Difference Between Normal and Inferior Goods
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Difference Between Normal and Inferior Goods
Which of the following is most likely to be an inferior good? a. soft drinks b. a subscription to the Wall Street Journal c. restaurant meals d. airline travel e. used clothing
____ 12. Which of the following is most likely to be a normal good? a. bus rides b. tickets to major league baseball games c. trips to the laundromat d. used paperback books e. macaroni-and-cheese dinners
____ 13. The difference between normal and inferior goods is that a. an increase in price will shift the demand curve for a normal good rightward and the
demand curve for an inferior good leftward b. normal goods are of better quality than inferior goods c. an increase in income will shift the demand curve for a normal good rightward and the
demand curve for an inferior good leftward d. an inferior good is something that will not be demanded until quantities of the normal
good have been exhausted e. if the price of a normal good increases, individuals who buy it are poorer; for inferior
goods, the opposite is true
____ 14. Which of the following will cause the demand curve for gasoline to shift leftward? a. a rightward shift of the supply of cars b. a decrease in the price of bicycles c. an increase in the price of gasoline d. a decrease in the price of gasoline e. a leftward shift of the supply of gasoline
____ 15. Two goods are considered substitutes only if a(n) a. decrease in the price of one leads to an increase in the demand for the other b. decrease in the supply of one leads producers to switch to production of the other c. increase in the price of one leads to an increase in the demand for the other d. decrease in the demand for one leads to a decrease in the supply of the other e. increase in the demand for one leads to a decrease in the supply of the other
____ 16. If the price of vanilla ice cream decreases, it is likely that a. demand for chocolate ice cream will increase b. demand for vanilla ice cream will increase c. the quantity demanded of vanilla ice cream will decrease d. demand for chocolate ice cream will decrease e. demand for vanilla ice cream will decrease
____ 17. An increase in the price of butter, a substitute good, would be most likely to cause a. a rightward shift of the demand curve for margarine b. the quantity of margarine demanded to increase c. the quantity of margarine demanded to decrease d. a decrease in the price of margarine e. a leftward shift of the demand curve for margarine
____ 18. Sugar and honey are viewed as substitutes for each other in many cooking applications. If the price of sugar rises, we would expect a. the quantity demanded of honey to decrease b. the demand for honey to increase c. the demand for honey to decrease d. the quantity demanded of honey to increase e. the price of honey to decrease
____ 19. Which of the following is the best example of complements? a. hiking boots and athletic shoes b. CDs and DVDs c. film and film processing (developing) d. milk and cheese e. coffee and tea
____ 20. If the price of potato chips increases, other things constant, demand for potato-chip dip will a. increase because the goods are substitutes b. decrease because the goods are substitutes c. not change; only quantity demanded will change d. decrease because the goods are complements e. increase because the goods are complements
____ 21. If good B is a complement to good A, then a decrease in the price of B a. increases the demand for A b. decreases the demand for A c. will cause the demand for B to increase d. decreases the quantity demanded of A e. increases the quantity demanded of A
____ 22. If good B is a complement to good A, then a rise in the price of B a. decreases the demand for A b. will cause the demand for B to increase c. decreases the quantity demanded of A d. increases the demand for A e. increases the quantity demanded of A
____ 23. A decrease in the demand for peanut butter could be caused by a(n) a. increase in the price of peanut butter b. doubling of the price of bread c. drought in Georgia that destroyed 30 percent of the peanut crop d. increase in the supply of peanut butter e. increase in consumer income
____ 24. An increase in the demand for peanut butter could be caused by a(n) a. increase in the supply of peanut butter b. decrease in the price of bread c. drought in Georgia that destroyed 30 percent of the peanut crop d. decrease in consumer income e. decrease in the price of bologna
____ 25. Which of the following statements about gold jewelry and round-trip bus tickets to Bismarck, North Dakota, is most likely to be correct? a. Their demand curves probably are quite similar. b. They are both inferior goods. c. They are unrelated. d. They are complements. e. They are substitutes.
Exhibit 4-2
____ 26. Refer to Exhibit 4-2. A shift from demand curve D to D’ illustrates a(n)
decrease in quantity demanded b. increase in quantity demanded c. increase in supply d. decrease in demand e. increase in demand
____ 27. Refer to Exhibit 4-2. Which of the following would cause a shift of demand from D’ to D? a. an increase in the price of a substitute good b. a decrease in the price of a complementary good c. an increase in the number of consumers d. a decline in consumers’ incomes if it is a normal good e. an increase in consumers’ incomes if it is a normal good
____ 28. In Exhibit 4-2, which of the following could not cause the shift from D to D’? a. an increase in the price of a substitute b. a decrease in the price of a complement c. an increase in the number of consumers d. a decrease in income if the good in question is an inferior good e. a decrease in the price of the good in question
____ 29. If the tea harvest is bad in a particular year, the supply of tea will a. decrease, its price will decrease, and the quantity demanded of coffee will increase b. decrease, its price will increase, and the quantity demanded of coffee will decrease c. increase, its price will increase, and the quantity demanded of coffee will increase d. decrease, its price will decrease, and the quantity demanded of coffee will decrease e. decrease, its price will increase, and the quantity demanded of coffee will increase
____ 30. A rightward shift of a supply curve a. would cause an excess quantity supplied at the previous equilibrium price b. might be caused by a price ceiling c. might be caused by a decrease in demand d. might be caused by an increase in demand e. represents a decrease in supply
____ 31. A decrease in supply will cause a(n) a. decrease in quantity demanded b. decrease in equilibrium price c. increase in quantity demanded d. decrease in demand e. increase in demand
____ 32. An increase in supply will cause equilibrium price to __________ and equilibrium quantity to __________. a. increase; increase b. decrease; decrease c. increase; decrease d. decrease; increase e. remain constant; increase
____ 33. An increase in supply will cause a(n) a. decrease in equilibrium quantity demanded b. decrease in demand c. increase in demand d. increase in quantity demanded e. increase in equilibrium price
____ 34. A new hormone will increase the amount of milk each cow produces. If this hormone is adopted by many dairies, what will be the effect on the milk market? a. an increase in supply, lower equilibrium price, and higher equilibrium quantity b. a decrease in supply, lower equilibrium price, and higher equilibrium quantity c. an increase in supply, higher equilibrium price, and higher equilibrium quantity d. an increase in supply, higher equilibrium price, and lower equilibrium quantity e. a decrease in supply, lower equilibrium price, and lower equilibrium quantity
____ 35. A decrease in the supply of chocolate chips would usually result in a a. higher equilibrium price and a higher equilibrium quantity b. higher equilibrium price and a lower equilibrium quantity c. lower equilibrium price and a lower equilibrium quantity d. lower equilibrium price and a higher equilibrium quantity e. decrease in the demand for chocolate chips
Exhibit 4-4
____ 36. In Exhibit 4-4, suppose a price floor is established at $20.00. What is the result?
a surplus of 20 units b. there is no change from the situation that exists at the equilibrium price c. a shortage of 10 units d. a shortage of 20 units e. a surplus of 10 units
Exhibit 4-12
____ 37. Refer to exhibit 4-12. An increase in the price of baby formula would cause which of the following to
happen? a. move from b on demand curve D1 to c on demand curve D2 b. move on demand curve D2 from d to c c. demand shift from D2 to D1 d. move on demand curve D1 from a to b e. demand shift from D1 to D2
____ 38. Refer to exhibit 4-12. A decrease in the price of baby formula would cause which of the following to happen? a. a movement from a to b on demand curve D1 b. demand shift from D1 to D2 c. movement from c to d on demand curve D2 d. demand shift from D2 to D1 e. either a or b
____ 39. Refer to exhibit 4-12. The discovery that breast milk provides more protection against disease than baby formula will cause which of the following to happen? a. a movement from a to b on demand curve D1 b. a demand shift from D1 to D2 c. movement from c to d on demand curve D2 d. demand shift from D2 to D1 e. either a or b
____ 40. Refer to exhibit 4-12. An increase in consumer income will cause which of the following to happen if baby formula is an inferior good? a. demand shift from D1 to D2 b. movement from b to a on demand curve D1 c. movement from d to c on demand curve D2 d. demand shift from D2 to D1 e. none of the above
____ 41. Refer to exhibit 4-12. An increase in the birth rate would cause which of the following to happen? a. movement from b to a on demand curve D1
- movement from d on demand curve D2 to a on demand curve D1 c. demand shift from D2 to D1 d. demand shift from D1 to D2 e. movement from d to c on demand curve D2
Exhibit 4-13
____ 42. Refer to exhibit 4-13. An increase in the price of baby formula will cause which of the following to occur?
a movement from a to b on supply curve S1 b. a movement from b to a on supply curve S1 c. supply shift from S2 to S1 d. a movement from d to c on supply curve S2 e. supply shift from S1 to S2
____ 43. Refer to exhibit 4-13. A decrease in the price of baby formula will cause which of the following to happen? a. movement from c to d on supply curve S2 b. movement from b to a on supply curve S1 c. supply shift from S2 to S1 d. supply shift from S1 to S2 e. none of the above
____ 44. Refer to exhibit 4-13. The discovery that breast milk offers greater health protection to babies than baby formula will cause which of the following to happen? a. supply shift from S2 to S1 b. supply shift from S1 to S2 c. movement from a to b on supply curve S1 d. movement from d to c on supply curve S2 e. movement from c to d on supply curve S2
____ 45. Refer to exhibit 4-13. The development of more efficient production technologies for baby formula will cause which of the following to happen? a. movement from c to d on supply curve S2 b. supply shift from S1 to S2 c. movement from b to a on supply curve S1 d. movement from a to b on supply curve S1 e. supply shift from S2 to S1
____ 46. Refer to exhibit 4-13. An increase in the number of firms producing baby formula will cause which of the following to happen? a. supply shift from S1 to S2 b. movement from c to d along supply curve S2 c. movement from d to c along supply curve S2 d. a movement from a to b along supply curve S1 e. supply shift from S2 to S1
Exhibit 4-14
____ 47. Refer to exhibit 4-14. If the market for baby formula is given by the demand curve D1 and the supply curve
S1, what is the equilibrium price and quantity? a. P1, Q2 b. P4, Q3 c. P1, Q1 d. P2, Q1 e. P3, Q4
____ 48. Refer to exhibit 4-14. If the market demand for baby formula is given by demand curve D2 and the supply is given by supply curve S2, which of the following is the market equilibrium? a. P1, Q1 b. P4, Q3 c. P2, Q1 d. P1, Q1 e. P3, Q4
____ 49. Refer to exhibit 4-14. The market demand curve is given by D1 and the supply by S1. Equilibrium price is P2 and equilibrium quantity is Q1. What will the new equilibrium price and quantity be if there is an increase in the birth rate? a. P3 and Q4 b. P2 and Q2 c. P1 and Q2 d. P4 and Q3 e. P2 and Q1
____ 50. In which of the following situations will the effect upon the equilibrium price of wheat be indeterminate? a. supply decreases and demand increases b. supply decreases and demand decreases c. demand remains constant and supply increases d. supply remains constant and demand increases e. demand decreases and supply increases.
Difference Between Normal and Inferior Goods
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Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration.
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