AP Micro Unit 2.1

A downward sloping demand curve can be explained by

I. diminishing marginal utility

II. diminishing marginal returns

III. the substitution effect

IV. the income effect

• I only

• II only

• I and III only

• I and IV only

• I, III, and Iv only

If hot dogs are an inferior good, an increase in income will result in

• an increase in the quantity demanded for hot dogs.

• an increase in the demand for hot dogs.

• a decrease in the quantity demanded for hot dogs.

• a decrease in the demand for hot dogs.

• no change in the demand for hot dogs.

Assume that coal is a normal good. If the price of coal increases and the quantity sold increases, which of the following is consistent with these observations?

• The price of oil, a substitute for coal, increased.

• A wage increase was given to coal miners.

• new machinery made coal mining more efficient.

• Consumers' incomes fell.

• The demand curve is inelastic.

During a football game, it starts to rain and the temperature drops. The senior class, which runs the concession stand and is studying economics, raises the price of coffee from 50 cents to 75 cents a cup. They sell more than ever before. Which answer explains this?

• The supply of coffeee increased.

• The demand curve for coffee was elastic.

• The supply of coffee decreased.

• The demand for coffee increased.

• The demand curve for coffee was inelastic

Which of the following statements best reflects the law of demising marginal utility?

• "I have to have a scoop of ice cream on my pie."

• "I'll never get tired of your cooking."

• "The last bite tastes just as good as the first."

• "I couldn't eat another doughnut if you paid me."

• "I prefer to eat several small meals a day, rather than three large ones."

Compare 2011 with 2012. Which of the following statements is/are true?

Year/Quantity sold/Price

2011/30,000/$10

2012/50,000/$20

I. Demand has increased.

II. Quantity demanded has increased.

III. Supply has increased.

IV. Quantity supplied has increased.

V. Supply has decreased.

• I only

• V only

• I and IV only

• I and V only

• I, II, and III only

During the 1990s, the price of VCRs fell by about 30 percent, and the quantity sold decreased by the same amount. The demand for VCRs must

• be inelastic.

• be elastic.

• be unit elastic.

• have shifted to the right.

• have shifted to the left.

A marketing survey shows that gate receipts would increase if the price of tickets to a summer rock concert increased, even though the number of tickets sold would fall. What does this imply about the price elasticity of demand for concert tickets?

• Demand is inelastic.

• Demand is elastic.

• Demand is unit elastic.

• Demand is perfectly inelastic.

• Demand is perfectly elastic.

If the price of lunch at the school cafeteria increases and cafeteria revenue remains constant, the price elasticity of demand for a school lunch must be

• elastic.

• perfectly elastic.

• unit elastic.

• inelastic.

• perfectly inelastic.

If the price of paperback books increases and consumer expenditures on paperback books also increase, which of the following is necessarily true?

• Paperback books are normal goods.

• Paperback goods are inferior goods.

• The demand for paperback books is unit elastic.

• The demand for paperback books is elastic.

• The demand for paperback books is inelastic.