Type:
Test Bank
Resource:
Economics of Managerial Decisions
Edition:
1st Edition
Author(s):
Roger Blair Mark Rush
Exam Name___________________________________ SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 1) There are no questions in this section. 1) _____________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 2) The simplest form of a business organization is a ________. A) corporation B) proprietorship C) limited liability company D) partnership
2) _______
3) Which of the following is an example of a proprietorship? A) Coca-Cola B) the United States Post Office C) a taxi driver D) the American Cancer Society
3) _______
4) Which of the following is an example of a proprietorship? A) Hunter Construction, LLC B) the United States Post Office C) the owner of a local nail salon D) the American Cancer Society
4) _______
5) Which of the following is an example of a proprietorship? A) FedEx B) a freelance photographer C) the American Heart Association D) Luxe Windows, LLC
5) _______
6) All of the following are true for a proprietorship except which one? A) Profits are taxed only once. B) The government requires that it is registered. C) It exists only for the life of the owner. D) It is easy to organize.
6) _______
7) All of the following are true for a partnership except which one? A) The government requires that it is registered. B) Profits are taxed only once. C) The owners have limited liability. D) It is owned by two or more people.
7) _______
8) All of the following are true for a partnership except which one? A) The owners have unlimited liability. B) It is owned by two or more people. C) The government requires that it is registered. D) Profits are taxed twice.
8) _______
9) All of the following are true for a limited liability company except which one? A) It exists for the lifetime of the owner. B) The government requires that it is registered. C) Profits are taxed only once. D) The owners have limited liability.
9) _______
10) All of the following are true for a corporation except which one? A) Profits are taxed only once. B) It has legal requirements in addition to registration. C) The owners have limited liability. D) It has perpetual life.
10) ______
11) Which of the following is an example of a limited liability company? A) Cooper and Cooper, LLC B) a taxi driver C) the owner of a local dry cleaner D) the United States Post Office
11) ______
12) A small law firm that is NOT registered as a limited liability company is likely to be a ________ or a ________. A) corporation; LLC B) proprietorship; corporation C) proprietorship; partnership D) partnership; corporation
12) ______
13) Which type of firm is subject to double-taxation? A) proprietorship C) partnership
13) ______ B) limited liability company D) corporation
14) A ________ profits are taxed twice. A) corporation C) limited liability company
B) proprietorship D) partnership
14) ______
15) Which of the following is an example of a corporation? A) a taxi driver B) Cooper and Cooper, LLC C) the United States Post Office D) Coca-Cola
15) ______
16) Owners of a ________ and a ________ both have limited liability. A) proprietorship; partnership B) corporation; proprietorship C) partnership; limited liability company D) limited liability company; corporation
16) ______
17) The government requires that each of the following types of firms register the firm except which one? A) limited liability company B) partnership C) proprietorship D) corporation
17) ______
18) In a ________, employees are motivated to become an owner. A) proprietorship B) corporation C) limited liability company D) partnership
18) ______
19) A ________ is typically run on a day-to-day basis by professional managers. A) partnership B) corporation C) proprietorship D) limited liability company
19) ______
20) A ________ is typically overseen by a board of directors. A) proprietorship B) corporation C) partnership D) limited liability company
20) ______
21) A ________ only exists for the life of the owner, while a ________ has perpetual life. A) corporation; proprietorship B) proprietorship; corporation C) proprietorship; limited liability company D) partnership; limited liability company
21) ______
22) If you want to establish and run your own business, but are very concerned about your liability should anything go wrong, which of the following would be the best kind of firm for you? A) limited liability company B) corporation C) partnership D) proprietorship
22) ______
23) In a corporation, board members ________.
23) ______
A) oversee the actions of managers B) only have their firm's profits taxed once C) typically run the corporation on a day-to-day basis D) face unlimited liability 24) Which type of firm pays dividends? A) limited liability company C) partnership
24) ______ B) corporation D) proprietorship
25) Which type of firm is legally required to setup a double-entry booking system to record its business transactions? A) partnership B) proprietorship C) limited liability company D) corporation
25) ______
26) Which type of firm is legally required file an annual report to their state government? A) limited liability company B) corporation C) proprietorship D) partnership
26) ______
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 27) Regardless of their organizational structure, all firms convert inputs into outputs that can sell or distribute.
