1-Which of the following scenarios is an example of a person interacting outside of a market?
Mark places his comic book collection up for sale on eBay.
Young buys fresh radishes at the local farmers’ market.
Melissa votes for her favorite performer at a local talent show.
Isabella agrees to fix Miguel’s sink if Miguel paints Isabella’s porch.
2-A market price:
is any price at which sellers desire to sell their good or service.
is a price dictated by a government agency before trading can begin.
is a price at which buyers and sellers agree to exchange money for a good or service.
is any price at which buyers desire to purchase a good or service.
3-Markets can:
force producers to make things they do not want to make.
force buyers to buy things they do not want to buy.
provide unlimited goods and services.
make buyers and sellers better off.
4-Which of the following is something that markets cannot do?
Make buyers and sellers better off
Determine the equilibrium price of a good or service
Provide unlimited goods and services
Determine the equilibrium quantity of a good or service
5-Use the table below to complete the question. This table represents the demand for
peaches in Hoboken, a town in New Jersey.
Demand for Peaches
Price (dollars) Quantity
Demanded
(pounds)
$20
2
14
14
8
26
2
38
a. Graph the information presented in the table.
Instructions: Use the tool provided 'Demand' to plot the line point by point (4 points total).
b. If the market price for peaches is $8 per pound, what is the quantity of peaches demanded
in Hoboken?
20 pounds
38 pounds
26 pounds
14 pounds
6-The table below represents the demand for bottles of sunscreen at Daytona Beach on a
sunny June day.
Demand for Sunscreen
Price (dollars)
$4
6
8
10
12
Quantity of Sunscreen Demanded
(bottles)
7,200
6,800
6,400
6,000
5,600
If the price of a bottle of sunscreen is $8, what will be the quantity demanded?
8,000 bottles
6,400 bottles
1,600 bottles
6,000 bottles
7-Everyone’s individual demand for a particular good or service can be represented by the
same demand curve.
True or false?
8-People do not always purchase all of the things they want.
True or false?
9-Consider each of the following scenarios and determine whether it is an example of the
income effect, the substitution effect, or diminishing marginal utility.
a. Sasha likes to treat herself to a small latte each afternoon. On Wednesdays, when the
coffee shop decreases the price of lattes, Sasha buys a large latte instead.?
Substitution effect
Income effect
Diminishing marginal utility
b. The price of chicken nuggets rises from $3 to $3.50 for a box of six. The price of
hamburgers stays the same. Mateo used to eat chicken nuggets three times a week.
All else equal, he now eats them twice a week.
Income effect
Diminishing marginal utility
Substitution effect
c. Jack offers Victoria a plate of a dozen chicken wings. Victoria enjoys the first wing the
best, the second wing a little bit less, and by the seventh wing, she has had enough and
chooses not to eat the remaining five wings.
Substitution effect
Income effect
Diminishing marginal utility
10- Which of the following best explains why people eventually stop eating when they dine at
an “All You Can Eat” buffet?
Diminishing marginal utility
Substitution effect
Income effect
Increasing marginal cost
11- Marcus budgets $120 a week for groceries. When the price of all food goes up by 10%
he buys less salmon. This can best be explained by:
the income effect.
a change in income.
the substitution effect.
diminishing marginal utility.
12- Juan likes both hot dogs and burritos. All else equal, when the price of hot dogs rises, he
buys more burritos. This can best be explained by:
increasing marginal cost.
diminishing marginal utility.
the substitution effect.
the income effect.
13- The table below represents the quantity of rice demanded for selected countries.
Price
(U.S. dollars per
metric ton)
600
Quantity of Rice Demanded
(millions of metric tons)
South
Japan Taiwan Korea
Market
6
0
1
500
7
0.5
3
400
8
1
5
300
9
1.5
7
200
10
2
9
a. Fill in the market quantity of rice demanded (column “Market”) for each given price.
Instructions: Enter your answers rounded to 1 decimal place.
b. What is the quantity of rice demanded in the market (in metric tons) if the market price is
$400 per metric ton?
Instructions: Enter your answer as a whole number. ?
14- The table below describes the demand for bathing suits on a warm, summer day in the
resort town of Wisconsin Dells:
Demand for Bathing Suits
Quantity of Bathing Suits
Price (dollars)
Demanded
$45
60
40
70
35
80
30
90
25
100
20
110
15
120
a. Graph the demand curve for bathing suits.
Instructions: Use the tool provided 'Demand' to plot the line point by point (7 points total)
on the graph below.
b. Due to an influx of tourists, the quantity of bathing suits demanded increases by 15
bathing suits at every price. Complete the column in the table below.
