Answer ALL Questions. Encircle Correct Answers (Overwriting or Cutting is not Al
ID: 1166271 • Letter: A
Question
Answer ALL Questions. Encircle Correct Answers (Overwriting or Cutting is not Allowed) 1) In economics the central problem is: CLO: SK a) Scarcity b) Consumption c) Production d) Allocation 2) The total demand for goods and services in an economy is known as: a) National Income b) Aggregate Demand c) Economy-wide Demand d) Gross National Product CLO: SK2 3) The quantity demanded of Pepsi has decreased. The best explanation for thi CLO: AR1 is that? a) Pepsi consumers had an increase in income b) Pepsi's advertising is not as effective as in the past c) The price of Pepsi has increased d) The price of Coca Cola has increased 4) If the demand for coffee decreases an income decreases, coffee is: (CLO: AR1 a) An inferior good b) A complementary good c) A substitute good d) A normal good 5) A movement along the demand curve to the left may be caused by: CLO: AR1) a) A decrease in supply b) A rise in the price of inputs c) A fall in the number of substitute goods d) A rise in income Page 2 of 7Explanation / Answer
1) a is correct
Scarcity is the central problem of economics.
2) b is correct
Aggregate demand is sum total of demand for goods and services.
3) c is correct
Increase in price of the good leads to decrease in quantity demanded.
4) d is correct
For a normal good, increase or decrease in income leads to increase or decrease in demand for the good.
5) a is correct
Decrease in supply leads to increase in price. Increase in price causes leftward movement along the demand curve.