1. Ren's Tent Company has total fixed costs of $300,000 per year.

The firm's average

variable cost is $120 for 10,000 tents. At that level of output, the firm's average total costs
equal
A. $140
B. $150
C. $130
D. $120
2. What will happen to the equilibrium price and quantity of new cars if the price of
gasoline rises, the price of steel rises, public transportation becomes cheaper and more
comfortable, and auto-workers negotiate higher wages?
A. Quantity will fall, and the effect on price is ambiguous.
B. Price will fall, and the effect on quantity is ambiguous.
C. Quantity will rise, and the effect on price is ambiguous.
D. Price will rise, and the effect on quantity is ambiguous.
3. A competitive market is a market in which
A. an auctioneer helps set prices and arrange sales.
B. no individual buyer or seller has any significant impact on the market price.
C. there are only a few sellers.
D. the forces of supply and demand do not apply.
4. A minimum wage that is set above a market's equilibrium wage will result in
A. an excess demand for labor, that is, unemployment.
B. an excess supply of labor, that is, unemployment.
C. an excess demand for labor, that is, a shortage of workers.
D. an excess supply of labor, that is, a shortage of workers.
5. When the price of candy bars is $1.10, the quantity demanded is 340 per day. When the
price falls to $0.90, the quantity demanded increases to 350. Given this information and
using the midpoint method, we know that the demand for candy bars is
A. elastic.
B. perfectly inelastic.
C. unit elastic.
D. inelastic.
6. Pizza is a normal good if the demand
A. curve for pizza slopes upward.
B. for pizza rises when the price of pizza falls.
C. curve for pizza shifts to the right when the price of burritos rises, assuming pizza and
burritos are substitutes.
D. for pizza rises when income rises.
7. Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the
federal government increases the minimum wage by $1.00 per hour, then it is likely that
the
A. demand for bicycle assembly workers will increase.
B. firm must increase output to maintain profit levels.
C. supply of bicycles will shift to the right.
D. supply of bicycles will shift to the left.
8. Suppose the number of buyers in a market increases and a technological advancement
occurs also. What would we expect to happen in the market?
A. Equilibrium price would decrease, but the impact on equilibrium quantity would be
ambiguous.
B. Equilibrium quantity would increase, but the impact on equilibrium price would be
ambiguous.
C. Equilibrium price would increase, but the impact on equilibrium quantity would be
ambiguous.
D. Equilibrium quantity would decrease, but the impact on equilibrium price would be
ambiguous.
9. Which of the following events would cause both the equilibrium price and equilibrium
quantity of number two grade potatoes to increase if number two grade potatoes are an
inferior good?
A. An increase in consumer income
B. A decrease in consumer income
C. Greater government restrictions on agricultural chemicals
D. Fewer government restrictions on agricultural chemicals
10. Which of the following events would unambiguously cause a decrease in the equilibrium
price of cotton shirts?
A. An increase in the price of wool shirts and an increase in the price of raw cotton
B. An increase in the price of wool shirts and a decrease in the price of raw cotton
C. A decrease in the price of wool shirts and an increase in the price of raw cotton
D. A decrease in the price of wool shirts and a decrease in the price of raw cotton
11. What would happen to the equilibrium price and quantity of smartphones if consumers'
incomes rise and smartphones are a normal good?
A. Both the equilibrium price and quantity would decrease.
B. Both the equilibrium price and quantity would increase.
C. The equilibrium price would increase, and the equilibrium quantity would decrease.
D. The equilibrium price would decrease, and the equilibrium quantity would increase.
12. The line that relates the price of a good and the quantity demanded of that good is called
the demand
A. curve, and it usually slopes downward.
B. schedule, and it usually slopes upward.
C. curve, and it usually slopes upward.
D. schedule, and it usually slopes downward.
13. A group of buyers and sellers of a particular good or service is called a(n)
A. competition.
B. economy.
C. coalition.
D. market.
14. Which of the following changes would not shift the demand curve for a good or service?
A. A change in the price of a related good or service.
B. A change in expectations about the future price of the good or service.
