# Econ 1012B Practice Questions 3 Chapter 4 1 Used copies of your textbook are a substit by bxi20303

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Practice Questions #3
Chapter 4

1. Used copies of your textbook are a substitute for new copies of your textbook.
When the price of used copies goes down
A) demand for new textbooks increases.
B) the quantity demanded for used textbooks decreases.
C) the quantity demanded for new textbooks increases.
D) demand for new textbooks decreases.

2. Which of the following situations best demonstrates the law of demand?
A) Moviegoers react to an increase in the price of a theater ticket by seeing fewer
movies per year.
B) Moviegoers see fewer movies per year due to an overall decrease in the quality of
newly released motion pictures.
C) A drought causes a decrease in the availability of pumpkins, resulting in fewer jack-
o-lanterns displayed on Halloween.
D) An increase in the number of people writing Economics textbooks results in a
decrease in average textbook prices.
Use the following to answer questions 3-5:

Price

Price
(A)               Quantity          (B)                Quantity
Price

Price

(C)               Quantity          (D)               Quantity

3. The curve that best demonstrates the law of demand is
A) A. B) B. C) C. D) D.

4. If firms could sell any amount to consumers as long as they charged a given price,
then the demand curve would look like
A) A. B) B. C) C. D) D.

5. If the quantity demanded by consumers is the same for every price, then the demand
curve would look like
A) A. B) B. C) C. D) D.

6. Which of the following is not held constant as you move along the demand curve?
A) the price of that good.       C) the incomes of consumers.
B) the price of other goods.    D) the preferences of consumers for the good.

7. Which of the following would likely result in an increase in the demand for beef?
A) A decrease in the supply of beef.  C) An increase in the price of feed grains.
B) An increase in family incomes.     D) A decrease in the price of pork.
Use the following to answer questions 35-36:

Price of each cassette

Price of each cassette
B
C
A
D
D1
D0

Quantity of cassettes                            Quantity of cassettes
per week                                         per week

8. Refer to the graph above. What arrow shows the effect of an increase in the number
of consumers in the market on the demand for cassettes?
A) A B) B C) C D) D

9. Refer to the graph above. The effect of an increase in the price of cassettes is best
shown by arrow
A) A B) B C) C D) D

10. Suppose farmers can use their land to grow either wheat or corn. The law of supply
predicts that an increase in the market price of wheat will cause
A) an increase in the quantity supplied of wheat as farmers substitute production of
wheat for production of corn.
B) an increase in the quantity supplied of corn as farmers substitute production of
wheat for production of corn.
C) a decrease in the quantity supplied of wheat as farmers substitute production of corn
for production of wheat.
D) an increase in the supply of wheat as farmers substitute production for wheat for the
production of corn.
Use the following to answer questions 11-12:

Price

Price
(A)               Quantity          (B)                Quantity
Price

Price

(C)               Quantity          (D)               Quantity

11. Refer to the graphs above. The curve that best demonstrates the law of supply is
A) A. B) B. C) C. D) D.

12. Refer to the graphs above. If quantity supplied is a fixed amount that does not vary
with price, then the supply curve looks like
A) A. B) B. C) C. D) D.

13. If the law requires apartment building owners to lower rent, the law of supply
predicts that, other things constant
A) the supply of apartment units will shift C) the quantity of apartment units
leftward.                                    supplied will rise.
B) the supply of apartment units will shift D) the quantity of apartment units
rightward.                                   supplied will fall.
14. An increase in the current price of gold is expected to cause a __________, while
the expectation of a future increase in the price of gold is expected to cause a
__________.
A) movement along the supply of gold curve; rightward shift of the supply of gold
curve
B) movement along the supply of gold curve; leftward shift of the supply of gold curve
C) rightward shift of the supply of gold curve; movement along the supply of gold
curve
D) leftward shift of the supply of gold curve; movement along the supply of gold curve

15. If current quantity demanded is 2,000 and current quantity supplied is 1,000, this is
an indication that
A) the current price is below the equilibrium price.
B) producers are not responsive to price changes.
C) the current price is above the equilibrium.
D) consumers of this particular item do not buy less of it when its price increases.

16.   When the wage rate paid to labour is above equilibrium
A)    the supply of labour increases.
B)   the demand for labour decreases.
C)   the number of workers seeking jobs exceeds the number of jobs available.
D)    the number of jobs available exceeds the number of workers seeking jobs.

17. If supply and demand intersect at a price of \$5.00, then a reduction in price from
\$6.00 to \$5.00 will cause an increase in quantity
A) supplied, a decrease in quantity demanded, and the alleviation of a shortage.
B) demanded, a decrease in quantity supplied, and the alleviation of a shortage.
C) supplied, a decrease in quantity demanded, and the alleviation of a surplus.
D) demanded, a decrease in quantity supplied, and the alleviation of a surplus.

18.   If supply and demand both shift to the right, equilibrium quantity
A)    rises, but the equilibrium price may rise, fall, or stay the same.
B)   falls, but the equilibrium price may rise, fall, or stay the same.
C)   may rise, fall, or stay the same, but equilibrium price will rise.
D)    may rise, fall, or stay the same, but equilibrium price will fall.

19. An increase in equilibrium price and a decrease in equilibrium quantity is most
likely the result of
A) an increase in demand.                       C) an increase in supply.
B) a decrease in demand.                      D) a decrease in supply.
20. If both buyers and sellers expect the price of a commodity to rise in future, it is
likely that
A) equilibrium price will fall, with little change in equilibrium quantity.
B) equilibrium price will rise, with little change in equilibrium quantity.
C) equilibrium quantity will fall, with little change in equilibrium price.
D) equilibrium quantity will rise, with little change in equilibrium price.

Use the following to answer questions 21-25:
Price

Price
S1                                S2
S2                                     S1

D1

D1        D2                            D2

(a)                   Quantity         (b)                Quantity
Price

Price

S2                                     S1
S1
S2

D1
D1        D2
D2

(c)                 Quantity            (d)             Quantity

21. Refer to the graphs above. The consequences of improved technology combined
with an increase in the number of consumers can best be illustrated by:
A) Graph A. B) Graph B. C) Graph C. D) Graph D.

22. Refer to the graphs above. Higher costs of production combined with an expectation
on the part of consumers of higher prices in the future would result in the shifts
depicted in:
A) Graph A. B) Graph B. C) Graph C. D) Graph D.
23. Refer to the graphs above. Suppose the price of a good that is a substitute in both
consumption and production for the good depicted in the graph falls. The expected
shifts in supply and demand are shown in
A) Graph A. B) Graph B. C) Graph C. D) Graph D.

24. Refer to the graphs above. The effect of increased consumer income and higher
production costs is most likely shown in
A) Graph A. B) Graph B. C) Graph C. D) Graph D.

25. Refer to the graphs above. The Iraq War increased the United States military's
recruitment goals. At the same time it made Americans less likely to “volunteer” for
military service. This situation is best represented by
A) Graph A. B) Graph B. C) Graph C. D) Graph D.

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