Reference no: EM132219690

1.What would lead a customer to purchase a product?

Select one:

a. She believes the firm will earn a fair profit by selling the product to her.

b. She believes the price is an accurate reflection of the good's relative scarcity.

c. Her expected value from consuming it exceeds the cost of purchasing it.

d. Her expected value from consuming it exceeds the cost of producing it.

2.The fact that consumers care about prices means that firms have to care about costs.

Select one:

a. true

b. false

3.In a free market economy,

Select one:

a. government decides what is produced, and producers decide who gets to consume it.

b. as a good becomes relatively more scarce, its price declines.

c. firms choose only to produce the most fashionable goods, regardless of the cost of production.

d. goods and services are allocated by a price system.

4.The current size of the U.S. labor force is less than 100 million workers.

Select one:

a. true

b. false

5.A recent study found that eating dark chocolate can provide cardiovascular health benefits. What effect does this have on the market for dark chocolate?

Select one:

a. The price of dark chocolate can be expected to decline.

b. Dark chocolate is now relatively less scarce.

c. Dark chocolate is now relatively more scarce.

d. The price that the typical consumer is willing to pay for dark chocolate will decline.

6.The factors of production are

Select one:

a. never as useful as people expect them to be.

b. valuable only because they are owned by corporations seeking to make a profit from them.

c. scarce resources.

d. abundant without limit on the planet.

7.In choosing whether to produce something, a firm wants to know

Select one:

a. how the cost of producing the good compares to its selling price.

b. how many other firms are producing the same good.

c. how long the typical consumer will shop before making this purchase.

d. how frequently consumers who purchase the good will actually use it.

8.The price of a good increases when it becomes relatively more scarce.

Select one:

a. true

b. false

9.Markets tend to

Select one:

a. benefit sellers at the expense of buyers.

b. exist primarily in towns or cities.

c. facilitate exchange.

d. benefit buyers at the expense of sellers.

10.At prices above the equilibrium price, shortages occur.

Select one:

a. true

b. false

11.The equilibrium price of a good is a price that everyone is happy with.

Select one:

a. true

b. false

12.Which one of the following is TRUE?

Select one:

a. An increase in price causes an increase in supply.

b. An increase in supply causes a decrease in demand.

c. An increase in price causes an increase in quantity supplied.

d. An increase in supply causes an increase in demand.

13.Which of the following is a determinant of demand?

Select one:

a. cost of production

b. number of suppliers

c. technology of production

d. income

14.Which one of the following would cause a rightward shift of the supply curve?

Select one:

a. A new tax is imposed on production of the good.

b. Some firms that have been producing the good go out of business.

c. Firms producing the good find ways of lowering their production costs.

d. There is an increase in demand for the good.

15.The market demand curve is the vertical summation of the demand curves of all the individuals in the market.

Select one:

a. true

b. false

16.The market demand for cotton clothing shifts to the right when

Select one:

a. more consumers enter the market for cotton clothing.

b. the price of cotton decreases.

c. the supply of cotton decreases.

d. cotton clothing becomes less popular.

17.An increase in the price of one good will decrease the demand for a substitute good.

Select one:

a. true

b. false

18.An increase in quantity demanded is caused by

Select one:

a. an increase in income.

b. a decrease in the price of a complement.

c. a change in expectations about price in the future.

d. a decrease in the price of the good.

19.The real income effect helps to explain why the supply curve slopes up.

Select one:

a. true

b. false

20.The demand curve is downward sloping because

Select one:

a. price and quantity have a direct relationship.

b. price is always constant.

c. demand is based on supply.

d. price and quantity have an inverse relationship.

21.Diminishing marginal utility means that

Select one:

a. as more and more of a good is consumed there is no impact on the rate of change of total utility.

b. as more and more of a good is consumed the rate at which total utility increases stays the same.

c. as more and more of a good is consumed the rate at which total utility increases starts to increase.

d. as more and more of a good is consumed the rate at which total utility increases starts to diminish.

22.When total utility is maximized,

Select one:

a. marginal utility is equal to total utility.

b. marginal utility is zero.

c. marginal utility is minimized.

d. marginal utility is negative.

23.Which one of the following statements is TRUE?

Select one:

a. Consumers consider the expected marginal utility from a good in deciding whether to buy it.

b. The law of diminishing marginal utility does not apply to expensive items, such as cars, houses, and exotic vacations.

c. Consumers will only buy goods which are not subject to diminishing marginal utility.

d. The law of diminishing marginal utility does not apply to fashion items that are relatively new on the market.

24.If the price elasticity of demand is 0.5, a 10 percent increase in the price will cause

Select one:

a. the quantity demanded to decrease by 20 percent.

b. the quantity demanded to decrease by 50 percent.

c. the quantity demanded to increase by 50 percent.

d. the quantity demanded to decrease by 5 percent.

25.Which one of the following would make the demand for satellite subscription TV relatively less elastic?

Select one:

a. The cost of administering the satellite service is lowered.

b. Cable TV service becomes less widely available.

c. Other networks of wireless entertainment become more widely available.

d. The cost of transmitting satellite signals is lowered.

26.Which of the following statements is true with respect to total utility and marginal utility?

Select one:

a. Marginal utility is always equal to total utility.

b. Total utility will always be negative when marginal utility is positive.

c. Total utility is minimized when marginal utility is zero.

d. Marginal utility can decline as total utility rises.

27.Everyone who views the latest adventure movie in theaters will derive the same utility from seeing it.

Select one:

a. true

b. false

28.A baker raised his bread prices by 10 percent and found that the quantity of bread sold decreased by 10 percent. What happened to the total amount of sales revenue he took in from bread sales?

Select one:

a. It decreased.

b. It remained unchanged.

c. It increased.

d. We cannot determine the effect on total revenue unless we also know the slope of the demand curve for bread.

29.Utility is a term economists use to refer to

Select one:

a. rationality.

b. satisfaction.

c. affordability.

d. expectation.

30.The price elasticity of demand becomes relatively greater as more substitutes are easily available.

Select one:

a. true

b. false