Question 1

Refer to the graphs shown. The arrow that best captures the impact of a decline in price on quantity supplied is:

Accepted Answer

A)  W. 
B)  X. 
C)  Y. 
D)  Z. 
A)  W. 
B)  X. 
C)  Y. 
D)  Z.

Question 2

Refer to the graphs shown. The market is computers. Which graph best represents the impact of cheaper memory chips on the computer market?

Accepted Answer

A)  Graph a 
B)  Graph b 
C)  Graph c 
D)  Graph d 
A)  Graph a 
B)  Graph b 
C)  Graph c 
D)  Graph d

Question 3

Given the graph, the quantity that would be associated with the price of $4 in a demand table would be:

Accepted Answer

A)  1. 
B)  2. 
C)  3. 
D)  4. 
A)  1. 
B)  2. 
C)  3. 
D)  4.

Question 4

Refer to the graphs shown. The curve that best demonstrates the law of demand is:

Accepted Answer

A)  I. 
B)  II. 
C)  III. 
D)  IV. 
A)  I. 
B)  II. 
C)  III. 
D)  IV.

Question 5

Suppose the supply and demand tables shown reflect the supply and demand for milk per week. What is the equilibrium price and quantity of milk? $\begin{array}{|c|c|c|}
\hline \begin{array}{c}
\text { Price } \
\text { (per gallon) }
\end{array} & \begin{array}{c}
\text { Quantity demanded (gallons per } \
\text { week) }
\end{array} & \begin{array}{c}
\text { Quantity Supplied (gallons per } \
\text { week) }
\end{array} \
\hline \$ 1 & 2,000 & 1,000 \
\hline \$ 2 & 1,500 & 1,500 \
\hline \$ 3 & 1,000 & 2,000 \
\hline \$ 4 & 500 & 2,500 \
\hline
\end{array}$

Accepted Answer

A)  $1 per gallon and 2,000 gallons per week 
B)  $2 per gallon and 1,500 gallons per week 
C)  $3 per gallon and 2,000 gallons per week 
D)  $4 per gallon and 2,000 gallons per week 
A)  $1 per gallon and 2,000 gallons per week 
B)  $2 per gallon and 1,500 gallons per week 
C)  $3 per gallon and 2,000 gallons per week 
D)  $4 per gallon and 2,000 gallons per week

Question 6

Consider the following demand table and the graph.     Which of the demand curves best reflects the demand table?

Accepted Answer

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

Question 7

Suppose farmers can use their land to grow either wheat or corn. The law of supply predicts that an increase in the market price of wheat will cause farmers to:

Accepted Answer

A)  substitute wheat for the production of corn. 
B)  substitute corn for the production of wheat. 
C)  lower the production of corn and wheat. 
D)  raise the production of wheat and corn. 
A)  substitute wheat for the production of corn. 
B)  substitute corn for the production of wheat. 
C)  lower the production of corn and wheat. 
D)  raise the production of wheat and corn.

Question 8

A decrease in the number of consumers in a market causes market demand to:

Accepted Answer

A)  decrease, resulting in a surplus which will be eliminated as price rises. 
B)  decrease, resulting in a surplus which will be eliminated as price falls. 
C)  increase, resulting in a shortage which will be eliminated as price rises. 
D)  increase, resulting in a shortage which will be eliminated as price falls. 
A)  decrease, resulting in a surplus which will be eliminated as price rises. 
B)  decrease, resulting in a surplus which will be eliminated as price falls. 
C)  increase, resulting in a shortage which will be eliminated as price rises. 
D)  increase, resulting in a shortage which will be eliminated as price falls.

