Question 1

Suppose that a severe freeze destroys a sizable portion of the lettuce crop.As a result:

Accepted Answer

A) quantity supplied will decrease, equilibrium price will increase and, demand will decrease. 
B) supply will decrease, equilibrium price will fall and, demand will increase. 
C) supply will decrease, equilibrium price will increase and, quantity demanded will decrease. 
D) cannot be determined from the information given. 
A) quantity supplied will decrease, equilibrium price will increase and, demand will decrease. 
B) supply will decrease, equilibrium price will fall and, demand will increase. 
C) supply will decrease, equilibrium price will increase and, quantity demanded will decrease. 
D) cannot be determined from the information given.

Question 2

If two goods are complements:

Accepted Answer

A) they are consumed jointly. 
B) an increase in the price of one will reduce the demand for the other. 
C) a decrease in the price of one will increase the demand for the other. 
D) all of the above will be true. 
A) they are consumed jointly. 
B) an increase in the price of one will reduce the demand for the other. 
C) a decrease in the price of one will increase the demand for the other. 
D) all of the above will be true.

Question 3

At any above-equilibrium price:

Accepted Answer

A) quantity demanded exceeds quantity supplied. 
B) the equilibrium price is above the current price. 
C) quantity supplied exceeds quantity demanded. 
D) the price of the good is likely to rise. 
A) quantity demanded exceeds quantity supplied. 
B) the equilibrium price is above the current price. 
C) quantity supplied exceeds quantity demanded. 
D) the price of the good is likely to rise.

Question 4

Assume in a competitive market that price is initially below the equilibrium level.We can predict that price will:

Accepted Answer

A) decrease, quantity demanded will decrease, and quantity supplied will increase. 
B) decrease and quantity demanded and quantity supplied will both decrease. 
C) decrease, quantity demanded will increase, and quantity supplied will decrease. 
D) increase, quantity demanded will decrease, and quantity supplied will increase. 
A) decrease, quantity demanded will decrease, and quantity supplied will increase. 
B) decrease and quantity demanded and quantity supplied will both decrease. 
C) decrease, quantity demanded will increase, and quantity supplied will decrease. 
D) increase, quantity demanded will decrease, and quantity supplied will increase.

Question 5

A government set minimum wage:

Accepted Answer

A) imposes a legal ceiling above the wage of the least skilled worker. 
B) is one of the reasons why price level falls during recessions. 
C) imposes a legal floor under the wage of the most skilled worker. 
D) imposes a legal floor under the wage of the least skilled worker. 
A) imposes a legal ceiling above the wage of the least skilled worker. 
B) is one of the reasons why price level falls during recessions. 
C) imposes a legal floor under the wage of the most skilled worker. 
D) imposes a legal floor under the wage of the least skilled worker.

Question 6

Economists use the term "demand" as:

Accepted Answer

A) a particular price-quantity combination on a stable demand curve. 
B) the total amount spent on a particular commodity over a stipulated time period. 
C) an upsloping line on a graph which relates consumer purchases and product price. 
D) a schedule of various combinations of market prices and amounts demanded. 
A) a particular price-quantity combination on a stable demand curve. 
B) the total amount spent on a particular commodity over a stipulated time period. 
C) an upsloping line on a graph which relates consumer purchases and product price. 
D) a schedule of various combinations of market prices and amounts demanded.

Question 7

A price fixed above the equilibrium price of a product will cause a shortage of that product.

Accepted Answer

A) True 
 B)False

Question 8

Refer to the above diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves.In this market:

Accepted Answer

A) supply has decreased and equilibrium price has increased. 
B) demand and Supply have increased and equilibrium price has decreased. 
C) demand has decreased and equilibrium price has decreased. 
D) demand has increased and equilibrium price has increased. 
A) supply has decreased and equilibrium price has increased. 
B) demand and Supply have increased and equilibrium price has decreased. 
C) demand has decreased and equilibrium price has decreased. 
D) demand has increased and equilibrium price has increased.

Question 9

In recent years, there has been a rapid increase in consumption of sushi in Canada and yet, the price of sushi has remained relatively stable.An explanation for this phenomenon could be:

Accepted Answer

A) although the demand for sushi has gone up, the supply of fish (an input in the production of sushi) has declined as well. 
B) while the demand for sushi has gone up, the supply of sushi has increase by about the same magnitude and therefore, the price has stayed relatively stable. 
C) while the demand for sushi has gone up, the supply of sushi has decreased by about the same magnitude and therefore, the price has stayed relatively stable. 
D) while the demand for sushi has gone up, the supply of sushi has not changed and therefore, the price has stayed relatively stable. 
A) although the demand for sushi has gone up, the supply of fish (an input in the production of sushi) has declined as well. 
B) while the demand for sushi has gone up, the supply of sushi has increase by about the same magnitude and therefore, the price has stayed relatively stable. 
C) while the demand for sushi has gone up, the supply of sushi has decreased by about the same magnitude and therefore, the price has stayed relatively stable. 
D) while the demand for sushi has gone up, the supply of sushi has not changed and therefore, the price has stayed relatively stable.

Question 10

An unusually bountiful crop of coffee beans might:

Accepted Answer

A) increase the supply of coffee. 
B) increase the price of coffee. 
C) decrease the quantity of coffee consumed. 
D) increase the price of tea. 
A) increase the supply of coffee. 
B) increase the price of coffee. 
C) decrease the quantity of coffee consumed. 
D) increase the price of tea.

