Question 1

If the number of consumers in a market increases, the market demand curve will

Accepted Answer

A) decrease, which is a shift to the left of the demand curve. 
B) increase, which is a shift to the right of the demand curve. 
C) not shift, but rather this will just cause a movement along the demand curve. 
D) do none of the above. 
A) decrease, which is a shift to the left of the demand curve. 
B) increase, which is a shift to the right of the demand curve. 
C) not shift, but rather this will just cause a movement along the demand curve. 
D) do none of the above.

Question 2

Which of the following would increase the price of fitness equipment?

Accepted Answer

A) a reduction in consumer income 
B) a major study indicating that a 30-minute workout each day improved health more than was previously thought to be the case 
C) a decrease in the price of steel used to produce the equipment 
D) all of the above 
A) a reduction in consumer income 
B) a major study indicating that a 30-minute workout each day improved health more than was previously thought to be the case 
C) a decrease in the price of steel used to produce the equipment 
D) all of the above

Question 3

Suppose demand increases and supply increases. Which of the following will happen?

Accepted Answer

A) Equilibrium price will rise, fall, or stay the same while equilibrium quantity will decrease. 
B) Equilibrium price will rise, fall, or stay the same while equilibrium quantity will increase. 
C) Equilibrium quantity will rise, fall, or stay the same and equilibrium price will increase. 
D) Equilibrium quantity will rise, fall, or stay the same while equilibrium price will decrease. 
E) The change in equilibrium price and quantity cannot be determined. 
A) Equilibrium price will rise, fall, or stay the same while equilibrium quantity will decrease. 
B) Equilibrium price will rise, fall, or stay the same while equilibrium quantity will increase. 
C) Equilibrium quantity will rise, fall, or stay the same and equilibrium price will increase. 
D) Equilibrium quantity will rise, fall, or stay the same while equilibrium price will decrease. 
E) The change in equilibrium price and quantity cannot be determined.

Question 4

Which of the following events would increase producer surplus?

Accepted Answer

A) Sellers' costs stay the same and the price of the good increases. 
B) Sellers' costs increase and the price of the good stays the same. 
C) Sellers' costs increase and the price of the good decreases. 
D) All of the above are correct. 
A) Sellers' costs stay the same and the price of the good increases. 
B) Sellers' costs increase and the price of the good stays the same. 
C) Sellers' costs increase and the price of the good decreases. 
D) All of the above are correct.

Question 5

In which statement(s) are "supply" and "quantity supplied" used correctly? (I) "An increase in the price of toasters will increase the quantity supplied of toasters."
(II) "A technological advance that lowers the cost of producing toasters will increase the supply of toasters."

Accepted Answer

A) in both statements I and II 
B) in statement I only 
C) in statement II only 
D) in neither statements I nor II 
A) in both statements I and II 
B) in statement I only 
C) in statement II only 
D) in neither statements I nor II

Question 6

If people expect the price of shorts to rise next month, the demand for shorts will

Accepted Answer

A) decrease now. 
B) increase now. 
C) stay the same now and increase next month. 
D) stay the same now and decrease next month. 
E) stay the same now and next month. 
A) decrease now. 
B) increase now. 
C) stay the same now and increase next month. 
D) stay the same now and decrease next month. 
E) stay the same now and next month.

Question 7

Figure 3-18  
-Refer to Figure 3-18. When the price falls from P1 to P2, which area represents the increase in consumer surplus to new buyers entering the market?

Accepted Answer

A) ABD 
B) ACF 
C) BCDE 
D) DEF 
A) ABD 
B) ACF 
C) BCDE 
D) DEF

Question 8

Suppose a new law requires all piercing studios to pass tougher licensing tests and to begin using more costly sterilization methods. Other things constant, this law would cause

Accepted Answer

A) an increase in the supply of piercings and a lower price for piercings. 
B) an increase in the supply of piercings and a higher price for piercings. 
C) a decrease in the supply of piercings and a higher price for piercings. 
D) a decrease in the supply of piercings and a lower price for piercings. 
A) an increase in the supply of piercings and a lower price for piercings. 
B) an increase in the supply of piercings and a higher price for piercings. 
C) a decrease in the supply of piercings and a higher price for piercings. 
D) a decrease in the supply of piercings and a lower price for piercings.

Question 9

A decrease in demand will cause

Accepted Answer

A) an increase in supply. 
B) a decrease in supply. 
C) an increase in quantity supplied. 
D) a decrease in quantity supplied. 
E) an increase in equilibrium price. 
A) an increase in supply. 
B) a decrease in supply. 
C) an increase in quantity supplied. 
D) a decrease in quantity supplied. 
E) an increase in equilibrium price.

