Question 1

Which of the following statements represents a correct and sequentially accurate economic explanation?

Accepted Answer

A) Good X is an inferior good and good Y is a substitute for X.Income rises, the demand for X falls, the price of X falls, and the demand for Y rises. 
B) Good X is an inferior good and good Y is a substitute for X.Income rises, the demand for X falls, the price of X falls, and the demand for Y falls. 
C) Good X is an inferior good and good Y is a substitute for X.Income falls, the demand for X rises, the price of X rises, and the demand for Y falls. 
D) Good X is an inferior good and good Y is a substitute for X.Income rises, the quantity demanded of X rises, the price of X rises, and the demand for Y falls. 
E) none of the above 
A) Good X is an inferior good and good Y is a substitute for X.Income rises, the demand for X falls, the price of X falls, and the demand for Y rises. 
B) Good X is an inferior good and good Y is a substitute for X.Income rises, the demand for X falls, the price of X falls, and the demand for Y falls. 
C) Good X is an inferior good and good Y is a substitute for X.Income falls, the demand for X rises, the price of X rises, and the demand for Y falls. 
D) Good X is an inferior good and good Y is a substitute for X.Income rises, the quantity demanded of X rises, the price of X rises, and the demand for Y falls. 
E) none of the above

Question 2

One point on a market supply curve represents $4 and 100 units quantity supplied. If there are three suppliers, and at a price of $4 one of the suppliers supplies 23 units, then which of the following combinations of price and quantity supplied might hold for the other two suppliers?

Accepted Answer

A) At $4, quantity supplied could be 40 units for one supplier and 27 for the other. 
B) At $4, quantity supplied could be 33 units for one supplier and 27 for the other. 
C) At $4, quantity supplied could be 40 units for one supplier and 37 for the other. 
D) At $4, quantity supplied could be 77 units for one supplier and 10 for the other. 
E) There is not enough information to answer this question. 
A) At $4, quantity supplied could be 40 units for one supplier and 27 for the other. 
B) At $4, quantity supplied could be 33 units for one supplier and 27 for the other. 
C) At $4, quantity supplied could be 40 units for one supplier and 37 for the other. 
D) At $4, quantity supplied could be 77 units for one supplier and 10 for the other. 
E) There is not enough information to answer this question.

Question 3

Suppose that good X is one of the more heavily subsidized industries in the United States. Suppose further that as a result of intense lobbying from health-related concerns, Congress repeals the subsidies on good X. Which of the following scenarios would likely occur?

Accepted Answer

A) The supply curve for good X would shift rightward, as it would now be cheaper to produce each level of output. 
B) The supply curve for good X would shift leftward, since it would now cost more to produce each level of output. 
C) There would be no shift in the supply curve for good X; subsidies don't affect output. 
D) There would be a movement along the supply curve for good X, but the supply curve would not shift. 
A) The supply curve for good X would shift rightward, as it would now be cheaper to produce each level of output. 
B) The supply curve for good X would shift leftward, since it would now cost more to produce each level of output. 
C) There would be no shift in the supply curve for good X; subsidies don't affect output. 
D) There would be a movement along the supply curve for good X, but the supply curve would not shift.

Question 4

As Jamal's income rises, his demand for pizza does not change. It follows that for Jamal, pizza is a(n)

Accepted Answer

A) normal good. 
B) inferior good. 
C) neutral good. 
D) substitute good. 
E) complementary good. 
A) normal good. 
B) inferior good. 
C) neutral good. 
D) substitute good. 
E) complementary good.

Question 5

The law of supply states that price and quantity supplied are

Accepted Answer

A) inversely related, ceteris paribus. 
B) directly related, ceteris paribus. 
C) not related. 
D) fixed. 
A) inversely related, ceteris paribus. 
B) directly related, ceteris paribus. 
C) not related. 
D) fixed.

Question 6

If the government increased licensing requirements for beauty salons, the supply curve for salon services would shift to the left.

Accepted Answer

A) True 
 B)False

Question 7

Jerry has $50,000 in his savings account and the average new car price is $23,000. Does Jerry have a demand for a new car?

Accepted Answer

A) Yes, since Jerry can afford a new car. 
B) Not necessarily.Jerry has the ability to buy a new car, but we don't know if he also has the willingness to buy a new car. 
C) Yes, since Jerry's savings is more than double the average new car price. 
D) none of the above 
A) Yes, since Jerry can afford a new car. 
B) Not necessarily.Jerry has the ability to buy a new car, but we don't know if he also has the willingness to buy a new car. 
C) Yes, since Jerry's savings is more than double the average new car price. 
D) none of the above

Question 8

When income rises for the buyers of good X, the ____________ curve for good X will shift ________________.

Accepted Answer

A) demand; rightward 
B) demand; leftward 
C) supply; rightward 
D) supply; leftward 
E) This question cannot be answered unless we know whether good X is a normal good, a neutral good, or an inferior good. 
A) demand; rightward 
B) demand; leftward 
C) supply; rightward 
D) supply; leftward 
E) This question cannot be answered unless we know whether good X is a normal good, a neutral good, or an inferior good.

Question 9

Exhibit 3-13
-----------------------------Quantity Demanded-------------------------------------
   Assume that Jose, Kaitlyn, Leah, and Maria are the only buyers in this market.
-Refer to Exhibit 3-13. Fill in blanks (C) and (D) respectively with the market quantity demanded at each given price.

Accepted Answer

A) 15.43; 10.88 
B) 74; 62 
C) 75; 64 
D) 108; 87 
E) none of the above 
A) 15.43; 10.88 
B) 74; 62 
C) 75; 64 
D) 108; 87 
E) none of the above

Question 10

Which of the following is an example of a service?

Accepted Answer

A) medical care 
B) dental care 
C) a psychology lecture 
D) a television set 
E) a, b and c 
A) medical care 
B) dental care 
C) a psychology lecture 
D) a television set 
E) a, b and c

Question 11

Exhibit 3-14
  
-Refer to Exhibit 3-14. At a price of $10, there is a ____________ of ____________ units of good X.

Accepted Answer

A) surplus; 340 
B) shortage; 230 
C) surplus; 60 
D) shortage; 340 
E) shortage; 270 
A) surplus; 340 
B) shortage; 230 
C) surplus; 60 
D) shortage; 340 
E) shortage; 270

Question 12

Exhibit 3-1
  
-Refer to Exhibit 3-1. At a price of $6 there is a

Accepted Answer

A) surplus of 100 units. 
B) surplus of 150 units. 
C) surplus of 200 units. 
D) shortage of 150 units. 
E) shortage of 200 units. 
A) surplus of 100 units. 
B) surplus of 150 units. 
C) surplus of 200 units. 
D) shortage of 150 units. 
E) shortage of 200 units.

Question 13

Exhibit 3-8
  
-Refer to Exhibit 3-8. Equilibrium price and quantity are ____________________, respectively.

Accepted Answer

A) $3 and 25 units 
B) $3 and 15 units 
C) $5 and 15 units 
D) $5 and 25 units 
E) $1 and 25 units 
A) $3 and 25 units 
B) $3 and 15 units 
C) $5 and 15 units 
D) $5 and 25 units 
E) $1 and 25 units

Question 14

A demand curve is the graphical representation of the law of demand.

Accepted Answer

A) True 
 B)False

Question 15

A rightward shift in the demand curve for tennis balls would most likely be caused by

Accepted Answer

A) a fall in the price of tennis balls. 
B) a fall in the price of tennis rackets. 
C) a rise in the price of tennis lessons. 
D) a fall in income, assuming tennis balls are a normal good. 
A) a fall in the price of tennis balls. 
B) a fall in the price of tennis rackets. 
C) a rise in the price of tennis lessons. 
D) a fall in income, assuming tennis balls are a normal good.

Question 16

A(n) _______________ good is one in which as income rises or falls, there is no change in the demand for the good.

Accepted Answer

A) normal 
B) inferior 
C) neutral 
D) substitute 
E) complementary 
A) normal 
B) inferior 
C) neutral 
D) substitute 
E) complementary

Question 17

In year 1 the price of good X is $10 and 100 units are bought and sold. In year 2 the price of good X is $13 and 230 units are bought and sold. What can explain this?

Accepted Answer

A) The supply of good X was higher in year 2 than in year 1 and the demand for good X was the same in year 2 as in year 1. 
B) The demand for good X was higher in year 2 than in year 1 and the supply of good X was the same in year 2 as in year 1. 
C) Both the demand for, and supply of, good X were higher in year 2 than in year 1. 
D) b or c 
E) a, b, or c 
A) The supply of good X was higher in year 2 than in year 1 and the demand for good X was the same in year 2 as in year 1. 
B) The demand for good X was higher in year 2 than in year 1 and the supply of good X was the same in year 2 as in year 1. 
C) Both the demand for, and supply of, good X were higher in year 2 than in year 1. 
D) b or c 
E) a, b, or c

Question 18

Exhibit 3-6
  
-Refer to Exhibit 3-6. If a decrease in income causes the demand for good X to shift from D1 to D2, then good X is

Accepted Answer

A) a normal good. 
B) an inferior good. 
C) a substitute good. 
D) a complementary good. 
E) a neutral good. 
A) a normal good. 
B) an inferior good. 
C) a substitute good. 
D) a complementary good. 
E) a neutral good.

