Question 1

Exhibit 3-5
  
-Refer to Exhibit 3-5. In the market shown, a rightward shift in supply from S1 to S2 could have been caused by

Accepted Answer

A) a decline in the number of buyers in the market. 
B) a decline in the price of a substitute good. 
C) a decrease in income (assuming the good is a normal good). 
D) the granting of a subsidy to the producer. 
E) none of the above 
A) a decline in the number of buyers in the market. 
B) a decline in the price of a substitute good. 
C) a decrease in income (assuming the good is a normal good). 
D) the granting of a subsidy to the producer. 
E) none of the above

Question 2

"As the price of apples goes up, the demand for apples goes down." The author of this statement

Accepted Answer

A) implies that price and demand are unrelated. 
B) uses the word "demand" when he should use the word "supply." 
C) uses the word "demand" when he should use the words "quantity demanded." 
D) implies that demand and price have a direct relationship. 
A) implies that price and demand are unrelated. 
B) uses the word "demand" when he should use the word "supply." 
C) uses the word "demand" when he should use the words "quantity demanded." 
D) implies that demand and price have a direct relationship.

Question 3

Exhibit 3-9
  
-Refer to Exhibit 3-9. A severe recession has sharply decreased the incomes of consumers. Knowing that X is a normal good, you expect a movement in the market for X from

Accepted Answer

A) A to B. 
B) E to F. 
C) F to E. 
D) B to A. 
A) A to B. 
B) E to F. 
C) F to E. 
D) B to A.

Question 4

Exhibit 3-4
  
-Refer to Exhibit 3-4. A price of $6 in this market will result in a

Accepted Answer

A) shortage of 10 units. 
B) surplus of 10 units. 
C) surplus of 5 units. 
D) shortage of 5 units. 
A) shortage of 10 units. 
B) surplus of 10 units. 
C) surplus of 5 units. 
D) shortage of 5 units.

Question 5

Exhibit 3-8
  
-Refer to Exhibit 3-8. A surplus exists at any price above

Accepted Answer

A) $2.00. 
B) $4.50. 
C) $4.00. 
D) $3.50. 
E) $3.00. 
A) $2.00. 
B) $4.50. 
C) $4.00. 
D) $3.50. 
E) $3.00.

Question 6

There is a technological improvement in the production of good X. As a result, the _____________ curve for good X will shift ____________ resulting in a(n) _____________ in the equilibrium price of X and a(n) ____________ in the equilibrium quantity of X.

Accepted Answer

A) supply; rightward; decrease; increase. 
B) demand; leftward; decrease; decrease 
C) demand; rightward; increase; increase 
D) supply; leftward; increase; decrease 
E) supply; leftward; increase; increase 
A) supply; rightward; decrease; increase. 
B) demand; leftward; decrease; decrease 
C) demand; rightward; increase; increase 
D) supply; leftward; increase; decrease 
E) supply; leftward; increase; increase

Question 7

Explain why the price of a good tends to rise when there is a shortage of the good. Give a hypothetical numerical example to help support your answer.

Accepted Answer

Shortages always occur at prices that ar

Question 8

A "decrease in the quantity demanded" means that

Accepted Answer

A) the demand curve has shifted to the right. 
B) the supply curve has shifted to the left. 
C) price has declined and consumers therefore want to purchase more of the good. 
D) price has increased and consumers therefore want to purchase less of the good. 
A) the demand curve has shifted to the right. 
B) the supply curve has shifted to the left. 
C) price has declined and consumers therefore want to purchase more of the good. 
D) price has increased and consumers therefore want to purchase less of the good.

Question 9

If Max's demand for hot dogs falls as his income rises, then for Max hot dogs are

Accepted Answer

A) a bad good. 
B) an inferior good. 
C) a preferential good. 
D) a normal good. 
E) a neutral good. 
A) a bad good. 
B) an inferior good. 
C) a preferential good. 
D) a normal good. 
E) a neutral good.

