ECO111 Microeconomics

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Term: Summer2023

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NAME: NGUYỄN KHÁNH HUYỀN ROLL NUMBER: HS186240

ROOM NO: CLASS: IB1906

FOR TEACHER ONLY

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ECO_111__No__Q01
Multiple Choice
Identify the choice that best completes the statement or answers the question.
QN=1 The marginal benefit John gets from eating a fourth cheese-
burger at a picnic is1
a. the total benefit John gets from eating four cheeseburgers
minus the total benefit John gets from eating three cheese-
burgers.
b. the same as the total benefit of eating four cheeseburgers.
c. less than the marginal cost of eating the fourth cheeseburger
since he chose to eat the fourth cheeseburger.
d. the total benefit John gets from eating five cheeseburgers
minus the total benefit John gets from eating four cheese-
burgers.

QN=2 Mitch has $100 to spend and wants to buy either a new am-
 plifier for his guitar or a new mp3 player to listen to music
while working out. Both the amplifier and the mp3 player
cost $100, so he can only buy one. This illustrates the basic
concept that2
a. trade can make everyone better off.
b. people face trade-offs
c. rational people think at the margin.
d. people respond to incentives.

QN=3 Senator Smart, who understands economic principles, is try-

ing to convince workers in her district that trade with other
countries is beneficial. Senator Smart should argue that
trade can be beneficial2222
a. only if it allows us to obtain things that we couldn't make
for ourselves.
b. because it allows specialization, which increases total out-
put.
c. to us if we can gain and the others involved in the trade lose.
d. in only a limited number of circumstances because others
are typically self-interested.

QN=4 Economics deals primarily with the concept of222

a. scarcity.
b. money.
c. poverty.
d. banking.

QN=5 Households and economies have each of the following in

common EXCEPT both222
a. must allocate scarce resources.
b. face many decisions.
c. must allocate the goods and services they produce.
d. must have a central decision maker.

QN=6 An increase in the overall level of prices in an economy is

referred to as22
a. economic growth.
b. inflation.
c. monetary policy.
d. supply shocks.

QN=7 In an economy in which decisions are guided by prices and

individual self-interest, there is3333
a. the potential to achieve efficiency in production.
b. a strong need for government intervention in the market.
c. less efficiency than would be observed in a centrally-
planned economy.
d. more need for a strong legal system to control individual
greed than would be needed in a centrally-planned econ-
omy.

QN=8 The invisible hand refers to3333

a. how central planners made economic decisions.
b. how the decisions of households and firms lead to desirable
market outcomes.
c. the control that large firms have over the economy.
d. government regulations without which the economy would
be less efficient.

QN=9 Moira decides to spend two hours taking a nap rather than
attending her classes. Her opportunity cost of napping is3
a. the value of the knowledge she would have received had she
attended class.
b. the $30 she could have earned if she had worked at her job
for those two hours.
c. the value of her nap less the value of attending class.
d. nothing, since she would valued sleep more than attendance
at class.

QN=10 Which of the following statements best represents the prin-

ciple represented by the adage, "There is no such thing as a
free lunch"?3
a. Melissa can attend the concert only if she takes her sister
with her.
b. Greg is hungry and homeless.
c. Brian must repair the tire on his bike before he can ride it to
 class.
d. Kendra must decide between going to Colorado or Cancun
for spring break.

QN=11 Suppose a typical worker in France can produce 32 units of

product in an eight-hour day, while a typical worker in Ger-
many can produce 30 units of product in a 10-hour day. We
can conclude that444
a. worker productivity in Germany is higher than in France.
b. the standard of living will likely be higher in France than in
Germany.
c. productivity is 4 units per hour for the German worker and 3
units per hour for the French worker.
d. there will be no difference between the standard of living in
France and Germany.

QN=12 Russell spends an hour studying instead of playing tennis.

The opportunity cost to him of studying is444
a. the improvement in his grades from studying for the hour.
b. the improvement in his grades from studying minus the en-
joyment of playing tennis.
c. the enjoyment and exercise he would have received had he
played tennis.
d. zero. Since Russell chose to study rather than to play tennis,
the value of studying must have been greater than the value
of playing tennis.

QN=13 The term market failure refers to444

a. a situation in which the market on its own fails to allocate
resources efficiently.
b. an unsuccessful advertising campaign which reduces de-
mand for a product.
c. a situation in which competition among firms becomes ruth-
less.
d. a firm which is forced out of business because of losses.

