Question 1

Refer to the above graph.X and Y are unrelated products.Which one of the lines in the graph best illustrates this relationship?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 2

Refer to the diagram illustrating the market for corn.If the price in this market were to be fixed at $4 per bushel, the part of the line marked A would represent a:

Accepted Answer

A) surplus of 8,000 bushels. 
B) shortage of 8,000 bushels. 
C) surplus of 7,000 bushels. 
D) shortage of 7,000 bushels. 
A) surplus of 8,000 bushels. 
B) shortage of 8,000 bushels. 
C) surplus of 7,000 bushels. 
D) shortage of 7,000 bushels.

Question 3

Refer to the above graph.X and Y are substitute products.Which one of the lines in the graph best illustrates this relationship?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 4

A shift to the right in the demand curve for product A can be most reasonably explained by saying that:

Accepted Answer

A) consumer incomes have declined and they now want to buy less of A at each possible price. 
B) the price of A has increased and, as a result, consumers want to purchase less of it. 
C) consumer preferences have changed in favour of A so that they now want to buy more at each possible price. 
D) the price of A has declined and, as a result, consumers want to purchase more of it. 
A) consumer incomes have declined and they now want to buy less of A at each possible price. 
B) the price of A has increased and, as a result, consumers want to purchase less of it. 
C) consumer preferences have changed in favour of A so that they now want to buy more at each possible price. 
D) the price of A has declined and, as a result, consumers want to purchase more of it.

Question 5

An inferior good is:

Accepted Answer

A) one whose demand curve will shift rightward as incomes rise. 
B) one whose price and quantity demanded varies directly. 
C) one which has not been approved by the federal Ministry of Agriculture. 
D) one whose demand curve will shift leftward as income rise. 
A) one whose demand curve will shift rightward as incomes rise. 
B) one whose price and quantity demanded varies directly. 
C) one which has not been approved by the federal Ministry of Agriculture. 
D) one whose demand curve will shift leftward as income rise.

Question 6

In moving along a demand curve which of the following is not held constant?

Accepted Answer

A) the price of the product for which the demand curve is relevant 
B) price expectations 
C) consumer incomes 
D) the prices of complementary goods 
A) the price of the product for which the demand curve is relevant 
B) price expectations 
C) consumer incomes 
D) the prices of complementary goods

Question 7

Which are not generally considered to be complementary goods?

Accepted Answer

A) gasoline and motor oil 
B) beef and chicken 
C) beer and pretzels 
D) razors and razor blades 
A) gasoline and motor oil 
B) beef and chicken 
C) beer and pretzels 
D) razors and razor blades

Question 8

People demand more of product X when the price of product Y decreases.This means X and Y are:

Accepted Answer

A) complements. 
B) substitutes. 
C) not related. 
D) both inexpensive. 
A) complements. 
B) substitutes. 
C) not related. 
D) both inexpensive.

Question 9

Refer to the diagram.The equilibrium price and quantity for milk in this market are:

Accepted Answer

A) $1.50 and 28 million gallons. 
B) $1.50 and 30 million gallons. 
C) $2.00 and 20 million gallons. 
D) $1.00 and 35 million gallons. 
A) $1.50 and 28 million gallons. 
B) $1.50 and 30 million gallons. 
C) $2.00 and 20 million gallons. 
D) $1.00 and 35 million gallons.

Question 10

A surplus of a product will arise when price is:

Accepted Answer

A) above equilibrium with the result that quantity demanded exceeds quantity supplied. 
B) above equilibrium with the result that quantity supplied exceeds quantity demanded. 
C) below equilibrium with the result that quantity demanded exceeds quantity supplied. 
D) below equilibrium with the result that quantity supplied exceeds quantity demanded. 
A) above equilibrium with the result that quantity demanded exceeds quantity supplied. 
B) above equilibrium with the result that quantity supplied exceeds quantity demanded. 
C) below equilibrium with the result that quantity demanded exceeds quantity supplied. 
D) below equilibrium with the result that quantity supplied exceeds quantity demanded.

Question 11

Graphically, the market demand curve is:

Accepted Answer

A) steeper than any individual demand curve which comprises it. 
B) greater than the sum of the individual demand curves. 
C) the horizontal sum of individual demand curves. 
D) the vertical sum of individual demand curves. 
A) steeper than any individual demand curve which comprises it. 
B) greater than the sum of the individual demand curves. 
C) the horizontal sum of individual demand curves. 
D) the vertical sum of individual demand curves.

Question 12

An "increase in the quantity demanded" means that:

Accepted Answer

A) given supply, the price of the product can be expected to decline. 
B) price has declined and consumers therefore want to purchase more of the product. 
C) the demand curve has shifted to the right. 
D) the demand curve has shifted to the left. 
A) given supply, the price of the product can be expected to decline. 
B) price has declined and consumers therefore want to purchase more of the product. 
C) the demand curve has shifted to the right. 
D) the demand curve has shifted to the left.

