Question 1) A shift in the demand curve occurs when __________.
a. suppliers place more goods on the market
b. the price of a commodity rises
c. consumers want to buy more than before at a given price
d. the price of a commodity falls
Question 2) If a 5 percent decrease in the price of long-distance phone calls leads to a 25 percent increase in the number of calls made, we can then conclude that the demand for long-distance phone calls at the current rate is ________.
a. elastic
b. inelastic
c. unitarily elastic
d. cannot be determined on the basis of data given
Question 3) A wage concession by the United Auto Workers would lead to a(n) ________ shift in the ___________ function for cars, leading to a(n) ____________ in the price of domestically produced cars.
a. upward, demand, increase
b. upward, supply, no change
c. downward, supply, decrease
d. downward, demand, increase
Question 4) When a new product (e.g., product “B”) appears on the market, and “B” can be readily used to substitute for an existing product (e.g., product “A”), then the demand function for “A” may be expected to __________________.
a. shift inward
b. shift outward
c. remain unchanged
d. move perfectly vertical
Question 5) The U.S. government banned cigarette advertising on radio and television in the early 1970’s. You would expect to find that, after the ban took effect, ___________________.
a. the demand for magazine ads for cigarettes will also decrease
b. there should be no change in demand for magazine ads for cigarettes
c. the demand for magazine ads for cigarettes will increase
d. the demand for magazine ads for cigarettes will remain unchanged but the
demand for ads by other products will rise.
Question 6) If the international oil price keeps rising, then we can expect the supply curves of products using oil to _______________.
a. shift outward to the right
b. remain unchanged
c. shift inward to the left
d. the supply curve itself will still be the same, except that its slope tilts rightward
Question 7) The concept of derived demand can best be illustrated by the statement:
a. An increase in the price of butter results in an increase in the demand for
margarine.
b. A decrease in the price of automobiles results in greater demand for automobiles, and the greater demand in automobiles results in greater demand for automobile windshields.
c. The demand curve is derived from the law of supply.
d. The demand for clothes depends upon buyers’ incomes.
Question 8) One way to view the law of diminishing marginal productivity is to say that ________________.
a. as more and more inputs (e.g., labor) are added to the production process, there will come a point where the marginal productivity will actually fall and even become negative
b. as more and more inputs are added to the production process, there will not be a change to total productivity
c. adding inputs to the production process will cause marginal productivity to keep rising infinitely, because, like money, there can never be enough supplies
d. as more and more units of input are added, the total product becomes ever lower
Question 9) The costs of a firm that vary with the level of production are called ___________.
a. fixed costs
b. total costs
c. variable costs
d. sunk costs
Question 10) A perfect competitor can reap an economic profit ________________.
a. in the short term
b. in the long term
c. never
d. in both the short term and long term