QN=14 In considering how to allocate its scarce resources among its

various members, a household considers4444
a. (i) each member’s abilities.
b. (ii) each member’s efforts.
c. (iii) each member’s desires.
d. all of (i), (ii), and (iii).

QN=15 The term used to describe a situation in which markets do

not allocate resources efficiently is5
a. economic meltdown.
b. market failure.
c. equilibrium.
d. the effect of the invisible hand.

QN=16 Communist countries worked on the premise that economic

well-being could be best attained by5555
a. a market economy.
b. a strong reliance on prices and individuals’ self-interests.
c. a system of large privately-owned firms.
d. the actions of government central planners.

QN=17 Productivity is defined as the55

a. amount of goods and services produced from each unit of la-
bor input.
b. number of workers required to produce a given amount of
goods and services.
c. amount of labor that can be saved by replacing workers with
machines.
d. actual amount of effort workers put into an hour of working
time.

QN=18 To promote good economic outcomes, policymakers should

strive to enact policies that5555
a. (i) enhance productivity.
b. (ii) enhance individuals' market power.
c. (iii) result in a rapidly-growing quantity of money.
d. All of (i), (ii), and (iii) are correct.

QN=19 Which of the following principles is not one of the four

 principles of individual decision making?66
a. People face tradeoffs.
b. Trade can make everyone better off.
c. People respond to incentives.
d. Rational people think at the margin.

QN=20 Prices direct economic activity in a market economy by66

a. influencing the actions of buyers and sellers.
b. reducing scarcity of the goods and services produced.
c. eliminating the need for government intervention.
d. allocating goods and services produced in the most equitable
way.

QN=21 In considering how to allocate its scarce resources among its

various members, a household considers6666
a. (i) each member’s abilities.
b. (ii) each member’s efforts.
c. (iii) each member’s desires.
d. all of (i), (ii), and (iii).

QN=22 A tradeoff exists between a clean environment and a higher

level of income in that66
a. studies show that individuals with higher levels of income
actually pollute less than low-income individuals.
b. to pay for pollution clean-up, the government must increase
taxes which lowers income.
c. laws that reduce pollution raise costs of production and re-
duce incomes.
d. by employing individuals to clean up pollution, employment
and income both rise.

QN=23 As a result of a successful attempt by government to cut the

economic pie into more equal slices,666
a. it is easier to cut the pie, and therefore the economy can pro-
duce a larger pie.
b. those who earn more income pay less in taxes.
c. the pie gets smaller, and there will be less pie overall.
d. government will spend too much time cutting and it causes
 the economy to lose the ability to produce enough pie for
everyone.

QN=24 In a market economy, who makes the decisions that guide

most economic activities?777
a. firms only
b. households only
c. firms and households
d. government

QN=25 When a society cannot produce all the goods and services
people wish to have it is said that the economy is experienc-
ing7777
a. scarcity.
b. communism.
c. externalities.
d. market failure.

QN=26 The tradeoff between inflation and unemployment7

a. (i) implies that policies designed to reduce unemployment
also reduce inflation.
b. (ii) was eliminated by improved economic policies in the
1900s.
c. (iii) is a long-run tradeoff, persisting for decades, according
to most economists.
d. None of (i), (ii), and (iii) are correct.

QN=27 Most economists believe that an increase in the quantity of

money results in7777
a. (i) an increase in the demand for goods and services.
b. (ii) lower unemployment in the short run.
c. (iii) higher inflation in the long run.
d. All of (i), (ii), and (iii) are correct.

QN=28 The terms equality and efficiency are similar in that they
both refer to benefits to society. However they are different
in that777
a. equality refers to uniform distribution of those benefits and
 efficiency refers to maximizing benefits from scarce re-
sources.
b. equality refers to maximizing benefits from scarce resources
and efficiency refers to uniform distribution of those bene-
fits.
c. equality refers to everyone facing identical tradeoffs and ef-
ficiency refers to the opportunity cost of the benefits.
d. equality refers to the opportunity cost of the benefits and ef-
ficiency refers to everyone facing identical tradeoffs.

QN=29 If Japan chooses to engage in trade, it8

a. will only benefit if it trades with countries that produce
goods Japan cannot produce.
b. cannot benefit if it trades with less developed countries.
c. should first attempt to produce the good itself.
d. can benefit by trading with any other country.

QN=30 When society requires that firms reduce pollution, there is8
a. a tradeoff because of reduced incomes to the firms' owners
and workers.
b. a tradeoff only if some firms are forced to close.
c. no tradeoff, since the cost of reducing pollution falls only on
the firms affected by the requirements.
d. no tradeoff, since everyone benefits from reduced pollution.

