Microeconomics Test

When a consumer is able and willing to buy a good or service, he or she creates which of the following?

• consumption

• elasticity

• demand

• allocation

What is a basic principle of the law of demand?

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

• Everyone has a limited income that 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 price of movie tickets in a town has risen from $7 to $9. What is the most likely effect of the change in price?

• The demand curve for movie tickets will move right.

• The quantity demanded of movie tickets will increase.

• The demand curve for movie tickets will move left.

• The quantity demanded of movie tickets will decrease.

If the price of orange juice doubles, people will buy another type of juice.  Why is this?

• Orange juice has many compliment goods.

• Orange juice has many substitute goods.

• Orange juice is yummy.

• Orange juice is an inferior good.

When buyers will purchase exactly as much as sellers are willing to sell, what is the condition that has been reached?

• supply and demand          

• equilibrium

• excess demand     

• price floor

What do sellers do if they expect the price of goods they have for sale to increase dramatically in the near future?

• sell the goods now and try to invest the money instead of resupplying

• sell the goods now but try to get the higher price for them

• store the goods until the price rises

• store the goods indefinitely regardless of when the price rises

Rent control is a type of

• price ceiling.

• rationing

• price floor

• surplus

What is monopolistic competition?

• A)        one company selling the identical product under different names

• B)        one company selling several different products under different name.

• c)        a very few companies selling identical products

• d)        many companies selling similar but not identical products

How much control over price do companies in a perfectly competitive market have?

• none

• some

• very little

• total control

1.          Which of the following is an advantage of a sole proprietorship?

• No one is responsible if it fails.

• Owners can sell stocks to make money.

•    It is an easy way to make a lot of money.

•   It is easy to get financing to start one.