Question 1

Which of the following will definitely result in an increase in the equilibrium price?

Accepted Answer

A) an increase in both demand and supply 
B) a decrease in both demand and supply 
C) an increase in demand combined with a decrease in supply 
D) a decrease in demand combined with an increase in supply 
E) an increase in supply combined with a decrease in demand 
A) an increase in both demand and supply 
B) a decrease in both demand and supply 
C) an increase in demand combined with a decrease in supply 
D) a decrease in demand combined with an increase in supply 
E) an increase in supply combined with a decrease in demand

Question 2

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.The price of cream falls.Simultaneously,there is an increase in the wages of farm workers who harvest coffee beans.The equilibrium quantity of coffee

Accepted Answer

A) increases. 
B) decreases. 
C) remains the same. 
D) increases or decreases depending on the slope of the supply and demand curves. 
E) increases, decreases, or remains the same depending on the relative shifts of the supply and demand curves. 
A) increases. 
B) decreases. 
C) remains the same. 
D) increases or decreases depending on the slope of the supply and demand curves. 
E) increases, decreases, or remains the same depending on the relative shifts of the supply and demand curves.

Question 3

There have been severe falls in the fish stocks in the Atlantic fishing industry.As a result,we would expect

Accepted Answer

A) an increase in the demand for meat (e.g., beef), because meat is a complement of fish. 
B) a fall in the price of fish, leading to a decrease in the demand for meat, because meat and fish are substitutes. 
C) a fall in the price of fish, leading to an increase in the demand for meat, because meat and fish are substitutes. 
D) an increase in the demand for meat, because meat is a substitute for fish. 
E) a rise in the price of fish, leading to a decrease in the demand for meat, because meat and fish are complements. 
A) an increase in the demand for meat (e.g., beef), because meat is a complement of fish. 
B) a fall in the price of fish, leading to a decrease in the demand for meat, because meat and fish are substitutes. 
C) a fall in the price of fish, leading to an increase in the demand for meat, because meat and fish are substitutes. 
D) an increase in the demand for meat, because meat is a substitute for fish. 
E) a rise in the price of fish, leading to a decrease in the demand for meat, because meat and fish are complements.

Question 4

All shredded wheat producers have decided to add a new ingredient,the "crunch enhancer" to shredded wheat.Crunch enhancer keeps cereals crisper longer in milk and,as a result,consumers decide they like shredded wheat more than before.What happens to the supply and demand curves for shredded wheat now that it costs more to produce and consumers like it better?

Accepted Answer

A) The supply and demand curves both shift rightward. 
B) The supply curve shifts rightward and the demand curve remains unchanged. 
C) The supply curve shifts leftward and the demand curve shifts rightward. 
D) The supply curve shifts leftward and the demand curve remains unchanged. 
E) Neither curve changes but a movement occurs up along the demand curve and a movement occurs up along the supply curve. 
A) The supply and demand curves both shift rightward. 
B) The supply curve shifts rightward and the demand curve remains unchanged. 
C) The supply curve shifts leftward and the demand curve shifts rightward. 
D) The supply curve shifts leftward and the demand curve remains unchanged. 
E) Neither curve changes but a movement occurs up along the demand curve and a movement occurs up along the supply curve.

Question 5

Use the figure below to answer the following questions.
   
Figure 3.4.2
-If the market for Twinkies is in equilibrium,then

Accepted Answer

A) Twinkies must be a normal good. 
B) producers would like to sell more at the current price. 
C) consumers would like to buy more at the current price. 
D) there is a surplus. 
E) the equilibrium quantity equals the quantity demanded. 
A) Twinkies must be a normal good. 
B) producers would like to sell more at the current price. 
C) consumers would like to buy more at the current price. 
D) there is a surplus. 
E) the equilibrium quantity equals the quantity demanded.

Question 6

Use the figure below to answer the following questions.
   
Figure 3.4.2
-Refer to Figure 3.4.2.When the price is $10 a unit

Accepted Answer

A) consumers will buy only 100 units of output. 
B) consumers will buy 500 units of output. 
C) consumers will buy nothing. 
D) a shortage occurs. 
E) the surplus is zero. 
A) consumers will buy only 100 units of output. 
B) consumers will buy 500 units of output. 
C) consumers will buy nothing. 
D) a shortage occurs. 
E) the surplus is zero.

Question 7

Use the figure below to answer the following questions.
   
