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					Ch. 6 Study Guide


____   1. If a bookstore manager prices a book higher than the equilibrium price, then
          A. there will be an excess demand for these books.
          B. there will be an excess supply of these books.
          C. the manager should expect to sell all of the books.
          D. the market price of the book will become higher.
____   2. Suppliers will keep raising prices in a certain market as long as
          A. there is excess supply and quantity supplied exceeds the quantity demanded.
          B. there is excess supply and quantity demanded exceeds the quantity supplied.
          C. there is excess demand and quantity demanded exceeds the quantity supplied.
          D. there is excess demand and quantity supplied exceeds the quantity demanded.
____   3. If the equilibrium quantity demanded for a new sports watch is 900 truckloads of watches and the equilibrium
          price is $70 per watch, then a drop in the price of watches to $40
          A. would raise the quantity demanded of these sports watches.
          B. would lower the quantity demanded of these sports watches.
          C. would raise the demand for these sports watches.
          D. would lower the demand for these sports watches.
____   4. A price support is a type of
          A. price ceiling.          SKIP THIS QUESTION     C. price floor.
          B. rent control.                                  D. price fixing.
____   5. As the supply of compact disc players has increased over the years and the price of compact disc players has
          dropped, the
          A. quantity demanded of compact disc players has decreased.
          B. quantity demanded of compact disc players has increased.
          C. demand for compact disc players has increased.
          D. demand for compact disc players has decreased.
____   6. Which of the four main advantages of price in a free market economy would best represent the statement
          “Prices can be easily increased to solve a problem of excess demand”?
          A. price as an incentive                          C. flexibility
          B. prices as signals                              D. price system is “free”
____   7. If the owner of a pizzeria purchases additional equipment for the kitchen, enabling the production of 30
          percent more pizzas, then
          A. the demand curve for pizza would shift to the left.
          B. the demand curve for pizza would shift to the right.
          C. the supply curve for pizza would shift to the left.
          D. the supply curve for pizza would shift to the right.
____   8. According to the law of supply, the higher the price,
          A. the more consumers are willing to pay.
          B. the larger the quantity produced.
          C. the smaller the quantity produced.
          D. the more the availability of a good is reduced.




          Econ 2010                                             1
____    9. Study the graph showing the equilibrium point for a pizzeria. Which of the following can be said about the
           equilibrium price and the equilibrium quantity?
           A. The quantity supplied and the quantity demanded are equal at 200 slices per day.
           B. The quantity demanded and the quantity supplied are equal at $2.00 per slice.
           C. The quantity supplied is not equal to the quantity demanded in this market, which should
               be at 200 per day.
           D. The maximum quantity demanded, 350 per day, is more than the quantity supplied.
____   10. Which word can be used twice to BEST complete this sentence? When supply _____, prices fall, and quantity
           demanded _____ to reach a new equilibrium.
           A. increases                                    C. levels
           B. decreases                                    D. reverses
____   11. The economic impact of a holiday fad is illustrated by
           A. a negative result on the change in demand graph.
           B. a flattening of the demand curve.
           C. a sharp drop in the marginal product demand ratio.
           D. a rapid shift to the right in a market demand curve.
____   12. What happens when wages are set above the equilibrium level by law?
           A. Firms tend to try to break the law and hire people at the equilibrium level.
           B. Firms employ more workers than they would at the equilibrium wage.
           C. Firms employ fewer workers than they would at the equilibrium wage.
           D. Firms hire more workers but for fewer hours than they would at the equilibrium wage.
____   13. When buyers will purchase exactly as much as sellers are willing to sell, what is the condition that has been
           reached?
           A. supply and demand                            C. equilibrium
           B. excess demand                                D. price floor




            Econ 2010                                            2
____ 14. What happens when the supply of a nonperishable good is greater than the consumer wants to buy?
         A. the good is discarded
         B. the good becomes a luxury and the price rises
         C. either the good remains unsold or the price drops
         D. either the good is saved for later sale or the price is raised
____ 15. What happens to a market in equilibrium when there is an increase in supply?
         A. Excess supply means that producers will make less of the good.
         B. Quantity demanded will exceed quantity supplied, so the price will drop.
         C. Quantity supplied will exceed quantity demanded, so the price will drop.
         D. Undersupply means that the good will become very expensive.
____ 16. What is the name of the smallest amount that can legally be paid to most workers for an hour of work?
         A. equilibrium price SKIP THIS QUESTION           C. price floor
         B. supply cost                                    D. minimum wage
____ 17. In response to rising car traffic, demand for bicycles has increased. The new equilibrium point will show
         A. more bicycles sold, but at a higher price.
         B. fewer bicycles sold, but at a higher price.
         C. more bicycles sold, but at a lower price.
         D. fewer bicycles sold, but at a higher price.
____ 18. A shortage will develop when
         A. the quantity supplied of a good is greater than the quantity demanded of that good.
         B. the equilibrium quantity supplied is lower than the actual quantity supplied.
         C. the government provides subsidies to producers.
         D. the market price is below the equilibrium price.




           Econ 2010                                             3
Ch. 6 Study Guide
Answer Section

MULTIPLE CHOICE

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




           Econ 2010   4

				
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