1 After the housing bubble burst consumer confidence plummet

1. After the housing bubble burst, consumer confidence plummeted and housing sales dropped to all-time lows. This caused the demand curve for normal goods to shift

a. inwards

b. outwards

c. stay constant

d. none of the above

2. The change in any factor other than ________ would shift the demand curve

a. Weather

b. interest rate

c. Price

d. all of the above

3. A decrease in the price of a substitute shifts the demand curve to the _______

a. right

b. left

c. it does not change the demand curve

d. none of the above

4. A decrease in the price of a substitute shifts the demand curve to the _______

a. right

b. left

c. it does not change the demand curve

d. none of the above

5. A decrease in the price of a complement shifts the demand curve to the

a. right

b. left

c. it does not change the demand curve

d. none of the above

6. An increase in demand could arise from which of the following factors

a. an increase in income

b. a decrease in the price of a complement

c. an increase in the price of a substitute

d. all of the above

7. An increase in demand could arise from which of the following factors

a. an increase in income

b. a decrease in the price of a substitute

c. an increase in the price of a complement

d. all of the above

8. Assuming that beer is a normal good, what will happen to the demand for beer near college towns if student income increased?

a. Demand will fall because students love these beers

b. Demand will fall

c. Demand will rise

d. Supply would rise

9. A recent medical study shows that peanuts are one of the leading causes of high cholesterol. This would cause the demand for peanuts to

a. Shift to the left

b. Shift to the right

c. go down the demand curve

d. not change

10. The change in quantity demanded derived from a change in price is

a. the movement along a demand curve

b. the movement along a supply curve

c. a shift in the demand curve

d. a shift in the supply curve

11. Recent research suggested that there are large health benefits from consuming cooked tomatoes. Holding other things constant, this will cause

a. The demand curve for tomatoes to shift to the right

b. The demand curve for tomatoes to shift to the left

c. The supply curve for tomatoes to shift to the right

d. The supply curve for tomatoes to shift to the left

12. How does an increase in income affect the market for bus rides (inferior good)?

a. The demand curve for bus rides to shift to the right

b. The demand curve for bus rides to shift to the left

c. The supply curve for bus rides to shift to the right

d. The supply curve for bus rides to shift to the left

13. An increase in income causes the demand for inferior goods to_____________ and the price of inferior goods to ____________.

a. Increase; increase

b. Increase; decrease

c. Decrease; increase

d. Decrease, decrease

14. An increase in income causes the demand of normal goods to _________ and the price of normal goods to

a. Increase; increase

b. Increase; decrease

c. Decrease; increase

d. Decrease, decrease

15. How does an increase in income affect the market for iPads (normal good)?

a. The demand curve for iPads shifts to the right

b. The demand curve for iPads shifts to the left

c. The supply curve for iPads shifts to the right

d. The supply curve for iPads shifts to the left

16. You lose your job and as a result your demand for steak falls. This implies that you consider steaks to be a

a. Complementary good

b. Normal good

c. Inferior good

d. Substitute good

17. While you were an intern you bought 5 packages of hot dogs a month. After acquiring a full-time job with a considerably higher salary, you stopped purchasing hot dogs. For you, hot dogs are a

a. Complementary good

b. Normal good

c. Inferior good

d. Substitute good

18. The wages for Nike workers increases. At the same time, we see the price for Adidas shoes increase. This would cause the price for Nike shoes_____________ and the quantity demanded for Nike shoes ____________.

a. Uncertain; decreases

b. Decreases; increases

c. Decreases; uncertain

d. Increases; uncertain

19. Firm X both produces automobiles and owns gas stations. If decides to decrease the gas to induce higher sales for the automobiles, it means that

a. the gas and the automobiles are complements

b. the gas and the automobiles are substitutes

c. the gas and the automobiles are not related in demand

d. none of the above

20. Peter’s Pizzeria sells both pizzas and wings. It wants to increase the sales of its pizzas. If it decides to increase the price of the wings, it is assuming that

a. the pizza and the wings are substitutes

b. the pizza and the wings are complements

c. the pizza and the wings are unrelated in demands

d. it cannot increase the sales of its pizzas

21. Holding other factors constant, if bad weather destroys the annual crop for carrots, it causes the supply curve for carrots to

a. Shift to the left, causing the prices of carrots to rise

b. Shift to the left, causing the prices of carrots to fall

c. Stay the same

d. The supply curve does not shift. Only the demand curve shifts.

22. All these factors would shift the supply curve of tobacco, except

a. Bad weather

b. Change in the price of tobacco

c. Changes in the wages of agricultural workers

d. A tax charged on the production of tobacco

23. A supply curve describes

a. the relationship between price and quantity demanded

b. the relationship between price and quantity supplied

c. the relationship between a group of buyers and sellers

d. none of the above

24. Which of the following factors would shift the supply curve for ice cream to the right?

a. a new cooling technology emerges

b. the price per unit increases

c. the number of producers in the market for ice cream increase

d. Both A&C

25. Which of the following would shift the supply of Florida Oranges to the left?

a. a hurricane in Florida destroying a major part of the crop

b. an increase in the price of water per unit, a major input, used to irrigate the orange trees

c. one of the orange grooves shuts down

d. all of the above

26. A recent medical study reports new benefits of cycling. Simultaneously, the price of the parts needed to make bikes falls. The demand curve would _________ and the supply curve would__________

a. Shift to the right, shift to the left

b. shift to the left, shift to the right

c. shift to the left, shift to the left

d. shift to the right, shift to the right

Solution

Answer : 1) The correct option is a.

Because here house selling is decreased and this lead to fall the income for house sellers. As demand for normal good increase if income increase and demand for normal good decrease if income decrease, hence for the given question demand for normal good decrease because of falling income which shift the demand curve to inward.

2) The correct option is c.

Because demand change depends on price factor mainly. When price is high then demand is low and vice versa. Therefore, shifting of demand curve mainly depends on changing price level.

3) The correct option is a.

Because if substitute product exist in the market then if the price of substitute good decrease then demand for substitute good increase as there is a negative relationship between price and quantity demanded which shift the demand curve to rightward.

4) The correct option is a.

Because if substitute product exist in the market then if the price of substitute good decrease then demand for substitute good increase which shift the demand curve to rightward.

5) The correct option is b.

In case of complementary good, if price fall then demand decrease and if price rise then demand increase. Hence in case of falling price for complement goods demand decrease which shift the demand curve to leftward.

6) The correct option is a.

Because if income increase then people buy more which increase the demand for goods.

7) The correct option is d.

Because if income increase then people buy more which increase the demand for goods. In case of substitute good, if price fall then demand increase. In case of complementay good, if price increase then demand increase. Therefore, option d is correct.