Question 1

If quantity supplied exceeds quantity demanded, there is a tendency for:

Accepted Answer

A) price to fall to restore equilibrium. 
B) price to rise to restore equilibrium. 
C) the demand curve to shift to the left to restore equilibrium. 
D) the demand curve to shift to the right to restore equilibrium. 
A) price to fall to restore equilibrium. 
B) price to rise to restore equilibrium. 
C) the demand curve to shift to the left to restore equilibrium. 
D) the demand curve to shift to the right to restore equilibrium.

Question 2

Refer to the following graphs:   Which curve depicts the market demand from the following individual demand tables? $$\begin{array} { | c | r | r | r | } 
\hline \text { Price } & { \text { D1 } } &   { \text { D2 } } &  { \text { D3 } } \
\hline 10 & 10 & 15 & 10 \
\hline 12 & 8 & 11 & 5 \
\hline 14 & 6 & 7 & 6 \
\hline 16 & 4 & 3 & 7 \
\hline 18 & 2 & 6 & 6 \
\hline
\end{array}$$

Accepted Answer

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

Question 3

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 4

Demand for healthy kidneys is high in both India in Nepal. But it is also illegal to buy or sell organs. Despite the legal and social disapproval, there is an illegal market for organs. Assuming the legal and social disapproval does not influence buyers but discourages sellers from offering organs, the disapproval will:

Accepted Answer

A) raise price and raise quantity. 
B) raise price but lower quantity. 
C) lower price but raise quantity. 
D) lower price and lower quantity. 
A) raise price and raise quantity. 
B) raise price but lower quantity. 
C) lower price but raise quantity. 
D) lower price and lower quantity.

Question 5

An increase in demand causes equilibrium price and quantity to rise, other things constant.

Accepted Answer

A) True 
 B)False

Question 6

The law of supply states that, other things constant, there is:

Accepted Answer

A) an inverse relation between price and the quantity supplied. 
B) an inverse relation between price and supply. 
C) a direct relation between price and the quantity supplied. 
D) a direct relation between price and supply. 
A) an inverse relation between price and the quantity supplied. 
B) an inverse relation between price and supply. 
C) a direct relation between price and the quantity supplied. 
D) a direct relation between price and supply.

Question 7

Refer to the graph showing the demand for books. The quantity demanded when price is $16.00 is:

Accepted Answer

A) 2 books. 
B) 4 books. 
C) 6 books. 
D) 8 books. 
A) 2 books. 
B) 4 books. 
C) 6 books. 
D) 8 books.

Question 8

Refer to the graphs shown. The market is salmon steaks. Which graph best represents the impact of increased concern that salmon is becoming endangered?

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 9

Assume the graphs shown reflect the egg market. The arrow that would best capture the impact of cheaper, prefabricated henhouses on the egg market is:

Accepted Answer

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

Question 10

According to the law of demand, an increase in the price of baseball trading cards causes:

Accepted Answer

A) people to buy fewer trading cards. 
B) people to buy more trading cards. 
C) the scarcity of baseball trading cards to increase. 
D) baseball trading cards to grow in abundance. 
A) people to buy fewer trading cards. 
B) people to buy more trading cards. 
C) the scarcity of baseball trading cards to increase. 
D) baseball trading cards to grow in abundance.

Question 11

The law of demand states that consumers buy more of a good when its price declines:

Accepted Answer

A) because their income increases at the same time. 
B) only if their income increases at the same time. 
C) even if other demand determinants change at the same time. 
D) provided all else remains constant. 
A) because their income increases at the same time. 
B) only if their income increases at the same time. 
C) even if other demand determinants change at the same time. 
D) provided all else remains constant.

Question 12

The point at which the supply curve and the demand curve intersect is called:

Accepted Answer

A) equilibrium, because quantity demanded equals quantity supplied so there is no tendency for price to change. 
B) equilibrium, because quantity demanded exceeds quantity supplied so there is a shortage. 
C) equilibrium, because quantity supplied exceeds quantity demanded so there is a surplus. 
D) irrelevant, because real-world prices never reach this point. 
A) equilibrium, because quantity demanded equals quantity supplied so there is no tendency for price to change. 
B) equilibrium, because quantity demanded exceeds quantity supplied so there is a shortage. 
C) equilibrium, because quantity supplied exceeds quantity demanded so there is a surplus. 
D) irrelevant, because real-world prices never reach this point.

Question 13

When airlines were deregulated, airfares declined by 30 percent. Deregulation is an example of political forces:

Accepted Answer

A) letting the market move toward equilibrium, reducing excess supply. 
B) letting the market move toward equilibrium, reducing excess demand. 
C) making the market move away from equilibrium, creating excess supply. 
D) making the market move away from equilibrium, creating excess demand. 
A) letting the market move toward equilibrium, reducing excess supply. 
B) letting the market move toward equilibrium, reducing excess demand. 
C) making the market move away from equilibrium, creating excess supply. 
D) making the market move away from equilibrium, creating excess demand.