27) ______
28) Non-profit firms are the only type of firm that does not convert inputs into outputs that can be sold or distributed.
28) ______
29) A partnership can be owned by just one person.
29) ______
30) The dividend a corporation pays per share is determined by the corporation's board of directors.
30) ______
31) If a corporation fails, the shareholders are responsible for repaying all of the debt.
31) ______
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 32) Total revenue is equal to A) price x quantity B) quantity x profit C) price x cost D) price x profit
32) ______
33) If Big Brothers Hot Dog stand sold 500 hot dogs at a price $2 per hot dog, the total revenue is A) $500 B) $2 C) $1,000 D) $5,000
33) ______
34) All of the following can affect a firm's total revenue except which one? A) returns B) discounts C) accounting costs D) allowances
34) ______
35) All of the following can affect a firm's total revenue except which one? A) returns B) rebates C) discounts D) opportunity costs
35) ______
36) Which of the following can affect a firm's total revenue? A) opportunity costs B) implicit costs C) allowances D) explicit costs
36) ______
37) Weed Masters provides an annual lawn care service to its customers. Weed Masters has 400 customers and charges $1,000 per annual lawn service. The company offers an 8 percent
disc t if oun custom
ers pay 37) in full at the start of the season. If every customer pays in full at the start of the season, Weed Masters' total revenue is ________ . A) $368,000
___ ___
B) $375,000
C) $400,000
D) $323,000
38) Weed Masters provides an annual lawn care service to its customers. Weed Masters has 350 customers and charges $750 per annual lawn service. The company offers a 4 percent discount if customers pay in full at the start of the season. If every customer pays in full at the start of the season, Weed Masters' total revenue is ________. A) $262,500 B) $10,500 C) $252,000 D) $15,500
38) ______
39) Weed Masters provides an annual lawn care service to its customers. Weed Masters has 225 customers and charges $800 per annual lawn service. The company offers a 5 percent discount if customers pay in full at the start of the season. If every customer pays in full at the start of the season, Weed Masters' total revenue is ________. A) $12,000 B) $180,000 C) $9,000 D) $171,000
39) ______
40) ________ is an example of an implicit cost. A) The cost to transport a firm's goods C) A firm's electric bill
40) ______ B) A salary paid to an employee D) The wear and tear on a firm's machinery
41) A cabinet firm paid $5,000 for 10,000 pieces of cabinet hardware. The firm has used 4,000 pieces of hardware and is holding the remaining 6,000 pieces in inventory. The current market price for the 6,000 pieces of hardware is $2,800. What is the opportunity cost of holding the 6,000 pieces of hardware in inventory? A) $2,800 B) $3,000 C) $5,000 D) $4,000
41) ______
42) A cabinet firm paid $5,000 for 10,000 pieces of cabinet hardware. The firm has used 4,000 pieces of hardware and is holding the remaining 6,000 pieces in inventory. The current market price for the 6,000 pieces of hardware is $2,800. What is the sunk cost of purchasing the cabinet hardware? A) $3,000 B) $5,000 C) $4,000 D) $2,800
42) ______
43) A florist paid $1,200 for 500 glass vases. The florist has used 300 of the glass vases and is holding the remaining 200 vases in inventory. The current market price for the 200 pieces of hardware is $600. What is the opportunity cost of holding the 200 vases in inventory?
