Multiple Choice Answers

1. According to the law of demand an increase in the price of gasoline will:
A. increase the quantity demanded of gasoline, other things constant.
B. decrease the quantity demanded of gasoline, other things constant.
C. increase the demand for gasoline.
D. decrease the demand for gasoline.

2. How would a decline in demand for imported commodities by the Chinese affect the market for cargo transportation to China?
A. Supply of cargo transportation shifts to the right causing an increase in quantity demanded and decline in equilibrium price.
B. Supply of cargo transportation shifts to the right causing an increase in demand and equilibrium quantity and a decrease in equilibrium price.
C. Demand for cargo transportation shifts to the left causing a decline in quantity supplied and price.
D. Demand for cargo transportation shifts to the left causing a decline in supply and equilibrium quantity and price.

3. Which of the following situations best demonstrates the law of demand?
A. Movie-goers react to an increase in the price of a theater ticket by seeing fewer movies per year.
B. Movie-goers see fewer movies per year due to an overall decrease in the quality of newly released motion pictures.
C. A drought causes a decrease in the availability of pumpkins, resulting in fewer jack-o-lanterns displayed on Halloween.
D. An increase in the number of people writing Economics textbooks results in a decrease in average textbook prices.

4. When applied to labor markets, the law of supply suggests that:
A. an increase in the wages earned by nurses will cause the quantity of nurses supplied to increase.
B. a decrease in the wages earned by nurses will cause the quantity of nurses supplied to increase.
C. an increase in the wages earned by nurses will cause the quantity of nurses demanded to increase.
D. a decrease in the wages earned by nurses will cause the quantity of nurses demanded to increase.

5. According to the law of supply:
A. supply curves slope upward.
B. supply curves slope downward.
C. price and quantity supplied are negatively related.
D. price and quantity supplied are inversely related.

6. conclusion is that:
A. the law of demand and supply do not hold in the market.
B. the fallacy of composition is not operative in the market.
C. the invisible hand is the only force at work in the market.
D. social and political forces are likely to exist.

7. According to Newton’s law, a body in motion remains in motion. A body in equilibrium according to this law:
A. does not exist.
B. bounces.
C. is in motion.
D. is in rest

8. Refer to the graphs above. Higher costs of production combined with an expectation on the part of consumers of higher prices in the future would result in the shifts depicted in:
A. Graph A.
B. Graph B.
C. Graph C.
D. Graph D.

9. Refer to the graphs above. The market is salmon steaks. Which graph best represents the impact of increased concern that salmon is becoming endangered?
A. Graph A
B. Graph B
C. Graph C
D. Graph D

10. Refer to the graphs above. The curve that best illustrates the law of supply is:
A. II.
B. IV.
C. III.
D. I.