Multiple Choice questions for Ch 3  

(Answers to these questions are at the bottom of the page)

Need some help on graphing? Go to practice problems in the workbook :   Problems  (you will find the Answers Linked to the Problems)

1. The Demand in a market is:

A) The amount that consumers want and/or need of the good.

B) The amounts that buyers are willing and able to purchase at various prices.

C) The satisfaction that consumers expect to get from the good.

D) The quantity that consumers actually buy of the good.

2. Ceteris paribus means:

A) Holding everything else constant.

B) Allowing the free market to decide, not government.

C) Changing prices to see how demand (or supply) shifts.

D) Holding prices constant to see how each determinant of demand changes the quantity demanded.

3. A market in which land, labor, capital is bought or sold is a:

A) Product market.

B) Securities market.

C) Factor market.

D) Bond market.

4. At the equilibrium price there are:

A) Shortages.

B) Surpluses.

C) Excess inventories.

D) No shortages or surpluses.

5. A market is said to be in equilibrium when:

A) Demand is fully satisfied at all alternative prices.

B) The buying intentions of all consumers are realized.

C) The supply intentions of all sellers are realized.

D) The quantity demanded equals the quantity supplied.

6. The term market mechanism refers to:

A) The use of market prices and sales to determine resource allocation.

B) The establishment of a ceiling price in a market.

C) Supply and demand curves.

D) Government laws and regulations concerning how the market should operate.

7. According to the law of demand, the quantity of a good demanded in a given time period:

A) Increases as its price rises, ceteris paribus.

B) Decreases as its price falls, ceteris paribus.

C) Increases as its price falls, ceteris paribus.

D) Does not change when price changes.

8. A change in demand means there has been a shift in the demand curve, and a change in the quantity demanded:

A) Corresponds to a movement along the demand curve.

B) Means a shortage or surplus will result from holding prices constant.

C) Results from a change in price of other goods.

D) Also means demand has shifted.

9. Given a downward-sloping market demand curve for bike tires, if the price of a bike tire falls from $10 to $8, then, ceteris paribus:

A) Demand for bike tires will increase.

B) The quantity demanded of bike tires will increase.

C) Demand for bike tires will decrease.

D) The quantity demanded of bike tires will decrease.

10. Which of the following is a determinant of supply?

A) Consumers desire for the good.

B) Income of the firm.

C) The prices of the resources used in making the good.

D) Number of buyers.

11. The amount of a good suppliers are willing and able to supply at any given price in a given time period could depend on:

A) Buyer's income.

B) Expectations on the part of buyers.

C) The state of technology at the time.

D) The consumer demand for the good.

12. Which of the following is purchased in a product market?

A) A factory.

B) National Defense.

C) An individuals' labor.

D) A bag of pretzels.

13. A rightward shift of the market supply curve, ceteris paribus, causes equilibrium:

A) Price to increase and quantity to decrease.

B) Price to increase and quantity to increase.

C) Price to decrease and quantity to decrease.

D) Price to decrease and quantity to increase.

14. The market supply curve of a particular product indicates the:

A) Total quantities that are actually sold during a given time period.

B) Total quantities that buyers are willing to purchase at alternative prices.

C) Total quantities that sellers are willing and able to offer for sale at alternative prices in a given time period, ceteris paribus.

D) Specific quantities that an individual seller will make available at a given price in a given time period, ceteris paribus.

15. If bagels and donuts are substitutes, then a decrease in the price of donuts will result in:

A) An increase in the demand for donuts.

B) An increase in the demand for bagels.

C) A decrease in the demand for donuts.

D) A decrease in the demand for bagels.

E) The quantity demanded of typing services will decrease.

Use the following to answer questions 17-18: Choose the letter of the diagram that best describes the type of shift that would occur in each situation for the market listed at the left, ceteris paribus.

 

 

17. Donuts: People become more health-wise and prefer bagels over donuts.

18. Computers: An advancement in technology reduces the cost of producing computers.

19. When supply decreases, ceteris paribus, the equilibrium price will increase because:

A) A shortage exists at the old equilibrium price.

B) A surplus exists at the old equilibrium price.

C) The quantity demanded has increased.

D) The quantity supplied has decreased.

 

Answer Key -- Ass2ch3

 

1. B 2. A 3. C 4. D 5. D 6. A 7. C 8. A 9. B  10. C  11. C  12. D  13. D  14. C  15. D 

17. C  18. B 19. A