Which of the following is LEAST likely to be an example of a normal good? a. Rou

Question

Which of the following is LEAST likely to be an example of a normal good?

a.       Routine medical care

b.      Housing

c.       Motor vehicles

d.      Store-brand breakfast cereal

If the interest rates on new car loans increase, the quantity of new cars supplied will

a.       Remain uncharged

b.      Decrease

c.       Increase

d.      Shift to the right

Between 2000 and 2007, many more furniture companies started producing furniture more cheaply in China. As a result, the

a.       Supply curve for furniture shifted to the left

b.      Supply curve for furniture shifted to the right

c.       Demand curve for furniture shifted to the left

d.      Demand curve for furniture shifted to the right

On the basic supply-demand graph, the point at which the demand curve and the supply curve intersect is located at

a.       Equilibrium demand and equilibrium supply

b.      Market price and market quantity

c.       Quantity demanded and quantity supplied

d.      Equilibrium price and equilibrium quantity.

A demand shift affects

a.       Sellers willingness to sell at various prices

b.      Buyers willingness to purchase at various prices

c.       Sellers willingness to sell at the equilibrium price only

d.      Buyers willingness to buy at the equilibrium price only

In the short run, the quantity of available hotel rooms is not particularly responsive to changes in price because hotels take time to build and to destroy. This implies that the short-run supply of hotel rooms is

a.       Elastic

b.      Inelastic

c.       In equilibrium

d.      Greater than demand

Explanation / Answer

1) A store brand cereal is least likely to be a normal good because as the income of the people rise they will switch to better brands. The correct answer is "D".

2) The demand for the car will "decrease".

3) "B" more producer will shift the supply curve to the right i.e. more supply at less price.

4) "A" Equilibrium demand and equilibrium supply. Price is decided by the demand and supply forces together.

5)  "B" buyers willingness to buy at various prices.

6) "B" Inelastic. i.e. it doesn't change with the price.

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