  This is because ___.

a. flowers and vases are substitutes
b. flowers and vases are complements
c. flowers are a normal good
d. flowers are an inferior good

3. The substitution effect says that ___.

a. as your income increases, you buy more expensive goods
b. if the price of one good decreases, the demand for the other good decreases
c. as the price increases, you substitute the relatively cheaper good in place of the relatively more expensive good
d. as the price increases, your purchasing power falls

4. Consider the market for oranges. Suppose, ceteris paribus, that freezing temperatures have destroyed ½ of the crop. Which of the following best describes the above situation?

a. Demand rises.
b. Demand falls.
c. Supply rises.
d. Supply falls.

5. Which of the following will make the supply of a firm's product more elastic?

a. An increase in the number of substitutes available to consumers.
b. Spending on this product uses up only a very small percentage of most consumer's incomes.
c. The producers have time to adjust to changes in the market.
d. Most producers view this product as a necessity