Question 1

Total consumer surplus is measured by the total area under the market demand curve and below the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 2

Exhibit 3-2 Demand curves
​  
-In Exhibit 3-2, which of the following could not have caused the shift in the demand curve from D1 to D2?

Accepted Answer

A)  Decrease in the number of consumers. 
B)  Increase in expected future prices. 
C)  Increase in the price of a substitute. 
D)  Decrease in the price of a complement. 
E)  Increase in income. 
A)  Decrease in the number of consumers. 
B)  Increase in expected future prices. 
C)  Increase in the price of a substitute. 
D)  Decrease in the price of a complement. 
E)  Increase in income.

Question 3

​ Market equilibrium is:

Accepted Answer

A)  ​defined as the condition in which there is neither a shortage or surplus. 
B)  ​ defined as the condition under which the separately formulated plans of buyers and sellers exactly mesh when tested in the market. 
C)  ​ represented graphically by the intersection of the supply and demand curves. 
D)  ​ all of the above. 
A)  ​defined as the condition in which there is neither a shortage or surplus. 
B)  ​ defined as the condition under which the separately formulated plans of buyers and sellers exactly mesh when tested in the market. 
C)  ​ represented graphically by the intersection of the supply and demand curves. 
D)  ​ all of the above.

Question 4

The law of demand refers to the:

Accepted Answer

A)  tendency of prices to increase as more units of a product are demanded. 
B)  increase in price that results from an increase in demand for a good with a limited supply. 
C)  inverse relationship between the price of a good and the quantity of the good demanded. 
D)  increase in the quantity of a good available as the price of the good increases. 
A)  tendency of prices to increase as more units of a product are demanded. 
B)  increase in price that results from an increase in demand for a good with a limited supply. 
C)  inverse relationship between the price of a good and the quantity of the good demanded. 
D)  increase in the quantity of a good available as the price of the good increases.

Question 5

Producer surplus is the:

Accepted Answer

A)  number of producers who are excluded from a market because of scarcity. 
B)  amount of a good that a producers will sell at a price below the equilibrium price. 
C)  amount consumers actually pay for a good minus the amount the sellers are willing to sell the good. 
D)  amount consumers are willing to pay for a good minus the cost of producing the good. 
A)  number of producers who are excluded from a market because of scarcity. 
B)  amount of a good that a producers will sell at a price below the equilibrium price. 
C)  amount consumers actually pay for a good minus the amount the sellers are willing to sell the good. 
D)  amount consumers are willing to pay for a good minus the cost of producing the good.

Question 6

If the demand for a good increases because consumer income increases, the good is a(n):

Accepted Answer

A)  inferior good. 
B)  normal good. 
C)  necessity good. 
D)  luxury good. 
A)  inferior good. 
B)  normal good. 
C)  necessity good. 
D)  luxury good.

Question 7

A shortage occurs when the quantity demanded exceeds the quantity supplied.

Accepted Answer

A) True 
 B)False

Question 8

​ Exhibit 3-16 Supply and demand curves for chairs
​   ​
​
-In Exhibit 3-16, if the market price of chairs is initially $15, a movement toward equilibrium would require:

Accepted Answer

A)  ​no change, because an equilibrium already exists. 
B)  ​the price to fall below $15 and both the quantity supplied and the quantity demanded to fall. 
C)  ​the price to remain the same, but the supply curve to shift to the left. 
D)  ​the price to fall below $15, the quantity supplied to fall, and the quantity demanded to rise.​ 
A)  ​no change, because an equilibrium already exists. 
B)  ​the price to fall below $15 and both the quantity supplied and the quantity demanded to fall. 
C)  ​the price to remain the same, but the supply curve to shift to the left. 
D)  ​the price to fall below $15, the quantity supplied to fall, and the quantity demanded to rise.​

Question 9

An increase in the number of producers will:

Accepted Answer

A)  increase the market supply, because the price will rise. 
B)  increase the market supply only when market demand increases too. 
C)  increase the market supply, because market supply is the sum of all individual supply curves. 
D)  increase the market supply only if each supplier has an identical supply curve. 
E)  decrease the market supply, because firms compete with each other and each firm will supply more. 
A)  increase the market supply, because the price will rise. 
B)  increase the market supply only when market demand increases too. 
C)  increase the market supply, because market supply is the sum of all individual supply curves. 
D)  increase the market supply only if each supplier has an identical supply curve. 
E)  decrease the market supply, because firms compete with each other and each firm will supply more.

Question 10

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 11

The most plausible reason why changes in the price of cotton can cause shifts in the supply curve for tobacco is:

Accepted Answer

A)  cigarette smokers often wear cotton shirts. 
B)  when incomes rise, people consume more cotton and tobacco. 
C)  firms can switch from growing tobacco to cotton and vice versa. 
D)  tobacco is an input in the production of cotton. 
E)  cotton and tobacco are unrelated markets in all ways. 
A)  cigarette smokers often wear cotton shirts. 
B)  when incomes rise, people consume more cotton and tobacco. 
C)  firms can switch from growing tobacco to cotton and vice versa. 
D)  tobacco is an input in the production of cotton. 
E)  cotton and tobacco are unrelated markets in all ways.

Question 12

Exhibit 3-3 Demand curves  
-Which of the graphs in Exhibit 3-3 depicts the effect of an increase in income on the demand for DVDs (a normal good)?

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.

Total consumer surplus is measured by the total area under the market demand curve and below the equilibrium price.

Exhibit 3-2 Demand curves -In Exhibit 3-2, which of the following could not have caused the shift in the demand curve from D₁ to D₂?

Market equilibrium is:

The law of demand refers to the:

Producer surplus is the:

If the demand for a good increases because consumer income increases, the good is a(n):

A shortage occurs when the quantity demanded exceeds the quantity supplied.

Exhibit 3-16 Supply and demand curves for chairs -In Exhibit 3-16, if the market price of chairs is initially $15, a movement toward equilibrium would require:

An increase in the number of producers will:

An increase in the demand for a good means that:

The most plausible reason why changes in the price of cotton can cause shifts in the supply curve for tobacco is:

Exhibit 3-3 Demand curves -Which of the graphs in Exhibit 3-3 depicts the effect of an increase in income on the demand for DVDs (a normal good)?

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

Filters

Exam 3: Market Demand and Supply

Total consumer surplus is measured by the total area under the market demand curve and below the equilibrium price.

Exhibit 3-2 Demand curves ​ -In Exhibit 3-2, which of the following could not have caused the shift in the demand curve from D1 to D2?

​ Market equilibrium is:

The law of demand refers to the:

Producer surplus is the:

If the demand for a good increases because consumer income increases, the good is a(n):

A shortage occurs when the quantity demanded exceeds the quantity supplied.

​ Exhibit 3-16 Supply and demand curves for chairs ​ ​ ​ -In Exhibit 3-16, if the market price of chairs is initially $15, a movement toward equilibrium would require:

An increase in the number of producers will:

An increase in the demand for a good means that:

The most plausible reason why changes in the price of cotton can cause shifts in the supply curve for tobacco is:

Exhibit 3-3 Demand curves -Which of the graphs in Exhibit 3-3 depicts the effect of an increase in income on the demand for DVDs (a normal good)?

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

Filters

Exhibit 3-2 Demand curves -In Exhibit 3-2, which of the following could not have caused the shift in the demand curve from D₁ to D₂?

Market equilibrium is:

Exhibit 3-16 Supply and demand curves for chairs -In Exhibit 3-16, if the market price of chairs is initially $15, a movement toward equilibrium would require: