232 ? Chapter 4 /The Market Forces of Supply and Demand
53. Holding the nonprice determinants of demand constant, a change in price would
a. result in either a decrease in demand or an increase in demand. b. result in a movement along a stationary demand curve. c. result in a shift of supply.
d. have no effect on the quantity demanded.
ANS: B
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Demand curve
54. A decrease in the price of a good would
a. increase the supply of the good.
b. increase the quantity demanded of the good.
c. give producers an incentive to produce more to keep profits from falling. d. shift the supply curve for the good to the left.
ANS: B
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Demand curve
55. The demand curve for textbooks shifts
a. when a determinant of the demand for textbooks other than income changes.
b. when a determinant of the demand for textbooks other than the price of textbooks changes. c. when any determinant of the demand for textbooks changes. d. only when the number of textbook-buyers changes.
ANS: B
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Determinants of demand
56. Which of the following is not a determinant of the demand for a particular good?
a. the prices of related goods b. income c. tastes
d. the prices of the inputs used to produce the good
ANS: D
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Determinants of demand
57. Each of the following is a determinant of demand except
a. tastes.
b. technology. c. expectations.
d. the prices of related goods.
ANS: B
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Determinants of demand
58. 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
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Determinants of demand
Chapter 4 /The Market Forces of Supply and Demand ? 233
59. If the demand for a good falls when income falls, then the good is called
a. a normal good. b. a regular good. c. a luxury good. d. an inferior good.
ANS: A
NAT: Analytic MSC: Definitional
DIF: 1 REF: 4-2 LOC: Supply and demand
TOP: Normal goods
60. 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
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Normal goods
61. If Francis experiences a decrease in his income, then we would expect Francis’s demand for
a. each good he purchases to remain unchanged. b. normal goods to decrease. c. luxury goods to increase. d. inferior goods to decrease.
ANS: B
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Normal goods
62. 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
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Normal goods
63. Pizza is a normal good if
a. the demand for pizza rises when income rises.
b. the demand for pizza rises when the price of pizza falls. c. the demand curve for pizza slopes downward.
d. the demand curve for pizza shifts to the right when the price of burritos rises, assuming pizza and
burritos are substitutes.
ANS: A
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Normal goods
64. Suppose that when income rises, the demand curve for computers shifts to the right. In this case, we know
computers are a. inferior goods. b. normal goods.
c. perfectly competitive goods. d. durable goods.
ANS: B
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Normal goods
234 ? Chapter 4 /The Market Forces of Supply and Demand
65. Which of the following would shift the demand curve for gasoline to the right?
a. a decrease in the price of gasoline
b. an increase in consumer income, assuming gasoline is a normal good c. an increase in the price of cars, a complement for gasoline d. a decrease in the expected future price of gasoline
ANS: B
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Normal goods
66. If a decrease in income increases the demand for a good, then the good is
a. a substitute good.
b. a complementary good. c. a normal good. d. an inferior good.
ANS: D
NAT: Analytic MSC: Definitional
DIF: 1 REF: 4-2 LOC: Supply and demand
TOP: Inferior goods
67. If a good is inferior, 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: B
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Inferior goods
68. 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 complementary good.
ANS: C
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Inferior goods
69. Soup is an inferior good if
a. the demand for soup falls when the price of a substitute for soup rises. b. the demand for soup rises when the price of soup falls. c. the demand curve for soup slopes upward. d. the demand for soup falls when income rises.
ANS: D
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Inferior goods
70. Suppose that Carolyn receives a pay increase. We would expect
a. to observe Carolyn moving down and to the right along her given demand curve. b. Carolyn's demand for inferior goods to decrease.
c. Carolyn's demand for each of two goods that are complements to increase. d. Carolyn's demand for normal goods to decrease.
ANS: B
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Inferior goods
Chapter 4 /The Market Forces of Supply and Demand ? 235
71. Two goods are substitutes when 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
NAT: Analytic MSC: Definitional
DIF: 1 REF: 4-2 LOC: Supply and demand
TOP: Substitutes
72. Suppose that a decrease in the price of good X results in fewer units of good Y being sold. This implies that
X and Y are
a. complementary goods. b. normal goods. c. inferior goods. d. substitute goods.
ANS: D
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Substitutes
73. Good X and good Y are substitutes. If the price of good Y increases, then the
a. demand for good X will decrease.
b. quantity demanded of good X will decrease. c. demand for good X will increase.
d. quantity demanded of good X will increase.
ANS: C
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Substitutes
74. 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
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Substitutes
75. A higher price for bagels would result in a(n)
a. increase in the demand for bagels. b. decrease in the demand for bagels. c. increase in the demand for muffins. d. decrease in the demand for muffins.
ANS: C
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Substitutes
76. You wear either shorts or sweatpants every day. You notice that sweatpants have gone on sale, so your
demand for
a. sweatpants will increase. b. sweatpants will decrease. c. shorts will increase. d. shorts will decrease.
ANS: D
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Substitutes
236 ? Chapter 4 /The Market Forces of Supply and Demand
77. Two goods are complements when 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
NAT: Analytic MSC: Definitional
DIF: 1 REF: 4-2 LOC: Supply and demand
TOP: Complements
78. If goods A and B are complements, then an increase in the price of good A will result in
a. more of good A being sold. b. more of good B being sold. c. less of good B being sold.
d. no difference in the quantity sold of either good.
ANS: C
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Complements
79. A likely example of complementary goods for most people would be
a. butter and margarine.
b. lawnmowers and automobiles. c. chips and salsa. d. cola and lemonade.
ANS: C
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Complements
80. 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
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Complements
81. 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
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Complements
82. Holding all other things constant, a higher price for ski lift tickets would
a. increase the number of skiers. b. increase the price of skis.
c. decrease the number of skis sold.
d. decrease the demand for other winter recreational activities.
ANS: C
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Complements