1. The best definition of a market is a. a store that offers a variety of goods and services. b. a place where buyers meet and an auctioneer calls out prices. c. a group of buyers... 1. The best definition of a market is a. a store that offers a variety of goods and services. b. a place where buyers meet and an auctioneer calls out prices. c. a group of buyers and sellers of a good or service. d. a venue where the sole supplier of a good offers its product. 2. In a perfectly competitive market, a. every seller tries to distinguish itself by offering a better product than its rivals. b. every seller takes the price of its product as set by market conditions. c. every seller tries to undercut the prices charged by its rivals. d. one seller has successfully outcompeted its rivals so no other sellers remain. 3. The market for which product best fits the definition of a perfectly competitive market? a. eggs b. tap water c. movies d. computer operating systems 4. A change in which of the following will NOT shift the demand curve for hamburgers? a. the price of hot dogs b. the price of hamburgers c. the price of hamburger buns d. the income of hamburger consumers 5. Which of the following will shift the demand curve for pizza to the right? a. an increase in the price of hamburgers, a substitute for pizza b. an increase in the price of root beer, a complement to pizza c. the departure of college students, as they leave for summer vacation d. a decrease in the price of pizza 6. If pasta is an inferior good, then the demand curve shifts to the _________ when _________ rises. a. right; the price of pasta b. right; consumers’ income c. left; the price of pasta d. left; consumers’ income 7. Which of the following moves the pizza market up along a given supply curve? a. an increase in the price of pizza b. an increase in the price of root beer, a complement to pizza c. a decrease in the price of cheese, an input to pizza d. a kitchen fire that destroys a popular pizza joint 8. Which of the following shifts the supply curve for pizza to the right? a. an increase in the price of pizza b. an increase in the price of root beer, a complement to pizza c. a decrease in the price of cheese, an input to pizza d. a kitchen fire that destroys a popular pizza joint 9. Movie tickets and film streaming services are substitutes. If the price of film streaming increases, what happens in the market for movie tickets? a. The supply curve shifts to the left. b. The supply curve shifts to the right. c. The demand curve shifts to the left. d. The demand curve shifts to the right. 10. The discovery of a large new reserve of crude oil will shift the _________ curve for gasoline, leading to a _________ equilibrium price. a. supply; higher b. supply; lower c. demand; higher d. demand; lower 11. If the economy goes into a recession and incomes fall, what happens in the markets for inferior goods? a. Prices and quantities both rise. b. Prices and quantities both fall. c. Prices rise and quantities fall. d. Prices fall and quantities rise. 12. Which of the following might lead to an increase in the equilibrium price of jelly and a decrease in the equilibrium quantity of jelly sold? a. an increase in the price of peanut butter, a complement to jelly b. an increase in the price of Marshmallow Fluff, a substitute for jelly c. an increase in the price of grapes, an input into jelly d. an increase in consumers’ incomes, as long as jelly is a normal good 13. An increase in _________ will cause a movement along a given supply curve, which is called a change in _________. a. supply; demand b. supply; quantity demanded c. demand; supply d. demand; quantity supplied Ch 5 1. A good tends to have a small price elasticity of demand if a. the good is a necessity. b. there are many close substitutes. c. the market is narrowly defined. d. the long-run response is being measured. 2. An increase in a good’s price reduces the total amount consumers spend on the good if the _________ elasticity of demand is _________ than one. a. income; less b. income; greater c. price; less d. price; greater 3. A linear, downward-sloping demand curve is a. inelastic. b. unit elastic. c. elastic. d. inelastic at some points, and elastic at others. 4. The citizens of Lilliput spend a higher fraction of their income on food than do the citizens of Brobdingnag. The reason could be that a. Lilliput has lower food prices, and the price elasticity of demand is zero. b. Lilliput has lower food prices, and the price elasticity of demand is 0.5. c. Lilliput has lower income, and the income elasticity of demand is 0.5. d. Lilliput has lower income, and the income elasticity of demand is 1.5. 5. The price of a good rises from $16 to $24, and the quantity supplied rises from 90 to 110 units. Calculated with the midpoint method, the price elasticity of supply is a. 1/5. b. 1/2. c. 2. d. 5. 6. If the price elasticity of supply is zero, the supply curve is a. upward sloping. b. horizontal. c. vertical. d. fairly flat at low quantities but steeper at larger quantities. 7. The ability of firms to enter and exit a market over time means that, in the long run, a. the demand curve is more elastic. b. the demand curve is less elastic. c. the supply curve is more elastic. d. the supply curve is less elastic. 8. An increase in the supply of grain will reduce the total revenue grain producers receive if a. the supply curve is inelastic. b. the supply curve is elastic. c. the demand curve is inelastic. d. the demand curve is elastic. 9. In competitive markets, farmers adopt new technologies that will eventually reduce their revenue because a. each farmer is a price taker. b. farmers are short-sighted. c. regulation requires the use of best practices. d. consumers pressure farmers to lower prices. 10. Because the demand curve for oil is _________ elastic in the long run, OPEC’s reduction in the supply of oil had a _________ impact on the price in the long run than it did in the short run. a. less; smaller b. less; larger c. more; smaller d. more; larger 11. Over time, technological advances increase consumers’ incomes and reduce the price of smartphones. Each of these forces increases the amount consumers spend on smartphones if the income elasticity of demand is greater than _________ and the price elasticity of demand is greater than _________. a. zero; zero b. zero; one c. one; zero d. one; one Read more