ECON - Unit 3 Practice Test

What is the basic principle of the law of demand?

• The higher the price, the more people will want the good.

• Everyone has a limited income they will spend.

• When a good’s price is lower, people will buy more of it.

• Services are of interest in the same way that goods are.

The tendency of consumers to replace a relatively more expensive product with a similar, lower-priced product is called the:

• Income effect

• Substitution effect

• Demand effect

• Marginal effect

What condition has been reached when quantity supplied equals quantity demanded?

• Supply and demand

• Excess demand

• Equilibrium/market clearing

• Price floor

The newest Marvel Avengers movie receives a very bad review. The movie’s popularity declines and the demand for tickets decreases. This causes the demand curve to shift

• To the left, due to a change in income

• To the left, due to tastes and preferences

• To the right, due to price of related goods

• To the right, due to the size of the population

If consumers’ incomes rise, the demand curve will shift

• To the left, due to consumer expectations

• To the left, due to the number of consumers

• To the right, due to taste and preferences

• To the right, due to a change in income

When the price of all the popular brands of salsa went up, the demand curve for tortilla chips moved

• To the left, due to price of related goods

• To the left, due to consumer expectations

• To the right, due to tastes and preferences

• To the right, due to the number of consumers

If the competition in the mechanical pencil market increases because a new firm enters the market, the supply curve for mechanical pencils will shift

• To the left, due to cost of production

• To the left, due to producer expectations

• To the right, due to number of suppliers

• To the right, due to government influences

If a new tax is put on the producers of cell phones, the supply curve for cell phones will shift

• To the left, due to government actions

• To the left, due to producer expectations

• To the right, due to changes in technology

• To the right, due to new education

If the price of chicken feed decreases, the supply of chicken nuggets will shift

• To the left, due to number of suppliers

• To the left, due to producer expectations

• To the right, due to cost of production

• To the right, due to changes in tech

A new robot makes the production of watches more efficient and less expensive. How will this affect the supply of watches?

• To the left, due to cost of production

• To the left, due to government influences

• To the right, due to changes in tech

• To the right, due to new education