Multiple Choice:
1. A market will experience a ________ in a situation where quantity supplied exceeds quantity demanded and a _______ in a Situation where quantity demanded exceeds quantity supplied.
a. Shortage; shortage
b. Surplus; surplus
c. Shortage; surplus
d. Surplus; shortage
2. The price of a good will tend to rise when
a. A temporary shortage at the current price occurs (assuming no price controls are imposed).
b. A temporary surplus at the current price occurs (assuming no price controls are imposed).
c. Demand decreases.
d. Supply increases.
3. Other things equal, a decrease in consumer income would
a. Increase the price and increase the quantity of autos exchanged.
b. Increase the price and decrease the quantity of autos exchanged.
c. Decrease the price and increase the quantity of autos exchanged.
d. Decrease the price and decrease the quantity of autos exchanged.
4. An increase in the expected future price of a good by consumers would, other things equal,
a. Increase the current price and increase the current quantity exchanged.
b. Increase the current price and decrease the current quantity exchanged.
c. Decrease the current price and increase the current quantity exchanged.
d. Decrease the current price and decrease the current quantity exchanged.
5. Assume that airline travel is a normal good and intercity bus travel is an inferior good. Higher incomes would
a. Increase both the price and the quantity of airline travel.
b. Decrease both the price and quantity of airline travel.
c. Increase the price and decrease the quantity of intercity bus travel.
d. Decrease the price and increase the quantity of intercity bus travel.
6. If you observed the price of a good increasing and the quantity exchanged decreasing, it would be most likely caused by
a. An increase in demand.
b. A decrease in demand.
c. An increase in supply.
d. A decrease in supply.
7. If you observed the price of a good increasing and the quantity exchanged increasing, it would be most likely caused by
a. An increase in demand.
b. A decrease in demand.
c. An increase in supply.
d. A decrease in supply.