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36. Which of the following would not be a determinant of the demand for a particular good?
a. prices of related goods b. income c. tastes
d. the prices of the inputs used to produce the good ANS: D PTS: 1 DIF: 2 REF: 4-2 TOP: Demand MSC: Interpretive
37. Each of the following is a determinant of demand except
a. tastes.
b. technology. c. expectations.
d. the prices of related goods. ANS: B PTS: 1 DIF: 2 REF: 4-2 TOP: Demand MSC: Interpretive
38. The amount of the good buyers are willing and able to purchase is called the
a. demand.
b. quantity demanded. c. supply.
d. quantity supplied. ANS: B PTS: 1 DIF: 1 REF: 4-2 TOP: Quantity demanded MSC: Definitional 39. If a good is normal, then an increase in income will result in
a. an increase in the demand for the good. b. a decrease in the demand for the good.
c. a movement down and to the right along the demand curve for the good. d. a movement up and to the left along the demand curve for the good. ANS: A PTS: 1 DIF: 2 REF: 4-2 TOP: Normal goods MSC: Interpretive
40. If Francis experiences a decrease in his income, we would expect that, as a result, Francis’s demand for
a. each good he purchases will remain unchanged. b. normal goods will decrease. c. luxury goods will increase. d. inferior goods will decrease. ANS: B PTS: 1 DIF: 2 REF: 4-2 TOP: Normal goods MSC: Interpretive
41. You lose your job and as a result you buy fewer romance novels. This shows that you consider romance novels to be
a(n)
a. luxury good. b. inferior good. c. normal good.
d. complementary good. ANS: C PTS: 1 DIF: 2 REF: 4-2 TOP: Normal goods MSC: Interpretive 42. Currently you purchase 6 packages of hot dogs a month. You will graduate from college in December and you will
start a new job in January. You have no plans to purchase hot dogs in January. For you, hot dogs are a. a substitute good. b. a normal good. c. an inferior good.
d. a law-of-demand good. ANS: C PTS: 1 DIF: 2 REF: 4-2 TOP: Inferior goods MSC: Interpretive
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43. Two goods are substitutes if a decrease in the price of one good
a. decreases the demand for the other good.
b. decreases the quantity demanded of the other good. c. increases the demand for the other good.
d. increases the quantity demanded of the other good. ANS: A PTS: 1 DIF: 2 REF: 4-2 TOP: Substitutes MSC: Definitional
44. Two goods are complements if a decrease in the price of one good
a. decreases the quantity demanded of the other good. b. decreases the demand for the other good.
c. increases the quantity demanded of the other good. d. increases the demand for the other good. ANS: D PTS: 1 DIF: 2 REF: 4-2 TOP: Complements MSC: Definitional 45. A likely example of complementary goods for most people would be
a. hamburgers and hot dogs. b. lawnmowers and automobiles. c. hamburgers and French fries. d. Dr. Pepper and Pepsi. ANS: C PTS: 1 DIF: 1 REF: 4-2 TOP: Complements MSC: Interpretive 46. A likely example of substitute goods for most people would be
a. peanut butter and jelly.
b. tennis balls and tennis rackets.
c. televisions and subscriptions to cable television services. d. pencils and pens. ANS: D PTS: 1 DIF: 1 REF: 4-2 TOP: Substitutes MSC: Interpretive
47. Which of the following statements about people’s tastes is correct?
a. Generally, economists are interested in explaining people’s tastes.
b. Generally, economists are interested in how changes in people’s tastes affect markets. c. Tastes never change enough over time to cause noticeable shifts in demand curves. d. All of the above are correct. ANS: B PTS: 1 DIF: 2 REF: 4-2 TOP: Tastes MSC: Interpretive 48. When it comes to people's tastes, economists generally believe that
a. tastes are based on forces that are well within the realm of economics. b. tastes are based on historical and psychological forces.
c. tastes can only be studied through well-constructed, real-life models.
d. since tastes do not directly affect demand, there is little need to explain people's tastes. ANS: B PTS: 1 DIF: 2 REF: 4-2 TOP: Tastes MSC: Interpretive
49. Economists in general
a. do not try to explain people's tastes, but they do try to explain what happens when tastes change.
b. believe that they must be able to explain people's tastes in order to explain what happens when tastes change. c. do not believe that people's tastes determine demand and therefore they ignore the subject of tastes.
d. incorporate tastes into economic models only to the extent that tastes determine whether pairs of goods are
substitutes or complements.
ANS: A PTS: 1 DIF: 2 REF: 4-2 TOP: Tastes MSC: Interpretive
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50. Suppose today people change their expectations about the future. This change in expectations
a. results in a movement along a demand curve.
b. can affect future demand, but not today’s demand. c. can affect today’s demand.
d. cannot affect either today’s demand or future demand. ANS: C PTS: 1 DIF: 2 REF: 4-2 TOP: Expectations MSC: Interpretive
51. You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by
drought, and that this will cause the price of peanuts to double by the end of the year. As a result, a. your demand for peanut butter will increase, but not until the end of the year. b. your demand for peanut butter increases today.
c. your demand for peanut butter decreases as you look for a substitute good.
d. you will wait for the price of jelly to change before altering your demand for peanut butter. ANS: B PTS: 1 DIF: 2 REF: 4-2 TOP: Expectations MSC: Interpretive 52. Ford Motor Company announces that it will offer $3,000 rebates on new Mustangs starting next month. As a result of
this information, today’s demand curve for Mustangs a. shifts to the right. b. shifts to the left.
c. shifts either to the right or to the left, but we cannot determine the direction of the shift from the given
information.
d. will not shift; rather, the demand curve for Mustangs will shift to the right next month. ANS: B PTS: 1 DIF: 2 REF: 4-2 TOP: Expectations MSC: Interpretive 53. Suppose you like to make, from scratch, pies filled with banana cream and vanilla pudding. You notice that the price
of bananas has increased. How would this price increase affect your demand for vanilla pudding? a. It would decrease. b. It would increase.
c. It would be unaffected.
d. There is insufficient information given to answer the question. ANS: A PTS: 1 DIF: 2 REF: 4-2 TOP: Complements MSC: Interpretive 54. Alyssa rents 5 movies per month when the price is $3.00 per rental and 7 movies per month when the price is $2.50
per rental. Alyssa’s demand demonstrates the law of a. price. b. supply. c. demand. d. expectations. ANS: C PTS: 1 DIF: 1 REF: 4-2 TOP: Law of demand MSC: Interpretive 55. According to the law of demand,
a. quantity supplied and quantity demanded are positively related. b. quantity supplied and quantity demanded are negatively related. c. price and quantity demanded are positively related. d. price and quantity demanded are negatively related. ANS: D PTS: 1 DIF: 1 REF: 4-2 TOP: Law of demand MSC: Definitional 56. The law of demand says that
a. an increase in price causes quantity demanded to increase. b. an increase in price causes quantity demanded to decrease. c. an increase in quantity demanded causes price to increase. d. an increase in quantity demanded causes price to decrease. ANS: B PTS: 1 DIF: 1 REF: 4-2 TOP: Law of demand MSC: Definitional
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57. Which of the following demonstrates the law of demand?
a. Relative to last month, Jon buys more pretzels at $1.50 per pretzel since he got a raise at work this month. b. Melissa buys fewer muffins at $0.75 per muffin than at $1 per muffin, other things equal. c. Dave buys more donuts at $0.25 per donut than at $0.50 per donut, other things equal.
d. Kendra buys fewer Snickers at $0.60 per Snickers since the price of Milky Ways fell to $0.50 per Milky Way. ANS: C PTS: 1 DIF: 2 REF: 4-2 TOP: Law of demand MSC: Interpretive 58. A downward-sloping demand curve reflects
a. the idea that the demand for the good in question is decreasing as time goes by. b. the idea that there are fewer suppliers of the good as time goes by.
c. the idea that there exists a substitute for the good in question and the price of that substitute is decreasing. d. the law of demand. ANS: D PTS: 1 DIF: 2 REF: 4-2 TOP: Law of demand MSC: Interpretive 59. The negative relationship between price and quantity demanded
a. applies to most goods in the economy.
