Question 1

Crude oil can be refined into home heating oil or gasoline. If very cold weather caused the price of home heating oil to increase, then the

Accepted Answer

A)  supply of gasoline would increase. 
B)  demand for gasoline would increase. 
C)  equilibrium price of gasoline would rise. 
D)  Both answers A and C are correct. 
A)  supply of gasoline would increase. 
B)  demand for gasoline would increase. 
C)  equilibrium price of gasoline would rise. 
D)  Both answers A and C are correct.

Question 2

What will happen to the equilibrium price and equilibrium quantity of ice cream cones when consumers' incomes decrease?

Accepted Answer

A)  If ice cream cones are a normal good, then the equilibrium price and quantity of ice cream cones will decrease. 
B)  If ice cream cones are a normal good, then the equilibrium price and equilibrium quantity of ice cream cones will increase. 
C)  If ice cream cones are an inferior good, then the equilibrium price for an ice cream cone will increase and the equilibrium quantity of ice cream cones will decrease. 
D)  If ice cream cones are an inferior good, then the equilibrium price and quantity of ice cream cones will decrease. 
A)  If ice cream cones are a normal good, then the equilibrium price and quantity of ice cream cones will decrease. 
B)  If ice cream cones are a normal good, then the equilibrium price and equilibrium quantity of ice cream cones will increase. 
C)  If ice cream cones are an inferior good, then the equilibrium price for an ice cream cone will increase and the equilibrium quantity of ice cream cones will decrease. 
D)  If ice cream cones are an inferior good, then the equilibrium price and quantity of ice cream cones will decrease.

Question 3

Auto workers negotiate a wage increase. How does this wage hike affect the supply of cars?

Accepted Answer

A)  It decreases the supply. 
B)  It increase the supply. 
C)  It has no effect. 
D)  There is not enough information to tell if the change increases, decreases, or has no effect on the supply of cars. 
A)  It decreases the supply. 
B)  It increase the supply. 
C)  It has no effect. 
D)  There is not enough information to tell if the change increases, decreases, or has no effect on the supply of cars.

Question 4

Explain why a relative price is an opportunity cost.

Accepted Answer

A relative price is the ratio of the pri

Question 5

A supply curve shows the relation between the quantity of a good supplied and

Accepted Answer

A)  income. Usually a supply curve has negative slope. 
B)  income. Usually a supply curve has positive slope. 
C)  the price of the good. Usually a supply curve has negative slope. 
D)  the price of the good. Usually a supply curve has positive slope. 
A)  income. Usually a supply curve has negative slope. 
B)  income. Usually a supply curve has positive slope. 
C)  the price of the good. Usually a supply curve has negative slope. 
D)  the price of the good. Usually a supply curve has positive slope.

Question 6

If the price of a video rental is below its equilibrium price, there will be a ________ of video rentals and the price will ________ .

Accepted Answer

A)  shortage; rise 
B)  shortage; fall 
C)  surplus; rise 
D)  surplus; fall 
A)  shortage; rise 
B)  shortage; fall 
C)  surplus; rise 
D)  surplus; fall

Question 7

-The above figures show the market for gasoline. Which figure shows the effect of a nation-wide strike by municipal bus drivers, which causes more people to drive their cars to work?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D

Question 8

The price of a good will fall if

Accepted Answer

A)  there is a surplus at the current price. 
B)  the current price is less than the equilibrium price. 
C)  the quantity demanded exceeds the quantity supplied. 
D)  the price of a complement in consumption falls. 
A)  there is a surplus at the current price. 
B)  the current price is less than the equilibrium price. 
C)  the quantity demanded exceeds the quantity supplied. 
D)  the price of a complement in consumption falls.

Question 9

What is the law of demand?

Accepted Answer

The law of demand states that other thin

Question 10

List the factors change demand and shift the demand curve. Tell what happens to demand and the demand curve when there is an increase in the factor.

Accepted Answer

One factor that changes demand is a chan

Question 11

When the price of a pizza decreases from $12 to $10, it is definitely the case that the

Accepted Answer

A)  income effect means people buy less pizza. 
B)  substitution effect means people buy more pizza. 
C)  quantity demanded of pizza will not change. 
D)  None of the above answers is correct. 
A)  income effect means people buy less pizza. 
B)  substitution effect means people buy more pizza. 
C)  quantity demanded of pizza will not change. 
D)  None of the above answers is correct.

Question 12

In 2011, the price of peanuts was rising, which lead peanut butter sellers and peanut butter buyers to expect the price of peanut butter would rise in the future. In the current market for peanut butter, the price rises and the quantity increases. This set of results means that

Accepted Answer

A)  demand increased by more than supply decreased. 
B)  supply decreased by more than demand increased. 
C)  demand increased by more than supply increased. 
D)  supply decreased by more than demand decreased. 
A)  demand increased by more than supply decreased. 
B)  supply decreased by more than demand increased. 
C)  demand increased by more than supply increased. 
D)  supply decreased by more than demand decreased.

Question 13

-The figure illustrates the market for chairs. If the supply of chairs increases, the price of a chair ________ $40 and the quantity ________.