QN=31 The business cycle is measured by the888

a. (i) production of goods and services.
b. (ii) number of people employed.
c. (iii) the interest rate.
d. both (i) and (ii).

QN=32 The phenomenon of scarcity stems from the fact that8

a. most economies’ production methods are not very good.
b. in most economies, wealthy people consume disproportion-
ate quantities of goods and services.
c. governments restrict production of too many goods and ser-
vices.
d. resources are limited.
QN=33 Trade between countries tends to9999
a. reduce both competition and specialization.
b. reduce competition and increase specialization.
c. increase competition and reduce specialization.
d. increase both competition and specialization.

QN=34 Hue decides to spend three hours working overtime rather

than watching a video with her friends. She earns $8 an
hour. Her opportunity cost of working is999
a. the $24 she earns working.
b. the $24 minus the enjoyment she would have received from
watching the video.
c. the enjoyment she would have received had she watched the
video.
d. nothing, since she would have received less than $24 of en-
joyment from the video.

QN=35 You are considering staying in college another semester so

that you can complete a major in economics. In deciding
whether or not to stay you should999
a. compare the total cost of your education to the total benefits
of your education.
b. compare the total cost of your education to the benefits of
staying one more semester.
c. compare the cost of staying one more semester to the bene-
fits of staying one more semester.
d. compare the total benefits of your education to the cost of
staying one more semester.

QN=36 Another term for factors of production is999

a. inputs.
b. output.
c. goods.
d. services.

QN=37 An economic theory about international trade that is based

on the assumption that there are only two countries trading
 two goods10101010
a. is useless, since the real world has many countries trading
many goods.
b. can be useful only in situations involving two countries and
two goods.
c. can be useful in the classroom, but is useless in the real
world.
d. can be useful in helping economists understand the complex
world of international trade involving many countries and
many goods.

QN=38 Which of the following transactions does not take place in

the markets for factors of production in the circular-flow di-
agram?1010
a. a landowner leases land to a farmer
b. a farmer hires a teenager to help with harvest
c. a retired farmer sells his combine to a new farmer
d. a woman buys corn for dinner

QN=39 When two variables have a positive correlation,10

a. (i) when the x-variable increases, the y-variable decreases.
b. (ii) when the x-variable decreases, the y-variable increases.
c. (iii) when the x-variable increases, the y-variable increases.
d. More than one of (i), (ii), and (iii) is correct.

QN=40 The slope of a steep upward-sloping line will be a1010

a. small positive number.
b. large positive number.
c. small negative number.
d. large negative number.

QN=41 Refer to Figure 2-1. Which arrow shows the flow of spending by
households?
10101010
a. A
b. B
c. C
d. D

QN=42 The slope of a fairly flat upward-sloping line will be

a11111111
a. small positive number.
b. large positive number.
c. small negative number.
d. large negative number.

QN=43 Refer to Figure 2-8, Panel (a). In order to gain 2 donuts by moving
from point L to point M, society must sacrifice
1111
a. (i) efficiency.
b. (ii) employment.
c. (iii) 4 cups of coffee.
d. More than one of (i), (ii), and (iii) is correct.

QN=44 Economists sometimes give conflicting advice be-

cause12121212
a. graduate students in economics are encouraged to argue
with each other.
b. economists have different values and scientific judgment.
c. economists acting as scientists do not like to agree with
economists acting as policy advisers.
d. economics is more of a belief system than a science.

QN=45 The scientific method is12121212

a. the use of modern technology to understand the way the
world works.
b. the use of controlled laboratory experiments to understand
the way the world works.
c. the dispassionate development and testing of theories about
how the world works.
d. the search for evidence to support preconceived theories
about how the world works.

QN=46 Refer to Figure 2-2. Malika works as an attorney for a cor-

poration and is paid a salary in exchange for the legal ser-
vices she performs. Jarel owns office buildings and rents his
buildings to companies in exchange for rent payments. If
Malika’s income is represented by a flow of dollars from
Box D to Box B of this circular-flow diagram, then Jarel’s
income is represented by a flow of dollars
13

a. from Box A to Box C.

b. from Box C to Box A.
c. from Box B to Box D.
d. from Box D to Box B.

QN=47 When economists make normative statements, they are13

a. speaking as scientists.
b. speaking as policy advisers.
c. making claims about how the world is.
d. revealing that they are very liberal in their views of how the
world works.
QN=48 When economists attempt to simplify the real world and
make it easier to understand they make141414
a. assumptions.
b. mistakes in judgment.
c. predictions.
d. evaluations.

QN=49 Which of the following is not correct?1414

a. Economists use some familiar words in specialized ways.
b. Economics has its own language and its own way of think-
ing, but few other fields of study do.
c. Supply, demand, elasticity, comparative advantage, con-
sumer surplus, and deadweight loss are all terms that are
part of the economist’s language.
d. The value of the economist’s language lies in its ability to
provide you with a new and useful way of thinking about
the world in which you live.

QN=50 The slope of a line is equal to14

a. the change in the value of x divided by the change in the
value of y.
b. the change in the value of y divided by the change in the
value of x.
c. the horizontal distance divided by the vertical distance.
d. the value of y divided by the value of x.

QN=51 Suppose an economy produces two goods, food and ma-

chines. This economy always operates on its production
possibilities frontier. Last year, it produced 50 units of food
and 30 machines. This year it experienced a technological
advance in its machine-making industry. As a result, this
year the society wants to produce 55 units of food and 30
machines. Which of the following statements is correct?
1414
a. Because the technological advance occurred in the machine-
making industry, it will not be possible to increase food pro-
duction without reducing machine production below 30.
b. Because the technological advance occurred in the machine-
making industry, increases in output can only occur in the
 machine industry.
c. In order to increase food production in these circumstances
without reducing machine production, the economy must re-
duce inefficiencies.
d. The technological advance reduced the amount of resources
needed to produce 30 machines, so these resources could be
used to produce more food.

QN=52 Refer to Figure 2-7. In order to reach point C, the economy

would have to
15151515

a. (i) acquire more resources or experience a technological ad-

vance.
b. (ii) begin using its available resources more efficiently than
it is currently using them.
c. (iii) shift resources away from the production of ribeye
steaks and toward production of books.
d. None of (i), (ii), and (iii) are correct; the economy will never
be able to reach point C.

QN=53 Factors of production are151515

a. used to produce goods and services.
b. also called output.
c. abundant in most economies.
d. assumed to be owned by firms in the circular-flow diagram.

QN=54 The two basic reasons why economists often appear to give
conflicting advice to policymakers are differences in16
a. opinions and education.
b. opinions and values.
c. scientific judgments and education.
d. scientific judgments and values.

QN=55 A model can be accurately described as a16161616

a. theoretical abstraction with very little value.
b. device that is useful only to the people who created it.
c. realistic and carefully constructed theory.
d. simplification of reality.

QN=56 Refer to Table 2-2. What is the opportunity cost to Batter-

land of increasing the production of pancakes from 150 to
300?
16

a. 75 waffles
b. 150 waffles
c. 250 waffles
d. 325 waffles

QN=57 The production possibilities frontier is a graph that shows

 the various combinations of output that an economy1717
a. should produce.
b. wants to produce.
c. can produce.
d. demands.

QN=58 Refer to Figure 2-9, Panel (a). In order to gain 2 radios by moving from
point S to point T, society must sacrifice
1717

a. (i) 6 televisions.
b. (ii) employment.
c. (iii) efficiency.
d. More than one of (i), (ii), and (iii) is correct.

QN=59 The field of economics is traditionally divided into two

broad subfields,171717
a. national economics and international economics.
b. consumer economics and producer economics.
c. private sector economics and public sector economics.
d. microeconomics and macroeconomics.
QN=60 Economists use models in order to181818
a. learn how the economy works.
b. make their profession appear more precise.
c. make economics difficult for students.
d. make sure that all of the details of the economy are included
in their analysis.

QN=61 Positive statements are18

a. prescriptive.
b. claims about how the world should be.
c. claims about how the world is.
d. made by economists speaking as policy advisers.

QN=62 Which of the following is correct?1818

a. A horizontal line has an infinite slope, and a vertical line has
a zero slope.
b. A horizontal line has a slope of 1, and a vertical line has a
slope of -1.
c. A horizontal line has a zero slope, and a vertical line has an
infinite slope.
d. A horizontal line has a slope of -1, and a vertical line has a
slope of 1.

