Question 1

Which of the following is consistent with the law of demand?

Accepted Answer

A) People substitute higher-priced goods for higher-quality goods. 
B) People substitute some higher-priced goods for other higher-priced goods. 
C) People substitute lower-priced goods for higher-priced goods. 
D) People substitute some lower-priced goods for other lower-priced goods. 
A) People substitute higher-priced goods for higher-quality goods. 
B) People substitute some higher-priced goods for other higher-priced goods. 
C) People substitute lower-priced goods for higher-priced goods. 
D) People substitute some lower-priced goods for other lower-priced goods.

Question 2

If price is on the vertical axis and quantity demanded is on the horizontal axis, why is a demand curve downward sloping (left to right)?

Accepted Answer

A) Because a demand curve is the graphical representation of the law of demand, which specifies an inverse relationship between price and supply, ceteris paribus. 
B) Because a demand curve is the graphical representation of the law of demand, which specifies a direct relationship between price and quantity supplied, ceteris paribus. 
C) Because a demand curve is the graphical representation of the law of demand, which specifies an inverse relationship between price and demand, ceteris paribus. 
D) Because a demand curve is the graphical representation of the law of demand, which specifies a direct relationship between price and demand, ceteris paribus. 
E) Because a demand curve is the graphical representation of the law of demand, which specifies an inverse relationship between price and quantity demanded, ceteris paribus. 
A) Because a demand curve is the graphical representation of the law of demand, which specifies an inverse relationship between price and supply, ceteris paribus. 
B) Because a demand curve is the graphical representation of the law of demand, which specifies a direct relationship between price and quantity supplied, ceteris paribus. 
C) Because a demand curve is the graphical representation of the law of demand, which specifies an inverse relationship between price and demand, ceteris paribus. 
D) Because a demand curve is the graphical representation of the law of demand, which specifies a direct relationship between price and demand, ceteris paribus. 
E) Because a demand curve is the graphical representation of the law of demand, which specifies an inverse relationship between price and quantity demanded, ceteris paribus.

Question 3

The law of demand states that ____________and quantity demanded are _____________ related, ceteris paribus.

Accepted Answer

A) price; directly 
B) price; inversely 
C) demand;inversely 
D) quantity supplied; directly 
E) supply; directly 
A) price; directly 
B) price; inversely 
C) demand;inversely 
D) quantity supplied; directly 
E) supply; directly

Question 4

Exhibit 3-4
  
-Refer to Exhibit 3-4. A price of $4 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. 
E) none of the above 
A) shortage of 10 units. 
B) surplus of 10 units. 
C) surplus of 5 units. 
D) shortage of 5 units. 
E) none of the above

Question 5

Exhibit 3-14
  
-Refer to Exhibit 3-14. At a price of $13, there is a ____________ of ____________ units of good X.

Accepted Answer

A) shortage; 140 
B) shortage; 160 
C) surplus; 140 
D) surplus; 20 
E) surplus; 100 
A) shortage; 140 
B) shortage; 160 
C) surplus; 140 
D) surplus; 20 
E) surplus; 100

Question 6

Which of the following statements is false?

Accepted Answer

A) An upward-sloping supply curve graphically represents the law of supply. 
B) A vertical supply curve graphically represents the law of supply. 
C) If income rises and good X is a normal good, then the demand for good X will rise. 
D) If income falls and good Y is an inferior good, then the demand for good Y will rise. 
A) An upward-sloping supply curve graphically represents the law of supply. 
B) A vertical supply curve graphically represents the law of supply. 
C) If income rises and good X is a normal good, then the demand for good X will rise. 
D) If income falls and good Y is an inferior good, then the demand for good Y will rise.

Question 7

Consumers' surplus is the difference between the maximum price the buyer is willing and able to pay for a good and the actual price paid.

Accepted Answer

A) True 
 B)False

Question 8

Exhibit 3-3
   Good Y
​
​
-Refer to Exhibit 3-3. A shift in demand from D1 to D2 can NOT occur from a change in the

Accepted Answer

A) population. 
B) price of a substitute for good Y. 
C) average income of good Y buyers. 
D) price of good Y. 
A) population. 
B) price of a substitute for good Y. 
C) average income of good Y buyers. 
D) price of good Y.

Question 9

The law of diminishing marginal utility helps to explain why supply curves are generally upward sloping.

Accepted Answer

A) True 
 B)False

Question 10

Oil producers expect that oil prices next year will be higher 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 11

Suppose that for a given good demand increases and supply increases at the same time. If demand increases by a lesser amount than supply increases, then equilibrium price __________ and equilibrium quantity __________ for that good.

Accepted Answer

A) rises; falls 
B) falls; falls 
C) rises; rises 
D) falls; rises 
A) rises; falls 
B) falls; falls 
C) rises; rises 
D) falls; rises

Question 12

If consumers' surplus is $30 and the price paid for the good is $50, then the maximum price a buyer is willing and able to pay for the good is

Accepted Answer

A) $80. 
B) $30. 
C) $50. 
D) $20. 
E) There is not enough information to answer the question. 
A) $80. 
B) $30. 
C) $50. 
D) $20. 
E) There is not enough information to answer the question.

Question 13

Mutually beneficial trade between buyers and sellers drives a market to equilibrium.

Accepted Answer

A) True 
 B)False

Question 14

If people begin to favor science fiction novels to a greater degree than previously, the demand curve for science fiction novels

Accepted Answer

A) shifts rightward. 
B) shifts leftward. 
C) stays constant. 
D) can shift either rightward or leftward. 
A) shifts rightward. 
B) shifts leftward. 
C) stays constant. 
D) can shift either rightward or leftward.

Question 15

With respect to the supply and demand for a given product, describe the connection that exists between equilibrium/disequilibrium and predictions. Cite your own unique example in order to help support your answer.

Accepted Answer

Economists use the concepts of equilibri

Question 16

A market is said to be in disequilibrium if

Accepted Answer

A) it exhibits either a surplus or a shortage. 
B) the number of units that individuals are willing to buy exceeds the number of units they can afford. 
C) it is a market for an inferior good. 
D) none of the above 
A) it exhibits either a surplus or a shortage. 
B) the number of units that individuals are willing to buy exceeds the number of units they can afford. 
C) it is a market for an inferior good. 
D) none of the above

Question 17

At a price below the equilibrium price, there is

Accepted Answer

A) a surplus. 
B) a shortage. 
C) excess supply. 
D) sub-equilibrium. 
E) none of the above 
A) a surplus. 
B) a shortage. 
C) excess supply. 
D) sub-equilibrium. 
E) none of the above

Question 18

An increase in supply is graphically represented by a leftward shift of the supply curve.

Accepted Answer

A) True 
 B)False

Question 19

On a supply-and-demand diagram, consider a price for which the horizontal distance to the supply curve is shorter than the horizontal distance to the demand curve. There is a __________ at that price and the current price must be __________ the equilibrium price.

Accepted Answer

A) shortage; above 
B) shortage; below 
C) surplus; above 
D) surplus; below 
A) shortage; above 
B) shortage; below 
C) surplus; above 
D) surplus; below

Question 20

Equilibrium and disequilibrium

Accepted Answer

A) are real world states. 
B) are mental constructs used by economists. 
C) foreshadow what is about to happen in a market. 
D) a and b 
E) a, b and c 
A) are real world states. 
B) are mental constructs used by economists. 
C) foreshadow what is about to happen in a market. 
D) a and b 
E) a, b and c

Exam 3: Supply and Demand Theory

Which of the following is consistent with the law of demand?

If price is on the vertical axis and quantity demanded is on the horizontal axis, why is a demand curve downward sloping (left to right)?

The law of demand states that ____________and quantity demanded are _____________ related, ceteris paribus.

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

Exhibit 3-14 -Refer to Exhibit 3-14. At a price of $13, there is a ____________ of ____________ units of good X.

Which of the following statements is false?

Consumers' surplus is the difference between the maximum price the buyer is willing and able to pay for a good and the actual price paid.

Exhibit 3-3 Good Y ​ ​ -Refer to Exhibit 3-3. A shift in demand from D1 to D2 can NOT occur from a change in the

The law of diminishing marginal utility helps to explain why supply curves are generally upward sloping.

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

Suppose that for a given good demand increases and supply increases at the same time. If demand increases by a lesser amount than supply increases, then equilibrium price __________ and equilibrium quantity __________ for that good.

If consumers' surplus is $30 and the price paid for the good is $50, then the maximum price a buyer is willing and able to pay for the good is

Mutually beneficial trade between buyers and sellers drives a market to equilibrium.

If people begin to favor science fiction novels to a greater degree than previously, the demand curve for science fiction novels

With respect to the supply and demand for a given product, describe the connection that exists between equilibrium/disequilibrium and predictions. Cite your own unique example in order to help support your answer.

A market is said to be in disequilibrium if

At a price below the equilibrium price, there is

An increase in supply is graphically represented by a leftward shift of the supply curve.

On a supply-and-demand diagram, consider a price for which the horizontal distance to the supply curve is shorter than the horizontal distance to the demand curve. There is a __________ at that price and the current price must be __________ the equilibrium price.

Equilibrium and disequilibrium

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

The law of demand states that and quantity demanded are _ related, ceteris paribus.

Exhibit 3-14 -Refer to Exhibit 3-14. At a price of $13, there is a of units of good X.

Exhibit 3-3 Good Y -Refer to Exhibit 3-3. A shift in demand from D₁ to D₂ can NOT occur from a change in the

Suppose that for a given good demand increases and supply increases at the same time. If demand increases by a lesser amount than supply increases, then equilibrium price and equilibrium quantity for that good.

On a supply-and-demand diagram, consider a price for which the horizontal distance to the supply curve is shorter than the horizontal distance to the demand curve. There is a at that price and the current price must be the equilibrium price.