Question 11

With a downward sloping demand curve and an upward sloping supply curve for a product, placing an excise tax on this product will:

Accepted Answer

A) increase equilibrium price and quantity. 
B) decrease equilibrium price and quantity. 
C) decrease equilibrium price and increase equilibrium quantity. 
D) increase equilibrium price and decrease equilibrium quantity. 
A) increase equilibrium price and quantity. 
B) decrease equilibrium price and quantity. 
C) decrease equilibrium price and increase equilibrium quantity. 
D) increase equilibrium price and decrease equilibrium quantity.

Question 12

Price ceilings and price floors:

Accepted Answer

A) cause surpluses and shortages respectively. 
B) make the rationing function of free markets more efficient. 
C) interfere with the rationing function of prices. 
D) shift demand and supply curves and therefore have no effect on the rationing function of prices. 
A) cause surpluses and shortages respectively. 
B) make the rationing function of free markets more efficient. 
C) interfere with the rationing function of prices. 
D) shift demand and supply curves and therefore have no effect on the rationing function of prices.

Question 13

On a graph, an increase in quantity demanded is represented by a:

Accepted Answer

A) leftward shift of the demand curve. 
B) rightward shift of the demand curve. 
C) movement upward and to the left along the demand curve. 
D) movement downward and to the right along the demand curve. 
A) leftward shift of the demand curve. 
B) rightward shift of the demand curve. 
C) movement upward and to the left along the demand curve. 
D) movement downward and to the right along the demand curve.

Question 14

The law of supply is illustrated by a curve which is:

Accepted Answer

A) horizontal. 
B) downward sloping. 
C) vertical. 
D) upward sloping. 
A) horizontal. 
B) downward sloping. 
C) vertical. 
D) upward sloping.

Question 15

Immigration to Canada from many parts of the world has increased the demand for a whole range of ethnic goods and services, particularly in:

Accepted Answer

A) Southern Ontario and British Columbia. 
B) Alberta and Quebec. 
C) Newfoundland and Nova Scotia. 
D) New Brunswick and Quebec. 
A) Southern Ontario and British Columbia. 
B) Alberta and Quebec. 
C) Newfoundland and Nova Scotia. 
D) New Brunswick and Quebec.

Question 16

If an effective legal ceiling is imposed on credit card interest rates:

Accepted Answer

A) such credit would be less readily available. 
B) annual credit card fees would fall. 
C) the product prices charged by merchants who issue credit cards would fall. 
D) more credit cards will be issued. 
A) such credit would be less readily available. 
B) annual credit card fees would fall. 
C) the product prices charged by merchants who issue credit cards would fall. 
D) more credit cards will be issued.

Question 17

Other things equal, the provision of a per unit subsidy for a product will:

Accepted Answer

A) increase its supply. 
B) increase its price. 
C) decrease the quantity sold. 
D) decrease its demand. 
A) increase its supply. 
B) increase its price. 
C) decrease the quantity sold. 
D) decrease its demand.

Question 18

The law of supply states that, ceteris paribus, there is an inverse relationship between the price of a good and the quantity supplied of the good.

Accepted Answer

A) True 
 B)False

Question 19

What is the likely effect on the market for wine of a simultaneous increase in both consumer incomes and producer taxes on wine?

Accepted Answer

A) an increase in both price and quantity 
B) an increase in price and a decrease in output 
C) a decrease in price and an indeterminate effect on quantity 
D) an increase in price and an indeterminate effect on quantity 
A) an increase in both price and quantity 
B) an increase in price and a decrease in output 
C) a decrease in price and an indeterminate effect on quantity 
D) an increase in price and an indeterminate effect on quantity

Question 20

The market system corrects a shortage by:

Accepted Answer

A) lowering the product price to decrease production. 
B) raising the product price to increase production. 
C) lowering the product price to increase production. 
D) raising the product price to decrease production. 
A) lowering the product price to decrease production. 
B) raising the product price to increase production. 
C) lowering the product price to increase production. 
D) raising the product price to decrease production.

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

Suppose that a severe freeze destroys a sizable portion of the lettuce crop.As a result:

If two goods are complements:

At any above-equilibrium price:

Assume in a competitive market that price is initially below the equilibrium level.We can predict that price will:

A government set minimum wage:

Economists use the term "demand" as:

A price fixed above the equilibrium price of a product will cause a shortage of that product.

Refer to the above diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves.In this market:

In recent years, there has been a rapid increase in consumption of sushi in Canada and yet, the price of sushi has remained relatively stable.An explanation for this phenomenon could be:

An unusually bountiful crop of coffee beans might:

With a downward sloping demand curve and an upward sloping supply curve for a product, placing an excise tax on this product will:

Price ceilings and price floors:

On a graph, an increase in quantity demanded is represented by a:

The law of supply is illustrated by a curve which is:

Immigration to Canada from many parts of the world has increased the demand for a whole range of ethnic goods and services, particularly in:

If an effective legal ceiling is imposed on credit card interest rates:

Other things equal, the provision of a per unit subsidy for a product will:

The law of supply states that, ceteris paribus, there is an inverse relationship between the price of a good and the quantity supplied of the good.

What is the likely effect on the market for wine of a simultaneous increase in both consumer incomes and producer taxes on wine?

The market system corrects a shortage by:

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, in which S₁ and D₁ represent the original supply and demand curves and S₂ and D₂ the new curves.In this market: