Question 1

Which of the following correctly describes how price adjustments eliminate a shortage?

Accepted Answer

A)  As the price rises, the quantity demanded decreases while the quantity supplied increases. 
B)  As the price rises, the quantity demanded increases while the quantity supplied decreases. 
C)  As the price falls, the quantity demanded decreases while the quantity supplied increases. 
D)  As the price falls, the quantity demanded increases while the quantity supplied decreases. 
A)  As the price rises, the quantity demanded decreases while the quantity supplied increases. 
B)  As the price rises, the quantity demanded increases while the quantity supplied decreases. 
C)  As the price falls, the quantity demanded decreases while the quantity supplied increases. 
D)  As the price falls, the quantity demanded increases while the quantity supplied decreases.

Question 2

When the demand curve shifts rightward and the supply curve shifts leftward, then the equilibrium price ________ and the equilibrium quantity ________.

Accepted Answer

A)  rises; decreases 
B)  falls; increases 
C)  rises; probably changes but the direction of the change cannot be determined 
D)  probably changes but the direction of the change cannot be determined; increases 
A)  rises; decreases 
B)  falls; increases 
C)  rises; probably changes but the direction of the change cannot be determined 
D)  probably changes but the direction of the change cannot be determined; increases

Question 3

Which of the following best reflects an increase in quantity demanded and not an increase in demand?

Accepted Answer

A)  A college expects enrollment to increase, despite no change in the tuition. 
B)  Skiing becomes a fashionable winter sports activity. 
C)  The price of hair styling falls. 
D)  Consumers expect lower prices next month for computers. 
A)  A college expects enrollment to increase, despite no change in the tuition. 
B)  Skiing becomes a fashionable winter sports activity. 
C)  The price of hair styling falls. 
D)  Consumers expect lower prices next month for computers.

Question 4

Until 2007, the price of sport utility vehicles (SUVs) rose and each year more were purchased. This experience suggests that

Accepted Answer

A)  there must have been technological advances in the way SUVs are produced. 
B)  the "law of demand" does not hold true in this market. 
C)  there must have movement leftward along the supply curve for SUVs. 
D)  there must have been a rightward shift of the demand curve for SUVs. 
A)  there must have been technological advances in the way SUVs are produced. 
B)  the "law of demand" does not hold true in this market. 
C)  there must have movement leftward along the supply curve for SUVs. 
D)  there must have been a rightward shift of the demand curve for SUVs.

Question 5

Which of the following always lowers the equilibrium price?

Accepted Answer

A)  an increase in both demand and supply 
B)  a decrease in both demand and supply 
C)  an increase in demand combined with a decrease in supply 
D)  a decrease in demand combined with an increase in supply 
A)  an increase in both demand and supply 
B)  a decrease in both demand and supply 
C)  an increase in demand combined with a decrease in supply 
D)  a decrease in demand combined with an increase in supply

Question 6

Scarcity guarantees that

Accepted Answer

A)  demands will exceed wants. 
B)  wants will exceed demands. 
C)  demands will be equal to wants. 
D)  most demands will be satisfied. 
A)  demands will exceed wants. 
B)  wants will exceed demands. 
C)  demands will be equal to wants. 
D)  most demands will be satisfied.

Question 7

Suppose we observe that both the equilibrium price of digital cameras and the equilibrium quantity of digital cameras have increased. Which of the following events could be responsible for this?

Accepted Answer

A)  technological advances in digital camera production 
B)  consumers' preferences changed in favor of digital cameras 
C)  the price of film cameras fell 
D)  workers who make digital cameras received a pay raise 
A)  technological advances in digital camera production 
B)  consumers' preferences changed in favor of digital cameras 
C)  the price of film cameras fell 
D)  workers who make digital cameras received a pay raise

Question 8

An increase in the price of jet fuel will ________ air flights and the equilibrium quantity of air flights will ________.

Accepted Answer

A)  decrease the supply of; decrease 
B)  increase the demand for; increase 
C)  decrease the supply of; increase 
D)  decrease the demand for; decrease 
A)  decrease the supply of; decrease 
B)  increase the demand for; increase 
C)  decrease the supply of; increase 
D)  decrease the demand for; decrease

Question 9

The law of demand implies that, other things remaining the same,

Accepted Answer

A)  as the price of a cheeseburger rises, the quantity of cheeseburgers demanded will increase. 
B)  as the price of a cheeseburger rises, the quantity of cheeseburgers demanded will decrease. 
C)  as income increases, the quantity of cheeseburgers demanded will increase. 
D)  as the demand for cheeseburgers increases, the price of a cheeseburger will fall. 
A)  as the price of a cheeseburger rises, the quantity of cheeseburgers demanded will increase. 
B)  as the price of a cheeseburger rises, the quantity of cheeseburgers demanded will decrease. 
C)  as income increases, the quantity of cheeseburgers demanded will increase. 
D)  as the demand for cheeseburgers increases, the price of a cheeseburger will fall.

Question 10

If the market for Twinkies is in equilibrium, then

Accepted Answer

A)  Twinkies must be a normal good. 
B)  producers would like to sell more at the current price. 
C)  consumers would like to buy more at the current price. 
D)  the quantity supplied equals the quantity demanded. 
A)  Twinkies must be a normal good. 
B)  producers would like to sell more at the current price. 
C)  consumers would like to buy more at the current price. 
D)  the quantity supplied equals the quantity demanded.

Question 11

What are substitutes in production?

Accepted Answer

Goods are substitutes in produ

Question 12

If a technological advance takes place in the computer industry, then the equilibrium price of a computer will ________ and the equilibrium quantity will ________.