QN=63 In the circular-flow diagram, which of the following items

flows from households to firms through the markets for the
factors of production?18181818
a. goods and services
b. land, labor, and capital
c. dollars spent on goods and services
d. wages, rent, and profit

QN=64 The production possibilities frontier is a graph that shows

the various combinations of output that an economy1818
a. should produce.
b. wants to produce.
c. can produce.
d. demands.
QN=65 In the circular-flow diagram, firms produce19
a. (i) goods and services using factors of production.
b. (ii) output using inputs.
c. (iii) factors of production using goods and services.
d. Both (i) and (ii) are correct.

QN=66 Economists build economic models by19

a. generating data.
b. conducting controlled experiments in a lab.
c. making assumptions.
d. reviewing statistical forecasts.

QN=67 In the circular-flow diagram,191919

a. (i) firms own the factors of production.
b. (ii) the factors of production are labor, land, and capital.
c. (iii) the factors of production are also called “output.”
d. All of (i), (ii), and (iii) are correct.

QN=68 Refer to Figure 2-2. Boxes C and D represent

1919

a. households and firms.

b. the goods and services market and the factors of production
market.
c. the goods and services market and the financial market.
d. households and government.
QN=69 A demand curve shows the relationship202020
a. between income and quantity demanded.
b. between price and income.
c. between price and quantity demanded.
d. among income, price, and quantity demanded.

QN=70 Refer to Figure 2-2. Alisha regularly buys fruits and vegeta-
bles at a grocery store. Santo regularly pays a lawn-care
company to mow his lawn. If the flow of fruits and vegeta-
bles from the grocery store to Alisha is represented by an ar-
row from Box C to Box B of this circular-flow diagram, then
the money paid by Santo to the lawn-care company is repre-
sented by an arrow
20202020

a. from Box A to Box D.

b. from Box B to Box C.
c. from Box C to Box B.
d. from Box D to Box A.

QN=71 The slope of a line is equal to20

a. the change in the value of x divided by the change in the
value of y.
b. the change in the value of y divided by the change in the
value of x.
c. the horizontal distance divided by the vertical distance.
d. the value of y divided by the value of x.

QN=72 Factors of production are212121

a. the mathematical calculations firms make in determining
their optimal production levels.
b. social and political conditions that affect production.
c. the physical relationships between economic inputs and out-
puts.
d. inputs into the production process.

QN=73 Which of the following is not an example of a positive, as

opposed to normative, statement?21
a. Higher gasoline prices will reduce gasoline consumption.
b. Equality is more important than efficiency.
c. Trade restrictions lower our standard of living.
d. If a nation wants to avoid inflation, it will restrict the growth
rate of the quantity of money.

QN=74 Two goods are substitutes if a decrease in the price of one

good21212121
a. increases the demand for the other good.
b. reduces the demand for the other good.
c. reduces the quantity demanded of the other good.
d. increases the quantity demanded of the other good.

QN=75 Who gets scarce resources in a market economy?2121

a. the government
b. whoever the government decides gets them
c. whoever wants them
d. whoever is willing and able to pay the price

QN=76 Refer to Table 4-2. Whose demand does not obey the law of demand?
21212121
a. Audrey’s
b. Bob’s
c. Chuck’s
d. Dottie’s

QN=77 In a market economy, supply and demand are important be-

cause they222222
a. (i) play a critical role in the allocation of the economy’s
scarce resources.
b. (ii) determine how much of each good gets produced.
c. (iii) can be used to predict the impact on the economy of
various events and policies.
d. All of (i), (ii), and (iii) are correct.

QN=78 Which of the following statements is correct?222222

a. Buyers determine supply and sellers determine demand.
b. Buyers determine demand and sellers determine supply.
c. Buyers determine both demand and supply.
d. Sellers determine both demand and supply.

QN=79 What will happen to the equilibrium price of new textbooks

if more students attend college, paper becomes cheaper,
textbook authors accept lower royalties, and fewer used
textbooks are sold?2222
a. Price will rise.
b. Price will fall.
c. Price will stay exactly the same.
d. The price change will be ambiguous.

QN=80 Suppose that Carolyn receives a pay increase. We would ex-

pect232323
a. to observe Carolyn moving down and to the right along her
given demand curve.
b. Carolyn's demand for inferior goods to decrease.
c. Carolyn will go shopping at a clothing store worse than be-
fore.
d. Carolyn's demand for normal goods to decrease.

QN=81 If the price of a good is low,2323

a. firms would increase profit by increasing output.
b. the quantity supplied of the good could be zero.
c. the supply curve for the good will shift to the left.
d. firms can and should raise the price of the product.

