Udayton-MBA-Quiz

# Udayton-MBA-Quiz - Survey of Microeconomics Quiz#1 Fall...

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Survey of Microeconomics, Quiz #1 Fall 2006 Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A relative price is A) the number of dollars that must be given up in exchange for the good. B) the ratio of one price to another price. C) not an opportunity cost. D) also called the money price. 1) 2) The "law of demand" is illustrated by a A) rightward shift of the demand curve. B) movement along the demand curve. C) leftward shift of the demand curve. D) Both answers A and B are correct. 2) 3) Which of the following will occur in the market for soft drinks if the money price of soft drinks increases? I) The relative price of soft drinks increases. II) The substitution effect may cause people to switch to drinking bottled water. A) II only B) I only C) neither I nor II D) both I and II 3) 4) Suppose that the price of cereal rises. As a result, people have cereal for breakfast on fewer days and eat eggs instead. This behavior is an example of A) an increase in quantity supplied of eggs because of the income effect. B) a decrease in the quantity demanded of cereal because of the substitution effect. C) a decrease in quantity supplied of cereal because of the substitution effect. D) an increase in quantity demanded of eggs because of the income effect. 4) 5) The "income effect" in the market for aspirin means that A) a decrease in the price of a substitute good like acetaminophen will make aspirin takers feel a little poorer than they were before. B) aspirin are generally taken by people with higher than average incomes. C) an increase in the price of aspirin will reduce the total purchasing power of aspirin takers, making them able to afford fewer aspirin. D) an increase in the price of aspirin will cause headache sufferers to look for a lower priced remedy. 5) 6) When the price of a normal good falls, ceteris paribus , the substitution effect leads to ________ in the quantity purchased and the income effect leads to ________ in the quantity purchased. A) a decrease; a decrease B) an increase; an increase C) an increase; a decrease D) a decrease; an increase 6) 7) Which of the following would lead to a movement along, but no shift in, the demand curve for spinach? A) a newly discovered increase in the nutritional value of spinach B) an increase in the price of broccoli, a substitute for spinach C) an increase in income for all spinach lovers D) disastrous weather that destroys about half of this year's spinach crop 7) 1

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8) The observation that the demand curve for grape jelly shifted rightward every time the price of peanut butter fell means that grape jelly and peanut butter are A) complements. B) substitutes. C) normal goods. D) inferior goods. 8) 9) If the price of chicken falls, then in the market for beef , A) the demand curve for beef would shift rightward.
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Udayton-MBA-Quiz - Survey of Microeconomics Quiz#1 Fall...

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