Accepted Answer

A)  fall; increase 
B)  fall; decrease 
C)  rise; increase 
D)  rise; decrease 
A)  fall; increase 
B)  fall; decrease 
C)  rise; increase 
D)  rise; decrease

Question 13

"If the price of crude oil falls, the demand for gasoline will increase, so people will by more gas and the price of gas will go up." Is this statement true or false? Explain.

Accepted Answer

The analysis is False. If the price of c

Question 14

-The figure above shows supply curves for soft drinks. Suppose the economy is at point a. A movement to point b could be the result of

Accepted Answer

A)  an increase in technology. 
B)  a decrease in the relative price of a soft drink. 
C)  an increase in the relative price of a soft drink. 
D)  an increase in the money price of a soft drink. 
A)  an increase in technology. 
B)  a decrease in the relative price of a soft drink. 
C)  an increase in the relative price of a soft drink. 
D)  an increase in the money price of a soft drink.

Question 15

If the price of a video download is below its equilibrium price, the quantity supplied is ________ than the quantity demanded. If the price of a video download is above its equilibrium price, the quantity supplied is ________ than the quantity demanded.

Accepted Answer

A)  less; greater 
B)  greater; less 
C)  less; less 
D)  greater; greater 
A)  less; greater 
B)  greater; less 
C)  less; less 
D)  greater; greater

Question 16

What is the effect on the price and quantity of a product if the demand decreases and the supply simultaneously increases?

Accepted Answer

The equilibrium price unambiguously fall

Question 17

At a price of $4 in the above figure,

Accepted Answer

A)  the equilibrium quantity is 400 units. 
B)  there is a surplus of 200 units. 
C)  the quantity supplied is 400 units. 
D)  there is a shortage of 200 units. 
A)  the equilibrium quantity is 400 units. 
B)  there is a surplus of 200 units. 
C)  the quantity supplied is 400 units. 
D)  there is a shortage of 200 units.

Question 18

-The figure illustrates the market for pens. The equilibrium quantity is

Accepted Answer

A)  between 400 and 600 pens, but it is impossible to be precise. 
B)  5 pens a month. 
C)  2 pens a month. 
D)  500 pens a month. 
A)  between 400 and 600 pens, but it is impossible to be precise. 
B)  5 pens a month. 
C)  2 pens a month. 
D)  500 pens a month.

Question 19

When supply decreases and demand does not change, the equilibrium quantity ________ and the equilibrium price ________.

Accepted Answer

A)  increases; rises 
B)  decreases; falls 
C)  increases; falls 
D)  decreases; rises 
A)  increases; rises 
B)  decreases; falls 
C)  increases; falls 
D)  decreases; rises

Question 20

Which of the following is consistent with the law of demand?

Accepted Answer

A)  An increase in the price of a DVD causes an increase in the quantity of DVDs demanded. 
B)  An increase in the price of a soda causes a decrease in the quantity of soda demanded. 
C)  A decrease in the price of a gallon of milk causes a decrease in the quantity of milk demanded. 
D)  A decrease in the price of juice causes no change in the quantity of juice demanded. 
A)  An increase in the price of a DVD causes an increase in the quantity of DVDs demanded. 
B)  An increase in the price of a soda causes a decrease in the quantity of soda demanded. 
C)  A decrease in the price of a gallon of milk causes a decrease in the quantity of milk demanded. 
D)  A decrease in the price of juice causes no change in the quantity of juice demanded.

Exam 3: Demand and Supply

Which of the following correctly describes how price adjustments eliminate a shortage?

When the demand curve shifts rightward and the supply curve shifts leftward, then the equilibrium price ________ and the equilibrium quantity ________.

Which of the following best reflects an increase in quantity demanded and not an increase in demand?

Until 2007, the price of sport utility vehicles (SUVs) rose and each year more were purchased. This experience suggests that

Which of the following always lowers the equilibrium price?

Scarcity guarantees that

Suppose we observe that both the equilibrium price of digital cameras and the equilibrium quantity of digital cameras have increased. Which of the following events could be responsible for this?

An increase in the price of jet fuel will ________ air flights and the equilibrium quantity of air flights will ________.

The law of demand implies that, other things remaining the same,

If the market for Twinkies is in equilibrium, then

What are substitutes in production?

If a technological advance takes place in the computer industry, then the equilibrium price of a computer will ________ and the equilibrium quantity will ________.

"If the price of crude oil falls, the demand for gasoline will increase, so people will by more gas and the price of gas will go up." Is this statement true or false? Explain.

-The figure above shows supply curves for soft drinks. Suppose the economy is at point a. A movement to point b could be the result of

If the price of a video download is below its equilibrium price, the quantity supplied is ________ than the quantity demanded. If the price of a video download is above its equilibrium price, the quantity supplied is ________ than the quantity demanded.

What is the effect on the price and quantity of a product if the demand decreases and the supply simultaneously increases?

At a price of $4 in the above figure,

-The figure illustrates the market for pens. The equilibrium quantity is

When supply decreases and demand does not change, the equilibrium quantity ________ and the equilibrium price ________.

Which of the following is consistent with the law of demand?

What Is Economics

The Economic Problem

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices and Public Goods

Externalities and the Environment

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

Filters

When the demand curve shifts rightward and the supply curve shifts leftward, then the equilibrium price and the equilibrium quantity .

An increase in the price of jet fuel will air flights and the equilibrium quantity of air flights will .

If a technological advance takes place in the computer industry, then the equilibrium price of a computer will and the equilibrium quantity will .

If the price of a video download is below its equilibrium price, the quantity supplied is than the quantity demanded. If the price of a video download is above its equilibrium price, the quantity supplied is than the quantity demanded.

When supply decreases and demand does not change, the equilibrium quantity and the equilibrium price .