Question 1

In a competitive market, when price is below the equilibrium price, there will be pressure for the price to:

Accepted Answer

A)  fall. 
B)  stay the same. 
C)  rise. 
D)  change only if demand and/or supply change. 
A)  fall. 
B)  stay the same. 
C)  rise. 
D)  change only if demand and/or supply change.

Question 2

What is the difference between a shortage and scarcity?

Accepted Answer

A)  Scarcity will always exist because choices must be made, but a shortage will only exist if the price is kept below the equilibrium level. 
B)  Scarcity is a result of two or more alternative uses and will always exist, and quantities of supply and demand adjusting to flexible prices will create shortages. 
C)  A surplus will exist when a good is scarce; a shortage merely implies that there isn't as much of something as people would like, which is nearly always the case. 
D)  There is no distinction between the two. They are the same thing. 
A)  Scarcity will always exist because choices must be made, but a shortage will only exist if the price is kept below the equilibrium level. 
B)  Scarcity is a result of two or more alternative uses and will always exist, and quantities of supply and demand adjusting to flexible prices will create shortages. 
C)  A surplus will exist when a good is scarce; a shortage merely implies that there isn't as much of something as people would like, which is nearly always the case. 
D)  There is no distinction between the two. They are the same thing.

Question 3

-(Exhibit: Demand and Supply Curves) A price of $10 per unit will result in:

Accepted Answer

A)  a shortage of 50 units. 
B)  a shortage of 200 units. 
C)  a shortage of 250 units. 
D)  quantity supplied exceeding quantity demanded. 
A)  a shortage of 50 units. 
B)  a shortage of 200 units. 
C)  a shortage of 250 units. 
D)  quantity supplied exceeding quantity demanded.

Question 4

Which would not cause the supply curve to shift?

Accepted Answer

A)  a change in technology 
B)  a change in factor costs 
C)  a change in the price of the good 
D)  a change in the prices of related goods 
A)  a change in technology 
B)  a change in factor costs 
C)  a change in the price of the good 
D)  a change in the prices of related goods

Question 5

A decrease in demand, with no change in supply, will lead to ________ in equilibrium quantity and ________ in equilibrium price.

Accepted Answer

A)  an increase; an increase 
B)  an increase; a decrease 
C)  a decrease; an increase 
D)  a decrease; a decrease 
A)  an increase; an increase 
B)  an increase; a decrease 
C)  a decrease; an increase 
D)  a decrease; a decrease

Question 6

An announcement that smoking will harm your ability to think clearly will most likely result in:

Accepted Answer

A)  an increase in the quantity of cigarettes demanded. 
B)  a decrease in the demand for cigarettes. 
C)  no change in smoking habits. 
D)  an increase in the equilibrium price of cigarettes. 
A)  an increase in the quantity of cigarettes demanded. 
B)  a decrease in the demand for cigarettes. 
C)  no change in smoking habits. 
D)  an increase in the equilibrium price of cigarettes.

Question 7

-(Exhibit: Demand and Supply-Determinants) The exhibit shows how supply and demand might shift in response to specific events. Suppose the technology for producing automotive gasoline improves. Which panel best describes how this will affect the market for automotive gasoline?

Accepted Answer

A)  Panel (a) 
B)  Panel (b) 
C)  Panel (c) 
D)  Panel (d) 
A)  Panel (a) 
B)  Panel (b) 
C)  Panel (c) 
D)  Panel (d)

Question 8

A market shortage occurs if the:

Accepted Answer

A)  price is above the equilibrium price. 
B)  price is equal to the equilibrium price. 
C)  equilibrium price is above the current price. 
D)  equilibrium price is below the current price. 
A)  price is above the equilibrium price. 
B)  price is equal to the equilibrium price. 
C)  equilibrium price is above the current price. 
D)  equilibrium price is below the current price.

Question 9

-(Exhibit: Simultaneous Shifts in Demand and Supply) D1 and S1 are original supply and demand curves, and S2 and D2 are new curves. In this market for a normal good:

Accepted Answer

A)  supply has increased and price has increased. 
B)  demand has increased and price has increased. 
C)  demand has decreased and price has fallen. 
D)  demand has increased and price has fallen. 
A)  supply has increased and price has increased. 
B)  demand has increased and price has increased. 
C)  demand has decreased and price has fallen. 
D)  demand has increased and price has fallen.

Question 10

-(Exhibit: Demand and Supply of Wheat) A price of ________ will result in a ________ , and a price of ________ will result in a ________ .

