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Chapter 2 The Basics of Supply and Demand Practice Questions LATEST 2021

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Chapter 2 The Basics of Supply and Demand 1) Which of the following is NOT an application of supply and demand analysis? A) Understanding changing world economic conditions and their effects on pric... es B) Evaluating the effects of government price controls on the agricultural industry C) Determining how taxes affect aggregate consumption spending patterns D) all of the above E) none of the above Answer: E Diff: 1 Section: 2.1 2) A supply curve reveals: A) the quantity of output consumers are willing to purchase at each possible market price. B) the difference between quantity demanded and quantity supplied at each price. C) the maximum level of output an industry can produce, regardless of price. D) the quantity of output that producers are willing to produce and sell at each possible market price. Answer: D Diff: 1 Section: 2.1 3) Plastic and steel are substitutes in the production of body panels for certain automobiles. If the price of plastic increases, with other things remaining the same, we would expect: A) the price of steel to fall. B) the demand curve for steel to shift to the right. C) the demand curve for plastic to shift to the left. D) nothing to happen to steel because it is only a substitute for plastic. E) the demand curve for steel to shift to the left. Answer: B Diff: 1 Section: 2.1 4) Coffee and cream: A) are both luxury goods. B) are complements. C) are both more inelastic in demand in the long run than in the short run. D) have a positive cross price elasticity of demand. Answer: B Diff: 1 Section: 2.1 16 5) Which of the following would shift the demand curve for new textbooks to the right? A) A fall in the price of paper used in publishing texts B) A fall in the price of equivalent used textbooks C) An increase in the number of students attending college D) A fall in the price of new textbooks. Answer: C Diff: 1 Section: 2.1 6) When an industryʹ s raw material costs increase, other things remaining the same, A) the supply curve shifts to the left. B) the supply curve shifts to the right. C) output increases regardless of the market price and the supply curve shifts upward. D) output decreases and the market price also decreases. Answer: A Diff: 1 Section: 2.1 7) Sugar can be refined from sugar beets. When the price of those beets falls, A) the demand curve for sugar would shift right. [Show More]

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