Demand for Bathing Suits
Quantity of Bathing Suits
Price (dollars)
Demanded
$45
40
35
30
25
20
15
c. Graph the new demand curve for bathing suits.
Instructions: Use the tool provided 'New Demand' to plot the line point by point (7 points
total) on the graph above.
15- The table below shows the quantity of funnel cakes demanded at the West Virginia State
Fair.
Demand for Funnel Cakes
Price
Quantity of
(dollars)
Cakes
Demanded
$1.75
8,750
1.50
9,000
1.25
9,250
1.00
9,500
0.75
9,750
0.50
10,000
0.25
10,250
a. Graph the demand curve for funnel cakes.
Instructions: Use the tool provided 'Demand' to plot the line point by point (7 points total)
on the graph below.
b. On rainy days the demand for funnel cakes at the West Virginia State Fair decreases by
1000 cakes at every price. Complete the table below by filling in the quantity of funnel cakes
demanded on a rainy day.
Demand for Funnel Cakes
Initial
New Quantity of
Price Quantity
Cakes
(dollars) of Cakes
Demanded
Demanded
$1.75
8,750
1.50
9,000
1.25
9,250
1.00
9,500
0.75
9,750
0.50
10,000
0.25
10,250
c. Graph the new demand curve for funnel cakes.
Instructions: Use the tool provided 'New Demand' to plot the line point by point (7 points
total) on the graph above.
16- The quantity demanded for cars monthly is shown in the table below.
Demand for Cars
Quantity of Cars Demanded
Price (dollars)
(thousands of cars)
$23,000
600
21,000
620
19,000
640
17,000
660
15,000
680
An increase in income increases the quantity demanded by 10% at every price. Which of the
following columns represents the new monthly quantity demanded for cars (in thousands of
cars)?
Price
(dollars)
$23,000
21,000
19,000
17,000
15,000
A
668
688
708
728
748
B
532
552
572
592
612
C
660
682
704
726
748
D
600
620
640
660
680
Column A
Column B
Column C
Column D
17- On average, about 3,500 new mobile homes are sold every month at an average price of
$40,000. In 2013 average income in the United States rose and, all else equal, mobile home
sales decreased. From the information given, it is reasonable to conclude that mobile homes:
are inferior goods
are normal goods
are not scarce
have and upward –sloping demand curve.
18- For each situation below, state whether it is an example of the income effect changing
quantity demanded or an example of a change in income shifting demand.
a. The mean income in Detroit rises and people purchase more homes.
Income effect changing quality demand
Change in shifting demand
b. The price of frozen pizza decreases, making frozen pizza more popular among college
students.
Income effect changing quality demand
Change in shifting demand
c. A recession forces many people out of work and more people purchase ramen noodles
than before.
Income effect changing quality demand
Change in shifting demand
d. An increase in the price of game consoles decreases sales, as fewer people can afford
them.
Income effect changing quality demand
Change in shifting demand
19- dentify which of the following scenarios is likely to shift the demand for wheat bread to
the right.
Instructions: You may select more than one answer. Click the box with a check mark for
the correct answers and click twice to empty the box for the wrong answers. You must click
to select or deselect each option in order to receive full credit.
The population of Arizona grows by 20%.
A drought in Kansas makes people believe that the price of wheat bread will increase in a
couple of months.
People learn that certain bread additives may be bad for their health.
As people become more health conscious, they discover the benefits of whole wheat as a part
of their diet.
20- Executives at an advertising agency want to increase the demand for the energy drink it
promotes. What advice should they give the producer?
Sell the drink for a lower price
Hire a prominent athlete to demonstrate the benefits of the drink
Sell the drink for a higher price
Announce a future decrease in the price of the drink
21- Which of the following is most likely to decrease the demand for Mango Jarritos, a
popular Mexican soft drink?
More people visit Mexico and embrace its cuisine.
The birth rate in the southern United States and Mexico increases.
Concerns over the empty calories soft drinks contain cause more people to drink mineral
water.
The health benefits of mangoes become widely known.
22- Tastes and preferences generally do not change for goods or services in markets.
True or false
23- Pam sees that the price of bananas has risen in the grocery store. All else equal, she
decides to buy more tangerines than she normally purchases. From the information given,
you might conclude that:
tangerines and bananas are substitutes.
tangerines are an inferior good.
tangerines and bananas are complements.
bananas are a luxury good.
24- Managers at a local home improvement store see that new home sales in their area have
increased. They order more refrigerators for their store. They likely do this because they
assume that:
new homes and refrigerators are complements.
new homes and refrigerators are substitutes.
refrigerators are inferior goods.
refrigerators are normal goods.