General Economics Quiz 1

A market is defined as

• a physical place where people buy only goods.

• a physical place where people buy both goods and services.

• a store where people buy physical goods.

• any arrangements that brings buyers and sellers together.

The law of demand refers to the fact that, other things remaining the same, when the price of a good rises,

• the demand curve shirts rightward.

• the demand curve shifts leftward.

• there is a movement down along the demand curve to a larger quantity demanded.

• there is a movement up along the demand curve to a smaller quantity demanded.

Two brands of water, Natural Water and Mountain Water, are close substitutes. If the price of Mountain Water decreases, the fall in price

• shifts the demand curve for Natural Water rightward.

• shifts the demand curve for Natural Water leftward.

• increases the price of Natural Water.

• increases the demand for Mountain Water.

Which of the following does NOT increase the supply of personal computers, that is, does not shift the supply curve of personal computers?

• an advance in the technology used to produce personal computers

• an increase in the number of firms producing personal computers

• a fall in the cost of the components used to assemble personal computers

• a rise in the price of a personal computer

If the number of sellers increases, then the supply curve __________ and the supply curve __________.

• shifts rightward; increases

• shifts rightward; decreases

• shifts leftward; increases

• shifts leftward; decreases

Suppose the equilibrium price of oranges is $4.00 per kg. If the actual price is above the equilibrium price, a

• shortage exists and the price falls to restore equilibrium.

• shortage exists and the price rises to restore equilibrium.

• surplus exists and the price falls to restore equilibrium.

• surplus exists and the price rises to restore equilibrium.

The price elasticity of demand is a measure of

• the equilibrium price of a good or service.

• buyers' responsiveness to changes in price of a good or service.

• the amount of a good or service purchased when income decreases.

• whether a good or service is a substitute or a complement.

If a good is a necessity, it has __________ substitutes and its demand is __________.

• few; elastic

• few; inelastic

• many; elastic

• many; inelastic

Total revenue increases if the price of the good

• rises and demand is elastic.

• rises and demand is unit elastic.

• rises and demand is inelastic.

• falls and supply is inelastic.

What is measured by the price elasticity of supply?

• The price elasticity of supply measures how resopnsive producers are to changes in the price of other goods and services.

• The price elasticity of supply measures how responsive producers are to changes in income.

• The price elasticity of supply measures how responsive producers are to changes in the price of a good or service.

• The price elasticity of supply is a measure of the slope of the supply curve.