Question 1

The law of supply states that the quantity supplied of a good is positively related to the price of that good.

Accepted Answer

A) True 
 B)False

Question 2

Exhibit 3-2  
-In the market represented in Exhibit 3-2, if price rises from $.70 to $.80 as a result of government mandate, then

Accepted Answer

A) a surplus of 30 units will occur. 
B) producers will not be able to sell all they are willing to produce. 
C) consumers would like to buy more than will be produced. 
D) a shortage of 15 units will occur. 
E) a new market equilibrium quantity of 25 units will result. 
A) a surplus of 30 units will occur. 
B) producers will not be able to sell all they are willing to produce. 
C) consumers would like to buy more than will be produced. 
D) a shortage of 15 units will occur. 
E) a new market equilibrium quantity of 25 units will result.

Question 3

Which of the following will not cause the demand for ice cream to change?

Accepted Answer

A) A change in population size 
B) A change in the price of ice cream 
C) A change in consumer incomes 
D) A change in the price of yogurt 
E) A change in seasons 
A) A change in population size 
B) A change in the price of ice cream 
C) A change in consumer incomes 
D) A change in the price of yogurt 
E) A change in seasons

Question 4

If quantity supplied is less than quantity demanded, then

Accepted Answer

A) there is a shortage in the market. 
B) prices will fall. 
C) equilibrium has been achieved. 
D) consumer incomes will increase. 
E) there is a surplus in the market. 
A) there is a shortage in the market. 
B) prices will fall. 
C) equilibrium has been achieved. 
D) consumer incomes will increase. 
E) there is a surplus in the market.

Question 5

An increase in the minimum wage will not affect the supply of hamburgers sold by McDonald's, which hires workers mostly at the minimum wage rate.

Accepted Answer

A) True 
 B)False

Question 6

The principle that producers sell more of a good or service when the price increases, all else held equal, is called the law of

Accepted Answer

A) increasing profit. 
B) supply. 
C) demand. 
D) opportunity cost. 
E) reduced real income. 
A) increasing profit. 
B) supply. 
C) demand. 
D) opportunity cost. 
E) reduced real income.

Question 7

When consumers expect the price of a good to go down in the future, demand will

Accepted Answer

A) decrease in the future. 
B) decrease today. 
C) increase in the future. 
D) not change. 
E) increase today. 
A) decrease in the future. 
B) decrease today. 
C) increase in the future. 
D) not change. 
E) increase today.

Question 8

Which of the following is not held constant when constructing a supply curve for good X?

Accepted Answer

A) Number of firms producing good X 
B) Price of inputs 
C) Price of good X 
D) Producer expectations 
E) Production technology 
A) Number of firms producing good X 
B) Price of inputs 
C) Price of good X 
D) Producer expectations 
E) Production technology

Question 9

If goods X and Y are substitutes, then the demand for good X increases when the price of good Y decreases.

Accepted Answer

A) True 
 B)False

Question 10

What is the underlying cause of the law of supply?

Accepted Answer

The incentive to pro

Question 11

Which of the following statements is true?

Accepted Answer

A) An increase in quantity demanded means a movement along a given demand curve. 
B) An increase in demand means a movement along a given demand curve. 
C) An increase in demand means that consumers will purchase less of a product at each possible price. 
D) Price and quantity demanded are positively related. 
E) An increase in demand always means the same as an increase in quantity demanded. 
A) An increase in quantity demanded means a movement along a given demand curve. 
B) An increase in demand means a movement along a given demand curve. 
C) An increase in demand means that consumers will purchase less of a product at each possible price. 
D) Price and quantity demanded are positively related. 
E) An increase in demand always means the same as an increase in quantity demanded.

Question 12

Exhibit 3-5
  
-Suppose that the price of bananas has been rising while the amount sold has been falling. Which of the following is the best explanation?

Accepted Answer

The best explanation is (C) because a re

Question 13

When supply shifts right and demand shifts left at the same time, the equilibrium market price drops.

Accepted Answer

A) True 
 B)False

Question 14

A rightward shift of a supply curve represents an increase in supply.

Accepted Answer

A) True 
 B)False

Question 15

What is the principle that explains the relationship between price and quantity demanded?

Accepted Answer

The answer of What is the principle that explains the...

Question 16

Use the supply and demand model to explain what happens to the equilibrium price and the equilibrium quantity for pasta in the following cases:

Accepted Answer

The answer of Use the supply and demand model to...

Question 17

The term quantity demanded refers to

Accepted Answer

A) that point where the supply and demand curves cross. 
B) the amount of a good consumers are willing to buy at a given price. 
C) a particular demand schedule. 
D) the entire demand curve. 
E) the amount of a good people must forcibly demand from a producer in order to survive. 
A) that point where the supply and demand curves cross. 
B) the amount of a good consumers are willing to buy at a given price. 
C) a particular demand schedule. 
D) the entire demand curve. 
E) the amount of a good people must forcibly demand from a producer in order to survive.

Question 18

An increase in supply and demand at the same time will always result in a higher equilibrium market price.

Accepted Answer

A) True 
 B)False

Question 19

All else held equal, if the price of sirloin steak increases from $4.25 to $8.60 per pound, a greater quantity of sirloin steak will be supplied.

Accepted Answer

A) True 
 B)False

Question 20

Each supply and demand model consists of all the following three elements:

Accepted Answer

A) math, geometry, and equations. 
B) supply, demand, and production possibilities. 
C) inputs, outputs, and production. 
D) technology, profit maximization, and government regulation. 
E) price, quantity, and equilibrium. 
A) math, geometry, and equations. 
B) supply, demand, and production possibilities. 
C) inputs, outputs, and production. 
D) technology, profit maximization, and government regulation. 
E) price, quantity, and equilibrium.

Exam 3: The Supply and Demand Model

The law of supply states that the quantity supplied of a good is positively related to the price of that good.

Exhibit 3-2 -In the market represented in Exhibit 3-2, if price rises from $.70 to $.80 as a result of government mandate, then

Which of the following will not cause the demand for ice cream to change?

If quantity supplied is less than quantity demanded, then

An increase in the minimum wage will not affect the supply of hamburgers sold by McDonald's, which hires workers mostly at the minimum wage rate.

The principle that producers sell more of a good or service when the price increases, all else held equal, is called the law of

When consumers expect the price of a good to go down in the future, demand will

Which of the following is not held constant when constructing a supply curve for good X?

If goods X and Y are substitutes, then the demand for good X increases when the price of good Y decreases.

What is the underlying cause of the law of supply?

Which of the following statements is true?

Exhibit 3-5 -Suppose that the price of bananas has been rising while the amount sold has been falling. Which of the following is the best explanation?

When supply shifts right and demand shifts left at the same time, the equilibrium market price drops.

A rightward shift of a supply curve represents an increase in supply.

What is the principle that explains the relationship between price and quantity demanded?

Use the supply and demand model to explain what happens to the equilibrium price and the equilibrium quantity for pasta in the following cases:

The term quantity demanded refers to

An increase in supply and demand at the same time will always result in a higher equilibrium market price.

All else held equal, if the price of sirloin steak increases from $4.25 to $8.60 per pound, a greater quantity of sirloin steak will be supplied.

Each supply and demand model consists of all the following three elements:

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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