QN=82 Today's demand curve for gasoline could shift in response

to23232323
a. (i) a change in today's price of gasoline.
b. (ii) a change in the expected future price of gasoline.
c. (iii) a change in the number of sellers of gasoline.
d. All of (i), (ii), and (iii) are correct.

QN=83 Which of the following events would cause the price of or-
anges to fall?23
a. (i) There is a shortage of oranges.
b. (ii) An article is published in which it is claimed that tanger-
ines cause a serious disease, and oranges and tangerines are
substitutes.
c. (iii) The price of land throughout Florida decreases, and
Florida produces a significant proportion of the nation’s or-
anges.
d. All of (i), (ii), and (iii) are correct.

QN=84 The law of demand states that, other things equal,2323

a. an increase in price causes quantity demanded to increase.
b. an increase in price causes quantity demanded to decrease.
c. an increase in quantity demanded causes price to increase.
d. an increase in quantity demanded causes price to decrease.

QN=85 In a market economy, supply and demand deter-

mine24242424
a. both the quantity of each good produced and the price at
which it is sold.
b. the quantity of each good produced, but not the price at
which it is sold.
c. the price at which each good is sold, but not the quantity of
each good produced.
d. neither the quantity of each good produced nor the price at
which it is sold.

QN=86 In a market economy,24242424

a. supply determines demand and demand, in turn, determines
prices.
b. demand determines supply and supply, in turn, determines
prices.
c. the allocation of scarce resources determines prices and
prices, in turn, determine supply and demand.
d. supply and demand determine prices and prices, in turn, al-
locate the economy’s scarce resources.

QN=87 Two goods are substitutes when a decrease in the price of

one good2424
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.

QN=88 A movement downward and to the left along a supply curve

is called2424
a. an increase in supply.
b. a decrease in supply.
c. a decrease in quantity supplied.
d. an increase in quantity supplied.
QN=89 Which of these statements best represents the law of de-
mand?25252525
a. When buyers’ tastes for a good increase, they purchase more
of the good.
b. When income levels increase, buyers purchase more of most
goods.
c. When the price of a good decreases, buyers purchase more
of the good.
d. When buyers’ demands for a good increase, the price of the
good increases.

QN=90 Which of the following is not held constant in a demand

schedule?252525
a. Income
b. Tastes
c. Price
d. Expectations

QN=91 Two goods are complements when a decrease in the price of

one good2525
a. decreases the quantity demanded of the other good.
b. decreases the demand for the other good.
c. increases the quantity demanded of the other good.
d. increases the demand for the other good.

QN=92 What will happen in the rice market now if sellers expect
higher rice prices in the near future?25252525
a. The supply of rice will increase.
b. The supply of rice will decrease.
c. The supply of rice will be unaffected.
d. The demand for rice will decrease.

QN=93 Other things equal, when the price of a good falls, the25
a. quantity demanded of the good decreases.
b. supply decreases.
c. quantity supplied of the good decreases.
d. demand increases.
QN=94 In a market economy, supply and demand deter-
mine26262626
a. both the quantity of each good produced and the price at
which it is sold.
b. the quantity of each good produced, but not the price at
which it is sold.
c. the price at which each good is sold, but not the quantity of
each good produced.
d. neither the quantity of each good produced nor the price at
which it is sold.

QN=95 The forces that make market economies work are2626

a. work and leisure.
b. politics and religion.
c. supply and demand.
d. taxes and government spending.

QN=96 An increase in the price of rubber coincides with an advance

in the technology of tire production. As a result of these
two events,26262626
a. (i) the demand for tires decreases and the supply of tires in-
creases.
b. (ii) the demand for tires is unaffected and the supply of tires
decreases.
c. (iii) the demand for tires is unaffected and the supply of tires
increases.
d. None of (i), (ii), and (iii) is necessarily correct.

QN=97 In a competitive market, the quantity of a product produced

and the price of the product are determined by2626
a. (i) buyers.
b. (ii) sellers.
c. (iii) both buyers and sellers.
d. None of (i), (ii), and (iii) is correct.

QN=98 Which of the following would most likely serve as an exam-

ple of a monopoly?26
a. a bakery in a large city
b. a bank in a large city
c. a local cable television company
d. a small group of corn farmers

QN=99 In a free market, who determines how much of a good will

be sold and the price at which it is sold?27
a. suppliers
b. demanders
c. the government
d. suppliers and demanders together

QN=100 Generally, the market for ice cream would be considered27

a. a monopolistic market.
b. a competitive market.
c. more organized than an auction.
d. a market where individual sellers have significant pricing
power.