Economics and Finance Exam

What is the primary relationship between price and quantity demanded according to economic theory?

• They move in the same direction

• They remain constant

• They move in opposite directions

• They are unrelated

Which of the following best describes a complementary good relationship?

• Apples and oranges

• Hot dogs and hot dog buns

• Tea and coffee

• Butter and margarine

When supply increases (shifts right), what happens to equilibrium price?

• Remains unchanged

• Increases significantly

• Decreases

• Depends on elasticity

What occurs in a market when QD > QS?

• Surplus exists

• Shortage exists

• Equilibrium occurs

• Price remains stable

Which cost is considered variable in business operations?

• Building lease

• Raw materials

• Insurance payments

• Property taxes

During an economic recession, what typically happens to inferior goods?

• Supply increases

• Demand increases

• Supply decreases

• Price always rises

What causes a movement along the supply curve?

• Change in technology

• Change in price

• Change in consumer income

• Change in number of sellers

Which factor would shift the demand curve to the left?

• Increase in population

• Rise in consumer income

• Decrease in price of substitutes

• Decrease in consumer income

What happens to peanut butter demand when jelly prices increase?

• Increases significantly

• Stays constant

• Decreases

• Becomes more elastic

Which cost is considered fixed?

• Labor wages

• Monthly rent

• Raw materials

• Shipping costs