Accepted Answer

A)  $6; shortage; $8; surplus 
B)  $8; surplus; $4; shortage 
C)  $8; shortage; $6; surplus 
D)  $4; surplus; $8; shortage 
A)  $6; shortage; $8; surplus 
B)  $8; surplus; $4; shortage 
C)  $8; shortage; $6; surplus 
D)  $4; surplus; $8; shortage

Question 11

If the price of mozzarella cheese (an ingredient in pizzas) declines due to a major technological breakthrough in the dairy industry, there would be:

Accepted Answer

A)  a decrease in the supply of pizza. 
B)  an increase in the supply of pizza. 
C)  an increase in the quantity of pizza supplied. 
D)  no change in the supply of pizza. 
A)  a decrease in the supply of pizza. 
B)  an increase in the supply of pizza. 
C)  an increase in the quantity of pizza supplied. 
D)  no change in the supply of pizza.

Question 12

Given that milk and cookies are complements, suppose the price of flour (an ingredient in cookies) rises. What happens in the market for milk?

Accepted Answer

A)  The equilibrium price and quantity rise. 
B)  The equilibrium price rises and the equilibrium quantity falls. 
C)  The equilibrium price and quantity fall. 
D)  The equilibrium price falls and the equilibrium quantity rises. 
A)  The equilibrium price and quantity rise. 
B)  The equilibrium price rises and the equilibrium quantity falls. 
C)  The equilibrium price and quantity fall. 
D)  The equilibrium price falls and the equilibrium quantity rises.

Question 13

A shortage or a surplus can exist when the current price is equal to the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 14

-(Exhibit: The Determinants of Demand and Supply) The exhibit shows how supply and demand might shift in response to specific events. Suppose scientists discover that eating a tomato a day prevents aging. Which panel best describes how this will affect the market for tomatoes?

Accepted Answer

A)  Panel (a) 
B)  Panel (b) 
C)  Panel (c) 
D)  Panel (d) 
A)  Panel (a) 
B)  Panel (b) 
C)  Panel (c) 
D)  Panel (d)

Question 15

-(Exhibit: The Supply of Music downloads) A decrease in the number of websites supplying music downloads would result in a change illustrated by:

Accepted Answer

A)  the move from n to o in Figure (a). 
B)  the move from p to q in Figure (b). 
C)  the move from s to t in Figure (c). 
D)  the move from u to v in Figure (d). 
A)  the move from n to o in Figure (a). 
B)  the move from p to q in Figure (b). 
C)  the move from s to t in Figure (c). 
D)  the move from u to v in Figure (d).

Question 16

The Market for Chocolate-Covered Peanuts
  
-(Exhibit: The Market for Chocolate-Covered Peanuts) If the price of chocolate-covered peanuts is 50 cents, there is:

Accepted Answer

A)  a surplus of 140 bags per month. 
B)  a shortage of 140 bags per month. 
C)  a surplus of 70 bags per month. 
D)  a shortage of 70 bags per month. 
A)  a surplus of 140 bags per month. 
B)  a shortage of 140 bags per month. 
C)  a surplus of 70 bags per month. 
D)  a shortage of 70 bags per month.

Question 17

-(Exhibit: The Determinants of Demand and Supply) The exhibit shows how supply and demand might shift in response to specific events. Suppose a fall frost destroys one-third of the nation's orange crop. Which panel best describes how this will affect the market for Vitamin C tablets, which are a substitute for oranges?

Accepted Answer

A)  Panel (a) 
B)  Panel (b) 
C)  Panel (c) 
D)  Panel (d) 
A)  Panel (a) 
B)  Panel (b) 
C)  Panel (c) 
D)  Panel (d)

Question 18

If both the demand for a product and the supply of it increase, then the equilibrium quantity will ________ and the equilibrium price will ________.

Accepted Answer

A)  decrease; increase 
B)  decrease; decrease 
C)  decrease; remain constant 
D)  increase; either increase, decrease, or remain constant 
A)  decrease; increase 
B)  decrease; decrease 
C)  decrease; remain constant 
D)  increase; either increase, decrease, or remain constant

Question 19

A price below the equilibrium price will:

Accepted Answer

A)  result in pressure for price to rise. 
B)  result in a surplus. 
C)  never be the case. 
D)  result in pressure for price to fall. 
A)  result in pressure for price to rise. 
B)  result in a surplus. 
C)  never be the case. 
D)  result in pressure for price to fall.

Question 20

If economists say, "the price is too high," they mean that:

Accepted Answer

A)  quantity demanded is greater than quantity supplied. 
B)  quantity supplied is greater than quantity demanded. 
C)  the equilibrium price exceeds the current price. 
D)  the price of a good will tend to increase. 
A)  quantity demanded is greater than quantity supplied. 
B)  quantity supplied is greater than quantity demanded. 
C)  the equilibrium price exceeds the current price. 
D)  the price of a good will tend to increase.

