Question 1

There will be a surplus of a product when:

Accepted Answer

A) price is below the equilibrium level. 
B) the supply curve is downward sloping and the demand curve is upward sloping. 
C) the demand and supply curves fail to intersect. 
D) consumers want to buy less than producers offer for sale. 
A) price is below the equilibrium level. 
B) the supply curve is downward sloping and the demand curve is upward sloping. 
C) the demand and supply curves fail to intersect. 
D) consumers want to buy less than producers offer for sale.

Question 2

When the price of one fruit increases, consumers buy more of another fruit.This situation is an illustration of:

Accepted Answer

A) the income effect. 
B) the substitution effect. 
C) diminishing marginal utility. 
D) the rationing function of prices. 
A) the income effect. 
B) the substitution effect. 
C) diminishing marginal utility. 
D) the rationing function of prices.

Question 3

A leftward shift of a product supply curve might be caused by:

Accepted Answer

A) an improvement in the relevant technique of production. 
B) a decline in the prices of needed inputs. 
C) an increase in consumer incomes. 
D) some firms leaving the industry. 
A) an improvement in the relevant technique of production. 
B) a decline in the prices of needed inputs. 
C) an increase in consumer incomes. 
D) some firms leaving the industry.

Question 4

If the price of K declines, the demand curve for the complementary product J will:

Accepted Answer

A) shift to the left. 
B) decrease. 
C) shift to the right. 
D) remain unchanged. 
A) shift to the left. 
B) decrease. 
C) shift to the right. 
D) remain unchanged.

Question 5

At the equilibrium price:

Accepted Answer

A) quantity supplied may exceed quantity demanded or vice versa. 
B) there are no pressures on price to either rise or fall. 
C) there are forces which cause price to rise. 
D) there are forces which cause price to fall. 
A) quantity supplied may exceed quantity demanded or vice versa. 
B) there are no pressures on price to either rise or fall. 
C) there are forces which cause price to rise. 
D) there are forces which cause price to fall.

Question 6

Which statement is not correct?

Accepted Answer

A) If demand increases and supply decreases, price will rise and the quantity exchanged may either rise or fall. 
B) If supply increases and demand decreases, price will fall and the quantity exchanged may either rise or fall. 
C) If supply declines and demand remains constant, price will rise and the quantity exchanged will rise. 
D) If demand and supply increase, the quantity exchanged will rise and price may either rise or fall. 
A) If demand increases and supply decreases, price will rise and the quantity exchanged may either rise or fall. 
B) If supply increases and demand decreases, price will fall and the quantity exchanged may either rise or fall. 
C) If supply declines and demand remains constant, price will rise and the quantity exchanged will rise. 
D) If demand and supply increase, the quantity exchanged will rise and price may either rise or fall.

Question 7

If an increase in consumer incomes causes the demand curve for product Z to shift to the left, then it can be said that product Z is a(n):

Accepted Answer

A) normal good. 
B) luxury good. 
C) inferior good. 
D) inexpensive good. 
A) normal good. 
B) luxury good. 
C) inferior good. 
D) inexpensive good.

Question 8

A newspaper reports that in an urban area the average price of new homes had decreased, but the number of new homes sold had increased.This situation would best be explained by a(n):

Accepted Answer

A) increase in demand. 
B) increase in supply. 
C) decrease in demand. 
D) decrease in supply. 
A) increase in demand. 
B) increase in supply. 
C) decrease in demand. 
D) decrease in supply.

Question 9

Which of the following will not cause the demand for product K to change?

Accepted Answer

A) a change in the price of close-substitute product J 
B) an increase in consumer incomes 
C) a change in the price of K 
D) a change in consumer tastes 
A) a change in the price of close-substitute product J 
B) an increase in consumer incomes 
C) a change in the price of K 
D) a change in consumer tastes

Question 10

If an economy produces its most wanted goods but uses outdated production methods, it is:

Accepted Answer

A) achieving productive efficiency, but not allocative efficiency. 
B) not achieving productive efficiency. 
C) achieving both productive and allocative efficiency. 
D) achieving the least-cost method of production. 
A) achieving productive efficiency, but not allocative efficiency. 
B) not achieving productive efficiency. 
C) achieving both productive and allocative efficiency. 
D) achieving the least-cost method of production.

Question 11

An increase in the price of a product will reduce the amount of it purchased because:

Accepted Answer

A) supply curves are upsloping. 
B) the higher price means that real incomes have risen. 
C) consumers will substitute other products for the one whose price has risen. 
D) consumers substitute relatively high-priced for relatively low-priced products. 
A) supply curves are upsloping. 
B) the higher price means that real incomes have risen. 
C) consumers will substitute other products for the one whose price has risen. 
D) consumers substitute relatively high-priced for relatively low-priced products.

Question 12

A television station reports that the price of coffee has increased but the quantity sold in the market has decreased.This situation would be caused by a(n):

Accepted Answer

A) increase in demand. 
B) increase in supply. 
C) decrease in demand. 
D) decrease in supply. 
A) increase in demand. 
B) increase in supply. 
C) decrease in demand. 
D) decrease in supply.

Question 13

Assume a drought in the Great Plains reduces the supply of wheat.Noting that wheat is a basic ingredient in the production of bread and that potatoes are a consumer substitute for bread, we would expect the price of wheat to:

Accepted Answer

A) rise, the supply of bread to increase, and the demand for potatoes to increase. 
B) rise, the supply of bread to decrease, and the demand for potatoes to increase. 
C) rise, the supply of bread to decrease, and the demand for potatoes to decrease. 
D) fall, the supply of bread to increase, and the demand for potatoes to increase. 
A) rise, the supply of bread to increase, and the demand for potatoes to increase. 
B) rise, the supply of bread to decrease, and the demand for potatoes to increase. 
C) rise, the supply of bread to decrease, and the demand for potatoes to decrease. 
D) fall, the supply of bread to increase, and the demand for potatoes to increase.

Question 14

We observe a market where the price has risen and the quantity being sold has declined.This could be caused by a(n):

Accepted Answer

A) increase in demand. 
B) increase in supply. 
C) decrease in demand. 
D) decrease in supply. 
A) increase in demand. 
B) increase in supply. 
C) decrease in demand. 
D) decrease in supply.

Question 15

If products C and D are close substitutes, an increase in the price of C will:

Accepted Answer

A) tend to cause the price of D to fall. 
B) shift the demand curve of C to the left and the demand curve of D to the right. 
C) shift the demand curve of D to the right. 
D) shift the demand curves of both products to the right. 
A) tend to cause the price of D to fall. 
B) shift the demand curve of C to the left and the demand curve of D to the right. 
C) shift the demand curve of D to the right. 
D) shift the demand curves of both products to the right.

Question 16

A normal good is one:

Accepted Answer

A) for which quantity demanded remains the same even as price increases. 
B) for which quantity supplied falls as price increases. 
C) for which demand increases when price decreases. 
D) for which demand increases when income increases. 
A) for which quantity demanded remains the same even as price increases. 
B) for which quantity supplied falls as price increases. 
C) for which demand increases when price decreases. 
D) for which demand increases when income increases.

Question 17

The table below shows three individual buyers' demand for wheat.Assume that there are three buyers in the market for wheat (data are hypothetical).   Refer to the table above.At a price of $6, the market demand for wheat is:

Accepted Answer

A) 17 bushels. 
B) 24 bushels. 
C) 37 bushels. 
D) 49 bushels. 
A) 17 bushels. 
B) 24 bushels. 
C) 37 bushels. 
D) 49 bushels.

Question 18

You are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product Xupon (1) the demand (D) for, or supply (S) of, X, (2) the equilibrium price (P) of X and (3) the equilibrium quantity (Q) of X.Refer to the above.Consumer expectations that the price of X will rise sharply in the future will:

Accepted Answer

A) increase S, increase P, and increase Q. 
B) increase D, increase P, and increase Q. 
C) decrease S, increase P, and increase Q. 
D) increase D, decrease P, and increase Q. 
A) increase S, increase P, and increase Q. 
B) increase D, increase P, and increase Q. 
C) decrease S, increase P, and increase Q. 
D) increase D, decrease P, and increase Q.

Question 19

Refer to the above diagram, which shows three demand curves for coffee.Which of the following would cause the change in the demand for coffee illustrated by the shift from D1 to D3?

Accepted Answer

A) a decrease in the price of tea 
B) an increase in consumer incomes 
C) a decrease in the price of sugar 
D) a technological improvement in the production of coffee 
A) a decrease in the price of tea 
B) an increase in consumer incomes 
C) a decrease in the price of sugar 
D) a technological improvement in the production of coffee

Question 20

Refer to the above diagram, which shows demand and supply conditions in the competitive market for product X.Given D0, if the supply curve moved from S0 to S1, then:

Accepted Answer

A) supply has increased and equilibrium quantity has decreased. 
B) supply has decreased and equilibrium quantity has decreased. 
C) there has been an increase in the quantity supplied. 
D) supply has increased and price has risen to 0G. 
A) supply has increased and equilibrium quantity has decreased. 
B) supply has decreased and equilibrium quantity has decreased. 
C) there has been an increase in the quantity supplied. 
D) supply has increased and price has risen to 0G.

Exam 3: B: Demand, Supply, and Market Equilibrium

There will be a surplus of a product when:

When the price of one fruit increases, consumers buy more of another fruit.This situation is an illustration of:

A leftward shift of a product supply curve might be caused by:

If the price of K declines, the demand curve for the complementary product J will:

At the equilibrium price:

Which statement is not correct?

If an increase in consumer incomes causes the demand curve for product Z to shift to the left, then it can be said that product Z is a(n):

A newspaper reports that in an urban area the average price of new homes had decreased, but the number of new homes sold had increased.This situation would best be explained by a(n):

Which of the following will not cause the demand for product K to change?

If an economy produces its most wanted goods but uses outdated production methods, it is:

An increase in the price of a product will reduce the amount of it purchased because:

A television station reports that the price of coffee has increased but the quantity sold in the market has decreased.This situation would be caused by a(n):

Assume a drought in the Great Plains reduces the supply of wheat.Noting that wheat is a basic ingredient in the production of bread and that potatoes are a consumer substitute for bread, we would expect the price of wheat to:

We observe a market where the price has risen and the quantity being sold has declined.This could be caused by a(n):

If products C and D are close substitutes, an increase in the price of C will:

A normal good is one:

The table below shows three individual buyers' demand for wheat.Assume that there are three buyers in the market for wheat (data are hypothetical). Refer to the table above.At a price of $6, the market demand for wheat is:

Refer to the above diagram, which shows three demand curves for coffee.Which of the following would cause the change in the demand for coffee illustrated by the shift from D1 to D3?

Refer to the above diagram, which shows demand and supply conditions in the competitive market for product X.Given D0, if the supply curve moved from S0 to S1, then:

B: Limits, Alternatives, and Choices

A: - Limits, Alternatives, and Choices

B: The Market System and the Circular Flow

A: - The Market System and the Circular Flow

A: - Demand, Supply, and Market Equilibrium

B: Market Failures: Public Goods and Externalities

A: - Market Failures: Public Goods and Externalities

B: Governments Role and Government Failure

A: Governments Role and Government Failure

B: an Introduction to Macroeconomics

A: an Introduction to Macroeconomics

B: Measuring the Economys Output

A: Measuring the Economys Output

B: Economic Growth

A: Economic Growth

B: Business Cycles, Unemployment, and Inflation

A: Business Cycles, Unemployment, and Inflation

B: Basic Macroeconomic Relationships

A: Basic Macroeconomic Relationships

B: The Aggregate Expenditures Model

A: The Aggregate Expenditures Model

B: Aggregate Demand and Aggregate Supply

A: Aggregate Demand and Aggregate Supply

B: Fiscal Policy, Deficits, Surpluses, and Debt

A: Fiscal Policy, Deficits, Surpluses, and Debt

B: Money, Banking, and Money Creation

A: Money, Banking, and Money Creation

B: Interest Rates and Monetary Policy

A: Interest Rates and Monetary Policy

C: Financial Economics

A: Long-Run Macroeconomic Adjustments

B: Long-Run Macroeconomic Adjustments

A: International Trade

B: International Trade

A: The Balance of Payments and Exchange Rates

B: The Balance of Payments and Exchange Rates

The Economics of Developing Countries

Filters

Refer to the above diagram, which shows three demand curves for coffee.Which of the following would cause the change in the demand for coffee illustrated by the shift from D₁ to D₃?

Refer to the above diagram, which shows demand and supply conditions in the competitive market for product X.Given D₀, if the supply curve moved from S₀ to S₁, then: