Question 1

Use the table below to answer the following questions.
Table 3.1.1
  
-Refer to Table 3.1.1.In 2012,the relative price of coffee in terms of cola is

Accepted Answer

A) 1.25. 
B) 1.00. 
C) 0.67. 
D) 1.56. 
E) unknown without more information. 
A) 1.25. 
B) 1.00. 
C) 0.67. 
D) 1.56. 
E) unknown without more information. A

Question 2

Use the figure below to answer the following questions.
   
Figure 3.4.2
-Which one of the following correctly describes how price adjustment eliminates a shortage?

Accepted Answer

A) As the price rises, the quantity demanded decreases and the quantity supplied increases. 
B) As the price rises, the quantity demanded increases and the quantity supplied decreases. 
C) As the price falls, the quantity demanded decreases and the quantity supplied increases. 
D) As the price falls, the quantity demanded increases and the quantity supplied decreases. 
E) As the price falls, the quantity demanded increases and the quantity supplied increases. 
A) As the price rises, the quantity demanded decreases and the quantity supplied increases. 
B) As the price rises, the quantity demanded increases and the quantity supplied decreases. 
C) As the price falls, the quantity demanded decreases and the quantity supplied increases. 
D) As the price falls, the quantity demanded increases and the quantity supplied decreases. 
E) As the price falls, the quantity demanded increases and the quantity supplied increases. A

Question 3

When the supply of good A decreases,

Accepted Answer

A) the equilibrium price and the equilibrium quantity will increase. 
B) the equilibrium price will increase but the equilibrium quantity will decrease. 
C) the equilibrium price and the equilibrium quantity will decrease. 
D) the equilibrium price will decrease but the equilibrium quantity will increase. 
E) a surplus will result. 
A) the equilibrium price and the equilibrium quantity will increase. 
B) the equilibrium price will increase but the equilibrium quantity will decrease. 
C) the equilibrium price and the equilibrium quantity will decrease. 
D) the equilibrium price will decrease but the equilibrium quantity will increase. 
E) a surplus will result. B

Question 4

If a factor of production can be used to produce either good A or good B,then A and B are

Accepted Answer

A) substitutes in production. 
B) complements in production. 
C) substitutes. 
D) complements. 
E) normal goods. 
A) substitutes in production. 
B) complements in production. 
C) substitutes. 
D) complements. 
E) normal goods.

Question 5

Use the table below to answer the following questions.
Table 3.5.1
The Market for Car-Seat Heaters
  
-Refer to Table 3.5.1.Suppose the cost of production rises,causing supply to decrease by 100 units at each price.The new equilibrium price is $________ and equilibrium quantity is ________ units.

Accepted Answer

A) 70;450 
B) 70;350 
C) 50;450 
D) 50;350 
E) 60;400 
A) 70;450 
B) 70;350 
C) 50;450 
D) 50;350 
E) 60;400

Question 6

Use the figure below to answer the following questions.
Table 3.5.2
Demand and Supply Schedules for Cups of Coffee each day at CoolU
  
-Refer to Table 3.5.2.Professor Hyper publishes a new study,showing that coffee raises the test performance of students.Students double their demand for coffee.This change would be represented as a

Accepted Answer

A) leftward shift of the demand curve. 
B) rightward shift of the demand curve. 
C) leftward shift of the supply curve. 
D) rightward shift of the supply curve. 
E) movement up along the demand curve. 
A) leftward shift of the demand curve. 
B) rightward shift of the demand curve. 
C) leftward shift of the supply curve. 
D) rightward shift of the supply curve. 
E) movement up along the demand curve.

Question 7

The law of supply tells us that other things remaining the same,as the

Accepted Answer

A) price of gasoline falls, the quantity of gasoline supplied decreases. 
B) price of gasoline rises, the quantity of gasoline supplied decreases. 
C) supply of gasoline increases, the price of gasoline falls. 
D) cost of producing gasoline falls, the supply of gasoline will increase. 
E) cost of producing gasoline increases, the price of gasoline rises. 
A) price of gasoline falls, the quantity of gasoline supplied decreases. 
B) price of gasoline rises, the quantity of gasoline supplied decreases. 
C) supply of gasoline increases, the price of gasoline falls. 
D) cost of producing gasoline falls, the supply of gasoline will increase. 
E) cost of producing gasoline increases, the price of gasoline rises.

Question 8

The demand curve for knobs is P = 75 - 6QD and the supply curve for knobs is P = 35 + 2QS.What is the equilibrium price of a knob?

Accepted Answer

A) $5 
B) $10 
C) $40 
D) $45 
E) None of the above. 
A) $5 
B) $10 
C) $40 
D) $45 
E) None of the above.

