Morehead State University ECON 661 Quiz 2 SP 2015

Question Test Quiz 2 • Question 1 1 out of 1 points “Demand” is best defined as the relationship between: Answers: the price of a good and the quantity consumers are willing and able to buy at each price level. the current price of a good and the quantity demanded at that price. the quantity supplied and the price people are willing to pay for a good. the amount of income someone has and the price he is willing to pay for a good. • Question 2 1 out of 1 points A grocery store owner remarks that “Other things equal the lower the price of bananas the greater the amount of bananas purchased.” This statement indicates that: Answers: the quantity of bananas purchased determines the price of bananas. all factors other than the price of bananas are assumed to be constant. economists can conduct controlled laboratory experiments. one cannot generalize about the relationship between the price of bananas and the quantity purchased • Question 3 0 out of 1 points At a price of $5 Jim buys 10 units of a product; when the price increases to $6 Jim buys 8 units. Julia says Jim’s demand has decreased. Is Julia correct? Answers: Yes Julia is correct. Jim’s demand has decreased. No Julia is incorrect. Jim’s demand has increased. No Julia is incorrect. Jim’s quantity demanded has decreased and his demand has not changed. No Julia is incorrect. Jim’s quantity demanded has increased and his demand has increased. • Question 4 1 out of 1 points In economic terms to say that there has been an increase in demand for a product means that: Answers: the demand curve has shifted to the left. the product’s price has fallen and as a result consumers are buying a larger quantity of the product. the product has become scarce for some reason. consumers are now willing to purchase more of the product at each possible price. • Question 5 1 out of 1 points All else constant all of the following would cause the demand curve for a good to shift except: Answers: a change in the cost of producing the good. a change in the price of a related good. a change in consumer’s incomes. a change in the number of buyers • Question 6 0 out of 1 points In the market for LED TV all of the following would cause the supply of LED TVs to change except: Answers: an improvement in the technology used to produce LED TVs. an increase in the cost of labor used to produce LED TVs. a change in LED TV producers’ expectations. an increase in the number of buyers in the market for LED TV. • Question 7 1 out of 1 points An increase in the price of T-shirts causes the supply of T-shirts to shift to the right Answers: True False • Question 8 1 out of 1 points When quantity demanded of a good is less than the quantity supplied at the prevailing price Answers: the market is in equilibrium the price of the good tends to rise the price of the good tends to fall the demand curve shifts rightward until the surplus is eliminated • Question 9 1 out of 1 points The effect of a fall in consumer income on equilibrium price and quantity of computers (a normal good) is Answers: to increase equilibrium price and quantity to decrease equilibrium price and quantity to increase equilibrium price and decrease equilibrium quantity that equilibrium price and quantity remain constant • Question 10 1 out of 1 points Which of the following would cause both the equilibrium price and equilibrium quantity of cookies to decrease? Answers: a rise in the price of milk (a complement) a rise in consumer incomes a drop in the price of cookie dough a rise in the price of crackers (a substitute) • Question 11 1 out of 1 points If the demand for apples increases at the same time the supply of apples increases the quantity of apples traded (bought and sold) will increase. Answers: True False • Question 12 1 out of 1 points Suppose that the market for green beans is in equilibrium and both the supply and demand curves for green beans shift to the left. As a result the equilibrium price __________ and the equilibrium quantity will __________. Answers: will fall; fall will rise; fall cannot be determined; fall cannot be determined; rise

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