In a competitive market, when price is below the equilibrium price, there will be pressure for the price to:

What is the difference between a shortage and scarcity?

-(Exhibit: Demand and Supply Curves) A price of $10 per unit will result in:

Which would not cause the supply curve to shift?

A decrease in demand, with no change in supply, will lead to in equilibrium quantity and in equilibrium price.

An announcement that smoking will harm your ability to think clearly will most likely result in:

-(Exhibit: Demand and Supply-Determinants) The exhibit shows how supply and demand might shift in response to specific events. Suppose the technology for producing automotive gasoline improves. Which panel best describes how this will affect the market for automotive gasoline?

A market shortage occurs if the:

-(Exhibit: Simultaneous Shifts in Demand and Supply) D₁ and S₁ are original supply and demand curves, and S₂ and D₂ are new curves. In this market for a normal good:

-(Exhibit: Demand and Supply of Wheat) A price of will result in a , and a price of will result in a .

If the price of mozzarella cheese (an ingredient in pizzas) declines due to a major technological breakthrough in the dairy industry, there would be:

Given that milk and cookies are complements, suppose the price of flour (an ingredient in cookies) rises. What happens in the market for milk?

A shortage or a surplus can exist when the current price is equal to the equilibrium price.

-(Exhibit: The Determinants of Demand and Supply) The exhibit shows how supply and demand might shift in response to specific events. Suppose scientists discover that eating a tomato a day prevents aging. Which panel best describes how this will affect the market for tomatoes?

-(Exhibit: The Supply of Music downloads) A decrease in the number of websites supplying music downloads would result in a change illustrated by:

The Market for Chocolate-Covered Peanuts -(Exhibit: The Market for Chocolate-Covered Peanuts) If the price of chocolate-covered peanuts is 50 cents, there is:

If both the demand for a product and the supply of it increase, then the equilibrium quantity will and the equilibrium price will .

A price below the equilibrium price will:

If economists say, "the price is too high," they mean that:

Economics: the Study of Choice

Applications of Demand and Supply

Macroeconomics: the Big Picture

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Economic Development

Socialist Economies in Transition

Filters

Exam 3: Demand and Supply

In a competitive market, when price is below the equilibrium price, there will be pressure for the price to:

What is the difference between a shortage and scarcity?

-(Exhibit: Demand and Supply Curves) A price of $10 per unit will result in:

Which would not cause the supply curve to shift?

A decrease in demand, with no change in supply, will lead to ________ in equilibrium quantity and ________ in equilibrium price.

An announcement that smoking will harm your ability to think clearly will most likely result in:

-(Exhibit: Demand and Supply-Determinants) The exhibit shows how supply and demand might shift in response to specific events. Suppose the technology for producing automotive gasoline improves. Which panel best describes how this will affect the market for automotive gasoline?

A market shortage occurs if the:

-(Exhibit: Simultaneous Shifts in Demand and Supply) D1 and S1 are original supply and demand curves, and S2 and D2 are new curves. In this market for a normal good:

-(Exhibit: Demand and Supply of Wheat) A price of ________ will result in a ________ , and a price of ________ will result in a ________ .

If the price of mozzarella cheese (an ingredient in pizzas) declines due to a major technological breakthrough in the dairy industry, there would be:

Given that milk and cookies are complements, suppose the price of flour (an ingredient in cookies) rises. What happens in the market for milk?

A shortage or a surplus can exist when the current price is equal to the equilibrium price.

-(Exhibit: The Determinants of Demand and Supply) The exhibit shows how supply and demand might shift in response to specific events. Suppose scientists discover that eating a tomato a day prevents aging. Which panel best describes how this will affect the market for tomatoes?

-(Exhibit: The Supply of Music downloads) A decrease in the number of websites supplying music downloads would result in a change illustrated by:

The Market for Chocolate-Covered Peanuts -(Exhibit: The Market for Chocolate-Covered Peanuts) If the price of chocolate-covered peanuts is 50 cents, there is:

If both the demand for a product and the supply of it increase, then the equilibrium quantity will ________ and the equilibrium price will ________.

A price below the equilibrium price will:

If economists say, "the price is too high," they mean that:

Economics: the Study of Choice

Applications of Demand and Supply

Macroeconomics: the Big Picture

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Economic Development

Socialist Economies in Transition

Filters

A decrease in demand, with no change in supply, will lead to in equilibrium quantity and in equilibrium price.

-(Exhibit: Simultaneous Shifts in Demand and Supply) D₁ and S₁ are original supply and demand curves, and S₂ and D₂ are new curves. In this market for a normal good:

-(Exhibit: Demand and Supply of Wheat) A price of will result in a , and a price of will result in a .

If both the demand for a product and the supply of it increase, then the equilibrium quantity will and the equilibrium price will .