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Question: 1 john is studying the effects of income on the...

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1) John is studying the effects of income on the demand for peppers. Which factors are held constant when using the "ceteris paribus" assumption?

Select the correct answer below:

a) income

b) all factors affecting demand, except income

c) all factors affecting demand, including income

d) none of the above

2) Which of the following factors will affect the overall supply of hats in the entire market?

(Select all the apply. Hint: There are 2 correct answers.)

Select all that apply:

a) higher textile costs

b) a decrease in overall consumer income

c) lower prices for trademarked logos

d) a drop in the price of a competitor's hats

3) A decrease in demand for _________________ results from a rise in income.

Select the correct answer below:

a) inferior goods

b) irregular goods

c) normal goods

d) abnormal goods

4) In general, improvements in technology that is used to produce a good will result in ___________.

Select the correct answer below:

a) a decrease in supply

b) a shortage of the good

c) an increase in supply

d) higher operating costs

5) Suppose there is a decrease in the price of butter. What do we expect to happen to the demand for bread? Assume that bread and butter are often consumed together.

Select the correct answer below:

a) There will be a decrease in demand for bread.

b) There will be an increase in demand for bread.

c) There will be no change in the demand for bread and no movement along the demand curve.

d) There will be no change in the demand for bread, but there will be a movement up along the demand curve for bread.

6) For normal goods, there is a _________________ relationship between income and demand levels, and there is an ______________ relationship for inferior goods.

Select the correct answer below:

a) positive, positive

b) positive, inverse

c) inverse, inverse

7) If we use "ceteris paribus" when plotting a demand curve for the price of canned beans, what is assumed to be constant?

Select the two correct answers below.

Select all that apply:

a) The price of a can of beans.

b) The price of a can of tomatoes.

c) The number of cans of beans supplied.

d) The costs of production of a can of beans.

8) Which of the following would likely cause a rightward shift in demand for solar power?

Select all that apply:

a) a widely-seen documentary touts the benefits of solar power

b) the price of kitchen sinks increases

c) the price of coal power increases

d) the population decreases

9) Which of the following factors would result in a change in the supply of farm equipment?

Select the correct answer below:

a) An increase in the price of gasoline

b) A decrease in the price of steel

c) An increase in the number of people who want to buy farm equipment.

d) None of the above.

10) The demand curve for a normal good is sloped _______________. The demand curve for an inferior good is sloped _______________.

Select the correct answer below:

a) upwards, downwards

b) upwards, upwards

c) downwards, upwards

d) downwards, downwards

11) Factors that increase supply include:

Select all that apply:

a) lower taxes on the cost of goods

b) an increase in the number of producers

c) a rise in input costs

d) changes in technology that increase firm costs without increasing productivity

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