Question 1

A change in supply will not be caused by a(n)

Accepted Answer

A) change in the price producers believe will prevail in the future. 
B) change in the price of inputs. 
C) change in the number of producers. 
D) increase in the number of consumers. 
E) improvement in technology. 
A) change in the price producers believe will prevail in the future. 
B) change in the price of inputs. 
C) change in the number of producers. 
D) increase in the number of consumers. 
E) improvement in technology.

Question 2

A shortage occurs when quantity demanded exceeds quantity supplied.

Accepted Answer

A) True 
 B)False

Question 3

According to the law of demand, the price of a product increases when the quantity demanded increases.

Accepted Answer

A) True 
 B)False

Question 4

The law of demand is violated when the demand for a product is high at a high price.

Accepted Answer

A) True 
 B)False

Question 5

If the price of product A falls and this causes the demand for product B to shift to the right, then we can conclude A and B are

Accepted Answer

A) normal. 
B) inferior. 
C) complements. 
D) substitutes. 
E) not related. 
A) normal. 
B) inferior. 
C) complements. 
D) substitutes. 
E) not related.

Question 6

Which of the following statements is false?

Accepted Answer

A) The supply and demand model serves to illustrate market behavior. 
B) Supply and demand must be combined for either to be useful in explaining and predicting market behavior. 
C) Supply illustrates the behavior of firms in a market. 
D) Demand illustrates the behavior of consumers in a market. 
E) Market equilibrium is not an important element of the supply and demand model. 
A) The supply and demand model serves to illustrate market behavior. 
B) Supply and demand must be combined for either to be useful in explaining and predicting market behavior. 
C) Supply illustrates the behavior of firms in a market. 
D) Demand illustrates the behavior of consumers in a market. 
E) Market equilibrium is not an important element of the supply and demand model.

Question 7

A demand curve is always flat.

Accepted Answer

A) True 
 B)False

Question 8

According to the law of demand, one way to reduce the amount of tobacco consumption is to

Accepted Answer

A) lower the price of tobacco. 
B) raise the price of tobacco. 
C) subsidize users of tobacco. 
D) subsidize treatments of diseases related to tobacco consumption. 
E) make tobacco consumption illegal. 
A) lower the price of tobacco. 
B) raise the price of tobacco. 
C) subsidize users of tobacco. 
D) subsidize treatments of diseases related to tobacco consumption. 
E) make tobacco consumption illegal.

Question 9

Using the supply and demand diagrams (one for each market), show what short-run changes in price and quantity would be expected in the following markets if worries about weight gain from fat consumption cause consumers to reduce the demand for ice cream. Each graph should contain the original and new demand and supply curves, and the original and new equilibrium prices and quantities. For each market, write one sentence explaining why each curve shifts or does not shift.

Accepted Answer

The answer of Using the supply and demand diagrams (one...

Question 10

Suppose you observe that fares per trip for the Uber share-riding service increased when more commuters called the Uber service. Which of the following is the best possible explanation?

Accepted Answer

A) The law of demand was violated. 
B) The law of supply was violated. 
C) The price of gasoline went up. 
D) People were irrational. 
E) Commuters did not have any choice. 
A) The law of demand was violated. 
B) The law of supply was violated. 
C) The price of gasoline went up. 
D) People were irrational. 
E) Commuters did not have any choice.

Question 11

If the price of ice cream decreases, then the

Accepted Answer

A) quantity demanded for ice cream will increase. 
B) demand for ice cream will decrease. 
C) demand for ice cream will increase. 
D) quantity demanded for ice cream will decrease. 
E) supply of ice cream will decrease. 
A) quantity demanded for ice cream will increase. 
B) demand for ice cream will decrease. 
C) demand for ice cream will increase. 
D) quantity demanded for ice cream will decrease. 
E) supply of ice cream will decrease.