Question 9

An increase in supply is shown by

Accepted Answer

A) a movement down along the supply curve. 
B) a movement up along the supply curve. 
C) a rightward shift of the supply curve. 
D) a leftward shift of the supply curve. 
E) an initial movement up and then down along the same supply curve. 
A) a movement down along the supply curve. 
B) a movement up along the supply curve. 
C) a rightward shift of the supply curve. 
D) a leftward shift of the supply curve. 
E) an initial movement up and then down along the same supply curve.

Question 10

Which of the following will shift the supply curve of good X rightward?

Accepted Answer

A) a decrease in the wages of workers employed to produce good X 
B) an increase in the cost of capital used to produce good X 
C) an increase in the price of energy 
D) a decrease in the number of suppliers of good X 
E) the price of Y, a substitute in production for good X, rises 
A) a decrease in the wages of workers employed to produce good X 
B) an increase in the cost of capital used to produce good X 
C) an increase in the price of energy 
D) a decrease in the number of suppliers of good X 
E) the price of Y, a substitute in production for good X, rises

Question 11

The y- axis intercept of the supply curve is 40 and the slope is 6.The equation of the supply curve is ________.

Accepted Answer

A) P = 3 + 40QS 
B) P = 40 + 6QS 
C) P = 40 - 6QS 
D) QS = 40 + 6P 
E) QS = 40 - 6P 
A) P = 3 + 40QS 
B) P = 40 + 6QS 
C) P = 40 - 6QS 
D) QS = 40 + 6P 
E) QS = 40 - 6P

Question 12

Use the table below to answer the following questions.
Table 3.1.1
  
-Refer to Table 3.1.1.Between 2011 and 2012,the price of coffee relative to the price of tea ________ while the price of coffee relative to the price of cola ________.

Accepted Answer

A) rose;rose 
B) rose;fell 
C) fell;rose 
D) fell;fell 
E) fell;stayed constant 
A) rose;rose 
B) rose;fell 
C) fell;rose 
D) fell;fell 
E) fell;stayed constant

Question 13

People buy more of good 1 when the price of good 2 rises.Good 1 and good 2 are

Accepted Answer

A) complements. 
B) substitutes. 
C) normal goods. 
D) inferior goods. 
E) substitutes in production 
A) complements. 
B) substitutes. 
C) normal goods. 
D) inferior goods. 
E) substitutes in production

Question 14

If we observe a fall in the equilibrium price of good A,we know that either the demand for A has

Accepted Answer

A) increased or the supply of A has decreased or both. 
B) increased or the supply of A has increased or both. 
C) decreased or the supply of A has increased or both. 
D) decreased or the supply of A has decreased or both. 
E) none of the above. 
A) increased or the supply of A has decreased or both. 
B) increased or the supply of A has increased or both. 
C) decreased or the supply of A has increased or both. 
D) decreased or the supply of A has decreased or both. 
E) none of the above.

Question 15

The price of good A rises,and the demand curve for good B shifts leftward.We can conclude that

Accepted Answer

A) A and B are substitutes. 
B) A and B are complements. 
C) A and B are complements in production. 
D) B is an inferior good. 
E) B is a normal good. 
A) A and B are substitutes. 
B) A and B are complements. 
C) A and B are complements in production. 
D) B is an inferior good. 
E) B is a normal good.

Question 16

Crude oil is a very important factor of production used in the production of gasoline.If the price of crude oil rises,we would expect the

Accepted Answer

A) price of gasoline to rise due to an increase in demand. 
B) price of gasoline to fall due to an increase in demand. 
C) price of gasoline to rise due to a decrease in supply. 
D) equilibrium quantity of gasoline to fall due to an increase in supply. 
E) equilibrium quantity of gasoline to rise due to an increase in demand. 
A) price of gasoline to rise due to an increase in demand. 
B) price of gasoline to fall due to an increase in demand. 
C) price of gasoline to rise due to a decrease in supply. 
D) equilibrium quantity of gasoline to fall due to an increase in supply. 
E) equilibrium quantity of gasoline to rise due to an increase in demand.

Question 17

If goods X and Y are substitutes in production,then a rise in the price of good X

Accepted Answer

A) increases the demand for good Y. 
B) decreases the demand for good Y. 
C) increases the supply of good Y. 
D) decreases the supply of good Y. 
E) might change the supply of Y;it depends on whether X and Y are also substitutes. 
A) increases the demand for good Y. 
B) decreases the demand for good Y. 
C) increases the supply of good Y. 
D) decreases the supply of good Y. 
E) might change the supply of Y;it depends on whether X and Y are also substitutes.

