Module 3 Quiz

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Question #1

Economists refer to the relationship that a higher price leads to a lower quantity demanded as the

A production possibilities frontier.

B price and demand model.

C law of demand.

Question #2

A decrease in the quantity supplied can result from

A a decrease in price.

B increased demand.

C a decrease in supply.

Question #3

The price of printers at the big box technology stores increases as a new type of print technology is rolled out to consumers. Which of the following scenarios for a complementary printer good would likely take place?

A The demand for printer ink decreases as less people are buying printers.

B The demand for printer ink rises as people stock up with their new printers.

C The demand for printer paper rises as people stock up.

Question #4

Which country has characteristics of a command economy?

A North Korea

B Australia

C United States

Question #5

Which of the following will cause the supply curve to shift to the left?

A a fall in input prices

B higher product taxes

C improved technology

Question #6

Excess demand occurs when the actual price in some market is ________ the equilibrium price.

A above

B below

C equal to

Question #7

The cost of leather used to produce leather jackets falls by 30%. This will result in ________.

A an increase in the quantity demanded

B a decrease in demand

C an increase in demand

Question #8

The supply curve will shift to the right if which of the following occurs?

A A new tax imposed on the product.

B Unfavorable natural conditions.

C An improvement in technology.

Question #9

If a perfume store currently sells perfume for $30 a bottle and averages $2000 sales per month, what sales might they anticipate if they raise the price to $40 a bottle?

A $2,000

B $1,500

C $2,500

Question #10

There is a tax rebate that everyone in the nation receives from the government of $1000. The market for laptops notices a shift because of this. What effect will this rebate have on the laptop market?

A This will decrease the quantity demanded.

B This will increase the quantity demanded.

C This will increase demand.

Question #11

In 1973 Arab countries imposed an oil embargo on the United States and other developed countries in the aftermath of the Yom Kippur war. At the same time improved infrastructure and increased income was altering consumer preferences in favor of automobiles over public transportation. If you were drawing a supply and demand graph to illustrate the change in the gasoline market in 1973-1974, what would you say has happened to the supply and demand curves and the equilibrium price and quantity during this time period?

A The supply of gasoline will decrease shifting the curve to the left while the demand curve shifts to the right. As a result the equilibrium price will increase but it is impossible to pinpoint the equilibrium quantity change.

B The demand for gasoline will decrease shifting the curve to the left while the supply curve also shifts to the left. As a result the equilibrium price will increase but it is impossible to pinpoint the equilibrium quantity change.

C The demand for gasoline will decrease shifting the curve to the left while the supply curve shifts to the right. As a result the equilibrium quantity will increase but it is impossible to pinpoint the equilibrium price change.

Question #12

Tangi Tumolo carves and creates beautiful furniture on the island of Kiribati. Each month he takes the furniture to the capital city of South Tawara and sells what he can for the best prices he can. He also takes orders from people each month to build certain furniture indicating what is currently in demand. Each month the prices and products very a bit depending on the demand in the market. Tangi enjoys the ebb and flow of the changing market as it keeps his business interesting and current with demand. Kiribati’s government takes a ‘hands off’ approach with the economy and the market is thriving on its own. Tangi Tumolo lives in what type of economy?

A mixed

B free Market

C command

Question #13

Suppose Congress passes legislation that offers subsidies to orange farmers. The impact on the market for orange juice will be a rightward shift of

A the supply curve.

B both the supply and demand curves.

C the demand curve.

Question #14

A ruthless dictator has recently taken over the small island of Tokoli’s government and is making changes to how the government and economy used to be. One of his first actions is to enforce a command economy so as to control all aspects of the country. As you watch this new dictator’s changes, which of these actions would be in line with this new command economy he is creating?