43) ______
A) $600
B) $200
C) $1,200
D) $300
44) A florist paid $1,200 for 500 glass vases. The florist has used 300 of the glass vases and is holding the remaining 200 vases in inventory. The current market price for the 200 pieces of hardware is $600. What is the sunk cost of purchasing the vases? A) $600 B) $1,200 C) $200 D) $300
44) ______
45) Big Trucking Company has purchased a $100,000 dump truck that has a useful life of 8 years. After the first year of use, the market value of the dump truck falls to $70,000. What is the straight-line depreciation of the dump truck? A) $12,500 B) $87,500 C) $70,000 D) $30,000
45) ______
46) Big Trucking Company has purchased a $100,000 dump truck that has a useful life of 8 years. After the first year of use, the market value of the dump truck falls to $70,000. What is the economic depreciation of the dump truck? A) $12,500 B) $70,000 C) $87,500 D) $30,000
46) ______
47) Big Trucking Company has purchased a $100,000 dump truck that has a useful life of 8 years. After the first year of use, the market value of the dump truck falls to $70,000. If the highest one-year return available is 10 percent, what is the one-year return from selling the dump truck? A) $60,000 B) $7,000 C) $70,000 D) $10,000
47) ______
48) To start up a two-person partnership law firm, the partners each invest $125,000 of their own funds. If the partners could have earned 5 percent return on these funds in another endeavor, what is their competitive return? A) $6,250 B) $237,500 C) $12,500 D) $118,750
48) ______
49) Suppose you have recently graduated and have been offered a salary position at a reputable accounting firm of $125,000 (including all benefits) per year. After much consideration, you turn down the offer to start your own accounting firm. You pay yourself $75,000 (including all benefits) a year. Which of the following represents the opportunity cost of your time? A) $125,000 B) $100,000 C) $75,000 D) $50,000
49) ______
50) Suppose you have recently graduated and have been offered a salary position at a reputable accounting firm of $125,000 (including all benefits) per year. After much consideration, you turn down the offer to start your own accounting firm. You pay yourself $75,000 (including all benefits) a year. Which of the following represents the explicit opportunity cost of your time? A) $100,000 B) $125,000 C) $50,000 D) $75,000
50) ______
51) Suppose you have recently graduated and have been offered a salary position at a reputable accounting firm of $125,000 (including all benefits) per year. After much consideration, you turn down the offer to start your own accounting firm. You pay yourself $75,000 (including all benefits) a year. Which of the following represents the implicit opportunity cost of your time? A) $50,000 B) $100,000 C) $75,000 D) $125,000
51) ______
Profit Using Accounting Costs Total Revenue Cost Nail technicians Owner's Salary Depreciation
Profit Using Opportunity Costs $700,000 Total Revenue Cost A Nail technicians B Owner's Time D Cost of using building and equipment
$700,000 A C $25,000
Allowance Total Cost Total Profit
(opportunity cost)
E
Total Cost Total Profit
F
Happy Nails is a locally owned nail salon that is in its first year of business. The nail salon employs 8 nail technicians that are paid $31,250 each and the owner's is paid $75,000. If the owner did not own Happy Nails, she would work for a competitor for $85,000. At the beginning of the year, the building and the salon equipment are worth $100,000 and at the end of the year, they are worth $85,000. The accountant for Happy Nails uses straight-line depreciation for the 15-year life of the building and salon equipment. The table above provides some additional information on revenue and the opportunity cost of using the building and equipment. 52) Refer to the table above. What is the value of A? A) $62,500 B) $312,500 53) Refer to the table above. What is the value of B? A) $85,000 B) $100,000 54) Refer to the table above. What is the value of C? A) $31,250 B) $85,000 55) Refer to the table above. What is the value of D? A) $5,666.67 B) $4,250
52) ______ C) $31,250
D) $250,000 53) ______
C) $75,000
D) $31,250 54) ______
C) $100,000
D) $75,000 55) ______
C) $5,000
D) $6,666.67
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 56) Refer to the table above. The value of E is greater than the value of F.
56) ______
57) Competition from profit-maximizing firms will drive firms that are not maximizing profits out of business.
57) ______
58) Both accounting cost and opportunity costs include explicit and implicit costs.
58) ______
59) Effective profit-maximizing managers work hard to minimize sunk costs.
59) ______
60) Managers should use straight-line depreciation when making decisions.
60) ______
61) Opportunity cost is a better measure of the true costs faced by firms than accounting costs.
61) ______
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 62) If the marginal ________ of an action exceeds its marginal ________ then the action ________ be performed. A) benefit; cost; should B) benefit; cost; should not C) cost; benefit; should D) none of the above
62) ______
63) At the 30th unit of action, the marginal benefit is equal to $50 and the marginal cost is equal to $40. Which of the following is true? A) The 30th unit of action minimizes total costs. B) The 30th unit of action should not be undertaken. C) The 30th unit of action maximizes total gains (total profits). D) The 30th unit of action should be undertaken.
63) ______
64) At the 50th unit of action, the marginal benefit is equal to $20 and the marginal cost is equal to
$25. Which
of the 64) followin g is true? A) The 50th unit of action minimizes total costs. B) The 50th unit of action should be undertaken. C) The 50th unit of action maximizes total gains (total profits). D) The 50th unit of action should not be undertaken.
