mcq2 - Sample Multiple Choice Questions (the books web site...

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Sample Multiple Choice Questions (the book’s web site contains many more) 1. If A and B are complements, an increase in the price of good A would: a) have no effect on the quantity demanded of B. b) lead to an increase in demand for B. c) lead to a decrease in demand for B. d) none of the above. Answer: C Difficulty: Med 2. If a shortage exists in a market, the natural tendency is for: a) demand to increase. b) price to increase. c) quantity supplied to decrease. d) no change in the market. Answer: B Difficulty: Med 3. If steak is a normal good, what do you suppose would happen to price and quantity during an economic recession? a) price would increase and quantity decrease. b) price and quantity would both increase. c) price and quantity would both decrease. d) price would decrease and quantity increase. Answer: C Difficulty: Med 4. Suppose you produce wooden desks, and government legislation protecting the spotted owl has made it more expensive for you to purchase wood. What do you expect to happen to the equilibrium price and quantity of wooden desks? a) price and quantity will increase. b) price will increase but quantity will decrease. c) price and quantity will decrease. d) price will decrease but quantity will increase. Answer: B Difficulty: Med 5. Suppose that supply increases and demand decreases. What effect will this have on price and quantity? a) price will increase and quantity may rise or fall. b) price will decrease and quantity will increase. c) price will decrease and quantity will decrease. d) none of the above. Answer: D Difficulty: Hard
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6. Suppose both supply and demand decrease. What effect will this have on price? a) it will fall. b) it will rise. c) it may rise or fall. d) it will remain the same. Answer: C Difficulty: Hard 7. Suppose that good X is a substitute for good Y. Then an increase in the price of good Y leads to a) an increase in the demand of good X. b) a decrease in the demand of good X. c) a decrease in the supply of good X. d) an increase in the supply of good X. Answer: A Difficulty: Med 8. If consumers expect future prices to be higher a) they substitute current purchases for future purchases of perishable products. b) stockpiling will happen when products are durable in nature. c) the position of the demand will not change. d) the demand for automobiles today will not change. Answer: B Difficulty: Med 9. The demand function a) describes how much of good X will be purchased at the alternative price of good X, given all the other variables being constant. b) recognizes that the quantity of a good consumed depends on its price and demand shifters. c) shows the relationship between the quantity demanded of X and variables other than its price. d)
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mcq2 - Sample Multiple Choice Questions (the books web site...

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