Question 9

At a price of $3.50, the quantity supplied by the market will be 14.
 $$\begin{array} { | r | c | c | c | c | } 
\hline \text { Price } & \text { Ann's Supply } & \text { Barry's Supply } & \text { Charlie's Supply } & \begin{array} { c } 
\text { Market } \
\text { Supply }
\end{array} \
\hline \$ 0.00 & 0 & 0 & 0 & 0 \
\hline 0.50 & 1 & 0 & 0 & 1 \
\hline 1.00 & 2 & 1 & 0 & 3 \
\hline 1.50 & 3 & 2 & 0 & 5 \
\hline 2.00 & 4 & 3 & 0 & 7 \
\hline 2.50 & 5 & 4 & 0 & - \
\hline 3.00 & 6 & 5 & 0 & - \
\hline 3.50 & 7 & 5 & 2 & - \
\hline 4.00 & 8 & 5 & 2 & - \
\hline
\end{array}$$

Accepted Answer

A) True 
 B)False

Question 10

According to the law of demand an increase in the price of gasoline will:

Accepted Answer

A)  increase the quantity demanded of gasoline, other things constant. 
B)  decrease the quantity demanded of gasoline, other things constant. 
C)  increase the demand for gasoline. 
D)  decrease the demand for gasoline. 
A)  increase the quantity demanded of gasoline, other things constant. 
B)  decrease the quantity demanded of gasoline, other things constant. 
C)  increase the demand for gasoline. 
D)  decrease the demand for gasoline.

Question 11

Suppliers will supply more of a good when the price of that good rises because the opportunity cost of not producing that good has risen.

Accepted Answer

A) True 
 B)False

Question 12

An upward-sloping supply curve implies that:

Accepted Answer

A)  quantity supplied increases when price decreases. 
B)  quantity supplied increases when price increases. 
C)  the law of supply is invalid. 
D)  there is no relationship between price and quantity supplied. 
A)  quantity supplied increases when price decreases. 
B)  quantity supplied increases when price increases. 
C)  the law of supply is invalid. 
D)  there is no relationship between price and quantity supplied.

Question 13

Which of the following will move the supply curve for housing in Florida, a popular retirement state, to the left?

Accepted Answer

A)  Increasing the number of people who are retiring 
B)  Increase in the cost of insurance 
C)  Higher real-estate prices 
D)  Higher construction costs 
A)  Increasing the number of people who are retiring 
B)  Increase in the cost of insurance 
C)  Higher real-estate prices 
D)  Higher construction costs

Question 14

Refer to the graphs shown. The effect of an increase in price on demand is best shown by which arrow?

Accepted Answer

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

Question 15

The distinction between supply and the quantity supplied is best made by saying that:

Accepted Answer

A)  the quantity supplied is represented graphically by a curve and supply as a point on that curve. 
B)  supply is represented graphically by a curve and quantity supplied as a point on that curve. 
C)  the quantity supplied is in a direct relation with prices, whereas supply is in an inverse relation. 
D)  the quantity supplied is in an inverse relation with prices, whereas supply is in a direct relation. 
A)  the quantity supplied is represented graphically by a curve and supply as a point on that curve. 
B)  supply is represented graphically by a curve and quantity supplied as a point on that curve. 
C)  the quantity supplied is in a direct relation with prices, whereas supply is in an inverse relation. 
D)  the quantity supplied is in an inverse relation with prices, whereas supply is in a direct relation.

Question 16

The following graph shows the supply of movie downloads. What is the market quantity that would be supplied at a price of $2.00?

Accepted Answer

A)  2 movies per week 
B)  3 movies per week 
C)  4 movies per week 
D)  7 movies per week 
A)  2 movies per week 
B)  3 movies per week 
C)  4 movies per week 
D)  7 movies per week

Question 17

Refer to the graphs shown. The market is fat-free potato chips that contain the fat substitute olestra. Which graph best represents the impact of increased consumer concern about the effects of olestra on long-term health?

Accepted Answer

A)  Graph a 
B)  Graph b 
C)  Graph c 
D)  Graph d 
A)  Graph a 
B)  Graph b 
C)  Graph c 
D)  Graph d

Question 18

If the price of steel rises, the law of supply predicts that, other things constant, the:

Accepted Answer

A)  supply of steel will increase. 
B)  supply of steel will decrease. 
C)  quantity supplied of steel will increase. 
D)  quantity supplied of steel will decrease. 
A)  supply of steel will increase. 
B)  supply of steel will decrease. 
C)  quantity supplied of steel will increase. 
D)  quantity supplied of steel will decrease.

