17. The law of demand is reflected by a. a downward-sloping demand curve.

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1 ECN 211 In class problems for 29 August 2011 EC 16. The Internet a. will be considered a market when the Internet firms are profitable. b. is a market because buyers and sellers are brought together to buy and sell. c. would be a market if there was only one physical location. d. cannot function as a market. 17. People s willingness and ability to buy a specified amount of a good or a service at a specific price during a specified period of time is called the a. quantity demanded. b. people s power. c. buyers demand. d. sellers demand. 18. The quantity demanded is a. what buyers will buy at every possible price. b. an amount per unit of time at a particular price that buyers are willing and able to buy. c. the amount buyers will purchase at the highest price they are willing to pay. d. what buyers will purchase at the price they prefer to pay. 11. According to the law of demand, other things remaining the same, if the price of a good a. falls, the quantity demanded increases. b. rises, the quantity demanded increases. c. falls; suppliers will produce more to meet the increase in demand. 15. Use the law of demand to complete this statement: Other things remaining the same, as the price of Mountain Dew decreases, the a. demand for Mountain Dew decreases. b. demand for Mountain Dew increases. c. quantity demanded of Mountain Dew decreases. d. quantity demanded of Mountain Dew increases. 17. The law of demand is reflected by a. a downward-sloping demand curve.

2 b. an inverse relationship between the price of a good or service and the quantity demanded. c. an increase in the quantity demanded if the price falls. d. All of the above answers are correct. 36. Which of the following pair of goods are substitute goods for consumers? a. a horse and a horse shoe b. shoes and socks c. Coke and Pepsi d. mustard and bread 43. U.S. Airways and Delta Airlines both provide air travel service at Atlanta International Airport. If U.S. Airways decreases its airline ticket prices, other things remaining the same, then the demand for a. U.S. Airways tickets will increase. b. Delta Airlines tickets will decrease. c. Delta Airlines tickets will increase. d. U.S. Airways tickets will decrease. 69. Other things remaining the same, an increase in the price of a pizza leads to a(n) a. increase in the supply of pizza. b. decrease in the supply of pizza. c. decrease in the quantity supplied of pizza. d. increase in the quantity supplied of pizza. 73. If the wages firms pay workers rise, a. firms increase the demand for their product. b. supply increases to make up for the higher wages. c. the quantity supplied increases to make up for the higher prices. d. supply decreases because costs have risen. 75. Auto manufactures come to expect that the price of an automobile will increase by 10 percent next year. Other things remaining the same, this belief will lead to a(n) a. increase in the quantity demanded of automobiles next year. b. increase in the supply of automobiles this year. c. decrease in the supply of automobiles this year. d. increase in the demand for automobiles next year.

3 79. If the number of firms supplying a good increases, the supply and the supply curve shifts. a. increases; leftward b. increases; rightward c. decreases; rightward d. decreases; leftward 103. Over time, income in the United States has increased. If a good is an inferior good, the increase in income has the demand for the good and the equilibrium price of the good. a. decreased; lowered b. decreased; raised c. increased; lowered d. increased; raised 104. After the December holidays, department stores put holiday lights on sale. A reason for putting lights on sale is that a. demand decreases after the holidays, leading to a surplus at the original price. The surplus leads to lower prices. b. demand decreases after the holidays, leading to a shortage at the original price. The shortage leads to lower prices. c. supply decreases after the holidays, leading to a surplus at the original price. The surplus leads to lower prices. d. supply decreases after the holidays, leading to a shortage at the original price. The shortage leads to lower prices If demand decreases because of a change in people s preferences, the result is a equilibrium price and a equilibrium quantity. a. lower; larger b. higher; smaller c. higher; larger d. lower; smaller

4 137. The effects of an effective minimum wage, where the minimum wage is set above the equilibrium wage rate, are to the wage rate paid workers and employment. a. raise; increase b. raise; decrease c. lower; increase d. lower; decrease 145. The price of gasoline has increased causing the demand for gasoline to decrease. Which of the following is correct about this statement? a. It is correct because it follows the law of demand. b. It is correct because as the price of anything rises, buyers buy less of it. c. It is false because gasoline is an inferior good. d. It is false because a rise in price decreases the quantity demanded not the demand News of a severe hurricane that destroys large amounts of orange groves leads to a. orange consumers immediately switching to some other fruit in anticipation of higher prices for b. the demand for oranges decreases immediately in anticipation of higher prices for c. the demand for oranges increases immediately in anticipation of higher prices for 148. Which of the following occurs if the minimum wage is doubled? a. More people go on welfare. b. The unemployment rate increases. c. The supply of goods and services that use workers paid the minimum wage decreases. d. All of the above occurs When a new hit movie appears at the local theater, there is usually a line of customers wanting to get a seat to view the movie. If some customers are turned away because there are not enough seats available, what does the fact that not all customers can watch the movie indicate? a. The ticket price is at the equilibrium level. b. The ticket price is below the equilibrium level.

5 c. The ticket price is above the equilibrium level. d. There is not enough information to arrive at any conclusions For many stocks on Wall Street, the closing price from one day to the next may be greatly different. Evidently a. there is no equilibrium price for these stocks. b. stock buyers and sellers must be irrational. c. demand or supply or both are constantly shifting from one day to the next.

Exam #1 Time: 1h 15m Date: 9 July Instructor: Brian B. Young. Multiple Choice. 2 points each

Economics 211 Macroeconomic Principles Exam #1 Time: 1h 15m Date: 9 July 2013 Name The value of this exam is 100 points. Instructor: Brian B. Young Please show your work where appropriate! Multiple Choice