Chapter 2 Multiple Choice Quiz

. The market demand curve shows

. At a price of $4.95, a pulp fiction novel is expected to sell 9,000 copies. If the novel is offered for sale at a price of $3.95, then the publisher can expect to sell

. During a recession, economies experience increased unemployment and a reduced level of activity. How would a recession be likely to affect the market demand for new cars?

. The market supply curve shows

. At a price of $299.95, the manufacturer of a portable gas-powered generator is willing to produce 19,000 units per quarter. At a price of $349.95, it is likely that the manufacturer will be willing to produce

. Unionized workers may be able to negotiate with management for higher wages during periods of economic prosperity. Suppose that workers at automobile assembly plants successfully negotiate a significant increase in their wage package. How would the new wage contract be likely to affect the market supply of new cars?

. If automobile manufacturers are producing cars faster than people want to buy them,

. If a computer software company introduces a new program and finds that orders from wholesalers far exceed the number of units that are being produced,

. Market equilibrium refers to a situation in which market price

. If the price of a good increases while the quantity of the good exchanged on markets increases, then the most likely explanation is that there has been

. If the price of a good decreases while the quantity of the good exchanged on markets increases, then the most likely explanation is that there has been

. If the price of a good increases while the quantity of the good exchanged on markets decreases, then the most likely explanation is that there has been

. If the price of a good decreases while the quantity of the good exchanged on markets decreases, then the most likely explanation is that there has been

. An increase in the demand for a good will cause

. An increase in the supply of a good will cause

. Assume that firms in an industry observe a 10% increase in the productivity of labor, but to get there they had to increase the cost of labor by 5%. What should be expected to happen in the output market as a result of this development?

. During 2002 – 2005 we saw significant increases in the construction of new housing stock in the US. During the same time period we also observed significant rises in the demand for homes. We know that during that time period both price and the level of homes traded increased. Based on that information what most likely happened in the market?

. If a rise in supply exceeds a rise in demand, then we should expect

. In which instance will both the equilibrium price and quantity rise?

. In which instance can we observe a rise in the equilibrium price accompanied by a decline in the equilibrium quantity?

. To be an importer of a product the country must have its domestic price of the product be _____ the foreign price

. To be an exporter of a product the country must have its domestic price of the product be _____ the foreign price

. Which of the following will help a country become an exporter of a product (assume that the product is a normal good given the median consumer income)?

. In 2010 Russia was affected by a significant draught. Russia is a major producer and exporter of several agricultural commodities. As a result of the draught, Russia reduced some of its agricultural exports. In the context of the world supply/demand model for the affected agricultural commodities we should observe:

.

In November of 2010 the US Central Bank, the Federal Reserve, embarked on a policy of quantitative easing. Since this policy essentially represents an increase in the supply of money, it may create inflationary expectations. Let's assume (and this is a strong assumption), that as a result of this policy, US households start to expect inflation (price increases) in the housing market. The effect on the housing market will be:

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