Question 10

Figure 3-2  
-Given the supply and demand conditions illustrated in Figure 3-2, the equilibrium price of steak is

Accepted Answer

A) $2 per pound. 
B) $4 per pound. 
C) $6 per pound. 
D) $8 per pound. 
A) $2 per pound. 
B) $4 per pound. 
C) $6 per pound. 
D) $8 per pound.

Question 11

An important assumption that is made when constructing a demand schedule is that

Accepted Answer

A) only price and quantity matter in determining demand. 
B) people always want a certain amount of a product. 
C) demand is too important to be left to the economists. 
D) all other determinants of demand are held constant. 
E) demand has a positive slope. 
A) only price and quantity matter in determining demand. 
B) people always want a certain amount of a product. 
C) demand is too important to be left to the economists. 
D) all other determinants of demand are held constant. 
E) demand has a positive slope.

Question 12

"The operator of the tunnel that links Britain and France, Eurotunnel, said that commercial and tourist traffic using its car and coach shuttle service had fallen sharply in 2004, leading to a drop in operating revenues of 4%. Eurotunnel's chief executive, Jean-Louis Raymond, blamed cut-throat competition from budget airlines." (news story, January 2005)
a.If Mr.Raymond is correct, are the services of airlines and Eurotunnel substitutes or complements?
b.Use demand and supply analysis to explain how lower airfares between Paris and London impact the market for the shuttle services of Eurotunnel.

Accepted Answer

a.
substitutes
b.
The lower ai

Question 13

If the United Auto Workers union can obtain a substantial wage increase for auto workers, there will be

Accepted Answer

A) a decrease in the supply of automobiles, which is a shift to the right of the supply curve. 
B) a decrease in the supply of automobiles, which is a shift to the left of the supply curve. 
C) an increase in the supply of automobiles, which is a shift to the right of the supply curve. 
D) an increase in the supply of automobiles, which is a shift to the left of the supply curve. 
A) a decrease in the supply of automobiles, which is a shift to the right of the supply curve. 
B) a decrease in the supply of automobiles, which is a shift to the left of the supply curve. 
C) an increase in the supply of automobiles, which is a shift to the right of the supply curve. 
D) an increase in the supply of automobiles, which is a shift to the left of the supply curve.

Question 14

Velcro is becoming more and more popular for a variety of uses, including as fasteners for shoes. What should happen to the equilibrium price and quantity for shoelaces as a result?

Accepted Answer

A) Both price and quantity will increase. 
B) Both price and quantity will decrease. 
C) Price will increase and quantity decrease. 
D) Price will decrease and quantity increase. 
E) Nothing. 
A) Both price and quantity will increase. 
B) Both price and quantity will decrease. 
C) Price will increase and quantity decrease. 
D) Price will decrease and quantity increase. 
E) Nothing.

Question 15

An increase in the demand for a good means that

Accepted Answer

A) the demand curve has shifted to the left. 
B) the good's price has fallen and, as a result, consumers are buying more of the good. 
C) the good has become scarce. 
D) consumers are willing to purchase more of the good at each possible price. 
A) the demand curve has shifted to the left. 
B) the good's price has fallen and, as a result, consumers are buying more of the good. 
C) the good has become scarce. 
D) consumers are willing to purchase more of the good at each possible price.

Question 16

Which of the following would most likely increase the price of automobiles?

Accepted Answer

A) a decrease in the price of steel used to produce automobiles 
B) an increase in the price of gasoline 
C) a decrease in consumer income 
D) the United Auto Workers union obtaining a substantial wage increase for auto workers 
A) a decrease in the price of steel used to produce automobiles 
B) an increase in the price of gasoline 
C) a decrease in consumer income 
D) the United Auto Workers union obtaining a substantial wage increase for auto workers

Question 17

Use the table below to choose the correct answer. The table is a schedule of the supply and demand for coffee (both given in thousands of pounds per month).   The equilibrium market price of coffee would be

Accepted Answer

A) $6 per pound. 
B) $8 per pound. 
C) $10 per pound. 
D) $12 per pound. 
A) $6 per pound. 
B) $8 per pound. 
C) $10 per pound. 
D) $12 per pound.

Question 18

Figure 3-15  
-Refer to Figure 3-15. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers?

Accepted Answer

A) BCE 
B) ACF 
C) DEF 
D) ABED 
A) BCE 
B) ACF 
C) DEF 
D) ABED

Question 19

If we observe a decrease in the price of a good and an increase in the amount of the good bought and sold, this could be explained by

Accepted Answer

A) an increase in the supply of the good. 
B) an increase in the demand for the good. 
C) a decrease in the demand for the good. 
D) a decrease in the supply of the good. 
A) an increase in the supply of the good. 
B) an increase in the demand for the good. 
C) a decrease in the demand for the good. 
D) a decrease in the supply of the good.