Question 19

Suppose that the following table shows the supply and demand schedules for Arabian light crude oil on the free market: $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Price } \
\text { (Dalars/barrel) }
\end{array} & \begin{array} { c } 
\text { Quantity demanded (mil. } \
\text { barrels per day) }
\end{array} & \begin{array} { c } 
\text { Quantity Supplied (mil. } \
\text { barrels per day) }
\end{array} \
\hline 26 & 14 & 10 \
\hline 27 & 13 & 11 \
\hline 28 & 12 & 12 \
\hline 29 & 11 & 13 \
\hline 30 & 10 & 14 \
\hline
\end{array}$$ Given the information in the table, the only price at which there is neither shortage nor surplus is:

Accepted Answer

A)  $26 per barrel. 
B)  $27 per barrel. 
C)  $28 per barrel. 
D)  $29 per barrel. 
A)  $26 per barrel. 
B)  $27 per barrel. 
C)  $28 per barrel. 
D)  $29 per barrel.

Question 20

Which of the following situations best demonstrates the law of demand?

Accepted Answer

A)  Movie-goers react to an increase in the price of a theater ticket by seeing fewer movies per year. 
B)  Movie-goers see fewer movies per year due to an overall decrease in the quality of newly released motion pictures. 
C)  A drought causes a decrease in the availability of pumpkins, resulting in fewer jack-o-lanterns displayed on Halloween. 
D)  An increase in the number of people writing Economics textbooks results in a decrease in average textbook prices. 
A)  Movie-goers react to an increase in the price of a theater ticket by seeing fewer movies per year. 
B)  Movie-goers see fewer movies per year due to an overall decrease in the quality of newly released motion pictures. 
C)  A drought causes a decrease in the availability of pumpkins, resulting in fewer jack-o-lanterns displayed on Halloween. 
D)  An increase in the number of people writing Economics textbooks results in a decrease in average textbook prices.

Exam 4: Supply and Demand

Refer to the graphs shown. The arrow that best captures the impact of a decline in price on quantity supplied is:

Refer to the graphs shown. The market is computers. Which graph best represents the impact of cheaper memory chips on the computer market?

Given the graph, the quantity that would be associated with the price of $4 in a demand table would be:

Refer to the graphs shown. The curve that best demonstrates the law of demand is:

Suppose the supply and demand tables shown reflect the supply and demand for milk per week. What is the equilibrium price and quantity of milk? Price (per gallon) Quantity demanded (gallons per week) Quantity Supplied (gallons per week) \ 1 2,000 1,000 \ 2 1,500 1,500 \ 3 1,000 2,000 \ 4 500 2,500

Consider the following demand table and the graph. Which of the demand curves best reflects the demand table?

Suppose farmers can use their land to grow either wheat or corn. The law of supply predicts that an increase in the market price of wheat will cause farmers to:

A decrease in the number of consumers in a market causes market demand to:

At a price of $3.50, the quantity supplied by the market will be 14. Price Ann's Supply Barry's Supply Charlie's Supply Market Supply \ 0.00 0 0 0 0 0.50 1 0 0 1 1.00 2 1 0 3 1.50 3 2 0 5 2.00 4 3 0 7 2.50 5 4 0 - 3.00 6 5 0 - 3.50 7 5 2 - 4.00 8 5 2 -

According to the law of demand an increase in the price of gasoline will:

Suppliers will supply more of a good when the price of that good rises because the opportunity cost of not producing that good has risen.

An upward-sloping supply curve implies that:

Which of the following will move the supply curve for housing in Florida, a popular retirement state, to the left?

Refer to the graphs shown. The effect of an increase in price on demand is best shown by which arrow?

The distinction between supply and the quantity supplied is best made by saying that:

The following graph shows the supply of movie downloads. What is the market quantity that would be supplied at a price of $2.00?

Refer to the graphs shown. The market is fat-free potato chips that contain the fat substitute olestra. Which graph best represents the impact of increased consumer concern about the effects of olestra on long-term health?

If the price of steel rises, the law of supply predicts that, other things constant, the:

Which of the following situations best demonstrates the law of demand?

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

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