1.
A supply restriction that restricts the amount of a good that can be imported is a(n)
A) price floor.
B) price ceiling.
C) black market.
D) import quota.
2.
According to the law of demand
A) price and quantity move in the same direction.
B) price and quantity move in opposite directions.
C) ceteris paribus does not apply.
D) price and quantity are unrelated.
3.
Demand applies to which of the following?
A) Fast food.
B) Criminal activity.
C) Labor market.
D) All of the above.
4.
According to the law of demand
A) people buy more of a good when the price rises.
B) people buy more of a good when their income rises.
C) people buy more of a good when the relative price rises.
D) people buy more of a good when the price falls.
5.
If we are comparing the price of regular gasoline with the price of super gasoline, then an increase in the relative price of regular gasoline implies that
A) the nominal price of regular gasoline increased.
B) the nominal price of super gasoline decreased.
C) the relative price of super gasoline decreased.
D) the relative price of regular gasoline increased.
6.
The price of a new textbook is $60 in one year and is $75 two years later, while the price of a used copy of the text increased from $20 to $30. The relative price of a new textbook
A) increased from 3 to 4.5.
B) decreased from 0.8 to 0.67.
C) decreased from 3 to 2.5.
D) remained constant.
7.
The relative price of bread to milk is 0.6 and the relative price of milk to butter is 1.2. What is the relative price of bread to butter?
A) 1.39.
B) 0.6.
C) 0.72.
D) 0.50.
8.
A change in the price of a good causes
A) an increase in supply.
B) a decrease in supply.
C) an increase in demand and a decrease in supply.
D) a change in quantity supplied.
9.
There will be an increase in supply when
A) a consumer's income increases.
B) there is an improvement in technology.
C) the demand curve shifts.
D) the market price goes from $3 to $4.
10.
The "terms of exchange" in a trade refer to the
A) legal requirements for contracts and exchanges.
B) price of the good.
C) voluntary character of the exchange.
D) transaction costs of carrying out the exchange.
11.
Chocolate has just been found to increase your life by 5 years if you eat it every day. In the market for chocolate this information will lead to
A) an increase in price and a decrease in quantity.
B) an increase in price and an increase in quantity.

C) a decrease in price and a decrease in quantity.
D) a decrease in price and an increase in quantity.
12.
An increase in demand and an increase in supply will lead to
A) increase in price and an increase in quantity.
B) increase in price and a decrease in quantity demanded.
C) increase in quantity but the effect on price is undetermined.
D) increase in price but the effect on quantity is undetermined.
13.
The more flexible prices are, the
A) greater demand shifts have to be to bring about a new equilibrium.
B) the larger the shifts in supply will be after a change in demand.
C) greater the reliance by sellers to change the nominal price.
D) more quickly a shock to the economy can be absorbed.
14.
During the Summer Olympics in Atlanta some residents rented rooms to visitors. This behavior
A) helped alleviate the shortage of hotel rooms caused by the high demand during the Olympics.
B) reduced the demand for tickets to the Olympics since many local residents left town while they rented out space in their homes.
C) hurt the hotel market in Atlanta in the long run because new hotels that should have been built were not built for the Olympics.
D) is dangerous and should have been prevented by the city of Atlanta.
15.
After an increase in the demand for construction workers, the market will attain its new long-run equilibrium faster if
A) wages are flexible.
B) wages are inflexible, forcing new people to enter the market.
C) unions restrict the number of new construction workers.
D) people ignore the shortage in the short run.