A decrease in the price of a complementary good will

d. Shift the demand curve of the joint commodity to the right.

a. Shift the demand curve of the joint commodity to the left.

b. Increase the price paid for a substitute good.

c. Shift the supply curve of the joint commodity to the left.

Demand for a product tends to be price inelastic if

d. Few good substitutes for the product are available

a. The product is considered a luxury item.

b. People spend a large percentage of their income on the product

c. The population in the market area is large.

In any competitive market, an equal increase in both demand and supply can be expected to always

c. Increase market-clearing quantity

a. Increase both price and market-clearing quantity

b. Decrease both price and market-clearing quantity

Which of the following will cause a shift in the supply curve of a product?

b. Changes in production taxes.

a. Changes in the price of the product

d. Changes in the number of buyers in the market

In which of the following situations would there be inelastic demand?

a. A 5% price increase results in 3% decrease in the quantity demanded.

b. A 4% price increase results in a 6% decrease in the quantity demanded.

c. A 4% price increase results in a 4% decrease in the quantity demanded.

d. A 3% price decrease results in a 5% increase in the quantity demanded.

If a group of consumers decide to boycott a particular product, the expected result would be

b. A decrease in the demand for the product.

a. An increase in the product price to make up lost revenue.

c. An increase in product supply because of increased availability

d. That demand for the product would become completely inelastic.

Which of the following is not likely to affect the supply of a particular good?

a. Changes in government subsidies.

d. Changes in production costs.

If a product’s demand is elastic and there is a decrease in price, the effect will be

d. An increase in total revenue.

a. A decrease in total revenue.

c. A decrease in total revenue and the demand curve shifts to the left.

The law of diminishing marginal utility states that

a. Marginal utility will decline as a consumer acquires additional units of a specific product.

b. Total utility will decline as a consumer acquires additional units of a specifi c product.

c. Declining utilities causes the demand curve to slope upward.

d. Consumers’ wants will diminish with the passage of time.

A natural monopoly exists because

c. Economic and technical conditions permit only one efficient supplier.

a. The firm owns natural resources.

d. The government is the only supplier.

Which of the following is not a key assumption of perfect competition?

d. Each firm can price its product above the industry price.

a. Firms sell a homogeneous product.

b. Customers are indifferent about which firm they buy from.

c. The level of a firm’s output is small relative to the industry’s total output.

An oligopolist faces a “kinked” demand curve. This terminology indicates that

a. When an oligopolist lowers its price, the other firms in the oligopoly will match the price reduction, but if the oligopolist raises its price, the other firms will ignore the price change.

b. An oligopolist faces a nonlinear demand for its product, and price changes will have little effect on demand for that product

c. An oligopolist can sell its product at any price, but after the “saturation point” another oligopolist will lower its price and, therefore, shift the demand curve to the left.

d. Consumers have no effect on the demand curve, and an oligopolist can shape the curve to optimize its own effi ciency.

If consumer confidence falls, the impact upon the economy is

d. Consumer confidence does not have an impact upon the economy.

For a given level of tax collections, prices, and interest rates, a decrease in governmental purchases will result in a(n)

c. Decrease in aggregate demand

a. Increase in aggregate demand.

b. Increase in aggregate supply.

d. Decrease in aggregate supply

In macroeconomic terms, aggregate demand is the

d. Total expenditures on consumer goods and investment, including government and foreign expenditures, during a given period.

a. Demand for money by the community in a period of full employment.

b. Total expenditure on capital goods by entrepreneurs during a period of full employment.

c. Demand that is needed if a country’s economy is to operate at optimum level and the level of investment is to be raised.

Which one of the following would not be included in the calculation of the gross domestic product (GDP)?

b. An automotive worker’s wages

Disposable income is calculated as

d. Personal income minus personal taxes.

a. Gross domestic product minus the capital cost allowance

b. Net domestic product minus indirect business taxes plus net income earned abroad.

c. Personal income minus transfer payments.

The primary reason for allowing legal immigration into industrial nations is the immigrants’ potential for

c. Contributing to economic growth.

b. Fulfilling a trade agreement.

d. Fulfilling a political agreement.

Some economic indicators lead the economy into a recovery or recession, and some lag it. An example of a lagging indicator is

b. Orders for consumer and producer goods.

Government borrowing to finance large deficits increases the demand for lendable funds and

d. Puts upward pressure on interest rates.

a. Increases the supply of lendable funds.

b. Exerts downward pressure on interest rates.

c. Has no impact on interest rates.

A period of rising inflation

d. Increases the price level, which is negatively related to the purchasing power of money.

a. Increases the price level, which benefits those who are entitled to receive specific amounts of money.

b. Enhances the positive relationship between the price level and the purchasing power of money.

c. Will not be affected by contracts that include the indexing of payments.

Economics

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

If both the supply and the demand for a good increase, the market price will

a. Rise only in the case of an inelastic supply function.

b. Fall only in the case of an inelastic supply function

c. Not be predictable with only these facts

d. Rise only in the case of an inelastic demand function.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A supply curve illustrates the relationship between

a. Price and quantity supplied

b. Price and consumer tastes.

c. Price and quantity demanded.

d. Supply and demand.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

As a business owner you have determined that the demand for your product is inelastic. Based upon this assessment you understand that

a. Increasing the price of your product will increase total revenue

b. Decreasing the price of your product will increase total revenue.

c. Increasing the price of your product will have no effect on total revenue.

d. Increasing the price of your product will increase competition

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following could cause the change shown in the graph?

a. A decrease in the price of the product.

b. An increase in supply of the product.

c. A change in consumer tastes.

d. A decrease in the price of a substitute for the product

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What will be the result on the equilibrium price for the product?

a. Increase.

b. Decrease.

c. Remain the same.

d. Cannot be determined

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which one of the following has an inverse relationship with the demand for money?

a. Aggregate income

b. Price levels.

c. Interest rates.

d. Flow of funds.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following market features is likely to cause a surplus of a particular product?

a. A monopoly.

b. A price floor.

c. A price ceiling

d. A perfect market.

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Economics

If both the supply and the demand for a good increase, the market price will

A supply curve illustrates the relationship between

As a business owner you have determined that the demand for your product is inelastic. Based upon this assessment you understand that

Which of the following could cause the change shown in the graph?

What will be the result on the equilibrium price for the product?

Which one of the following has an inverse relationship with the demand for money?

Which of the following market features is likely to cause a surplus of a particular product?

A decrease in the price of a complementary good will

Demand for a product tends to be price inelastic if

Which of the following has the highest price elasticity coefficient?

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