Question 10

One reads in the newspaper: "Today the president and Congress enacted a law which adds new requirements that child care providers must meet before they can offer their services for sale." As a result, an economist would predict that

Accepted Answer

A) the supply of child care services will increase, thus lowering the price of child care services. 
B) the supply of child care services will be unaffected by the stiffer requirements and therefore the price of child care services will not change. 
C) the demand for child care services will fall because people who buy child care services do not want stiffer requirements placed on child care providers. 
D) the supply of child care services will decrease, thus raising the price of child care services. 
E) none of the above 
A) the supply of child care services will increase, thus lowering the price of child care services. 
B) the supply of child care services will be unaffected by the stiffer requirements and therefore the price of child care services will not change. 
C) the demand for child care services will fall because people who buy child care services do not want stiffer requirements placed on child care providers. 
D) the supply of child care services will decrease, thus raising the price of child care services. 
E) none of the above

Question 11

If the quantity demanded of good X is greater than the quantity supplied of good X, then the market for good X is in disequilibrium.

Accepted Answer

A) True 
 B)False

Question 12

Supply curves are ________________ upward sloping.

Accepted Answer

A) always 
B) usually 
C) rarely 
D) never 
A) always 
B) usually 
C) rarely 
D) never

Question 13

Exhibit 3-6
  
-Refer to Exhibit 3-6. If an increase in the price of good Y causes the demand for good X to shift from D1 to D2, goods X and Y are

Accepted Answer

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

Question 14

When the price of carrots falls, the quantity demanded of carrots rises, ceteris paribus.

Accepted Answer

A) True 
 B)False

Question 15

Oil producers expect that oil prices next year will be lower than oil prices this year. As a result, oil producers are most likely to

Accepted Answer

A) place more oil on the market this year, thus shifting the present supply curve of oil rightward. 
B) hold some oil off the market this year, thus shifting the present supply curve of oil leftward. 
C) place more oil on the market this year, thus increasing the quantity supplied of oil at lower but not higher prices. 
D) hold some oil off the market this year, thus decreasing the quantity supplied of oil at lower but not higher prices. 
A) place more oil on the market this year, thus shifting the present supply curve of oil rightward. 
B) hold some oil off the market this year, thus shifting the present supply curve of oil leftward. 
C) place more oil on the market this year, thus increasing the quantity supplied of oil at lower but not higher prices. 
D) hold some oil off the market this year, thus decreasing the quantity supplied of oil at lower but not higher prices.

Question 16

In year 1 the average price of X is $10, and in year 2 the average price of X is $23. If consumers buy more units of X in year 2 than in year 1, it follows that

Accepted Answer

A) the law of supply does not hold for good X. 
B) demand for good X could be higher in year 2 than in year 1. 
C) supply of good X could be less in year 2 than in year 1. 
D) good X buyers have received an increase in income between year 1 and year 2, and good X is a normal good. 
E) b and d 
A) the law of supply does not hold for good X. 
B) demand for good X could be higher in year 2 than in year 1. 
C) supply of good X could be less in year 2 than in year 1. 
D) good X buyers have received an increase in income between year 1 and year 2, and good X is a normal good. 
E) b and d

Question 17

If the U.S. government imposes a more restrictive import quota on Japanese video gaming systems, the ____________ curve for Japanese video gaming systems in the U.S. will shift ___________.

Accepted Answer

A) supply; leftward 
B) supply; rightward 
C) demand; leftward 
D) demand; rightward 
A) supply; leftward 
B) supply; rightward 
C) demand; leftward 
D) demand; rightward

Question 18

Exhibit 3-4
  
-Refer to Exhibit 3-4. A price of $2 in the market will result in a

Accepted Answer

A) shortage of 10 units. 
B) surplus of 10 units. 
C) surplus of 5 units. 
D) shortage of 5 units. 
A) shortage of 10 units. 
B) surplus of 10 units. 
C) surplus of 5 units. 
D) shortage of 5 units.