___ ___
65) To maximize total profit, managers want to produce the quantity in which marginal benefit ________ marginal cost. A) is equal to B) maximizes C) minimizes D) exceeds
65) ______
66) To maximize total profit, managers want to produce the quantity in which marginal cost ________ marginal benefit. A) maximizes B) is equal to C) exceeds D) minimizes
66) ______
67) If the marginal benefit curve is linear and downward sloping and the marginal cost curve is linear and upward sloping, an increase in the marginal cost that causes an upward shift of the curve will ________ the profit-maximizing number of units undertaken. A) not change B) decrease C) exactly double D) increase
67) ______
68) If the marginal benefit curve is linear and downward sloping and the marginal cost curve is linear and upward sloping, a decrease in the marginal cost that causes a downward shift of the curve will ________ the profit-maximizing number of units undertaken. A) decrease B) not change C) increase D) reduce by exactly half
68) ______
69) Refer to the figure above. At the 10th unit of action, which of the following is true? A) Marginal cost exceeds marginal benefit. B) Total gains are maximized. C) Marginal benefit exceeds marginal cost. D) Total losses are minimized.
69) ______
70) Refer to the figure above. At the 20th unit of action, which of the following is true? A) Total losses are minimized. B) Marginal benefit exceeds marginal cost. C) Marginal cost exceeds marginal benefit. D) Total gains are maximized.
70) ______
71) Refer to the figure above. At the 40th unit of action, which of the following is true? A) Marginal benefit exceeds marginal cost. B) Marginal cost exceeds marginal benefit. C) Total gains are maximized. D) Total losses are minimized.
71) ______
72) Refer to the figure above. At the 50th unit of action, which of the following is true? A) Marginal cost exceeds marginal benefit. B) Marginal benefit exceeds marginal cost. C) Total gains are maximized. D) Total losses are minimized.
72) ______
73) Refer to the figure above. Undertaking the 10th unit of action, yields a surplus of benefit of ________. A) $20 B) $60 C) $80 D) $40
73) ______
74) Refer to the figure above. Undertaking the 20th unit of action, yields a surplus of benefit of ________. A) $50 B) $60 C) $20 D) $30
74) ______
75) Refer to the figure above. Which unit of action maximizes total gains (total profits)? A) 40 B) 20 C) 10 D) 30
75) ______
76) Refer to the figure above. Undertaking the 30th unit of action, yields a surplus of benefit of ________. A) $30 B) $20 C) $10 D) $0
76) ______
77) Refer to the figure above. An increase in the marginal cost that causes an upward shift of the curve will cause the profit-maximizing number of units undertaken to ________. A) decrease B) equal 40 C) equal 50 D) increase
77) ______
78) Refer to the figure above. At the 20th unit of action, which of the following is true? A) Total gains are maximized. B) Marginal benefit exceeds marginal cost. C) Marginal cost exceeds marginal benefit. D) Total losses are minimized.
78) ______
79) Refer to the figure above. At the 30th unit of action, which of the following is true? A) Marginal benefit exceeds marginal cost. B) Total gains are maximized. C) Total losses are minimized. D) Marginal cost exceeds marginal benefit.
79) ______
80) Refer to the figure above. At the 50th unit of action, which of the following is true? A) Total gains are maximized. B) Total losses are minimized. C) Marginal cost exceeds marginal benefit. D) Marginal benefit exceeds marginal cost.
80) ______
81) Refer to the figure above. At the 70th unit of action, which of the following is true? A) Total losses are minimized. B) Total gains are maximized. C) Marginal benefit exceeds marginal cost. D) Marginal cost exceeds marginal benefit.
81) ______
82) Refer to the figure above. Undertaking the 20th unit of action, yields a surplus of benefit of ________. A) $40 B) $80 C) $20 D) $60
82) ______
83) Refer to the figure above. Undertaking the 30th unit of action, yields a surplus of benefit of ________. A) $70 B) $20 C) $50 D) $30
83) ______
84) Refer to the figure above. Which unit of action maximizes total gains (total profits)? A) 40 B) 30 C) 50 D) 20
84) ______
85) Refer to the figure above. Undertaking the 40th unit of action, yields a surplus of benefit of ________. A) $0 B) $30 C) $20 D) $10
85) ______
86) Refer to the figure above. An increase in the marginal cost that causes an upward shift of the curve will cause the profit-maximizing number of units undertaken to ________. A) decrease B) equal 50 C) increase D) equal 40
86) ______
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 87) Marginal analysis is the comparison of the total benefit of an action compared to its total cost.