Question 19

An increase in the price of good B resulting from a decrease in the supply of B caused an increase in the demand for good C. This indicates that goods B and C are

Accepted Answer

A) complements. 
B) substitutes. 
C) neither substitutes nor complements. 
D) normal goods. 
A) complements. 
B) substitutes. 
C) neither substitutes nor complements. 
D) normal goods.

Question 20

In the supply-and-demand diagram of the market for peanut butter, the equilibrium point has moved down and to the right. What could have caused this?

Accepted Answer

A) a fall in the price of peanuts 
B) a rise in the price of peanuts 
C) a rise in income, assuming that peanut butter is an inferior good 
D) a shift in preferences toward peanut butter 
A) a fall in the price of peanuts 
B) a rise in the price of peanuts 
C) a rise in income, assuming that peanut butter is an inferior good 
D) a shift in preferences toward peanut butter

Exam 3: Supply and Demand Theory

Which of the following statements represents a correct and sequentially accurate economic explanation?

One point on a market supply curve represents $4 and 100 units quantity supplied. If there are three suppliers, and at a price of $4 one of the suppliers supplies 23 units, then which of the following combinations of price and quantity supplied might hold for the other two suppliers?

Suppose that good X is one of the more heavily subsidized industries in the United States. Suppose further that as a result of intense lobbying from health-related concerns, Congress repeals the subsidies on good X. Which of the following scenarios would likely occur?

As Jamal's income rises, his demand for pizza does not change. It follows that for Jamal, pizza is a(n)

The law of supply states that price and quantity supplied are

If the government increased licensing requirements for beauty salons, the supply curve for salon services would shift to the left.

Jerry has $50,000 in his savings account and the average new car price is $23,000. Does Jerry have a demand for a new car?

When income rises for the buyers of good X, the ____________ curve for good X will shift ________________.

Exhibit 3-13 -----------------------------Quantity Demanded------------------------------------- Assume that Jose, Kaitlyn, Leah, and Maria are the only buyers in this market. -Refer to Exhibit 3-13. Fill in blanks (C) and (D) respectively with the market quantity demanded at each given price.

Which of the following is an example of a service?

Exhibit 3-14 -Refer to Exhibit 3-14. At a price of $10, there is a ____________ of ____________ units of good X.

Exhibit 3-1 -Refer to Exhibit 3-1. At a price of $6 there is a

Exhibit 3-8 -Refer to Exhibit 3-8. Equilibrium price and quantity are ____________________, respectively.

A demand curve is the graphical representation of the law of demand.

A rightward shift in the demand curve for tennis balls would most likely be caused by

A(n) _______________ good is one in which as income rises or falls, there is no change in the demand for the good.

In year 1 the price of good X is $10 and 100 units are bought and sold. In year 2 the price of good X is $13 and 230 units are bought and sold. What can explain this?

Exhibit 3-6 -Refer to Exhibit 3-6. If a decrease in income causes the demand for good X to shift from D1 to D2, then good X is

An increase in the price of good B resulting from a decrease in the supply of B caused an increase in the demand for good C. This indicates that goods B and C are

In the supply-and-demand diagram of the market for peanut butter, the equilibrium point has moved down and to the right. What could have caused this?

What Economics Is About

Production Possibilities Frontier Framework

Prices Free Controlled and Relative

Supply Demand and Price Applications

Macroeconomic Measurements Part I Prices and Unemployment

Macroeconomic Measurements Part II Gdp and Real Gdp

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability a Critique of the Self Regulating Economy

Fiscal Policy and the Federal Budget

Money Banking and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth Resources Technology Ideas and Institutions

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition Oligopoly and Game Theory

Government and Product Markets Antitrust and Regulation

Factor Markets With Emphasis on the Labor Market

Wages Unions and Labor

The Distribution of Income and Poverty

Interest Rent and Profit

Market Failure Externalities Public Goods and Asymmetric Information

Public Choice and Special Interest Group Politics

Building Theories to Explain Everyday Life From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government Five Topics Considered

Stocks Bonds Futures and Options

Filters

When income rises for the buyers of good X, the curve for good X will shift ____.

Exhibit 3-14 -Refer to Exhibit 3-14. At a price of $10, there is a of units of good X.

Exhibit 3-6 -Refer to Exhibit 3-6. If a decrease in income causes the demand for good X to shift from D₁ to D₂, then good X is