 Test: 9:00- 10:15

 Chapters 1-5, 17 (LO1) --- Units 1-3

 40 multiple choice

Casio FX 991_ _

Change in Demand – entire demand curve shifts

Change in Quantity Demanded – move a point on the curve

Every time there is a change in demand, there is a change in quantity supplied

Increase in demand, creates in increase in quantity supplied

1) A headline from a recent article on an animal welfare website: Becan Consupmtion

declines as prices rise” Example of:
2) increase in demand
3) decrease in demand
4) increase in Qd
5) decrease in Qd --- because it is a change in price
6) Not enough info to know

2) Price of pencils have fallen. What caused the drop in price?

a) increase in price of graphite
b) increase in use of standardized tests
c) new technology lowers the cost of producing pencils

3) Price of pencils have fallen, either due to new tech in pencil production or decrease in price
of ink pens. How would we know which was the cause of the lower price?
a) depends on whether the demand or supply changed first
b) if equilibrium quantity of pencils decreased, must be tech
c) if the equilibrium quantity increased, must be price of ink pens
d) if the equilibrium quantity increased, it must be tech

4) Compared with last year, the prices of jeans has fallen and more jeans are being sold. Both
demand and the supply have shifted. Which is most likely?
a) increase in demand is greater than increase in supply
b) increase in demand is smaller than decrease in supply
c) decrease in demand is greater than decrease in supply
d) decrease in demand is smaller than the increase in supply
5) Which of the following statements about Qd and Qs is correct?
a) Qd is stock variable and Qs is a flow variable
b) Qd is flow and Qs is stock
c) Qd and Qs are both stock
d) Qd and Qs are both flow --- Qd and Qs are measured within a period of time (ex. A cup of
coffee a day, a jug of milk per week, etc)

7) Why does the aggregate demand curve slop downward?

a) Because price level increases, consumers feel poorer and therefore buy less
b) When price level increases, consumers feel richer and therefore buy more
c) When domestic price increase, consumers sub domestic goods for imported ones
d) When price of a particular good increases, consumers substitute away from that good