Test Bank For Principles of Economics International 15th Edition
Chapter 4—Price: The Role of Demand and Supply
MULTIPLE CHOICE
1.For demand to exist, there must be
a.
a desire and an ability to buy
b.
a supply of the product in the market
c.
a price that is low enough to permit all consumers to afford the product
d.
all of these
ANS: A PTS: 1
2.The demand for a product at a given time is defined as the
a.
desire for it
b.
sum spent on it
c.
measure of total utility for it
d.
amount that would be bought at various prices
ANS: D PTS: 1
3.The law of demand illustrates that as
a.
price decreases, demand increases
b.
price increases, quantity demanded increases
c.
price decreases, quantity supplied increases
d.
price decreases, quantity demanded increases
ANS: D PTS: 1
4.The demand curve for a product slopes downward to the right because more of the product will be
a.
demanded as income rises
b.
bought as the population grows
c.
purchased as price falls
d.
demanded as the price of substitutes falls
ANS: C PTS: 1
5.A change in demand means that
a.
more will be bought at a lower price
b.
a changed amount will be bought at the same given prices
c.
less will be purchased at a higher price
d.
the quantity demanded changes as the price changes
ANS: B PTS: 1
6.A change in demand would be illustrated by
a.
a drop in price, which causes people to buy more
b.
an increase in price, which causes people to buy less
c.
a change in people’s preferences that causes them to buy either more or less than before
d.
all of these
ANS: C PTS: 1
7.The price elasticity of demand is defined as
a.
the absolute change in price divided by the absolute change in quantity demanded
b.
the absolute change in quantity demanded divided by the absolute change in price
c.
the percentage change in quantity demanded divided by the percentage change in price
d.
the percentage change in price divided by the percentage change in quantity demanded
ANS: C PTS: 1
8.When talking about demand, price elasticity refers to the
a.
price flexibility in response to demand changes
b.
adaptability of suppliers to price changes
c.
responsiveness of buyers to price changes
d.
ability to stretch one’s budget by making wise choices
ANS: C PTS: 1
9.If 12 units of a good are sold when the price is $1 per unit, and 8 units are sold at a price of $1.50 per unit, then demand is
a.
elastic
b.
inelastic
c.
of indeterminate elasticity
d.
unit elastic
ANS: D PTS: 1
10.Consider the market for bicycles. If a dealer cuts prices by 10 percent and sells 20 percent more bikes, then demand for bicycles is
a.
inelastic, and total revenue will increase
b.
elastic, and total revenue will increase
c.
inelastic, and total revenue will decrease
d.
elastic, and total revenue will decrease
ANS: B PTS: 1
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