Question 20

How will an increase in the price of coffee affect the market for cocoa, a substitute good?

Accepted Answer

A) The supply of cocoa will increase, leading to a reduction in the price of cocoa. 
B) The supply of cocoa will decrease, leading to an increase in the price of cocoa. 
C) The demand for cocoa will increase, leading to an increase in the price of cocoa. 
D) The demand for cocoa will decrease, leading to a reduction in the price of cocoa. 
A) The supply of cocoa will increase, leading to a reduction in the price of cocoa. 
B) The supply of cocoa will decrease, leading to an increase in the price of cocoa. 
C) The demand for cocoa will increase, leading to an increase in the price of cocoa. 
D) The demand for cocoa will decrease, leading to a reduction in the price of cocoa.

If the number of consumers in a market increases, the market demand curve will

Which of the following would increase the price of fitness equipment?

Suppose demand increases and supply increases. Which of the following will happen?

Which of the following events would increase producer surplus?

In which statement(s) are "supply" and "quantity supplied" used correctly? (I) "An increase in the price of toasters will increase the quantity supplied of toasters." (II) "A technological advance that lowers the cost of producing toasters will increase the supply of toasters."

If people expect the price of shorts to rise next month, the demand for shorts will

Figure 3-18 -Refer to Figure 3-18. When the price falls from P₁ to P₂, which area represents the increase in consumer surplus to new buyers entering the market?

Suppose a new law requires all piercing studios to pass tougher licensing tests and to begin using more costly sterilization methods. Other things constant, this law would cause

A decrease in demand will cause

Figure 3-2 -Given the supply and demand conditions illustrated in Figure 3-2, the equilibrium price of steak is

An important assumption that is made when constructing a demand schedule is that

If the United Auto Workers union can obtain a substantial wage increase for auto workers, there will be

Velcro is becoming more and more popular for a variety of uses, including as fasteners for shoes. What should happen to the equilibrium price and quantity for shoelaces as a result?

An increase in the demand for a good means that

Which of the following would most likely increase the price of automobiles?

Use the table below to choose the correct answer. The table is a schedule of the supply and demand for coffee (both given in thousands of pounds per month). The equilibrium market price of coffee would be

Figure 3-15 -Refer to Figure 3-15. When the price rises from P₁ to P₂, which area represents the increase in producer surplus to existing producers?

If we observe a decrease in the price of a good and an increase in the amount of the good bought and sold, this could be explained by

How will an increase in the price of coffee affect the market for cocoa, a substitute good?

The Economic Approach

Some Tools of the Economist

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters

Exam 3: Demand, Supply, and the Market Process

If the number of consumers in a market increases, the market demand curve will

Which of the following would increase the price of fitness equipment?

Suppose demand increases and supply increases. Which of the following will happen?

Which of the following events would increase producer surplus?

In which statement(s) are "supply" and "quantity supplied" used correctly? (I) "An increase in the price of toasters will increase the quantity supplied of toasters." (II) "A technological advance that lowers the cost of producing toasters will increase the supply of toasters."

If people expect the price of shorts to rise next month, the demand for shorts will

Figure 3-18 -Refer to Figure 3-18. When the price falls from P1 to P2, which area represents the increase in consumer surplus to new buyers entering the market?

Suppose a new law requires all piercing studios to pass tougher licensing tests and to begin using more costly sterilization methods. Other things constant, this law would cause

A decrease in demand will cause

Figure 3-2 -Given the supply and demand conditions illustrated in Figure 3-2, the equilibrium price of steak is

An important assumption that is made when constructing a demand schedule is that

If the United Auto Workers union can obtain a substantial wage increase for auto workers, there will be

Velcro is becoming more and more popular for a variety of uses, including as fasteners for shoes. What should happen to the equilibrium price and quantity for shoelaces as a result?

An increase in the demand for a good means that

Which of the following would most likely increase the price of automobiles?

Use the table below to choose the correct answer. The table is a schedule of the supply and demand for coffee (both given in thousands of pounds per month). The equilibrium market price of coffee would be

Figure 3-15 -Refer to Figure 3-15. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers?

If we observe a decrease in the price of a good and an increase in the amount of the good bought and sold, this could be explained by

How will an increase in the price of coffee affect the market for cocoa, a substitute good?

The Economic Approach

Some Tools of the Economist

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters

Figure 3-18 -Refer to Figure 3-18. When the price falls from P₁ to P₂, which area represents the increase in consumer surplus to new buyers entering the market?

Figure 3-15 -Refer to Figure 3-15. When the price rises from P₁ to P₂, which area represents the increase in producer surplus to existing producers?