Figure 3.5.2
Original equilibrium at 1.
-Refer to Figure 3.5.2,which represents the market for cow manure.If the price of milk,a complement in production of manure,rises,what is the new manure equilibrium,ceteris paribus?

Accepted Answer

A) 8 
B) 3 
C) 9 
D) 5 
E) 6 
A) 8 
B) 3 
C) 9 
D) 5 
E) 6

Question 8

Some producers are chatting over a beer.Which one of the following quotations refers to a movement along the supply curve?

Accepted Answer

A) "Wage increases have forced us to raise our prices." 
B) "Our new, sophisticated equipment will enable us to undercut our competitors." 
C) "Raw material prices have sky-rocketed;we will have to pass the cost on to our customers." 
D) "We anticipate a big increase in demand.Our product price should rise, so we are planning for an increase in output." 
E) "New competitors in the industry are causing prices to fall." 
A) "Wage increases have forced us to raise our prices." 
B) "Our new, sophisticated equipment will enable us to undercut our competitors." 
C) "Raw material prices have sky-rocketed;we will have to pass the cost on to our customers." 
D) "We anticipate a big increase in demand.Our product price should rise, so we are planning for an increase in output." 
E) "New competitors in the industry are causing prices to fall."

Question 9

Which of the following events leads to a rise in the price of oranges?

Accepted Answer

A) a rise in the price of apples if apples and oranges are substitutes 
B) a scientific discovery that oranges cause hair loss 
C) a decrease in income if oranges are a normal good 
D) good growing weather in Florida 
E) a technological improvement in the production of oranges 
A) a rise in the price of apples if apples and oranges are substitutes 
B) a scientific discovery that oranges cause hair loss 
C) a decrease in income if oranges are a normal good 
D) good growing weather in Florida 
E) a technological improvement in the production of oranges

Question 10

If a turnip is an inferior good,then,ceteris paribus,an increase in the price of a turnip will

Accepted Answer

A) decrease the demand for turnips. 
B) increase the demand for turnips. 
C) decrease the supply of turnips. 
D) increase the supply of turnips. 
E) none of the above. 
A) decrease the demand for turnips. 
B) increase the demand for turnips. 
C) decrease the supply of turnips. 
D) increase the supply of turnips. 
E) none of the above.

Question 11

Some sales managers are talking shop.Which of the following quotations refers to a movement along the demand curve?

Accepted Answer

A) "Since our competitors raised their prices, our sales have doubled." 
B) "It has been an unusually mild winter;our sales of wool scarves are down from last year." 
C) "We decided to cut our prices, and the increase in our sales has been remarkable." 
D) "The Green movement has sparked an increase in our sales of biodegradable products." 
E) None of the above. 
A) "Since our competitors raised their prices, our sales have doubled." 
B) "It has been an unusually mild winter;our sales of wool scarves are down from last year." 
C) "We decided to cut our prices, and the increase in our sales has been remarkable." 
D) "The Green movement has sparked an increase in our sales of biodegradable products." 
E) None of the above.

Question 12

Use the figure below to answer the following questions.
   
Figure 3.5.1
-Initially,the demand curve for good A is D? in Figure 3.5.1.If income increases and A is a normal good,we would expect to see a movement from point A to point

Accepted Answer

A) B. 
B) C. 
C) D. 
D) E. 
E) C and back to point A. 
A) B. 
B) C. 
C) D. 
D) E. 
E) C and back to point A.

Question 13

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 and the quantity of coffee demanded at each price doubles.In addition,a premature frost destroys half the coffee trees and the supply of coffee is cut in half.The new equilibrium price is $________ and the new equilibrium quantity is ________ cups a day.

Accepted Answer

A) 1.10;400 
B) 1.10;1,600 
C) 1.10;800 
D) 1.50;800 
E) 1.50;400. 
A) 1.10;400 
B) 1.10;1,600 
C) 1.10;800 
D) 1.50;800 
E) 1.50;400.

Question 14

"As fewer people buy computers,the demand for Internet service will decrease and the price of Internet service will increase.The rise in the price of Internet service will increase the supply of Internet service." This statement is ________ because ________.

