Question 1

The U.S. surgeon general warns that animal fat in the diet poses a health risk. With the discovery that longhorn beef cattle have little body fat, you would expect

Accepted Answer

A) ranchers to be more willing to produce longhorn cattle as the price rises. 
B) the number of longhorn cattle to dwindle as they are slaughtered. 
C) the price of longhorn beef to fall as it becomes more popular. 
D) it will become increasingly difficult to obtain longhorn beef. 
E) little in the beef market to change. 
A) ranchers to be more willing to produce longhorn cattle as the price rises. 
B) the number of longhorn cattle to dwindle as they are slaughtered. 
C) the price of longhorn beef to fall as it becomes more popular. 
D) it will become increasingly difficult to obtain longhorn beef. 
E) little in the beef market to change.

Question 2

Exhibit 3-1  
-Consider the market represented by the schedule in Exhibit 3-1. At a price of $2 per unit,

Accepted Answer

A) the quantity purchased is 1,000 units. 
B) there will be a tendency for the price to decrease. 
C) there is a surplus of 300 units. 
D) the quantity sold is 350 units. 
E) the quantity purchased equals the quantity sold. 
A) the quantity purchased is 1,000 units. 
B) there will be a tendency for the price to decrease. 
C) there is a surplus of 300 units. 
D) the quantity sold is 350 units. 
E) the quantity purchased equals the quantity sold.

Question 3

An increase in production costs shifts the supply curve leftward.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following will not increase the demand for a good?

Accepted Answer

A) An expectation of a decline in the product price in the future 
B) The product price falls, ceteris paribus. 
C) An increase in the price of a substitute 
D) A decrease in the price of a complement 
E) A foreign country opens its markets to imports from others. 
A) An expectation of a decline in the product price in the future 
B) The product price falls, ceteris paribus. 
C) An increase in the price of a substitute 
D) A decrease in the price of a complement 
E) A foreign country opens its markets to imports from others.

Question 5

Plastic bags are made from petroleum. Why does an increase in gasoline consumption, which is another product made from petroleum, raise the price of plastic bags? Use the supply and demand model to explain your answer.

Accepted Answer

An increase in gasoline consum

Question 6

Draw a supply and demand diagram. Label the equilibrium price and equilibrium quantity as well as the axes and curves.

Accepted Answer

P^e = equili

Question 7

Draw a supply and demand diagram with supply and demand both increasing and market equilibrium price increasing as well.

Accepted Answer

The answer of Draw a supply and demand diagram with...

Question 8

What is the difference between a decrease in demand and a decrease in quantity demanded?

Accepted Answer

A decrease in demand is a shif

Question 9

At the equilibrium price, there is no pressure on price to rise or fall.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is the most likely reason for the increase in the price of roses on Valentine's Day?

Accepted Answer

A) An increase in the supply of roses 
B) An increase in the demand for roses 
C) The expectation of an increase in the price of roses after Valentine's Day 
D) A decrease in consumer income 
E) An increase in the prices of other flowers 
A) An increase in the supply of roses 
B) An increase in the demand for roses 
C) The expectation of an increase in the price of roses after Valentine's Day 
D) A decrease in consumer income 
E) An increase in the prices of other flowers

Question 11

A market equilibrium predicts both the price and quantity bought and sold in a market.

Accepted Answer

A) True 
 B)False

Question 12

The law of supply states that

Accepted Answer

A) price and quantity supplied are inversely related. 
B) price and supply are positively related. 
C) the higher the price, the smaller the quantity that will be sold. 
D) price and quantity supplied are positively related. 
E) price and quantity demanded are inversely related. 
A) price and quantity supplied are inversely related. 
B) price and supply are positively related. 
C) the higher the price, the smaller the quantity that will be sold. 
D) price and quantity supplied are positively related. 
E) price and quantity demanded are inversely related.

Question 13

According to the law of supply, if the price of personal computers increased, ceteris paribus,

Accepted Answer

A) the quantity supplied of personal computers would not change. 
B) the quantity supplied of personal computers would decrease. 
C) the supply of personal computers would decrease. 
D) the quantity supplied of personal computers would increase. 
E) the supply of personal computers would increase. 
A) the quantity supplied of personal computers would not change. 
B) the quantity supplied of personal computers would decrease. 
C) the supply of personal computers would decrease. 
D) the quantity supplied of personal computers would increase. 
E) the supply of personal computers would increase.

Question 14

An increase in consumer income causes a movement up along the demand curve.

Accepted Answer

A) True 
 B)False

Question 15

In the case of a surplus,

Accepted Answer

A) there is no market adjustment because buyers can purchase what they want. 
B) the quantity supplied exceeds the quantity demanded at the current price level. 
C) producer incomes will fall and production will rise in order to make up for the shortfall. 
D) market price will rise. 
E) the quantity demanded exceeds the quantity supplied at the current price level. 
A) there is no market adjustment because buyers can purchase what they want. 
B) the quantity supplied exceeds the quantity demanded at the current price level. 
C) producer incomes will fall and production will rise in order to make up for the shortfall. 
D) market price will rise. 
E) the quantity demanded exceeds the quantity supplied at the current price level.

Question 16

Suppose a war in the Middle East destroys many oil fields. This will cause a(n)

Accepted Answer

A) redistribution of income from the rich to the poor. 
B) increase in the quantity of oil traded. 
C) increase in oil prices. 
D) decrease in the demand for oil. 
E) increase in the supply of oil. 
A) redistribution of income from the rich to the poor. 
B) increase in the quantity of oil traded. 
C) increase in oil prices. 
D) decrease in the demand for oil. 
E) increase in the supply of oil.

Question 17

An increase in demand is graphically illustrated by

Accepted Answer

A) a shift of the demand curve to the right. 
B) a shift of the demand curve to the left. 
C) an upward movement along the demand curve. 
D) a downward movement along the demand curve. 
E) both a shift and an upward movement along the demand curve. 
A) a shift of the demand curve to the right. 
B) a shift of the demand curve to the left. 
C) an upward movement along the demand curve. 
D) a downward movement along the demand curve. 
E) both a shift and an upward movement along the demand curve.

Question 18

Exhibit 3-4  
-Refer to Exhibit 3-4. If S1 and D1 are the original supply and demand curves and, ceteris paribus, demand shifts to D2,

Accepted Answer

A) the quantity supplied increases from Q3 to Q4. 
B) the quantity supplied increases from Q2 to Q3. 
C) supply decreases from Q3 to Q2. 
D) the quantity supplied increases from Q2 to Q4. 
E) the quantity demanded increases from Q3 to Q2. 
A) the quantity supplied increases from Q3 to Q4. 
B) the quantity supplied increases from Q2 to Q3. 
C) supply decreases from Q3 to Q2. 
D) the quantity supplied increases from Q2 to Q4. 
E) the quantity demanded increases from Q3 to Q2.

Question 19

When a surplus exists in a market, the actual price will begin to decrease.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following causes a leftward shift of the supply curve?

Accepted Answer

A) An increase in the number of producers 
B) An increase in the cost of production 
C) A government subsidy on production 
D) An increase in the price of the good being sold 
E) An improvement in production technology 
A) An increase in the number of producers 
B) An increase in the cost of production 
C) A government subsidy on production 
D) An increase in the price of the good being sold 
E) An improvement in production technology

Exam 3: The Supply and Demand Model

The U.S. surgeon general warns that animal fat in the diet poses a health risk. With the discovery that longhorn beef cattle have little body fat, you would expect

Exhibit 3-1 -Consider the market represented by the schedule in Exhibit 3-1. At a price of $2 per unit,

An increase in production costs shifts the supply curve leftward.

Which of the following will not increase the demand for a good?

Plastic bags are made from petroleum. Why does an increase in gasoline consumption, which is another product made from petroleum, raise the price of plastic bags? Use the supply and demand model to explain your answer.

Draw a supply and demand diagram. Label the equilibrium price and equilibrium quantity as well as the axes and curves.

Draw a supply and demand diagram with supply and demand both increasing and market equilibrium price increasing as well.

What is the difference between a decrease in demand and a decrease in quantity demanded?

At the equilibrium price, there is no pressure on price to rise or fall.

Which of the following is the most likely reason for the increase in the price of roses on Valentine's Day?

A market equilibrium predicts both the price and quantity bought and sold in a market.

The law of supply states that

According to the law of supply, if the price of personal computers increased, ceteris paribus,

An increase in consumer income causes a movement up along the demand curve.

In the case of a surplus,

Suppose a war in the Middle East destroys many oil fields. This will cause a(n)

An increase in demand is graphically illustrated by

Exhibit 3-4 -Refer to Exhibit 3-4. If S1 and D1 are the original supply and demand curves and, ceteris paribus, demand shifts to D2,

When a surplus exists in a market, the actual price will begin to decrease.

Which of the following causes a leftward shift of the supply curve?

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 S₁ and D₁ are the original supply and demand curves and, ceteris paribus, demand shifts to D₂,