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Unit 2 Practice Exam Econ

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Unit II Exam

Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.

____ 1. The demand for a good or service is determined by
a. those who buy the good or service.
b. the government.
c. the producers who create the good or service.
d. those who supply the raw materials used in the production of the good or service.

____ 2. Which of the following is not a characteristic of a perfectly competitive market?
a. Different sellers sell identical products.
b. There are many sellers.
c. Sellers almost always accept the price the market determines.
d. All of the above are characteristics of a perfectly competitive market.

____ 3. Which of the following would not be a determinant of the demand for a particular good?
a. prices of related goods
b. income
c. tastes
d. the prices of the inputs used to produce the good

____ 4. Two goods are substitutes if a decrease in the price of one good
a. decreases the demand for the other good.
b. decreases the quantity demanded of the other good.
c. increases the demand for the other good.
d. increases the quantity demanded of the other good.

____ 5. Ford Motor Company announces that it will offer $3,000 rebates on new Mustangs starting next month. As a result of this information, today’s demand curve for Mustangs
a. shifts to the right.
b. shifts to the left.
c. shifts either to the right or to the left, but we cannot determine the direction of the shift from the given information.
d. will not shift; rather, the demand curve for Mustangs will shift to the right next month.

____ 6. A higher price for batteries would result in a(n)
a. increase in the demand for flashlights.
b. decrease in the demand for flashlights.
c. increase in the demand for batteries.
d. decrease in the demand for batteries.

____ 7. With respect

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