Exam (elaborations) TEST BANK FOR Macroeconomics 4th Australian Editio

Exam (elaborations) TEST BANK FOR Macroeconomics 4th Australian Editio 1) The market for tablet computers has grown rapidly over the past few years. Following the successful launch of the iPad in 2010 with nearly 20 million sales and growing to 310 million in 2016, companies such as Samsung, Dell, Microsoft, Amazon, Google and many others have all introduced products to compete with the iPad. The tablets introduced to compete with the iPad would be considered: A) complements to the iPad. B) substitutes for the iPad. C) inferior goods compared to the iPad. D) normal goods compared to the iPad. Answer: B Difficulty: Moderate Learning Objective: 3.1 Discuss the variables that influence the demand for goods and services. Topic: The demand side of the market AACSB: Able to analyse and frame problems 2) If the Apple iPad and other tablets are considered substitutes, then, other things equal, a decrease in the price of the iPad will: A) increase the demand for the iPad. B) decrease the demand for Microsoft tablets. C) increase the quantity demanded for Dell tablets. D) decrease the quantity demanded for the iPad. Answer: B Difficulty: Basic Learning Objective: 3.1 Discuss the variables that influence the demand for goods and services. Topic: The demand side of the market AACSB: Able to analyse and frame problems 3) What is the difference between an ‘increase in demand’ and an ‘increase in quantity demanded’? A) There is no difference between the two terms; they both refer to a shift of the demand curve. B) An ‘increase in demand’ is represented by a rightward shift of the demand curve while an ‘increase in quantity demanded’ is represented by a movement along a given demand curve. C) There is no difference between the two terms; they both refer to a movement downward along a given demand curve. D) An ‘increase in demand’ is represented by a movement along a given demand curve, while an ‘increase in quantity demanded’ is represented by a rightward shift of the demand curve. Answer: B Difficulty: Basic Learning Objective: 3.1 Discuss the variables that influence the demand for goods and services. Topic: The demand side of the market AACSB: Able to analyse and frame problems 4) The demand by all the consumers of a given good or service is the ________ for the good or service. A) market demand B) quantity demanded C) law of demand D) scheduled demand Answer: A Difficulty: Basic Learning Objective: 3.1 Discuss the variables that influence the demand for goods and services. Topic: The demand side of the market AACSB: Able to analyse and frame problems 5) If the quantity of chocolate demanded decreases as the price of chocolate increases, economists would describe this as: A) a decrease in demand. B) a decrease in quantity demanded. C) a change in consumer income. D) a decrease in consumers’ taste for chocolate. Answer: B Difficulty: Basic Learning Objective: 3.1 Discuss the variables that influence the demand for goods and services. Topic: The demand side of the market AACSB: Able to analyse and frame problems 6) By drawing a demand curve with ________ on the vertical axis and ________ on the horizontal axis, economists assume that the most important determinant of the demand for a good is the ________ of the good. A) quantity; price; quantity B) price; quantity; quantity C) price; quantity; price D) quantity; price; price Answer: C Difficulty: Basic Learning Objective: 3.1 Discuss the variables that influence the demand for goods and services. Topic: The demand side of the market AACSB: Able to analyse and frame problems 7) If a demand curve shifts to the right, then: A) demand has increased. B) quantity demanded has increased. C) demand has decreased. D) quantity demanded has decreased. Answer: A Difficulty: Basic Learning Objective: 3.1 Discuss the variables that influence the demand for goods and services. Topic: The demand side of the market AACSB: Able to analyse and frame problems 8) If a demand curve shifts to the left, then: A) demand has increased. B) quantity demanded has increased. C) demand has decreased. D) quantity demanded has decreased. Answer: C Difficulty: Basic Learning Objective: 3.1 Discuss the variables that influence the demand for goods and services. Topic: The demand side of the market AACSB: Able to analyse and frame problems 9) Holding everything else constant, a decrease in the price of tablet computers will result in: A) a decrease in the quantity of tablet computers supplied. B) a increase in the demand for tablet computers. C) a decrease in the demand of tablet computers. D) a increase in the quantity of tablet computers demanded. Answer: D Difficulty: Moderate Learning Objective: 3.1 Discuss the variables that influence the demand for goods and services. Topic: The demand side of the market AACSB: Able to analyse and frame problems 10) A change in which of the following variables will change the quantity demanded for a product: A) the price of the product. B) population and demographics. C) income. D) tastes. Answer: A Difficulty: Basic Learning Objective: 3.1 Discuss the variables that influence the demand for goods and services. Topic: The demand side of the market AACSB: Able to analyse and frame problems 11) The ‘income effect’ of a price change refers to the impact of a change in: A) income on the price of a good. B) demand when income changes. C) the quantity demanded when income changes. D) the price of a good on a consumer’s purchasing power. Answer: D Difficulty: Complex Learning Objective: 3.1 Discuss the variables that influence the demand for goods and services. Topic: The demand side of the market AACSB: Able to analyse and frame problems 12) The demand curve for a good will shift leftward if there is: A) a change in the technology used to produce the good. B) an increase in the price of the good. C) an increase in the price of a complementary good. D) a decrease in the price of the good. Answer: C Difficulty: Basic Learning Objective: 3.1 Discuss the variables that influence the demand for goods and services. Topic: The demand side of the market AACSB: Able to analyse and frame problems 13) A movement along the demand curve for toothpaste would be caused by a change in: A) the price of toothbrushes. B) consumer income. C) the price of toothpaste. D) population. Answer: C Difficulty: Basic Learning Objective: 3.1 Discuss the variables that influence the demand for goods and services. Topic: The demand side of the market AACSB: Able to analyse and frame problems 14) When the price of a good increases, consumers buy a smaller quantity because of the ________ effect and the ________ effect. A) substitution; income B) normal; inferior C) substitute; complement D) price; quantity Answer: A Difficulty: Basic Learning Objective: 3.1 Discuss the variables that influence the demand for goods and services. Topic: The demand side of the market AACSB: Able to analyse and frame problems 15) If the price of grapefruit rises, the substitution effect due to the price change will cause a decrease in the: A) demand for grapefruit. B) demand for oranges, a substitute for grapefruit. C quantity demanded of grapefruit. D) quantity supplied of grapefruit. Answer: C Difficulty: Complex Learning Objective: 3.1 Discuss the variables that influence the demand for goods and services. Topic: The demand side of the market AACSB: Able to analyse and frame problems 16) If the price of orchids falls, the substitution effect due to the price change will cause an increase in the: A) demand for orchids. B) demand for roses, a substitute for orchids. C) quantity demanded of orchids. D) quantity supplied of orchids. Answer: C Difficulty: Complex Learning Objective: 3.1 Discuss the variables that influence the demand for goods and services. Topic: The demand side of the market AACSB: Able to analyse and frame problem