87) ______
88) All actions in which the marginal benefit exceeds the marginal cost should be undertaken.
88) ______
89) All actions in which the marginal cost exceeds the marginal benefit should be undertaken.
89) ______
90) Total profit is maximized when marginal benefit equals marginal cost.
90) ______
91) Total profit is maximized as long as marginal benefit exceeds marginal cost.
91) ______
1) 2) B 3) C 4) C 5) B 6) B 7) C 8) D 9) A 10) A 11) A 12) C 13) D 14) A 15) D 16) D 17) C 18) D 19) B 20) B 21) B 22) A 23) A 24) B 25) D 26) B 27) TRUE 28) FALSE 29) FALSE 30) TRUE 31) FALSE 32) A 33) C 34) C 35) D 36) C 37) A 38) C 39) D 40) D 41) A 42) B 43) A 44) B 45) A 46) D 47) B 48) C 49) A 50) D 51) A
52) D 53) C 54) B 55) D 56) TRUE 57) TRUE 58) TRUE 59) FALSE 60) TRUE 61) TRUE 62) A 63) D 64) D 65) A 66) B 67) B 68) C 69) C 70) B 71) B 72) A 73) D 74) C 75) D 76) D 77) A 78) B 79) A 80) C 81) D 82) A 83) B 84) A 85) A 86) A 87) FALSE 88) TRUE 89) FALSE 90) TRUE 91) FALSE
Exam Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) If the price of ground beef decreases, which of the following will occur? A) Consumers will experience a decrease in their purchasing power. B) The substitution effect will cause some consumers to switch to other types of meat. C) The demand curve for ground beef will shift to the left. D) There will be a movement down the demand curve for ground beef.
1) _______
2) If the price of peanut butter increases, which of the following will occur? A) Consumers will experience an increase in their purchasing power. B) The demand curve for peanut butter will shift to the right. C) The demand curve for peanut butter will shift to the left. D) There will be a movement up the demand curve for peanut butter.
2) _______
3) Which of the following will cause a movement along the demand curve for apple juice? A) an expected change in the future price of apple juice B) an increase in the price of apple juice C) a change in the price of orange juice, a substitute for apple juice D) a decrease in consumer incomes
3) _______
4) Which of the following will cause a movement down the demand curve for frozen chicken nuggets? A) an increase in the price of frozen chicken nuggets B) a decrease in the price of frozen chicken nuggets C) an increase in consumer incomes D) a decrease in consumer incomes
4) _______
5) Which of the following will cause a movement up the demand curve for digital printing services? A) an increase in consumer incomes B) a decrease in consumer incomes C) an increase in the price of digital printing services D) a decrease in the price of digital printing services
5) _______
6) The demand function for Super Big Bright LED light bulbs is Qd = (45 million) - (3.5 million × P).
6) _______
If the company charged a price of $8 per bulb, how many will be demanded? A) 17 million B) 41.5 million C) 37 million D) 10 million 7) The demand function for Super Big Bright LED light bulbs is Qd = (45 million) - (3.5 million × P).
7) _______
The company is currently charging a price of $8 per bulb, but is considering increasing the price to $10. How will the increase in price affect the quantity demanded? A) Consumers will decrease the quantity demanded by 7 million. B) Consumers will decrease the quantity demanded by 10 million. C) Consumers will increase the quantity demanded by 7 million. D) Consumers will increase the quantity demanded by 10 million. 8) The demand function for a pack of four Never Die Batteries is Q d = (62 million) - (8 million × P).
