SAMPLE QUIZ 2

1.The relationship that shows how much buyers of a product want to buy at each possible
price, holding fixed all other factors is called
A. A demand curve
B. Elasticity of demand
C. Demand function
D. An indifference curve

2. Two products are substitutes if

A. An increase in the price of one causes buyers to demand less of the other
B. An increase in the price of one causes buyers to demand more of the other
C. A decrease in the price of one causes buyers to demand more of the other
D. Individuals consume the goods together

3. Two products are complements if

A. A decrease in the price of one causes buyers to demand less of the other
B. An increase in the price of one causes buyers to demand more of the other
C. A decrease in the price of one causes buyers to demand more of the other
D. Individuals consume the goods together

4. An increase in the price of a good is shown by a

A. Rightward shift of the demand curve
B. Leftward shift of the demand curve
C. Movement up and to the left along the demand curve
D. Movement down and to the right along the demand curve

5. A change in demand of a good is shown by a

A. Movement along a demand curve
B. Shift of a demand curve
C. Movement along the demand function
D. Shift of the demand function

6. A product's ________ describes the amount of the product that is demanded for each
possible combination of its price and other factors.
A. Demand curve
B. Price-consumption curve
C. Utility function
D. Demand function

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7. The effect of an increase in the price of gasoline on the demand for sport utility vehicles
would be shown by a
A. Rightward shift of the demand curve for sport utility vehicles
B. Leftward shift of the demand curve for sport utility vehicles
C. Movement up and to the left along the demand curve for sport utility vehicles
D. Movement down and to the right along the demand curve for sport utility vehicles

8. Suppose the demand function for cable TV service is given by QCTV = 15 - 0.25xPCTV +
0.0005xM + 0.3xPSTV, QCTV is the quantity of cable TV demanded (thousands of households),
PCTV is the price of cable TV, M is income and PSTV is the price of satellite TV service.
Suppose consumers' income is $50,000 and the price of satellite TV service is $90. At what
price would the demand for cable TV services be 55,000 households?
A. $67
B. $48
C. $12
D. There is not enough information to answer the question

9. A product's ________ shows how much sellers of a product want to sell at each possible
price, holding all other factors fixed.
A. Supply function
B. Supply curve
C. Production function
D. Total product curve

10. An increase in the price of a good is shown by a

A. Movement up and to the left along the supply curve
B. Movement down and to the right along the supply curve
C. Movement up and to the right along the supply curve
D. Movement down and to the left along the supply curve

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11. Which of the following is a factor that affects both the supply of and demand for a good?
A. Technology
B. Price of Inputs
C. Consumers' Income
D. Government Regulations

12. A product's ______ describes the amount of the product that is supplied for each possible
combination of its price and other factors.
A. Production function
B. Supply curve
C. Supply function
D. Production possibilities curve

13. Consider the relationship given by QCars = 100 + 4xPCars - 2xPSteel - .2xPWorkers, where is the
quantity of cars (in thousands), is the price of cars and P is the wage earned by autoworkers. If
the price of steel is $10 per unit and the price of workers (the wage) is $20, what is the supply
curve for cars?
A. QCars = 140 + 4xPCars
B. QCars = 100 + 4xPCars - 2xPSteel - .2xPWorkers
C. QCars = 100 + 4xPCars
D. QCars = 60 + 4xPCars

14. Which of the following best describes the process that occurs when the price of a good is
below equilibrium?
A. The excess demand for the good provides an incentive for buyers to offer a higher price.
These higher prices encourage sellers to supply more of the good
B. The excess supply of the good provides an incentive for buyers to offer a higher price.
These higher prices encourage sellers to supply more of the good
C. The excess demand for the good provides an incentive for buyers to offer a lower price.
These lower prices encourage sellers to supply less of the good
D. The excess supply for the good provides an incentive for buyers to offer a lower price.
These lower prices encourage sellers to supply less of the good

15. Excess supply is

A. The result of a price that is above equilibrium, causing the quantity demanded to exceed
the quantity supplied
B. The result of a price that is below equilibrium, causing the quantity demanded to exceed
the quantity supplied
C. The result of a price that is above equilibrium, causing the quantity supplied to exceed the
quantity demanded
D. The result of a price that is below equilibrium, causing the quantity supplied to exceed the
quantity demanded

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16. Which of the following would result from an increase in the demand for a good?
A. Both equilibrium price and quantity would rise
B. Both equilibrium price and quantity would fall
C. Equilibrium price would rise and equilibrium quantity would fall
D. Equilibrium quantity would rise and equilibrium price would fall

17. Which of the following would result from an increase in the supply of a good?
A. Both equilibrium price and quantity would rise
B. Both equilibrium price and quantity would fall
C. Equilibrium price would rise and equilibrium quantity would fall
D. Equilibrium quantity would rise and equilibrium price would fall

18. The ______ the demand curve, the _____ responsive is the amount demanded to price.
A. Steeper; less
B. Steeper; more
C. Flatter; less
D. Higher; less

19. Suppose there is an increase in the supply of a good. Which of the following statements is
true?
A. The closer the demand curve is to being vertical, the larger the decrease in equilibrium
price and the smaller the increase in equilibrium quantity
B. The closer the demand curve is to being horizontal, the larger the decrease in equilibrium
price and the smaller the increase in equilibrium quantity
C. The closer the demand curve is to being vertical, the smaller the decrease in equilibrium
price and the larger the increase in equilibrium quantity
D. The closer the demand curve is to being vertical, the larger the increase in equilibrium
price and the smaller the decrease in equilibrium quantity

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