Multiple Choice
1. Which of the following is a market?
a. A garage sale
b. A restaurant
c. The New York Stock Exchange
d. An eBay auction
e. All of the above
2. In a competitive market,
a. There are a number of buyers and sellers.
b. No single buyer or seller can appreciably affect the market price.
c. Sellers offer similar products.
d. All of the above are true.
3. If the demand for milk is downward sloping, then an increase in the price of milk will result in a(n)
a. Increase in the demand for milk.
b. Decrease in the demand for milk.
c. Increase in the quantity of milk demanded.
d. Decrease in the quantity of milk demanded.
e. Decrease in the supply of milk.
4. Which of the following would be most likely to increase the demand for jelly?
a. An increase in the price of peanut butter, which is often used with jelly
b. An increase in income; jelly is a normal good
c. The price of jelly falls
d. Medical research that finds that daily consumption of jelly makes people live 10 years less, on average
5. Which of the following would not cause a change in the demand for cheese?
a. An increase in the price of crackers, which are consumed with cheese
b. An increase in the income of cheese consumers
c. An increase in the population of cheese lovers
d. An increase in the price of cheese
6. Ceteris paribus, an increase in the price of DVD players would tend to
a. Decrease the demand for DVD players.
b. Increase the price of televisions, a complement to DVD players.
c. Increase the demand for DVD players.
d. Decrease the demand for DVDs.
7. Whenever the price of Good A decreases, the demand for Good B increases. Goods A and B appear to be
a. complements.
b. Substitutes.
c. Inferior goods.
d. Normal goods.
e. Inverse goods.
8. Whenever the price of Good A increases, the demand for Good B increases as well. Goods A and B appear to be
a. Complements.
b. Substitutes.
c. Inferior goods.
d. Normal goods.
e. Inverse goods.
9. The difference between a change in quantity demanded and a change in demand is that a change in
a. Quantity demanded is caused by a change in a good’s own price, while a change in demand is caused by a change in some other variable, such as income, tastes, or expectations.
b. Demand is caused by a change in a good’s own price, while a change in quantity demanded is caused by a change in some other variable, such as income, tastes, or expectations.
c. Quantity demanded is a change in the amount people actually buy, while a change in demand is a change in the amount they want to buy.
d. This is a trick question. A change in demand and a change in quantity demanded are the same thing.

10. Suppose CNN announces that bad weather in Central America has greatly reduced the number of cocoa bean plants and for this reason the price of chocolate is expected to rise soon. As a result,
a. The current market demand for chocolate will decrease.
b. The current market demand for chocolate will increase.
c. The current quantity demanded for chocolate will decrease.
d. No change will occur in the current market for chocolate.