Question 18

Use the information below to answer the following questions.
Fact 3.5.1
The market for coffee is initially in equilibrium.Pepsi is a substitute for coffee;cream is a complement of coffee.Consider the market for coffee.Assume that all ceteris paribus assumptions continue to hold except for the event listed.
-Refer to Fact 3.5.1.A technological improvement lowers the cost of producing coffee.At the same time,preferences for coffee decrease.The equilibrium quantity of coffee

Accepted Answer

A) increases. 
B) decreases. 
C) remains the same. 
D) increases or decreases depending on whether the price of coffee falls or rises. 
E) increases, decreases, or remains the same depending on the relative shifts of the demand and supply curves. 
A) increases. 
B) decreases. 
C) remains the same. 
D) increases or decreases depending on whether the price of coffee falls or rises. 
E) increases, decreases, or remains the same depending on the relative shifts of the demand and supply curves.

Question 19

Which one of the following will shift the supply curve of good X leftward?

Accepted Answer

A) a decrease in the wages of workers employed to produce X 
B) an increase in the cost of machinery used to produce X 
C) a technological improvement in the production of X 
D) a situation where quantity demanded exceeds quantity supplied 
E) a decrease in the cost of capital used to produce X 
A) a decrease in the wages of workers employed to produce X 
B) an increase in the cost of machinery used to produce X 
C) a technological improvement in the production of X 
D) a situation where quantity demanded exceeds quantity supplied 
E) a decrease in the cost of capital used to produce X

Question 20

"As domestic car prices have increased,consumers have found foreign cars to be a better bargain.Consequently,domestic car sales have fallen and foreign car sales have risen." Based on this information alone,there has been a

Accepted Answer

A) shift in the demand curves for both domestic and foreign cars. 
B) shift in the supply curves for both domestic and foreign cars. 
C) movement along the demand curves for both domestic and foreign cars. 
D) movement along the demand curve for domestic cars and a shift of the demand curve for foreign cars. 
E) shift of the demand curve for domestic cars and a movement along the demand curve for foreign cars. 
A) shift in the demand curves for both domestic and foreign cars. 
B) shift in the supply curves for both domestic and foreign cars. 
C) movement along the demand curves for both domestic and foreign cars. 
D) movement along the demand curve for domestic cars and a shift of the demand curve for foreign cars. 
E) shift of the demand curve for domestic cars and a movement along the demand curve for foreign cars.

Exam 3: Demand and Supply

Use the table below to answer the following questions. Table 3.1.1 -Refer to Table 3.1.1.In 2012,the relative price of coffee in terms of cola is

Use the figure below to answer the following questions. Figure 3.4.2 -Which one of the following correctly describes how price adjustment eliminates a shortage?

When the supply of good A decreases,

If a factor of production can be used to produce either good A or good B,then A and B are

Use the table below to answer the following questions. Table 3.5.1 The Market for Car-Seat Heaters -Refer to Table 3.5.1.Suppose the cost of production rises,causing supply to decrease by 100 units at each price.The new equilibrium price is $________ and equilibrium quantity is ________ units.

The law of supply tells us that other things remaining the same,as the

The demand curve for knobs is P = 75 - 6QD and the supply curve for knobs is P = 35 + 2QS.What is the equilibrium price of a knob?

An increase in supply is shown by

Which of the following will shift the supply curve of good X rightward?

The y- axis intercept of the supply curve is 40 and the slope is 6.The equation of the supply curve is ________.

Use the table below to answer the following questions. Table 3.1.1 -Refer to Table 3.1.1.Between 2011 and 2012,the price of coffee relative to the price of tea ________ while the price of coffee relative to the price of cola ________.

People buy more of good 1 when the price of good 2 rises.Good 1 and good 2 are

If we observe a fall in the equilibrium price of good A,we know that either the demand for A has

The price of good A rises,and the demand curve for good B shifts leftward.We can conclude that

Crude oil is a very important factor of production used in the production of gasoline.If the price of crude oil rises,we would expect the

If goods X and Y are substitutes in production,then a rise in the price of good X

Which one of the following will shift the supply curve of good X leftward?

"As domestic car prices have increased,consumers have found foreign cars to be a better bargain.Consequently,domestic car sales have fallen and foreign car sales have risen." Based on this information alone,there has been a

What Is Economics?

The Economic Problem

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: The Keynesian Model

Canadian Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Use the table below to answer the following questions. Table 3.5.1 The Market for Car-Seat Heaters -Refer to Table 3.5.1.Suppose the cost of production rises,causing supply to decrease by 100 units at each price.The new equilibrium price is $ and equilibrium quantity is units.

Use the table below to answer the following questions. Table 3.1.1 -Refer to Table 3.1.1.Between 2011 and 2012,the price of coffee relative to the price of tea while the price of coffee relative to the price of cola .