CHAPTER 3 Demand, Supply, and Market Equilibrium

31. If average income
increases, ceteris paribus, then there will be:
A) a shift of
the demand curve.
B) a movement
along the demand curve.
C) a movement
along and a shift in the demand curve.
D) no effect on
the demand curve, because income is not a ceteris paribus
condition.

32. Which would be a
likely cause of an increase in the price of pizza?
A) a decreased
interest in take-out and fast-food dining
B) a decrease
in the price of hamburgers, a substitute food
C) an increase
in the price of cheese, a complement
D) a health
report showing eating pizza reduces stress

33. Which will not,
ceteris paribus, cause the demand curve for good A to shift?
A) a change in the price of A
B) a change in the price of B, a complement
C) a change in the price of C, a substitute
D) an increase in average income

34. Which will not
cause a change in the demand for product A?
A) a change in
consumer preferences
B) a change in
the price of A
C) a decline
in consumer incomes
D) a decrease
in the price of close-substitute product B

35. A normal good is one:
A) which all
people like.
B) which all
normal people like.
C) for which
demand increases when price decreases.
D) for which
demand increases when income increases.

36. An inferior good is
one:
A) that
doesn’t work.
B) that costs
too much.
C) that won’t
be purchased at any price.
D) for which
demand increases as income decreases.

37. Which goods would
usually be an inferior good?
A) French
wines
B) generic
beer
C) theater
tickets
D) steak

38. If product Y is an
inferior good, an increase in consumer incomes will:
A) result in a
surplus of product Y.
B) not affect
the sales of product Y.
C) shift the
demand curve for product Y to the left.
D) shift the
demand curve for product Y to the right.

39. For most products,
purchases tend to rise with increases in buyers’ incomes, and to fall with
decreases in buyers’ incomes. Such products are known as:
A) inferior
goods.
B) direct
goods.
C) average
goods.
D) normal
goods.

40. For some products,
purchases tend to decrease as the buyer’s income increases. Such products are
known as:
A) common
goods.
B) inferior
goods.
C) inverse
goods.
D) normal
goods.

41. If an increase in
consumer incomes causes the demand curve for product Q to shift to the right,
then it can be said that product Q is a(n):
A) normal
good.
B) luxury
good.
C) inferior
good.
D) inexpensive
good.

42. If an increase in
consumer incomes causes the demand curve for product Z to shift to the left,
then it can be said that product Z is a(n):
A) normal
good.
B) luxury
good.
C) inferior
good.
D) inexpensive
good.

Use
the following to answer questions 43-44:

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43. Refer to the above
diagram, which shows three demand curves for coffee. Which would cause the change
in the demand for coffee illustrated by the shift from D1 to D2?
A) a decrease
in the price of tea
B) an increase
in consumer incomes
C) an increase
in the price of sugar
D) a
technological improvement in the production of coffee

44. Refer to the above
diagram, which shows three demand curves for coffee. Which would cause the
change in the demand for coffee illustrated by the shift from D1toD3?
A) a decrease
in the price of tea
B) an increase
in consumer incomes
C) a decrease
in the price of sugar
D) a
technological improvement in the production of coffee

45. If two goods are
close substitutes:
A) consumers
will always buy the one that has the lower price.
B) a fall in
the price of one will decrease the demand for the other.
C) an increase
in the price of one causes the demand for the other to decrease.
D) a decrease
in the price of one causes an increase in the demand for the other.