1) Which of the following does NOT shift the demand curve?
a) changes in the product's price
b) changes in income
c) changes in population
d) changes in tastes and preferences
2) Refer to the figure. At a price of $3, quantity supplied is ______ and quantity demanded is
______, leading to a _______.
a) 6; 2; surplus of 4 units
b) 2; 6; shortage of 8 units
c) 2; 4; surplus of 2 units
d) 4; 2; shortage of 2 units
3) If the demand curve is elastic a price ________ causes a(n) ________ in revenues.
a) decrease; decrease
b) increase; increase
c) decrease; increase
d) There is not enough information to answer
4) When the maximum legal price is below the market price we say that there is a price:
5) Refer to the figure. The equilibrium price (in $) is:
6) Inflation can be defined as:
a) the general rise in the level of output in an economy.
b) the boom and bust cycles of an economy.
c) the rise and fall of the general level of prices in an economy.
d) the increase in the general level of prices in an economy.
7) A price ceiling is a(n):
a) legally established minimum price that can be charged for a good.
b) illegally established minimum price that can be charged for a good.
c) legally established maximum price that can be charged for a good.
d) illegally established maximum price that can be charged for a good.
8) In a market, the equilibrium condition is given by the following:
a) quantity demanded = quantity supplied
b) quantity demanded × quantity supplied
c) quantity demanded/quantity supplied
d) price × quantity demanded = quantity supplied
9) Producer surplus is:
a) the difference between the market price and the minimum price at which producers are
willing to sell a good.
b) the amount at which producers are willing to sell a good.
c) the amount at which producers sell a good.
d) the amount at which producers are willing to sell a good plus the amount at which they
10) The quantity supplied is the:
a) amount of inputs that a firm earns profit on.
b) change in the sellers' output multiplied by the change in price.
c) incremental cost of producing one more unit of output, holding all other things constant.
d) amount of a good that firms are willing and able to sell at a particular price during a given
period of time.
11) According to the figure, what is the amount of the deadweight loss caused by the imposition
of the tax on gadgets?
12) According to the figure, what is the tax revenue that the government collects from the tax on
13) According to the figure, what is the amount of the tax that has been imposed on the sale of
14) Why is the war on drugs hard to win?
a) It is not a conventional war.
b) The government has not used adequate resources in the war.
c) Drug dealers get stronger following successful government prohibition efforts.
d) The demand for illegal drugs is too elastic.
15) An increase in supply and a decrease in demand occur in a market. What happens to the
equilibrium price and quantity?
a) The equilibrium price decreases; the change in the equilibrium quantity is ambiguous.
b) The equilibrium price decreases; the equilibrium quantity increases.
c) The equilibrium price increases; the change in the equilibrium quantity is ambiguous.
d) The equilibrium price increases; the equilibrium quantity decreases.
16) A rent control is a regulation that:
a) ensures apartments being available for rent.
b) controls rents at constant levels.
c) upholds rents to above equilibrium levels.
d) prevents rents from rising to equilibrium levels
17) Refer to the figure. Calculate the dollar amount of consumer surplus being earned in this
18) Which of the following could explain the figure?
a) Consumer income increases in the market for a normal good.
b) Consumer income falls in the market for a normal good.
c) Consumer income rises in the market for an inferior good.
d) Consumer income falls in the market for a luxury good.
19) In the oil market, an increase in the wage of oil workers will:
a) shift the supply curve of oil to the right.
b) shift the supply curve of oil to the left.
c) shift the demand curve for oil to the left.
d) shift the demand curve for oil to the right.
20) If the price of shotguns ______, the demand for shotgun shells will _______.
a) increases; decrease
b) increases; increase
c) decreases; decrease
d) double; double
21) The opportunity cost of a choice is:
a) the value of the opportunities lost.
b) the net value of the opportunities gained.
c) the difference between the benefits and costs of the choice.
d) sometimes positive or negative.
22) A shortage results when:
a) a price floor is imposed.
b) a price ceiling is imposed.
c) there is excess supply without any price controls.
d) a price floor is imposed but it is not binding.
23) The main incentive for business activity is:
a) government subsidies.
b) technological advancement.
24) If Major League Baseball ticket prices rise by 15 percent, the number of tickets sold falls by
5 percent. The elasticity of demand is:
25) The difference between the maximum price a consumer is willing to pay for a given quantity
of a good and its market price is:
a) producer shortage.
b) consumer shortage.
c) producer surplus.
d) consumer surplus.
26) If the cross-price elasticity of demand of two goods is positive, we can conclude that the two
a) normal goods.
b) inferior goods.
27) A decrease in income causes demand for a normal good to ________, and an increase in
income causes demand for an inferior good to ________.
a) decrease; decrease
b) increase; increase
c) decrease; increase
d) increase; decrease
28) Why is the demand curve for oil rather inelastic?
a) There are few widely available good substitutes for oil.
b) To increase the production of oil requires a significant outlay of exploration and drilling
c) The world supply of oil is low relative to demand.
d) The demand curve for oil is always perfectly inelastic.
29) The demand curve is inelastic if the absolute value of the elasticity is:
a) greater than 1.
b) greater than 0.
c) less than 1.
d) equal to 1.
30) Refer to the figure. An increase in price from $40 to $50 would cause the change in quantity
demanded for D1 to be:
a) greater than the change in quantity demanded for D2 so D1 is more elastic than D2.
b) greater than the change in quantity demanded for D2 so D2 is more elastic than D1.
c) less than the change in quantity demanded for D2 so D1 is more inelastic than D2.
d) less than the change in quantity demanded for D2 so D2 is more inelastic than D1.