Question

1. Best Bagels Company makes bagels. The law of demand implies, holding everything else constant, that a. as the price of bagels increases, the quantity of bagels demanded will increase. b. as the price of bagels increases, the demand for bagels will increase. c. as the price of bagels increases, the quantity of bagels demanded will decrease. d. as the price of bagels increases, the demand for bagels will decrease! 2. When the price of a normal good falls, ceteris paribus, consumers buy a larger quantity because of the effect and the effect. a. supply: demand b. substitute, complement c. normal; inferior d. substitution; income 3. A change in all of the following variables will change the market demand for a product EXCEPT a. the price of the product in question. b. tastes. c. income. d. population and demographics. 4. Which of the following products would be most likely to see a rise in demand due to a decrease in consumer incomes? a. new cars b. lobster dinners c. luxury hotel rooms d. instant ramen noodles 5. Many universities offer student bus passes (often included with student fi discounted rates) in an effort to reduce demand for on campus parking. Th means universities must believe that a. students are bad at parking. b. bus passes and on campus parking are substitutes in consumption. c. taking the bus is better for students. d. bus passes are normal goods. 6. Which of the following would NOT cause a change in supply in a market? A change in: a. the number of suppliers b. input prices c. consumer incomes d. technology that affects production 7. In 2016, forest fires forced the evacuation of Fort McMurray. Many of those evacuated went to Edmonton and required a hotel room for lodging. As a result, what would we expect to see in the market for hotel rooms in Edmonton at the original equilibrium price? a. a surplus of hotel rooms b. a shortage of hotel rooms c. an increase in the supply of hotel rooms. d. the quantity demanded equal to the quantity supplied

Answer 1

(1) (c)

As per law of demand, increase (decrease) in price decreases (increases) quantity demanded.

(2) (d)

A change in price changes quantity demanded due to income and substitution effects.

(3) (a)

A change in price changes quantity demanded but not demand.

(4) (d)

Demand for inferior goods increases (decreases) when income decreases (increases).

(5) (b)

Availability of a substitute (bus pass) will decrease the demand for car parking.

(6) (c)

Consumer income shifts demand, not supply.

(7) (b)

At original price, quantity demanded will be higher than quantity supplied, causing shortage.