Question 14

Suppose the supply and demand tables shown reflect the supply and demand for milk per week. At a price of $4, there is a: $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Price } \
\text { (per gallm) }
\end{array} & \begin{array} { c } 
\text { Quantity demanded (gallons per } \
\text { week) }
\end{array} & \begin{array} { c } 
\text { Quantity Supplied (gallms per } \
\text { week) }
\end{array} \
\hline \$ 1 & 2,000 & 1,000 \
\hline \$ 2 & 1,500 & 1,500 \
\hline \$ 3 & 1,000 & 2,000 \
\hline \$ 4 & 500 & 2,500 \
\hline
\end{array}$$

Accepted Answer

A) surplus of 1,000 gallons per week. 
B) surplus of 2,000 gallons per week. 
C) shortage of 1,000 gallons per week. 
D) shortage of 2,000 gallons per week. 
A) surplus of 1,000 gallons per week. 
B) surplus of 2,000 gallons per week. 
C) shortage of 1,000 gallons per week. 
D) shortage of 2,000 gallons per week.

Question 15

The distinction between demand and the quantity demanded is best made by saying that:

Accepted Answer

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

Question 16

Refer to the graphs shown. The effect of increased consumer income and higher production costs on a normal good is most likely shown in:

Accepted Answer

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

Question 17

The explanation for the law of demand involves:

Accepted Answer

A) suppliers' ability to substitute inputs. 
B) consumers' ability to substitute different goods. 
C) the government's ability to set prices. 
D) the market's ability to equate supply and demand. 
A) suppliers' ability to substitute inputs. 
B) consumers' ability to substitute different goods. 
C) the government's ability to set prices. 
D) the market's ability to equate supply and demand.

Question 18

Demonstrate graphically and explain verbally the concept of equilibrium in a supply and demand model.

Accepted Answer

Equilibrium in general is a concept in w

Question 19

Suppose OPEC oil cartel announces that it will increase production of oil. Using supply and demand analysis to predict the effect of increased production on equilibrium price and quantity, the first step is to show the:

Accepted Answer

A) demand curve shifting to the right. 
B) demand curve shifting to the left. 
C) supply curve shifting to the right. 
D) supply curve shifting to the left. 
A) demand curve shifting to the right. 
B) demand curve shifting to the left. 
C) supply curve shifting to the right. 
D) supply curve shifting to the left.

Question 20

What is equilibrium? Explain what it means to say equilibrium is a characteristic of the model,not a state of the world.

Accepted Answer

Equilibrium is a concept in which opposi

Exam 4: Supply and Demand

If quantity supplied exceeds quantity demanded, there is a tendency for:

Refer to the following graphs: Which curve depicts the market demand from the following individual demand tables? Price D1 D2 D3 10 10 15 10 12 8 11 5 14 6 7 6 16 4 3 7 18 2 6 6

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:

An increase in demand causes equilibrium price and quantity to rise, other things constant.

The law of supply states that, other things constant, there is:

Refer to the graph showing the demand for books. The quantity demanded when price is $16.00 is:

Refer to the graphs shown. The market is salmon steaks. Which graph best represents the impact of increased concern that salmon is becoming endangered?

Assume the graphs shown reflect the egg market. The arrow that would best capture the impact of cheaper, prefabricated henhouses on the egg market is:

According to the law of demand, an increase in the price of baseball trading cards causes:

The law of demand states that consumers buy more of a good when its price declines:

The point at which the supply curve and the demand curve intersect is called:

When airlines were deregulated, airfares declined by 30 percent. Deregulation is an example of political forces:

Suppose the supply and demand tables shown reflect the supply and demand for milk per week. At a price of $4, there is a: Price (per gallm) Quantity demanded (gallons per week) Quantity Supplied (gallms per week) \ 1 2,000 1,000 \ 2 1,500 1,500 \ 3 1,000 2,000 \ 4 500 2,500

The distinction between demand and the quantity demanded is best made by saying that:

Refer to the graphs shown. The effect of increased consumer income and higher production costs on a normal good is most likely shown in:

The explanation for the law of demand involves:

Demonstrate graphically and explain verbally the concept of equilibrium in a supply and demand model.

Suppose OPEC oil cartel announces that it will increase production of oil. Using supply and demand analysis to predict the effect of increased production on equilibrium price and quantity, the first step is to show the:

What is equilibrium? Explain what it means to say equilibrium is a characteristic of the model,not a state of the world.

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

Economic Growth, Business Cycles, and Unemployment

Measuring and Describing the Aggregate Economy

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

Filters