ECON 200: INTRODUCTION TO
ECONOMICS
ONLINE COURSE
PRACTICE:
Supply and Demand
Multipe Choice:
identify the correct answer.
Which graph above correctly illustrates
the market adjustment that occurs in each situation that follows?
1.
New robotic technology on factory production lines lowers the average
cost of production for each Cherokee produced.
a. (A)
b. (B)
c. (C)
d. (D)
e. none of the above is correct
2. The price of Ford
Broncos (a competitor) falls.
a. (A)
b. (B)
c. (C)
d. (D)
e. none of the above is correct
3. Consumers incomes rise due to
prolonged growth in the economy.
a. (A)
b. (B)
c. (C)
d. (D)
e. none of the above is correct
4. The price of insurance for
four-wheel drive vehicles doubles. (Cherokees are four wheel drives.)
a. (A)
b. (B)
c. (C)
d. (D)
e. none of the above is correct
5.
The government places a $2000 tax per vehicle on the
production of all sports utility vehicles (including Cherokees) to
discourage the production of low mileage cars.
a. (A)
b. (B)
c. (C)
d. (D)
e. none of the above is correct
6. A new union contract raises
wages at Jeep Cherokee plants.
a. (A)
b. (B)
c. (C)
d. (D)
e. none of the above is correct
7. The price of gasoline rises
to $3.89 per gallon.
a. (A)
b. (B)
c. (C)
d.
(D)
e. none of the above is correct
8.
The National Highway Safety Council releases a warning that tests and
accident reports indicate that Sports Utility Vehicles, including the
Jeep Cherokee, have a high rate of rolling over and are unsafe for
small children and seniors as a result.
a.
(A)
b.
(B)
c.
(C)
d.
(D)
e.
none of the above is correct
9. Cherokee prices are expected
to rise in the near future.
a.
(A)
b.
(B)
c.
(C)
d.
(D)
e.
none of the above is correct
10. Due to a successful,
extended ad campaign consumer preferences become more positive for the
Jeep Cherokee.
a.
(A)
b.
(B)
c.
(C)
d.
(D)
e.
none of the above is correct
11. A new technology allows the
costs of gasoline refining to fall by 50%. This will result in
a. the demand curve for gasoline shifting in
b. the supply curve for
gasoline
shifting in
c. the demand curve for
gasoline shifting
out
d. the supply curve for
gasoline
shifting out
12. In the above question (#11),
the new equilibrium will be reached when
a. the Supply of
gasoline falls
and price rises
b. the Supply of
gasoline rises
and price falls
c. the quantity supplied of
gasoline rises
and price rises
d. the Demand of
gasoline rises
and price falls
13.
Due to a technological breakthrough it is discovered that automobiles
can now run on recycled cooking oil at half the price of gasoline. What
adjustment will occur?
a. The demand line for gas will shift out, to the
right.
b. The quantity supplied of gas
will decrease due to a left shift of the Demand curve.
c. The supply line for gas will shift in, to the left
d. The supply line for gas will shift out, to the
right.
14. The adjustment in the above
question (#13) will cause
a. the price of gas to fall and output to increase
b. the price of gas to fall and output to decrease
c. the price of gas to rise and output to decrease
d. the price of gas to rise and output to increase
15. If you refer to movements
along a Demand curve, you are talking about
a. a rightward shift in the Demand curve
b. a leftward shift in the Demand curve
c. changes in the quantity Demand
d. an increase in Demand
16. Which of the
following will cause a decrease in the supply of
chicken?
a.
The price of chicken falls.
b.
Health conscious consumers substitue tofu for chicken in their diets.
c.
The nesting costs of chicken farmers increase.
d.
New breeding technologies lowers the costs of production of chicken
farmers.
e. Newspaper warnings of salmonella bacteria frighten consumers.
17. At prices above
the equilibrium price, quantity demanded is:
a. less than quantity supplied,
forcing prices down.
b. less than quantity
supplied, forcing prices up.
c.
greater than quantity supplied, forcing prices down.
d.
greater than quantity supplied, forcing prices up.
18. On a graph, a
demand line with a slope equal to zero is
a. upward sloping.
b. downward sloping, but
very steep.
c.
verical.
d.
horizontal.
19. The recycling
station says it will buy all our scrap aluminum for 19 cents per
pound. Its demand curve for aluminum is
a. upward sloping.
b. downward sloping, but
very steep.
c.
verical.
d.
horizontal.
20. With a nearly
flat (or horizontal) demand curve, a shift of the
supply curve will generate
a. a
very small change in output
b.
a very large change in output
c. a very large change in price
d. a and c
e. none of the above.
ANSWERS
1.
c
2. b
3. a
4. b
5. d
|
6. d
7. b
8. b
9. a
10. a
|
11.
d
12. b
13. b
14. b
15. c |
16.
c
17. a
18. d
19. d
20. b
|
Do you have questions? Phil's e-mail: martinezp@lcc.edu
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