8) _______
If the company charged a price of $5 per package, how many packages will be demanded? A) 8 million B) 22 million C) 54 million D) 102 million 9)
Th e
__ __ __ _
demand 9) function for a pack of four Never Die Batteries is Qd = (62 million) (8 million × P). The company is currently charging a price of $5 per package, but is consideri ng decreasi ng the price to $4. How will the decrease in price affect how many packages of batteries consume rs will buy? A) Consumers will decrease the quantity demanded by 8 million. B) Consumers will increase the quantity demanded by 8 million. C) Consumers will increase the quantity demanded by 30 million. D) Consumers will decrease the quantity demanded by 30 million. 10) For any demand function, which of the following represents the dependent variable? A) the price of a substitute good B) the quantity demanded of a good C) consumer incomes D) the price of the good
10) ______
11) For demand functions, which of the following cannot be an independent variable? A) consumer incomes B) the price of a substitute good
11) ______
C) the quantity demanded of a good
D) the price of the good in question
12) If an increase in consumers' incomes results in a leftward shift of the demand curve for a good, which of the following is true? A) The good has an upward sloping demand curve. B) The good is a normal good. C) The demand for the good does not follow the Law of Demand. D) The good is an inferior good.
12) ______
13) If Goods X and Y are complements, if the price of Good X decreases, this will cause a movement ________ the demand curve for Good X and a ________ shift in the demand for Good Y. A) down; rightward B) up; leftward C) up; rightward D) down; leftward
13) ______
14) If Goods X and Y are substitutes, if the price of Good X decreases, this will cause a movement ________ the demand curve for Good X and a ________ shift in the demand for Good Y. A) down; leftward B) down; rightward C) up; rightward D) up; leftward
14) ______
15) If Goods X and Y are substitutes, if the price of Good X increases, this will cause a movement ________ the demand curve for Good X and a ________ shift in the demand for Good Y. A) down; leftward B) up; leftward C) down; rightward D) up; rightward
15) ______
16) Refer to the figure above. Which of the following could have caused the shift in the demand curve? A) a decrease in the price of Good Z B) a decrease in the expected future price of Good Z C) an increase in income if Good Z is an inferior good D) an increase in the price of a substitute for Good Z
16) ______
17) Refer to the figure above. Which of the following could have caused the shift in the demand curve? A) a decrease in the price of a substitute for Good Z B) a decrease in income if Good Z is an inferior good C) a decrease in the price of Good Z D) an increase in the price of a complement for Good Z
17) ______
18) Refer to the figure above. Which of the following could have caused the shift in the demand curve? A) an increase in income if Good Z is an inferior good B) a decrease in the price of Good Z C) a decrease in the expected future price of Good Z D) an effective marketing campaign that changes preferences towards Good Z
18) ______
19) Refer to the figure above. Which of the following could have caused the shift in the demand curve? A) a decrease in the expected future price of Good Z B) an increase in the number of demanders for Good Z C) an increase in the price of Good Z D) a decrease in the price of Good Z
19) ______
20) Refer to the figure above. Which of the following could have caused the shift in the demand curve? A) a decrease in the number of demanders for Good Z B) an increase in the price of a complement for Good Z C) a decrease in the price of a substitute for Good Z D) an increase in the expected future price of Good Z
20) ______
21) Refer to the figure above. Which of the following could have caused the shift in the demand curve? A) a decrease in the price of a complement for Good Z
21) ______
B) an increase in the price of a substitute for Good Z C) a decrease in the expected future price of Good Z D) an increase in the number of demanders for Good Z 22) Refer to the figure above. Which of the following could have caused the shift in the demand curve? A) an increase in the price of Good Z B) a decrease in income if Good Z is an inferior good C) an increase in the expected future price of Good Z D) a decrease in the price of a substitute for Good Z
22) ______
23) Refer to the figure above. Which of the following could have caused the shift in the demand curve? A) an increase in the price of Good Z B) an increase in income if Good Z is an inferior good C) a decrease in the price of a complement for Good Z D) an increase in the price of a substitute for Good Z
23) ______
24) Refer to the figure above. Which of the following could have caused the shift in the demand curve? A) a decrease in income if Good Z is an inferior good B) an increase in the expected future price of Good Z C) an increase in the price of a complement for Good Z D) an increase in the price of Good Z
24) ______
25) Refer to the figure above. Which of the following could have caused the shift in the demand curve? A) an increase in the price of Good Z B) a decrease in the price of Good Z C) a decrease in the price of a complement for Good Z D) a decrease in income if Good Z is a normal good
25) ______
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 26) The Law of Demand states that as consumers' incomes increase, the demand for normal goods increase.