C. A change in the price of the good or service.
D. A change in income.
15. The price elasticity of demand measures
A. buyers' responsiveness to a change in the price of a good.
B. the extent to which demand increases as additional buyers enter the market.
C. how much more of a good consumers will demand when incomes rise.
D. the movement along a supply curve when there is a change in demand.
16. Using the midpoint method, the price elasticity of demand for a good is computed to be
approximately 1.45. Which of the following events is consistent with a 20 percent
decrease in the quantity of the good demanded?
A. An increase of 29.0 percent in the price of the good
B. An increase of 13.79 percent in the price of the good
C. An increase in the price of the good from $29.00 to $20
D. An increase in the price of the good from $20 to $49.00
17. Suppose that gasoline prices increase dramatically this month. Kaliah commutes 100
miles to work each weekday.
Over the next few months, Kaliah drives less on the weekends to try to save money.
Within the year, she sells her home and purchases one only 10 miles from her place of
employment. These examples illustrate the importance of
A. the time horizon in determining the price elasticity of demand.
B. the availability of close substitutes in determining the price elasticity of demand.
C. a necessity versus a luxury in determining the price elasticity of demand.
D. the definition of a market in determining the price elasticity of demand.
18. Which of the following is likely to have the most price inelastic demand?
A. White chocolate chip with macadamia nut cookies
B. Cookies
C. Mrs. Field's chocolate chip cookies
D. Milk chocolate chip cookies
19. If the price elasticity of demand for a good is 5, then a 10 percent increase in price results
in a
A. 0.50 percent decrease in the quantity demanded.
B. 2.00 percent decrease in the quantity demanded.
C. 50.00 percent decrease in the quantity demanded.
D. 100.00 percent decrease in the quantity demanded.
20. When the price of good A is $50, the quantity demanded of good A is 500 units. When
the price of good A rises to $70, the quantity demanded of good A falls to 400 units.
Using the midpoint method, the price elasticity of demand for good A is
A. 1.50, and an increase in price will result in an increase in total revenue for good
B. 1.50, and an increase in price will result in a decrease in total revenue for good A.
C. 0.67, and an increase in price will result in an increase in total revenue for good A.
D. 0.67, and an increase in price will result in a decrease in total revenue for good A.
21. Your younger sister needs $50 to buy a new bike. She has opened a lemonade stand to
make the money she needs. Your mother is paying for all of the ingredients. She currently is
charging 25 cents per cup, but she wants to adjust her price to earn the $50 faster. If you
know that the demand for lemonade is elastic, what is your advice to her?
A. Leave the price at 25 cents and be patient.
B. Raise the price to increase total revenue.
C. Lower the price to increase total revenue.
D. There isn't enough information given to answer this question.
22. Income elasticity of demand measures how
A. the quantity demanded changes as consumer income changes.
B. consumer purchasing power is affected by a change in the price of a good.
C. the price of a good is affected when there is a change in consumer income.
D. many units of a good a consumer can buy given a certain income level.
23. For which of the following goods is the income elasticity of demand likely lowest?
A. Water
B. Pineapples
C. Sapphire pendant necklaces
D. Yachts
24. Last year, Damaris bought 8 burgers when her income was $43,000. This year, her
income is $54,000, and she purchased 9 burgers. Holding other factors constant and using
the midpoint method, it follows that Damaris's income elasticity of demand is about
A. 1.93, and Damaris regards burgers as inferior goods.
B. 1.93, and Damaris regards burgers as normal goods.
C. 0.52, and Damaris regards burgers as inferior goods.
D. 0.52, and Damaris regards burgers as normal goods.
25. Cross-price elasticity of demand measures how
A. the price of one good changes in response to a change in the price of another good.
B. the quantity demanded of one good changes in response to a change in the quantity
demanded of another good.
C. the quantity demanded of one good changes in response to a change in the price of
another good.
D. trongly normal or inferior a good is.
26. For which pairs of goods is the cross-price elasticity most likely to be positive?
