Question

1.Suppose that good ABC is a neutral good for Leah. If Leah's income rises, then the result will be that Leah's demand curve for good ABC will

a.shift rightward.

b.shift leftward.

c.not shift at all.

d.shift rightward immediately and then shift leftward.

( I chose option A)

2. Which of the following illustrates the law of supply?

a.Company ABC increases the quantity supplied of its product as the price of that product rises.

b.Company ABC decreases the quantity supplied of its product as the price of that product rises.

c.Joan buys more of product ABC as the price of that product falls.

d.Joan buys less of product ABC as the price of that product falls.

(for # 2 I pick option A)

3. The supply of good X falls and the price of good X rises. Good Y is a substitute for good X. It follows that:

a.supply of good Y will rise.

b.demand for good Y will rise.

c.supply of good Y will decline.

d.demand for good Y will fall

4.Which of the following would cause a leftward shift of the supply curve for peanut butter?

a.an increase in the price of peanut butter

b.an increase in the price of peanuts

c.an improvement in technology in the production of peanut butter

d.a subsidy is granted to peanut butter producers

( for #4 i pick A, but in economic i thought a decrease result in the leftward shape= demand, so is supply curve a result of an increase)

5. As technology improves in the production of computers, the equilibrium price of computers will ____________ and the equilibrium quantity will _________________.

a.rise, rise

b.fall, fall

c.fall, rise

d.rise, fall

6. For which situation is it true that an increase in the supply of the good will not change the equilibrium price of the good?

The supply curve is perfectly vertical and the demand curve is downward sloping.

b.The supply curve is perfectly horizontal and the demand curve is downward sloping.

c.The demand curve is perfectly vertical and the supply curve is upward sloping.

d.The demand curve is perfectly horizontal and the supply curve is upward sloping.

7. Which of the following illustrates the law of demand?

a.Karen buys fewer shirts at $30 each than at $25 each, ceteris paribus.

b.Jingnan buys more of a given soft drink at $4 a gallon than at $3 per gallon, ceteris paribus.

c.George buys fewer pens at $3 per pen than at $2 per pen, ceteris paribus.

d.a, b, and c

e.a and c

8. Which of the following would lead to a movement up along a given demand curve for carrots?

a.a decrease in the price of carrots

b.an increase in the price of carrots

c.an increase in the price of a substitute for carrots

d.a decrease in the price of a substitute for carrots

9. Suppose that the equilibrium price of grapes is $1.59 per pound, but the current price of grapes is $1.75. From this information, we know that there is currently a _________________ of grapes which will push the price __________________.

a.surplus, downward

b.shortage, upward

c.surplus, upward

d.shortage, downward

Answer 1

1) Option C because neutral goods are independent of income change. When income changes, their demand remains unchanged.

2. Option A because price increase encourages supplier to supply more and earn more profit

3. Price of good X rises where Good Y is a substitute for good X. Hence consumers of good X would switch to the market for good Y and start consuming it by replacing good X. Hence demand for good Y increases. Select option B

4. Option B because expensive peanuts will increase cost of producing peanut butter and so supply decreases.

5. Option C following the supply curve shift to the right showing increase in supply

6. Option B

7. Option D

8. Option A

9. Option A.