26) ______
27) If an increase in the price of Good X causes the demand for Good Y to shift rightward, Goods X and Y are complements.
27) ______
28) If a decrease in the price of Good X causes the demand for Good Y to shift rightward, Goods X and Y are complements.
28) ______
29) An increase in the number of demanders for a good will cause a downward movement along the demand curve.
29) ______
30) A news report discussing a medical study that found conclusive evidence of the positive health benefits of farm-raised eggs is likely to cause a rightward shift of the demand curve for farm-raised eggs.
30) ______
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 31) If the price of avocados increases, which of the following will occur? A) The supply curve for avocados will shift to the left. B) There will be a movement down the supply curve for avocados.
31) ______
C) The supply curve for avocados will shift to the right. D) There will be a movement up the supply curve for avocados. 32) If the price of tomato juice decreases, which of the following will occur? A) The supply curve for tomato juice will shift to the right. B) There will be a movement up the supply curve for tomato juice. C) There will be a movement down the supply curve for tomato juice. D) The supply curve for tomato juice will shift to the left.
32) ______
33) Which of the following will cause a movement down the supply curve for frozen chicken nuggets? A) a decrease in the cost to produce frozen chicken nuggets B) a decrease in the price of frozen chicken nuggets C) an increase in the number of suppliers of frozen chicken nuggets D) a decrease in the expected future price of frozen chicken nuggets
33) ______
34) The supply function for a pack of four Never Die Batteries is QS = (0) + (6 million × P). If the
34) ______
company charged a price of $5 per package, how many packages will be supplied? A) 30 million B) 22 million C) 0 D) 6 million 35) The supply function for a pack of four Never Die Batteries is QS = (0) + (6 million × P). If the price of a package of four Never Die Batteries increases by $1, how will this change the quantity supplied? A) decrease by 6 million B) decrease by 1 million C) increase by 1 million D) increase by 6 million
35) ______
36) The supply function for a half gallon of Happy Cow Milk is QS = (0) + (2 million × P). If the
36) ______
company charged a price of $3.5 per half gallon, how many half gallons will be supplied? A) 0 B) 3.5 million C) 7 million D) 2 million 37) The supply function for a half gallon of Happy Cow Milk is QS = (0) + (2 million × P). If the price of a Happy Cow Milk decreases by $1, how will this change the quantity supplied? A) increase by 2 million B) decrease by 2 million C) increase by 1 million D) decrease by 1 million
37) ______
38) If Goods X and Y are substitutes in production, if the price of Good X decreases, this will cause a movement ________ the supply curve for Good X and a ________ shift in the supply curve for Good Y. A) down; rightward B) up; leftward C) up; rightward D) down; leftward
38) ______
39) If Goods X and Y are substitutes in production, if the price of Good X increases, this will cause a movement ________ the supply curve for Good X and a ________ shift in the supply curve for Good Y. A) down; rightward B) up; rightward C) up; leftward D) down; leftward
39) ______
40) If Goods X and Y are substitutes in production, if the price of Good X decreases, this will cause a ________ the supply curve for Good X and a ________ the supply curve for Good Y. A) shift in; shift in B) movement along; shift in C) movement along; movement along D) shift in; movement along
40) ______
41) If Goods X and Y are substitutes in production, if the price of Good X increases, this will cause a ________ the supply curve for Good X and a ________ the supply curve for Good Y. A) movement along; movement along B) shift in; shift in C) movement along; shift in D) shift in; movement along
41) ______
42) If Goods R and S are complements in production, if the price of Good R increases, this will cause a(n) ________ the supply curve for Good S. A) upward movement along B) downward movement along C) leftward shift in D) rightward shift in
42) ______
43) If Goods R and S are complements in production, if the price of Good R decreases, this will cause a(n) ________ the supply curve for Good S. A) leftward shift in B) rightward shift in C) upward movement along D) downward movement along
43) ______
44) A technological advancement in the production of LED light bulbs will result in ________. A) a downward movement along the supply curve B) a rightward shift of the supply curve C) a leftward shift of the supply curve D) an upward movement along the supply curve
44) ______
45) A bad growing season for avocados will result in ________. A) a leftward shift of the supply curve B) a downward movement along the supply curve C) a rightward shift of the supply curve D) an upward movement along the supply curve
45) ______
46) Refer to the figure above. Which of the following could have caused the shift in the supply curve? A) a decrease in the price of Good R B) an increase in the price of a substitute good in production C) an increase in the number of sellers of Good R D) an increase in the cost of producing Good R
