Question 1

The positive relationship between price and quantity supplied, other things being equal, is considered to be

Accepted Answer

A) universally true for all markets. 
B) never true in heavily regulated markets. 
C) sometimes true in all markets. 
D) true only in market-based economies. 
E) true only when consumers act irrationally. 
A) universally true for all markets. 
B) never true in heavily regulated markets. 
C) sometimes true in all markets. 
D) true only in market-based economies. 
E) true only when consumers act irrationally.

Question 2

A demand schedule is a table of prices and

Accepted Answer

A) minimum quantities people have purchased at each price. 
B) quantities people are able to purchase at each price. 
C) quantities people are willing to buy at each price. 
D) quantities people have purchased at each price. 
E) quantities people are willing to produce at each price. 
A) minimum quantities people have purchased at each price. 
B) quantities people are able to purchase at each price. 
C) quantities people are willing to buy at each price. 
D) quantities people have purchased at each price. 
E) quantities people are willing to produce at each price.

Question 3

Suppose consumer incomes increase, and we are looking at a market for a normal good. What will happen to demand, quantity demanded, supply, and quantity supplied as a result of this market change?

Accepted Answer

Demand increases, but supply d

Question 4

Exhibit 3-4  
-Refer to Exhibit 3-4. If S2 and D2 are the original supply and demand curves and, ceteris paribus, supply shifts to S1,

Accepted Answer

A) the quantity demanded decreases from Q4 to Q2. 
B) supply decreases. 
C) the quantity demanded increases from Q2 to Q4. 
D) the quantity supplied increases from Q3 to Q4. 
E) the equilibrium price falls from P2 to P1. 
A) the quantity demanded decreases from Q4 to Q2. 
B) supply decreases. 
C) the quantity demanded increases from Q2 to Q4. 
D) the quantity supplied increases from Q3 to Q4. 
E) the equilibrium price falls from P2 to P1.

Question 5

A demand curve represents the relationship between consumer income and the quantity demanded.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following will increase the demand for a normal good?

Accepted Answer

A) A decrease in the number of consumers 
B) A decrease in the price of a substitute 
C) An increase in consumer income 
D) An increase in the price of a complement 
E) An increase in the demand for a substitute 
A) A decrease in the number of consumers 
B) A decrease in the price of a substitute 
C) An increase in consumer income 
D) An increase in the price of a complement 
E) An increase in the demand for a substitute

Question 7

According to the law of demand, when the price of a Gucci handbag increases, the quantity demanded for these goods will also increase because the goods have become more prestigious.

Accepted Answer

A) True 
 B)False

Question 8

Equilibrium prices are determined by

Accepted Answer

A) supply alone. 
B) demand alone. 
C) both supply and demand. 
D) the government. 
E) nothing at all. 
A) supply alone. 
B) demand alone. 
C) both supply and demand. 
D) the government. 
E) nothing at all.

Question 9

The law of demand states that, as the price of a product increases, consumers

Accepted Answer

A) buy more of that product. 
B) buy less of that product. 
C) buy more of other related products. 
D) buy less of other related products. 
E) may buy more or less of that product. 
A) buy more of that product. 
B) buy less of that product. 
C) buy more of other related products. 
D) buy less of other related products. 
E) may buy more or less of that product.

Question 10

Which of the following is not held constant when constructing a demand curve for good A?

Accepted Answer

A) Price of good A 
B) Consumer tastes 
C) Prices of other goods 
D) Consumer expectations 
E) Consumer income 
A) Price of good A 
B) Consumer tastes 
C) Prices of other goods 
D) Consumer expectations 
E) Consumer income

Question 11

The demand for apples shifts rightward when consumers react to a lower apple price by buying more.

Accepted Answer

A) True 
 B)False

Question 12

The relationship between price and quantity demanded, other things being equal, is

Accepted Answer

A) negative in some markets but positive in other markets. 
B) negative in markets without government intervention but positive in markets with government intervention. 
C) always negative in any market. 
D) positive in markets without government intervention but negative in markets with government intervention. 
E) always positive in any market. 
A) negative in some markets but positive in other markets. 
B) negative in markets without government intervention but positive in markets with government intervention. 
C) always negative in any market. 
D) positive in markets without government intervention but negative in markets with government intervention. 
E) always positive in any market.

Question 13

Which of the following will not cause the supply of internet service to increase?

Accepted Answer

A) A reduction in the number of internet service companies 
B) A reduction in space shuttle fees to launch telecommunications satellites 
C) A decrease in the price of computer electronics used to access the internet 
D) A decrease in the number of government regulations on internet services 
E) A reduction in the price of fiber-optic cables over which the internet is accessed 
A) A reduction in the number of internet service companies 
B) A reduction in space shuttle fees to launch telecommunications satellites 
C) A decrease in the price of computer electronics used to access the internet 
D) A decrease in the number of government regulations on internet services 
E) A reduction in the price of fiber-optic cables over which the internet is accessed

Question 14

List four factors that affect willingness to sell and that shift the supply curve.