Accepted Answer

A)  will rise above; demanded will decrease 
B)  will rise above; supplied will increase 
C)  will fall below; demanded will increase 
D)  will fall below; demanded will decrease 
A)  will rise above; demanded will decrease 
B)  will rise above; supplied will increase 
C)  will fall below; demanded will increase 
D)  will fall below; demanded will decrease

Question 14

When there is a surplus in the market, the quantity sold is

Accepted Answer

A)  equal to the quantity supplied. 
B)  equal to the quantity demanded. 
C)  less than the quantity demanded. 
D)  greater than the quantity bought. 
A)  equal to the quantity supplied. 
B)  equal to the quantity demanded. 
C)  less than the quantity demanded. 
D)  greater than the quantity bought.

Question 15

The "law of demand" is illustrated by a

Accepted Answer

A)  rightward shift of the demand curve. 
B)  leftward shift of the demand curve. 
C)  movement along the demand curve. 
D)  Both answers A and B are correct. 
A)  rightward shift of the demand curve. 
B)  leftward shift of the demand curve. 
C)  movement along the demand curve. 
D)  Both answers A and B are correct.

Question 16

The "law of demand" refers to the fact that, all other things remaining the same, when the price of a good rises

Accepted Answer

A)  the demand curve shifts rightward. 
B)  the demand curve shifts leftward. 
C)  there is a movement down along the demand curve to a larger quantity demanded. 
D)  there is a movement up along the demand curve to a smaller quantity demanded. 
A)  the demand curve shifts rightward. 
B)  the demand curve shifts leftward. 
C)  there is a movement down along the demand curve to a larger quantity demanded. 
D)  there is a movement up along the demand curve to a smaller quantity demanded.

Question 17

If the demand for bathing suits and supply of bathing suits both decrease, then definitely the equilibrium

Accepted Answer

A)  price will decrease. 
B)  price will increase. 
C)  quantity will increase. 
D)  quantity will decrease. 
A)  price will decrease. 
B)  price will increase. 
C)  quantity will increase. 
D)  quantity will decrease.

Question 18

If consumers' incomes increase and the demand for bus rides decreases,

Accepted Answer

A)  bus rides are a normal good. 
B)  consumers are behaving irrationally. 
C)  bus rides are an inferior good. 
D)  none of the above 
A)  bus rides are a normal good. 
B)  consumers are behaving irrationally. 
C)  bus rides are an inferior good. 
D)  none of the above

Question 19

The interaction of supply and demand explains

Accepted Answer

A)  the prices of goods and services but not their quantities. 
B)  the quantities of goods and services but not their prices. 
C)  both the prices and the quantities of goods and services. 
D)  neither the prices nor the quantities of goods and services. 
A)  the prices of goods and services but not their quantities. 
B)  the quantities of goods and services but not their prices. 
C)  both the prices and the quantities of goods and services. 
D)  neither the prices nor the quantities of goods and services.

Question 20

The supply curve slopes upward when graphed against ________, because of ________.

Accepted Answer

A)  the price of the good; increasing marginal cost 
B)  the price of the good; decreasing marginal cost 
C)  income; increasing marginal cost 
D)  income; decreasing marginal cost 
A)  the price of the good; increasing marginal cost 
B)  the price of the good; decreasing marginal cost 
C)  income; increasing marginal cost 
D)  income; decreasing marginal cost

Exam 3: Demand and Supply

Crude oil can be refined into home heating oil or gasoline. If very cold weather caused the price of home heating oil to increase, then the

What will happen to the equilibrium price and equilibrium quantity of ice cream cones when consumers' incomes decrease?

Auto workers negotiate a wage increase. How does this wage hike affect the supply of cars?

Explain why a relative price is an opportunity cost.

A supply curve shows the relation between the quantity of a good supplied and

If the price of a video rental is below its equilibrium price, there will be a ________ of video rentals and the price will ________ .

-The above figures show the market for gasoline. Which figure shows the effect of a nation-wide strike by municipal bus drivers, which causes more people to drive their cars to work?

The price of a good will fall if

What is the law of demand?

List the factors change demand and shift the demand curve. Tell what happens to demand and the demand curve when there is an increase in the factor.

When the price of a pizza decreases from $12 to $10, it is definitely the case that the

In 2011, the price of peanuts was rising, which lead peanut butter sellers and peanut butter buyers to expect the price of peanut butter would rise in the future. In the current market for peanut butter, the price rises and the quantity increases. This set of results means that

-The figure illustrates the market for chairs. If the supply of chairs increases, the price of a chair ________ $40 and the quantity ________.

When there is a surplus in the market, the quantity sold is

The "law of demand" is illustrated by a

The "law of demand" refers to the fact that, all other things remaining the same, when the price of a good rises

If the demand for bathing suits and supply of bathing suits both decrease, then definitely the equilibrium

If consumers' incomes increase and the demand for bus rides decreases,

The interaction of supply and demand explains

The supply curve slopes upward when graphed against ________, because of ________.

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

If the price of a video rental is below its equilibrium price, there will be a of video rentals and the price will .

-The figure illustrates the market for chairs. If the supply of chairs increases, the price of a chair $40 and the quantity .

The supply curve slopes upward when graphed against , because of .