46) ______
47) Refer to the figure above. Which of the following could have caused the shift in the supply curve? A) a bad state of nature for the production of Good R B) an increase in the price of Good R C) a decrease in the cost of producing Good R D) an increase in the price of a substitute good in production
47) ______
48) Refer to the figure above. All of the following except which one could have caused the shift in the supply curve? A) an increase in the price of Good R B) an increase in the number of sellers of Good R C) a good state of nature for the production of Good R D) a decrease in the cost of producing Good R
48) ______
49) Refer to the figure above. Which of the following could have caused the shift in the supply curve? A) a decrease in the price of Good R B) an increase in the price of a complement good in production C) an increase in the expected future price of Good R D) an increase in the price of a substitute good in production
49) ______
50) Refer to the figure above. Which of the following could have caused the shift in the supply curve? A) a decrease in the price of a substitute good in production B) a decrease in the price of a complement good in production C) a bad state of nature for the production of Good R D) a decrease in the number of sellers of Good R
50) ______
51) Refer to the figure above. Which of the following could have caused the shift in the supply curve? A) an increase in the price of Good R B) an increase in the number of sellers of Good R C) a decrease in the price of a substitute good in production D) an increase in the cost of producing Good R
51) ______
52) Refer to the figure above. Which of the following could have caused the shift in the supply curve? A) an increase in the price of a substitute good in production B) a good state of nature for the production of Good R C) a decrease in the price of Good R D) a decrease in the cost of producing Good R
52) ______
53) Refer to the figure above. All of the following except which one could have caused the shift in the supply curve? A) an increase in the price of a complement good in production B) a decrease in the number of sellers of Good R C) an increase in the cost of producing Good R D) an increase in the price of a substitute good in production
53) ______
54) Refer to the figure above. Which of the following could have caused the shift in the supply curve? A) a technological advancement in the production of Good R B) a decrease in the cost of producing Good R
54) ______
C) a decrease in the price of a complement good in production D) a decrease in the expected future price of Good R 55) Refer to the figure above. Which of the following could have caused the shift in the supply curve? A) a bad state of nature for the production of Good R B) a decrease in the expected future price of Good R C) a technological advancement in the production of Good R D) an increase in the price of a complement good in production TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 56) An increase in the price of Good R will cause a movement upward on the supply curve for Good R.
55) ______
56) ______
57) If Goods Y and Z are complements in production, the increase in the price of Good Y will shift the supply curve for Good Z to the right.
57) ______
58) Only a change in the price of almonds will cause a movement along the supply curve of almonds.
58) ______
59) If Goods R and S are complements in production, if the price of Good R increases, both the supply curve for Good R and Good S will shift.
59) ______
60) In terms of production, cost and price are the same.
60) ______
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 61) At the equilibrium price, which of the following is true? A) The quantity demanded exceeds the quantity supplied. B) The quantity supplied exceeds the quantity demanded. C) The quantity demanded equals the quantity supplied. D) There is a shortage of the product.
61) ______
62) At any price higher than the equilibrium price, a ________ in quantity will be created and at any price lower than the equilibrium price, a ________ in quantity will be created. A) surplus; surplus B) shortage; shortage C) shortage; surplus D) surplus; shortage
62) ______
63) If there is a surplus in the market, market forces will drive the quantity supplied to ________ and the quantity demanded to ________. A) increase; decrease B) increase; increase C) decrease; increase D) decrease; decrease
63) ______
64) If there is a shortage in the market, market forces will drive the quantity supplied to ________ and the quantity demanded to ________. A) decrease; increase B) increase; increase C) decrease; decrease D) increase; decrease
64) ______
65) If the equilibrium price for a half gallon of organic milk is $4 and the current price for a half gallon of milk is $5.25, market forces will cause all of the following to occur except which one? A) the quantity supplied to increase B) the quantity supplied to decrease C) the quantity demanded to increase D) the price to fall to the equilibrium price
65) ______
66) If the equilibrium price for a half gallon of organic milk is $4 and the current price for a half
gall on of