Accepted Answer

A) false;the decrease in the demand for Internet service creates a surplus and to eliminate the surplus, supply increases 
B) true;when the demand for Internet service increases, the supply of Internet service increases so that the price of Internet service does not increase 
C) true, when the demand for Internet service increases, the supply of Internet service increases too so that no surplus occurs 
D) true;the increase in the price of Internet service increases the supply of Internet service to eliminate the shortage 
E) false;a decrease in demand for Internet service does not increase the price of Internet service and an increase in the price of Internet service does not increase the supply of Internet service 
A) false;the decrease in the demand for Internet service creates a surplus and to eliminate the surplus, supply increases 
B) true;when the demand for Internet service increases, the supply of Internet service increases so that the price of Internet service does not increase 
C) true, when the demand for Internet service increases, the supply of Internet service increases too so that no surplus occurs 
D) true;the increase in the price of Internet service increases the supply of Internet service to eliminate the shortage 
E) false;a decrease in demand for Internet service does not increase the price of Internet service and an increase in the price of Internet service does not increase the supply of Internet service

Question 15

Use the figure below to answer the following questions.
   
Figure 3.4.2
-The price of a good will tend to fall if

Accepted Answer

A) there is a surplus at the current price. 
B) the current price is below the equilibrium price. 
C) the quantity supplied exceeds the quantity demanded at the current price. 
D) both A and C are true. 
E) none of the above are true. 
A) there is a surplus at the current price. 
B) the current price is below the equilibrium price. 
C) the quantity supplied exceeds the quantity demanded at the current price. 
D) both A and C are true. 
E) none of the above are true.

Question 16

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.If the price is set at $1.30 per cup,there is a ________ leading to a price ________.

Accepted Answer

A) shortage;rise 
B) shortage;fall 
C) surplus;rise 
D) surplus;fall 
E) equilibrium;rise 
A) shortage;rise 
B) shortage;fall 
C) surplus;rise 
D) surplus;fall 
E) equilibrium;rise

Question 17

A technological improvement in the production of good A

Accepted Answer

A) decreases the supply of A. 
B) increases the demand for A. 
C) decreases the equilibrium price of A and decreases the equilibrium quantity. 
D) decreases the quantity demanded of A. 
E) increases the supply of A. 
A) decreases the supply of A. 
B) increases the demand for A. 
C) decreases the equilibrium price of A and decreases the equilibrium quantity. 
D) decreases the quantity demanded of A. 
E) increases the supply of A.

Question 18

A relative price is

Accepted Answer

A) the ratio of one price to another. 
B) an opportunity cost. 
C) a quantity of a "basket" of goods and services forgone. 
D) determined by demand and supply. 
E) all of the above. 
A) the ratio of one price to another. 
B) an opportunity cost. 
C) a quantity of a "basket" of goods and services forgone. 
D) determined by demand and supply. 
E) all of the above.

Exam 3: Demand and Supply

Which of the following will definitely result in an increase in the equilibrium price?

There have been severe falls in the fish stocks in the Atlantic fishing industry.As a result,we would expect

Use the figure below to answer the following questions. Figure 3.4.2 -If the market for Twinkies is in equilibrium,then

Use the figure below to answer the following questions. Figure 3.4.2 -Refer to Figure 3.4.2.When the price is $10 a unit

Use the figure below to answer the following questions. Figure 3.5.2 Original equilibrium at 1. -Refer to Figure 3.5.2,which represents the market for cow manure.If the price of milk,a complement in production of manure,rises,what is the new manure equilibrium,ceteris paribus?

Some producers are chatting over a beer.Which one of the following quotations refers to a movement along the supply curve?

Which of the following events leads to a rise in the price of oranges?

If a turnip is an inferior good,then,ceteris paribus,an increase in the price of a turnip will

Some sales managers are talking shop.Which of the following quotations refers to a movement along the demand curve?

Use the figure below to answer the following questions. Figure 3.5.1 -Initially,the demand curve for good A is D? in Figure 3.5.1.If income increases and A is a normal good,we would expect to see a movement from point A to point

"As fewer people buy computers,the demand for Internet service will decrease and the price of Internet service will increase.The rise in the price of Internet service will increase the supply of Internet service." This statement is ________ because ________.

Use the figure below to answer the following questions. Figure 3.4.2 -The price of a good will tend to fall if

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.If the price is set at $1.30 per cup,there is a ________ leading to a price ________.

A technological improvement in the production of good A

A relative price is

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

"As fewer people buy computers,the demand for Internet service will decrease and the price of Internet service will increase.The rise in the price of Internet service will increase the supply of Internet service." This statement is because .

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.If the price is set at $1.30 per cup,there is a leading to a price .