A. Peanut butter and jelly
B. Bicycle frames and bicycle tires
C. Pens and pencils
D. Digital college textbooks and iPhones
27. Suppose that when the price of good X increases from $600 to $720, the quantity
demanded of good Y decreases from 67 to 15. Using the midpoint method, the cross-price
elasticity of demand is about
A. 6.98, and X and Y are substitutes.
B. –0.14, and X and Y are complements.
C. 0.14, and X and Y are substitutes.
D. –6.98, and X and Y are complements.
28. Kerem makes candles. If he charges $25 for each candle, his total revenue will be
A. $1,250 if he sells 100 candles.
B. $625 if he sells 25 candles.
C. $25 regardless of how many candles he sells.
D. $2,500 if he sells 5 candles.
29. A firm's opportunity costs of production are equal to its
A. explicit costs only.
B. implicit costs only.
C. explicit costs + implicit costs.
D. explicit costs + implicit costs + total revenue.
30. Bubba is a shrimp fisherman who could earn $5,000 as a fishing tour guide. Instead, he is
a full-time shrimp fisherman. In calculating the economic profit of his shrimp business, the
$5,000 that Bubba gave up is counted as part of the shrimp business's
A. total revenue.
B. explicit costs.
C. implicit costs.
D. marginal costs.
31. Which of the following is an example of an implicit cost?
A. Interest paid on the firm's debt
B. Rent paid by the firm to lease office space
C. The owner of a firm forgoing an opportunity to earn a large salary working for a
Wall Street brokerage firm
D. Wages paid to workers
32. Bev is opening her own court-reporting business. She financed the business by
withdrawing money from her personal savings account. When she closed the account, the
bank representative mentioned that she would have earned $300 in interest next year. If Bev
hadn't opened her own business, she would have earned a salary of $25,000. In her first year,
Bev's revenues were $30,000, and she spent $1,000 on materials and supplies. Which of the
following statements is correct?
A. Bev's total explicit costs are $26,300.
B. Bev's total implicit costs are $300.
C. Bev's accounting profits exceed her economic profits by $300.
D. Bev's economic profit is $3,700.
33. Jane was a partner at a law firm earning $223,000 per year. She left the firm to open her
own law practice. In the first year of business she generated revenues of $347,000 and
incurred explicit costs of $163,000. Jane's economic profit from her first year in her own
practice is
A. −$39,000.
B. $124,000.
C. $163,000.
D. $184,000.
34. Diamond is an organic brocolli farmer, but she also spends part of her day as a
professional organizing consultant. As a consultant, Diamond helps people organize their
houses. Due to the popularity of her home-organization services, Farmer Diamond has more
clients requesting her services than she has time to help if she maintains her farming
business. Farmer Diamond charges $45 an hour for her home-organization services. One
spring day, Diamond spends 8 hours in her fields planting $130 worth of seeds on her farm.
She expects that the seeds she planted will yield $300 worth of brocolli. What is the total
opportunity cost of the day that Farmer Diamond spent in the field planting brocolli?
A. $130
B. $490
C. $300
35. Diamond is an organic brocolli farmer, but she also spends part of her day as a
professional organizing consultant. As a consultant, Diamond helps people organize their
houses. Due to the popularity of her home-organization services, Farmer Diamond has more
clients requesting her services than she has time to help if she maintains her farming
business. Farmer Diamond charges $45 an hour for her home-organization services. One
spring day, Diamond spends 8 hours in her fields planting $130 worth of seeds on her farm.
She expects that the seeds she planted will yield $300 worth of brocolli. Diamond's
economic profit from farming equals
A. −$130.
B. −$190.
C. $130.
D. $170.
36. Kate is a florist. Kate can arrange 27 bouquets per day. She is considering hiring her
husband Amir to work for her. Together Kate and Amir can arrange 41 bouquets per day.
What is Amir's marginal product?
A. 68 bouquets
B. 41 bouquets
C. 29 bouquets
D. 14 bouquets
37. Suppose a certain firm is able to produce 110 units of output per day when 12 workers
are hired. The firm is able to produce 120 units of output per day when 13 workers are hired,
holding other inputs fixed. The marginal product of the 13th worker is
A. 4 units of output.
B. 5 units of output.
C. 10 units of output.
D. 120 units of output.
38. Which of the following statements is correct?

A. Marginal cost is rising for quantities higher than D because marginal cost is higher
than average total cost.
B. Average variable cost is declining for quantities less than B because marginal cost
is lower than average variable cost.
C. Marginal cost is minimized at B because at that quantity, marginal cost equals
average variable cost.
D. Average total cost is declining for quantities less than C because average variable
cost is less than average total cost.
39. Each worker at the Wooden Chair Factory costs $12 per hour. The cost of each machine
is $20 per day regardless of the number of chairs produced. What is the total daily cost of
producing at a rate of 55 chairs per hour if the factory operates 8 hours per day?

A. $480
B. $576
C. $520
D. $616
40. The Wooden Chair Factory experiences diminishing marginal product of labor with the
addition of which worker?

A. The third worker

B. The fourth worker
C. The fifth worker
D. The sixth worker
41. If Farmer Brown plants no seeds on his farm, he gets no harvest. If he plants 1 bag of
seeds, he gets 5 bushels of wheat. If he plants 2 bags, he gets 9 bushels. If he plants 3 bags,
he gets 12 bushels. A bag of seeds costs $120, and seeds are his only cost. Farmer Brown's
production function exhibits
A. increasing marginal product.
B. constant marginal product.
C. diminishing marginal product.
D. The production function is unrelated to the marginal product.
42. If a firm produces nothing, which of the following costs will be zero?
A. Total cost
B. Fixed cost
C. Opportunity cost
D. Variable cost
43. Omar's Car Wash has average variable costs of $4 and average fixed costs of $5 when it
produces 200 units of output (car washes). The firm's total cost is
A. $800.
B. $1,000.
C. $200.
D. $1,800.
44. Suppose that for a particular firm the only variable input into the production process is
labor and that output equals zero when no workers are hired. In addition, suppose that the
average total cost when 5 units of output are produced is $80, and the marginal cost of the
sixth unit of output is $160. What is the average total cost when six units are produced?
A. $80.00
B. $83.33
C. $88.33
D. $93.33
45. A firm produces 400 units of output at a total cost of $1,200. If total variable costs are
$1,000,
A. average fixed cost is 50 cents.
B. average variable cost is $2.
C. average total cost is $2.50.
D. average total cost is 50 cents.
46. Bobby pays all his workers the same wage, and labor is his only variable cost. From this
information we can conclude that Bobby's average variable cost decreases

A. as output rises from 0 to 10, but rises after that.

B. as output rises from 0 to 26, but rises after that.
C. as output rises from 0 to 33, but increases after that.
D. continually as output rises.
47. What is the marginal product of the third worker?

A. 80 units
B. 60 units
C. 40 units
 D. 20 units
48. The marginal products of hiring additional workers are

A. increasing at an increasing rate.

B. increasing at a decreasing rate.
C. decreasing.
D. constant.
49. For the firm whose production function and costs are specified in the table, its total-cost
curve is

A. constant.
B. increasing at a decreasing rate.
C. increasing at an increasing rate.
D. unknown because there is no relationship between a firm's production function
and its total-cost curve.
50. If marginal cost is rising,
A. average variable cost must be falling.
B. average fixed cost must be rising.
C. marginal product must be falling.
 D. marginal product must be rising.
51. Curve D is always declining because

A. of diminishing marginal product.

B. we are dividing fixed costs by higher and higher levels of output.
C. marginal product first increases, then decreases.
D. marginal product first decreases, then increases.
52. The efficient scale of production occurs at which quantity?

A. A C. C
B. B. D. D
53. When marginal cost is less than average total cost,
A. marginal cost must be falling.
B. average variable cost must be falling.
C. average total cost is falling.
 D. average total cost is rising.
54. The minimum points of the average variable cost and average total cost curves
occur where the
A. marginal cost curve lies below the average variable cost and average total cost
curves.
B. marginal cost curve intersects those curves.
C. average variable cost and average total cost curves intersect.
D. slope of total cost is the smallest.
55. For this firm, the average revenue when 17 units are produced and sold is

A. $2.
B. $7.
C. $1.
D. $0.
56. For this firm, the marginal revenue of the 15th unit is

A. $7.
B. $1.
C. $2.
 D. The marginal revenue cannot be determined without knowing the total revenue
when 15 units are sold.
57. Which of the following statements is correct?
A. For all firms, marginal revenue equals the price of the good.
B. Only for competitive firms does average revenue equal the price of the good.
C. Marginal revenue can be calculated as total revenue divided by the quantity sold.
D. Only for competitive firms does average revenue equal marginal revenue.
58. Suppose a firm in a competitive market produces and sells 150 units of output and earns
$1,800 in total revenue from the sales. If the firm increases its output to 200 units, the
average revenue of the 200th unit will be
A. zero.
B. less than $12.
C. $12.
D. more than $12.
59. Whenever a perfectly competitive firm chooses to change its level of output, its MR
A. increases if MR < ATC and decreases if MR > ATC.
B. does not change.
C. always increases.
D. always decreases.
60. If a competitive firm is currently producing a level of output at which marginal cost
exceeds marginal revenue, then
A. a one-unit increase in output will increase the firm's profit.
B. a one-unit decrease in output will increase the firm's profit.
C. total revenue exceeds total cost.
D. total cost exceeds total revenue.
61. Ms. Joplin sells colored pencils. The colored-pencil industry is competitive. Ms.
Joplin hires a business consultant to analyze her company's financial records. The consultant
recommends that Ms. Joplin increase her production. The consultant must have concluded
that, at her current level of production, Ms. Joplin's
A. marginal revenue exceeds her total cost.
B. marginal revenue exceeds her marginal cost.
 C. total revenues equal her total economic costs.
D. marginal cost exceeds her marginal revenue.
62. The accountants hired by Forever Fitness have determined total fixed cost to be $75,000,
total variable cost to be $130,000, and total revenue to be $125,000. Because of this
information, in the short run, Forever Fitness should
A. shut down because staying open would be more expensive.
B. lower their prices to increase their profits.
C. stay open because shutting down would be more expensive.
D. stay open because the firm is making an economic profit.
63. Raiman's Shoe Repair produces custom-made shoes. When Mr. Raiman produces 12
pairs per week, the marginal cost of the 12th pair is $84, and the marginal revenue of the
12th pair is $70. What would you advise Mr. Raiman to do?
A. Produce fewer custom-made shoes
B. Decrease the price
C. Produce more custom-made shoes
D. Shut down the business
64. The information below applies to a competitive firm that sells its output for $45 per unit.
• When the firm produces and sells 120 units of output, its average total cost is $23.5.
• When the firm produces and sells 121 units of output, its average total cost is $23.65.
When the firm produces 120 units of output, its total cost is
A. $5,400.00.
B. $1,064.25.
C. $2,820.00.
D. $2,838.00.
65. The information below applies to a competitive firm that sells its output for $45 per unit.
• When the firm produces and sells 120 units of output, its average total cost is $23.5.
• When the firm produces and sells 121 units of output, its average total cost is $23.65.
When the firm produces 120 units of output, its profit is
A. $5,400.00.
B. $2,580.00.
C. $2,820.00.
 D. $7,675.00.
66. The information below applies to a competitive firm that sells its output for $45 per unit.
• When the firm produces and sells 120 units of output, its average total cost is $23.5.
• When the firm produces and sells 121 units of output, its average total cost is $23.65.
When the firm increases its output from 120 units to 121 units, its profit
A. decreases by $45.00.
B. decreases by $3.35.
C. increases by $45.00.
D. increases by $3.35.
67. The firm's short-run supply curve is its marginal cost curve above

