Unit 2 Microeconomics Test Part 3: Multiple Choice

The law of demand says

• the higher the price, the more consumers will buy

• the lower the price, the less consumers will buy

• the lower the price, the more consumers will buy

• the lower the price, the more consumers will substitute

If you choose NOT to buy a good due to a price increase, your demand for that good is...

• strong

• inelastic

• nonexistent

• elastic

Which of the following is an example of a fixed cost when running a business?

• rent

• labor

• heating and air

• raw materials

Which of the following leads to an increase in supply?

• an increase in the cost of raw materials

• a decrease in the cost of raw materials

• diminishing marginal returns

• a change in the law of supply

An oligopoly occurs when

• one firm controls the whole market

• 2-4 firms control 70-80% of output for that industry

• when all products are identical

• There is collusion and price fixing

The ideal output level for a factory is when

• marginal cost equals marginal revenue

• marginal cost is less than marginal revenue

• marginal cost is greater than marginal revenue

When there is excess supply...

• prices tend to rise

• prices tend to fall

• demand will rise

• the government will impose price cielings

If producers/sellers expect the price of a good to rise in the future, they will

• put more goods on the market immediately

• raise their prices now

• store goods now and sell more in the future

• set prices according to the law of demand

Which of the following is an example of a shortage?

• stores cannot sell all the new popular toys they have on hand

• Manufacturers make too many units of a popular new toy.

• consumers cannot find enough of a popular new toy in stores

• consumers cannot afford to buy a new popular toy.

Both regulation and deregulation is meant to

• create safer products

• antitrust laws

• lower prices and increase competition

• increase government control