Question 13

Which of the following will cause the demand curve for product A to shift to the left?

Accepted Answer

A) population growth which causes an expansion in the number of persons consuming A 
B) an increase in money income if A is a normal good 
C) a decrease in the price of complementary product C 
D) an increase in money income if A is an inferior good 
A) population growth which causes an expansion in the number of persons consuming A 
B) an increase in money income if A is a normal good 
C) a decrease in the price of complementary product C 
D) an increase in money income if A is an inferior good

Question 14

Which of the following statements is correct about the determinants of supply and demand?

Accepted Answer

A) A majority of the determinants of demand and supply are the same. 
B) All the determinants of demand and supply are the same. 
C) A minority of the determinants of demand and supply are the same. 
D) None of the determinants of demand and supply are the same. 
A) A majority of the determinants of demand and supply are the same. 
B) All the determinants of demand and supply are the same. 
C) A minority of the determinants of demand and supply are the same. 
D) None of the determinants of demand and supply are the same.

Question 15

Which of the above diagrams illustrate(s) the effect of a decline in the price of irrigation equipment upon the market for corn?

Accepted Answer

A) B only 
B) C only 
C) B and C 
D) D only 
A) B only 
B) C only 
C) B and C 
D) D only

Question 16

Students at Informed University pay $40 per year for a parking permit but many complain that they are unable to find a parking place in University lots.In terms of equilibrium, this suggests that:

Accepted Answer

A) student incomes are too low. 
B) parking permits are underpriced. 
C) parking permits are overpriced. 
D) the University should make parking free. 
A) student incomes are too low. 
B) parking permits are underpriced. 
C) parking permits are overpriced. 
D) the University should make parking free.

Question 17

Refer to the diagram.A price of $2.00 in this market will result in:

Accepted Answer

A) a shortage of 10 million gallons of milk per week. 
B) a surplus of 8 million gallons of milk per week. 
C) a surplus of 10 million gallons of milk per week. 
D) a shortage of 8 million gallons of milk per week. 
A) a shortage of 10 million gallons of milk per week. 
B) a surplus of 8 million gallons of milk per week. 
C) a surplus of 10 million gallons of milk per week. 
D) a shortage of 8 million gallons of milk per week.

Question 18

At the point where the demand and supply curves intersect:

Accepted Answer

A) the market is in equilibrium. 
B) there is neither a surplus nor a shortage of the product. 
C) quantity demanded equals quantity supplied. 
D) all of the above hold true. 
A) the market is in equilibrium. 
B) there is neither a surplus nor a shortage of the product. 
C) quantity demanded equals quantity supplied. 
D) all of the above hold true.

Question 19

The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q.Refer to the above information.After the change in demand, the new equilibrium quantity is:

Accepted Answer

A) 10 
B) 20 
C) 15 
D) 30 
A) 10 
B) 20 
C) 15 
D) 30

Question 20

One can say with certainty that equilibrium quantity will increase when supply:

Accepted Answer

A) and demand both decrease. 
B) increases and demand decreases. 
C) decreases and demand increases. 
D) and demand both increase. 
A) and demand both decrease. 
B) increases and demand decreases. 
C) decreases and demand increases. 
D) and demand both increase.

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

Refer to the above graph.X and Y are unrelated products.Which one of the lines in the graph best illustrates this relationship?

Refer to the diagram illustrating the market for corn.If the price in this market were to be fixed at $4 per bushel, the part of the line marked A would represent a:

Refer to the above graph.X and Y are substitute products.Which one of the lines in the graph best illustrates this relationship?

A shift to the right in the demand curve for product A can be most reasonably explained by saying that:

An inferior good is:

In moving along a demand curve which of the following is not held constant?

Which are not generally considered to be complementary goods?

People demand more of product X when the price of product Y decreases.This means X and Y are:

Refer to the diagram.The equilibrium price and quantity for milk in this market are:

A surplus of a product will arise when price is:

Graphically, the market demand curve is:

An "increase in the quantity demanded" means that:

Which of the following will cause the demand curve for product A to shift to the left?

Which of the following statements is correct about the determinants of supply and demand?

Which of the above diagrams illustrate(s) the effect of a decline in the price of irrigation equipment upon the market for corn?

Students at Informed University pay $40 per year for a parking permit but many complain that they are unable to find a parking place in University lots.In terms of equilibrium, this suggests that:

Refer to the diagram.A price of $2.00 in this market will result in:

At the point where the demand and supply curves intersect:

The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q.Refer to the above information.After the change in demand, the new equilibrium quantity is:

One can say with certainty that equilibrium quantity will increase when supply:

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

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