A. $2. C. $6
B. $4. D. $13
68. The firm will earn a negative economic profit but remain in business in the short run if
the market price is

A. above $13 but less than $18.

B. anywhere above $13.
C. less than $13 but more than $6.
 D. less than $6.
69. If the market price is $12, the firm will earn

A. positive economic profits in the short run.

B. negative economic profits in the short run but remain in business.
C. zero economic profits in the short run.
D. negative economic profits and shut down.
70. Firms would be encouraged to enter this market for all prices that exceed

A. P1.
B. P2.
C. P3.
D. P4.
71. Which of the following is a necessary characteristic of a monopoly?
A. The firm is the sole seller of its product.
B. The firm is located in a small geographic market.
C. The firm generates a large economic profit.
D. The firm's product has many close substitutes.
72. When market price is P2, a profit-maximizing firm's losses can be represented by the area

A. At a market price of P2, the firm earns profits, not losses.

B. (P2 − P1) × (Q2 − Q1).
C. At a market price of P2 the firm has losses, but the reference points in the figure
don't identify the losses.
D. (P4 − P2) × Q2.
73. If the distribution of water is a natural monopoly, then
A. a single firm cannot serve the market at the lowest possible average total cost.
B. allowing for competition among different firms in the water-distribution industry is
efficient.
C. multiple firms would likely each have to pay large fixed costs to develop their own
network of pipes.
D. average cost increases as the quantity of water produced increases.
74. A monopolist can sell 300 units of output for $50 per unit. Alternatively, it can sell 301
units of output for $49.60 per unit. The marginal revenue of the 301st unit of output is
A. $70.40.
B. -$70.40.
C. -$0.40.
D. -$99.60.
75. The profit-maximization problem for a monopolist differs from that of a competitive firm
in which of the following ways?
A. A competitive firm maximizes profit at the point where marginal revenue equals
marginal cost; a monopolist maximizes profit at the point where marginal revenue
exceeds marginal cost.
B. For a competitive firm, marginal revenue at the profit-maximizing level of output
is equal to marginal revenue at all other levels of output; for a monopolist,
marginal revenue at the profit-maximizing level of output is smaller than it is for
larger levels of output.
C. For a profit-maximizing competitive firm, thinking at the margin is much more
important than it is for a profit-maximizing monopolist.
D. A competitive firm maximizes profit at the point where average revenue equals
marginal cost; a monopolist maximizes profit at the point where average revenue
exceeds marginal cost.
76. A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level
of output, its marginal revenue is $40, its average revenue is $80, and its average total cost is
$44. At Q = 500, the firm's profit is
A. $18,000.
B. $40,000.
C. $22,000.
D. $20,000.
77. For a monopolistically competitive firm,
A. at the profit-maximizing quantity of output, price equals the minimum of average
total cost.
B. at the profit-maximizing quantity of output, price equals marginal cost.
C. at the profit-maximizing quantity of output, marginal revenue equals marginal
cost.
D. marginal revenue and price are the same.
78. Based upon the information shown, what price will Bearclaws charge to maximize
profits?

A. $14
B. $7
C. $12
D. $10.50
79. Based upon the information shown, how many units will Bearclaws produce to maximize
profits?
A. 130
B. 70
C. 105
D. 90
80. Based upon the information shown, what is total revenue for Bearclaws, given that it
maximizes profits?
A. $900.
B. $980.
C. $490.
D. $1,080.
81. The deadweight loss associated with a monopoly occurs because the monopolist
A. maximizes profits.
B. produces an output level less than the socially optimal level.
C. produces an output level greater than the socially optimal level.
D. equates marginal revenue with marginal cost.
82. What is the socially efficient price and quantity?

A. Price = Y; quantity = J
B. Price = X; quantity = J
C. Price = Z; quantity = K
D. Price = Y; quantity = K
83. What is the monopoly price and quantity?
A. Price = X; quantity = J
B. Price = Y; quantity = J
C. Price = Z; quantity = J
D. Price = Y; quantity = K
84. The two types of imperfectly competitive markets are
A. monopolistic competition and oligopoly.
B. monopoly and monopolistic competition.
C. monopolistic competition and cartels.
D. monopoly and oligopoly.
85. A monopolistically competitive industry is characterized by
A. a few firms, differentiated products, and barriers to entry.
B. many firms, differentiated products, and barriers to entry.
C. a few firms, identical products, and free entry.
D. many firms, differentiated products, and free entry.
86. In the short run, a firm operating in a monopolistically competitive market
A. must earn zero economic profits.
B. maximizes revenues as well as profits.
C. produces an output level where marginal revenue equals average total cost.
D. produces an output where marginal revenue equals marginal cost, and the price is
determined by demand.
87. Which of the following conditions is characteristic of a monopolistically competitive firm
in both the short run and the long run?
A. P > MC
B. MC = ATC
C. P < MR
D. P = ATC
88. Which of the graphs depicts a short-run equilibrium that will encourage the
entry of other firms into this monopolistically competitive industry?

A. Graph (d)
B. Graph (c)
C. Graph (b)
D. Graph (a)
89. What price will the monopolistically competitive firm charge in this market?

A. $90 C. $80
B. $60 D. $70
90. How much consumer surplus will be derived from the purchase of this product at the
monopolistically competitive price?
A. $200 C. $1,600
B. $400 D. $600
91. How much profit will the monopolistically competitive firm earn in this situation?
A. $200 C. $0
B. $1,600 D. $400
92. How much output will the monopolistically competitive firm produce in this situation?
A. 20 units C. 10 units
B. 40 units D. 90 unitS
93. A group of buyers and sellers of a particular good or service is called a(n)
A. Command
B. Traditional
C. Market
D. Mixed
94. A movement upward and to the left along a demand curve is called
A. an increase in quantity demand
B. an increase in demand.
C. a decrease in quantity demand
D. an decrease in demand.
95. A likely example of substitute goods for most people would be
A. tennis balls and tennis rackets.
B. televisions and subscriptions to cable television services.
C. pencils and pens.
D. peanut butter and jelly.
96. Which of the following might cause the demand curve for an inferior good to shift to the
left?
A. an increase in the price of a complement
B. an increase in the price of a substitute
C. None of the above
D. All of the above
97. A price ceiling is
A. often imposed when sellers of a good are successful in their attempts to convince
the government that the market outcome is unfair without a price ceiling.
B. often imposed on markets in which “cutthroat competition” would prevail without
a price ceiling.
C. a legal maximum on the price at which a good can be sold.
D. All of the above are correct.
98. A price floor will be binding only if it is set
A. above the equilibrium price.
B. equal to the equilibrium price.
C. either above or below the equilibrium price.
D. below the equilibrium price.
99. If the government removes a binding price floor from a market, then the price received by
sellers will
A. increase and the quantity sold in the market will decrease.
B. decrease and the quantity sold in the market will decrease.
C. decrease and the quantity sold in the market will increase.
D. increase and the quantity sold in the market will increase.
100.Which of the following is correct?
A. Rent control is an example of a price ceiling, and the minimum wage is an
example of a price floor.
B. Rent control is an example of a price floor, and the minimum wage is an
example of a price ceiling.
C. Rent control and the minimum wage are both examples of price floors.
D. Rent control and the minimum wage are both examples of price ceilings.