b. is represented by a downward-sloping demand curve. c. is referred to as the law of demand. d. All of the above are correct. ANS: D PTS: 1 DIF: 1 REF: 4-2 TOP: Negative relationships | Law of demand MSC: Interpretive 60. A higher price for batteries would result in a(n)
a. increase in the demand for flashlights. b. decrease in the demand for flashlights. c. increase in the demand for batteries. d. decrease in the demand for batteries. ANS: B PTS: 1 DIF: 2 REF: 4-2 TOP: Complements MSC: Applicative 61. If a decrease in income increases the demand for a good, then the good is
a. a substitute good. b. a complement good. c. a normal good. d. an inferior good. ANS: D PTS: 1 DIF: 1 REF: 4-2 TOP: Inferior goods MSC: Definitional 62. Which of the following is not a determinant of demand?
a. the price of a resource that is used to produce the good b. the price of a complementary good c. the price of the good next month d. the price of a substitute good ANS: A PTS: 1 DIF: 2 REF: 4-2 TOP: Demand MSC: Interpretive
63. What will happen in the rice market if buyers are expecting higher rice prices in the near future?
a. The demand for rice will increase. b. The demand for rice will decrease. c. The demand for rice will be unaffected. d. The supply of rice will increase. ANS: A PTS: 1 DIF: 2 REF: 4-2 TOP: Expectations MSC: Interpretive
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64. A table that shows the relationship between the price of a good and the quantity demanded of that good is called a(n)
a. price-quantity table. b. complementary table. c. demand schedule. d. equilibrium schedule. ANS: C PTS: 1 DIF: 1 REF: 4-2 TOP: Demand schedule MSC: Definitional 65. A demand schedule is a table showing the relationship between
a. quantity demanded and quantity supplied. b. income and quantity demanded. c. price and quantity demanded. d. price and expected price. ANS: C PTS: 1 DIF: 1 REF: 4-2 TOP: Demand schedule MSC: Definitional
66. A demand schedule is a table showing the relationship between
a. quantity demanded and quantity supplied, and those quantities are usually positively related. b. quantity demanded and quantity supplied, and those quantities are usually negatively related. c. price and quantity demanded, and those quantities are usually positively related. d. price and quantity demanded, and those quantities are usually negatively related. ANS: D PTS: 1 DIF: 2 REF: 4-2 TOP: Demand schedule | Negative relationshipss MSC: Interpretive
67. With respect to the variables price and quantity demanded,
a. price and quantity demanded are independent of each other.
b. price is the dependent variable and quantity demanded is the independent variable. c. price is the independent variable and quantity demanded is the dependent variable.
d. price and quantity demanded are both dependent variables, since both depend on the actions of buyers and sellers. ANS: C PTS: 1 DIF: 3 REF: 4-2 TOP: Price | Quantity demanded MSC: Interpretive
68. When constructing a demand curve,
a. demand is on the vertical axis and quantity is on the horizontal axis. b. price is on the horizontal axis and quantity is on the vertical axis. c. price is on the vertical axis and demand is on the horizontal axis.
d. price is on the vertical axis and quantity demanded is on the horizontal axis. ANS: D PTS: 1 DIF: 1 REF: 4-2 TOP: Demand curve MSC: Interpretive
69. The line that relates the price of a good to the quantity demanded of that good is called the
a. demand schedule, and it usually slopes upward. b. demand schedule, and it usually slopes downward. c. demand curve, and it usually slopes upward. d. demand curve, and it usually slopes downward. ANS: D PTS: 1 DIF: 1 REF: 4-2 TOP: Demand curve MSC: Definitional
70. The line that relates the price of a good to the quantity demanded of that good is called the
a. demand schedule, and it slopes upward only if the good for which the line is drawn fails to conform to the law of
demand.
b. demand schedule, and it slopes upward only if the demand for the good in question, relative to the demand for
other goods, is increasing over time.
c. demand curve, and it slopes upward only if there is a positive relationship between income and quantity
demanded.
d. demand curve, and it slopes downward as long as the good in question conforms to the law of demand. ANS: D PTS: 1 DIF: 2 REF: 4-2 TOP: Demand curve MSC: Interpretive