Accepted Answer

Technology, input pr

Question 15

If a technological improvement took place in the computer industry, we would expect to see the equilibrium price of computers to

Accepted Answer

A) increase and the quantity of computers sold to decrease. 
B) decrease and the quantity of computers sold to increase. 
C) decrease and the quantity of computers sold to decrease. 
D) increase and the quantity of computers sold to increase. 
E) increase and the quantity of computers sold to stay the same. 
A) increase and the quantity of computers sold to decrease. 
B) decrease and the quantity of computers sold to increase. 
C) decrease and the quantity of computers sold to decrease. 
D) increase and the quantity of computers sold to increase. 
E) increase and the quantity of computers sold to stay the same.

Question 16

More iPhones are being sold today than one year ago, and the selling price of iPhones has increased. This could have been caused by a(n)

Accepted Answer

A) increase in demand. 
B) decrease in supply. 
C) decrease in demand. 
D) increase in supply. 
E) exception to the law of demand. 
A) increase in demand. 
B) decrease in supply. 
C) decrease in demand. 
D) increase in supply. 
E) exception to the law of demand.

Question 17

If the equilibrium quantity decreases while the equilibrium price increases, which of the following is the most likely reason?

Accepted Answer

A) Supply increases while demand decreases. 
B) Supply increases while demand does not change. 
C) Both supply and demand increase. 
D) Both supply and demand decrease. 
E) Neither supply nor demand changes. 
A) Supply increases while demand decreases. 
B) Supply increases while demand does not change. 
C) Both supply and demand increase. 
D) Both supply and demand decrease. 
E) Neither supply nor demand changes.

Question 18

Why does the law of demand hold?

Accepted Answer

First, when price rises, a consumer's sp

Question 19

A government energy policy that focuses on new technologies for conservation and new sources of energy would result in

Accepted Answer

A) an increase in both the supply of and the demand for gasoline. 
B) a decrease in both the supply of and the demand for gasoline. 
C) an increase in the supply of gasoline along with a decrease in the demand for gasoline. 
D) a decrease in the supply of gasoline along with an increase in the demand for gasoline. 
E) no change in either the supply of or the demand for gasoline. 
A) an increase in both the supply of and the demand for gasoline. 
B) a decrease in both the supply of and the demand for gasoline. 
C) an increase in the supply of gasoline along with a decrease in the demand for gasoline. 
D) a decrease in the supply of gasoline along with an increase in the demand for gasoline. 
E) no change in either the supply of or the demand for gasoline.

Question 20

Suppose more firms enter the computer market. What will happen to demand, quantity demanded, supply, and quantity supplied as a result of this market change?

Accepted Answer

Supply increases but demand do

Exam 3: The Supply and Demand Model

The positive relationship between price and quantity supplied, other things being equal, is considered to be

A demand schedule is a table of prices and

Suppose consumer incomes increase, and we are looking at a market for a normal good. What will happen to demand, quantity demanded, supply, and quantity supplied as a result of this market change?

Exhibit 3-4 -Refer to Exhibit 3-4. If S2 and D2 are the original supply and demand curves and, ceteris paribus, supply shifts to S1,

A demand curve represents the relationship between consumer income and the quantity demanded.

Which of the following will increase the demand for a normal good?

According to the law of demand, when the price of a Gucci handbag increases, the quantity demanded for these goods will also increase because the goods have become more prestigious.

Equilibrium prices are determined by

The law of demand states that, as the price of a product increases, consumers

Which of the following is not held constant when constructing a demand curve for good A?

The demand for apples shifts rightward when consumers react to a lower apple price by buying more.

The relationship between price and quantity demanded, other things being equal, is

Which of the following will not cause the supply of internet service to increase?

List four factors that affect willingness to sell and that shift the supply curve.

If a technological improvement took place in the computer industry, we would expect to see the equilibrium price of computers to

More iPhones are being sold today than one year ago, and the selling price of iPhones has increased. This could have been caused by a(n)

If the equilibrium quantity decreases while the equilibrium price increases, which of the following is the most likely reason?

Why does the law of demand hold?

A government energy policy that focuses on new technologies for conservation and new sources of energy would result in

Suppose more firms enter the computer market. What will happen to demand, quantity demanded, supply, and quantity supplied as a result of this market change?

The Central Idea

Observing and Explaining the Economy

Subtleties of the Supply and Demand Model

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Efficiency of Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth Around the World

International Trade

International Finance

Filters

Exhibit 3-4 -Refer to Exhibit 3-4. If S₂ and D₂ are the original supply and demand curves and, ceteris paribus, supply shifts to S₁,