Question 19

As the price of good X rises as a result of a decrease in supply, the demand for good Y falls. Therefore, goods X and Y are

Accepted Answer

A) substitutes for one another. 
B) normal goods. 
C) complements to one another. 
D) inferior goods. 
E) none of the above 
A) substitutes for one another. 
B) normal goods. 
C) complements to one another. 
D) inferior goods. 
E) none of the above

Question 20

Exhibit 3-2
   Good X
​
​
-Refer to Exhibit 3-2. Which of the following would result in a movement from point B on D2 to point A on D1?

Accepted Answer

A) There was an increase in income (assuming that good X is an inferior good) and technology remained constant. 
B) There was an increase in income (assuming that good X is a normal good) and technology remained constant 
C) There was an increase in income (assuming that good X is an inferior good) and technology improved. 
D) There was an increase in income (assuming that good X is a normal good) and technology declined. 
A) There was an increase in income (assuming that good X is an inferior good) and technology remained constant. 
B) There was an increase in income (assuming that good X is a normal good) and technology remained constant 
C) There was an increase in income (assuming that good X is an inferior good) and technology improved. 
D) There was an increase in income (assuming that good X is a normal good) and technology declined.

Exam 3: Supply and Demand Theory

Exhibit 3-5 -Refer to Exhibit 3-5. In the market shown, a rightward shift in supply from S1 to S2 could have been caused by

"As the price of apples goes up, the demand for apples goes down." The author of this statement

Exhibit 3-9 -Refer to Exhibit 3-9. A severe recession has sharply decreased the incomes of consumers. Knowing that X is a normal good, you expect a movement in the market for X from

Exhibit 3-4 -Refer to Exhibit 3-4. A price of $6 in this market will result in a

Exhibit 3-8 -Refer to Exhibit 3-8. A surplus exists at any price above

There is a technological improvement in the production of good X. As a result, the _____________ curve for good X will shift ____________ resulting in a(n) _____________ in the equilibrium price of X and a(n) ____________ in the equilibrium quantity of X.

Explain why the price of a good tends to rise when there is a shortage of the good. Give a hypothetical numerical example to help support your answer.

A "decrease in the quantity demanded" means that

If Max's demand for hot dogs falls as his income rises, then for Max hot dogs are

One reads in the newspaper: "Today the president and Congress enacted a law which adds new requirements that child care providers must meet before they can offer their services for sale." As a result, an economist would predict that

If the quantity demanded of good X is greater than the quantity supplied of good X, then the market for good X is in disequilibrium.

Supply curves are ________________ upward sloping.

Exhibit 3-6 -Refer to Exhibit 3-6. If an increase in the price of good Y causes the demand for good X to shift from D1 to D2, goods X and Y are

When the price of carrots falls, the quantity demanded of carrots rises, ceteris paribus.

Oil producers expect that oil prices next year will be lower than oil prices this year. As a result, oil producers are most likely to

In year 1 the average price of X is $10, and in year 2 the average price of X is $23. If consumers buy more units of X in year 2 than in year 1, it follows that

If the U.S. government imposes a more restrictive import quota on Japanese video gaming systems, the ____________ curve for Japanese video gaming systems in the U.S. will shift ___________.

Exhibit 3-4 -Refer to Exhibit 3-4. A price of $2 in the market will result in a

As the price of good X rises as a result of a decrease in supply, the demand for good Y falls. Therefore, goods X and Y are

Exhibit 3-2 Good X ​ ​ -Refer to Exhibit 3-2. Which of the following would result in a movement from point B on D2 to point A on D1?

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

Exhibit 3-5 -Refer to Exhibit 3-5. In the market shown, a rightward shift in supply from S₁ to S₂ could have been caused by

There is a technological improvement in the production of good X. As a result, the _______ curve for good X will shift resulting in a(n) _ in the equilibrium price of X and a(n) ______ in the equilibrium quantity of X.

Exhibit 3-6 -Refer to Exhibit 3-6. If an increase in the price of good Y causes the demand for good X to shift from D₁ to D₂, goods X and Y are

If the U.S. government imposes a more restrictive import quota on Japanese video gaming systems, the __ curve for Japanese video gaming systems in the U.S. will shift _.

Exhibit 3-2 Good X -Refer to Exhibit 3-2. Which of the following would result in a movement from point B on D₂ to point A on D₁?