Question 1

By definition, an inferior good is a

Accepted Answer

A)  want that is not expressed by demand. 
B)  normal substitute good. 
C)  good for which demand decreases when its price rises. 
D)  good for which demand decreases when income increases. 
A)  want that is not expressed by demand. 
B)  normal substitute good. 
C)  good for which demand decreases when its price rises. 
D)  good for which demand decreases when income increases.

Question 2

-Using the above figure, suppose that roses are a normal good. If incomes decrease while simultaneously there is an increase in the price of the resources used to produce roses, then

Accepted Answer

A)  the price will definitely increase above $25 per dozen roses. 
B)  the quantity will definitely decrease below 10 dozen roses. 
C)  the price will definitely decrease below $25 per dozen roses. 
D)  we cannot tell what will happen to equilibrium quantity. 
A)  the price will definitely increase above $25 per dozen roses. 
B)  the quantity will definitely decrease below 10 dozen roses. 
C)  the price will definitely decrease below $25 per dozen roses. 
D)  we cannot tell what will happen to equilibrium quantity.

Question 3

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

Accepted Answer

A)  Consumers' preferences changed in favor of digital cameras. 
B)  Technological advances were made in film camera production. 
C)  Workers who make cameras received a pay raise. 
D)  The price of digital cameras increased. 
A)  Consumers' preferences changed in favor of digital cameras. 
B)  Technological advances were made in film camera production. 
C)  Workers who make cameras received a pay raise. 
D)  The price of digital cameras increased.

Question 4

Joe pays $8,000.00 in tuition. The 8,000 dollar tuition Joe pays is an example of what economists call

Accepted Answer

A)  a relative price. 
B)  a money price. 
C)  an indexed price. 
D)  an opportunity price. 
A)  a relative price. 
B)  a money price. 
C)  an indexed price. 
D)  an opportunity price.

Question 5

-Consider the demand curves for soft drinks shown in the figure above. Suppose the economy is at point a. An increase in the price of a soda results in a movement to a point such as

Accepted Answer

A)  none of the points illustrated. 
B)  b. 
C)  c. 
D)  d. 
A)  none of the points illustrated. 
B)  b. 
C)  c. 
D)  d.

Question 6

Jeep Cherokees are a normal good. If people's incomes increase, the direct result will be

Accepted Answer

A)  an increase in the supply of the vehicles. 
B)  a decrease in the demand for the vehicles. 
C)  an increase in the demand for the vehicles. 
D)  Both answers A and C are correct. 
A)  an increase in the supply of the vehicles. 
B)  a decrease in the demand for the vehicles. 
C)  an increase in the demand for the vehicles. 
D)  Both answers A and C are correct.

Question 7

Bicycles are made out of steel. If the price of steel increases, there is a shift in the supply curve of bicycles that leads to

Accepted Answer

A)  a shift in the demand curve for bicycles. 
B)  a temporary surplus of bicycles. 
C)  a permanent surplus of bicycles. 
D)  an increase in the price of a bicycle. 
A)  a shift in the demand curve for bicycles. 
B)  a temporary surplus of bicycles. 
C)  a permanent surplus of bicycles. 
D)  an increase in the price of a bicycle.

Question 8

-Suppose the market for CD-Rs has the demand and supply schedules shown in the table above. Suppose a decrease in the price of a CD burner increases the quantity of disks demanded at each price by 20 million. What are the new equilibrium price and equilibrium quantity of CD-Rs?

Accepted Answer

The initial equilibrium price is $1.50 a

Question 9

Blank DVDs and prerecorded DVDs are substitutes in production. An increase in the price of a blank DVD will lead to

Accepted Answer

A)  an increase in the supply of prerecorded DVDs. 
B)  a decrease in the supply of prerecorded DVDs. 
C)  an increase in the quantity supplied of prerecorded DVDs but not in the supply of prerecorded DVDs. 
D)  a decrease in the quantity supplied of prerecorded DVDs but not in the supply of prerecorded DVDs. 
A)  an increase in the supply of prerecorded DVDs. 
B)  a decrease in the supply of prerecorded DVDs. 
C)  an increase in the quantity supplied of prerecorded DVDs but not in the supply of prerecorded DVDs. 
D)  a decrease in the quantity supplied of prerecorded DVDs but not in the supply of prerecorded DVDs.

Question 10

Twenty years ago a stove cost $300 and a refrigerator cost $1,500. Today a stove costs $600, while a refrigerator costs $1,800. Which of the following statements is true?

Accepted Answer

A)  The relative price of stoves and refrigerators has not changed. 
B)  The relative price of a refrigerator has increased. 
C)  The relative price of a stove has increased. 
D)  The money price of a refrigerator has fallen. 
A)  The relative price of stoves and refrigerators has not changed. 
B)  The relative price of a refrigerator has increased. 
C)  The relative price of a stove has increased. 
D)  The money price of a refrigerator has fallen.

Question 11

-The above figures show the market for oranges. Which figure(s) shows the effect of a new government program that provides each public school child with an orange to start the day?

Accepted Answer

A)  Figure A 
B)  Figure D 
C)  Figures A and C 
D)  Figures A and D 
A)  Figure A 
B)  Figure D 
C)  Figures A and C 
D)  Figures A and D

Question 12

-In the above figure, in order for the equilibrium price to remain constant while the equilibrium quantity increases, the

Accepted Answer

A)  supply and demand curves both would have to shift leftward. 
B)  supply curve would have to shift leftward and the demand curve would have to shift rightward. 
C)  supply curve would have to shift rightward and the demand curve would have to shift leftward. 
D)  supply and demand curves both would have to shift rightward. 
A)  supply and demand curves both would have to shift leftward. 
B)  supply curve would have to shift leftward and the demand curve would have to shift rightward. 
C)  supply curve would have to shift rightward and the demand curve would have to shift leftward. 
D)  supply and demand curves both would have to shift rightward.

Question 13

-The above figure shows the market for hamburger. Which panel shows the effect of a new excise tax on all beef products?

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 14

-The above figure shows the market for pizza. Which figure shows the effect of an increase in the price of a complement such as soda?

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 15

Good A and good B are substitutes in production. The demand for good A decreases, which lowers the price of good A. The decrease in the price of good A

Accepted Answer

A)  decreases the supply of good B. 
B)  increases the supply of good B. 
C)  decreases the demand for good B. 
D)  increases the demand for good B. 
A)  decreases the supply of good B. 
B)  increases the supply of good B. 
C)  decreases the demand for good B. 
D)  increases the demand for good B.

Question 16

If there is surplus of a good, then the quantity demanded ________ the quantity supplied and the price will ________.

Accepted Answer

A)  is less than; rise 
B)  is less than; fall 
C)  is greater than; rise 
D)  is greater than; fall 
A)  is less than; rise 
B)  is less than; fall 
C)  is greater than; rise 
D)  is greater than; fall

Question 17

Which of the following decreases the demand for an inferior good?

Accepted Answer

A)  an increase in income 
B)  a decrease in the price of a complement 
C)  a decrease in income 
D)  an increase in the price of a substitute 
A)  an increase in income 
B)  a decrease in the price of a complement 
C)  a decrease in income 
D)  an increase in the price of a substitute

Question 18

A normal good is one

Accepted Answer

A)  with a downward sloping demand curve. 
B)  for which demand increases when the price of a substitute rises. 
C)  for which demand increases when income increases. 
D)  none of the above 
A)  with a downward sloping demand curve. 
B)  for which demand increases when the price of a substitute rises. 
C)  for which demand increases when income increases. 
D)  none of the above

Question 19

If the good in the above figure is a normal good and income rises, then the new equilibrium quantity

Accepted Answer

A)  is less than 300 units. 
B)  is 300 units. 
C)  is more than 300 units. 
D)  could be less than, equal to, or more than 300 units. 
A)  is less than 300 units. 
B)  is 300 units. 
C)  is more than 300 units. 
D)  could be less than, equal to, or more than 300 units.

Question 20

Which of the following does NOT shift the supply curve?

Accepted Answer

A)  a technological advance 
B)  a decrease in the wages of labor used in production of the good 
C)  a fall in the price of a substitute in production 
D)  an increase in the price of the good 
A)  a technological advance 
B)  a decrease in the wages of labor used in production of the good 
C)  a fall in the price of a substitute in production 
D)  an increase in the price of the good

Exam 3: Demand and Supply

By definition, an inferior good is a

-Using the above figure, suppose that roses are a normal good. If incomes decrease while simultaneously there is an increase in the price of the resources used to produce roses, then

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

Joe pays $8,000.00 in tuition. The 8,000 dollar tuition Joe pays is an example of what economists call

-Consider the demand curves for soft drinks shown in the figure above. Suppose the economy is at point a. An increase in the price of a soda results in a movement to a point such as

Jeep Cherokees are a normal good. If people's incomes increase, the direct result will be

Bicycles are made out of steel. If the price of steel increases, there is a shift in the supply curve of bicycles that leads to

-Suppose the market for CD-Rs has the demand and supply schedules shown in the table above. Suppose a decrease in the price of a CD burner increases the quantity of disks demanded at each price by 20 million. What are the new equilibrium price and equilibrium quantity of CD-Rs?

Blank DVDs and prerecorded DVDs are substitutes in production. An increase in the price of a blank DVD will lead to

Twenty years ago a stove cost $300 and a refrigerator cost $1,500. Today a stove costs $600, while a refrigerator costs $1,800. Which of the following statements is true?

-The above figures show the market for oranges. Which figure(s) shows the effect of a new government program that provides each public school child with an orange to start the day?

-In the above figure, in order for the equilibrium price to remain constant while the equilibrium quantity increases, the

-The above figure shows the market for hamburger. Which panel shows the effect of a new excise tax on all beef products?

-The above figure shows the market for pizza. Which figure shows the effect of an increase in the price of a complement such as soda?

Good A and good B are substitutes in production. The demand for good A decreases, which lowers the price of good A. The decrease in the price of good A

If there is surplus of a good, then the quantity demanded ________ the quantity supplied and the price will ________.

Which of the following decreases the demand for an inferior good?

A normal good is one

If the good in the above figure is a normal good and income rises, then the new equilibrium quantity

Which of the following does NOT shift the supply curve?

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 there is surplus of a good, then the quantity demanded the quantity supplied and the price will .