Question 12

The law of demand is represented by

Accepted Answer

A) the positive slope of the demand curve. 
B) the negative slope of the demand curve. 
C) a shift of the demand curve to the right when price increases. 
D) a shift of the demand curve to the left when price decreases. 
E) a shift of the demand curve when income changes. 
A) the positive slope of the demand curve. 
B) the negative slope of the demand curve. 
C) a shift of the demand curve to the right when price increases. 
D) a shift of the demand curve to the left when price decreases. 
E) a shift of the demand curve when income changes.

Question 13

Which of the following is not an element of the supply and demand model?

Accepted Answer

A) Price 
B) Inputs 
C) Market 
D) Equilibrium 
E) Quantity 
A) Price 
B) Inputs 
C) Market 
D) Equilibrium 
E) Quantity

Question 14

Shifts in both the supply of and the demand for oil can explain the observation of an increase in gasoline prices.

Accepted Answer

A) True 
 B)False

Question 15

A surplus occurs when there is excess supply.

Accepted Answer

A) True 
 B)False

Question 16

Why is the word equilibrium used to describe the price determined by supply and demand in a market?

Accepted Answer

Equilibrium is a general term

Question 17

Exhibit 3-1  
-Consider the market represented by the schedule in Exhibit 3-1. At equilibrium,

Accepted Answer

A) there is a surplus of 500 units. 
B) there is a shortage of 500 units. 
C) the market price is $4 per unit. 
D) the market price is $1 per unit and the quantity traded is 100 units. 
E) 500 units are traded at a price of $3 per unit. 
A) there is a surplus of 500 units. 
B) there is a shortage of 500 units. 
C) the market price is $4 per unit. 
D) the market price is $1 per unit and the quantity traded is 100 units. 
E) 500 units are traded at a price of $3 per unit.

Question 18

A higher price leads to a leftward shift of the demand curve.

Accepted Answer

A) True 
 B)False

Question 19

Suppose it becomes a common belief among consumers that the current cotton crop falls because of a drought, the price of cotton clothing will rise greatly next year. Then in the current market for cotton clothing, the

Accepted Answer

A) equilibrium price will fall and the equilibrium quantity will rise. 
B) equilibrium price and equilibrium quantity will increase as demand increases. 
C) equilibrium price and equilibrium quantity will decrease as demand increases. 
D) demand for cotton clothing will decrease as consumers search for alternatives. 
E) equilibrium price will rise and the equilibrium quantity will fall. 
A) equilibrium price will fall and the equilibrium quantity will rise. 
B) equilibrium price and equilibrium quantity will increase as demand increases. 
C) equilibrium price and equilibrium quantity will decrease as demand increases. 
D) demand for cotton clothing will decrease as consumers search for alternatives. 
E) equilibrium price will rise and the equilibrium quantity will fall.

Question 20

The demand curve for a particular good shifts when any factor other than the price of that good changes.

Accepted Answer

A) True 
 B)False

Exam 3: The Supply and Demand Model

A change in supply will not be caused by a(n)

A shortage occurs when quantity demanded exceeds quantity supplied.

According to the law of demand, the price of a product increases when the quantity demanded increases.

The law of demand is violated when the demand for a product is high at a high price.

If the price of product A falls and this causes the demand for product B to shift to the right, then we can conclude A and B are

Which of the following statements is false?

A demand curve is always flat.

According to the law of demand, one way to reduce the amount of tobacco consumption is to

Suppose you observe that fares per trip for the Uber share-riding service increased when more commuters called the Uber service. Which of the following is the best possible explanation?

If the price of ice cream decreases, then the

The law of demand is represented by

Which of the following is not an element of the supply and demand model?

Shifts in both the supply of and the demand for oil can explain the observation of an increase in gasoline prices.

A surplus occurs when there is excess supply.

Why is the word equilibrium used to describe the price determined by supply and demand in a market?

Exhibit 3-1 -Consider the market represented by the schedule in Exhibit 3-1. At equilibrium,

A higher price leads to a leftward shift of the demand curve.

Suppose it becomes a common belief among consumers that the current cotton crop falls because of a drought, the price of cotton clothing will rise greatly next year. Then in the current market for cotton clothing, the

The demand curve for a particular good shifts when any factor other than the price of that good changes.

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

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