Question 1

If demand increases and supply simultaneously decreases, equilibrium price will rise.

Accepted Answer

A) True 
 B)False

Question 2

If there is a surplus in a market, competition among the sellers will drive price down.

Accepted Answer

A) True 
 B)False

Question 3

If market demand increases and market supply decreases, the change in equilibrium price is unpredictable without first knowing the exact magnitudes of the demand and supply changes.

Accepted Answer

A) True 
 B)False

Question 4

A television station reports that the price of orange juice has declined but the quantity traded has increased.This situation could be caused by a(n)

Accepted Answer

A) increased preference for orange juice among buyers. 
B) significant decrease in the harvest of oranges in the nation's orchards. 
C) improvement in the technology of producing orange juice. 
D) decrease in income, and orange juice is a normal good. 
A) increased preference for orange juice among buyers. 
B) significant decrease in the harvest of oranges in the nation's orchards. 
C) improvement in the technology of producing orange juice. 
D) decrease in income, and orange juice is a normal good.

Question 5

At the current price, there is a shortage of a product.We would expect price to

Accepted Answer

A) increase, quantity demanded to increase, and quantity supplied to decrease. 
B) increase, quantity demanded to decrease, and quantity supplied to increase. 
C) increase, quantity demanded to increase, and quantity supplied to increase. 
D) decrease, quantity demanded to increase, and quantity supplied to decrease. 
A) increase, quantity demanded to increase, and quantity supplied to decrease. 
B) increase, quantity demanded to decrease, and quantity supplied to increase. 
C) increase, quantity demanded to increase, and quantity supplied to increase. 
D) decrease, quantity demanded to increase, and quantity supplied to decrease.

Question 6

For most products, purchases tend to fall with decreases in buyers' incomes.Such products are known as

Accepted Answer

A) inferior goods. 
B) direct goods. 
C) average goods. 
D) normal goods. 
A) inferior goods. 
B) direct goods. 
C) average goods. 
D) normal goods.

Question 7

An increase in product price will cause

Accepted Answer

A) quantity demanded to decrease. 
B) quantity supplied to decrease. 
C) quantity demanded to increase. 
D) the supply curve to shift to the left. 
A) quantity demanded to decrease. 
B) quantity supplied to decrease. 
C) quantity demanded to increase. 
D) the supply curve to shift to the left.

Question 8

In the dollar-euro foreign exchange market, if many financial investors become worried about the stability of the euro and thus invest in U.S.financial assets instead of in European assets, then the

Accepted Answer

A) supply of euros will decrease and the euro will appreciate. 
B) supply of euros will increase and the euro will depreciate. 
C) demand for euros will increase and the euro will appreciate. 
D) demand for U.S.dollars will decrease and the dollar will depreciate. 
A) supply of euros will decrease and the euro will appreciate. 
B) supply of euros will increase and the euro will depreciate. 
C) demand for euros will increase and the euro will appreciate. 
D) demand for U.S.dollars will decrease and the dollar will depreciate.

Question 9

A television station reports that the price of coffee has increased and the quantity traded in the market has decreased.This situation would be caused by a(n)

Accepted Answer

A) increase in demand. 
B) increase in supply. 
C) decrease in demand. 
D) decrease in supply. 
A) increase in demand. 
B) increase in supply. 
C) decrease in demand. 
D) decrease in supply.

Question 10

The following are explanations of the Law of Demand, except

Accepted Answer

A) expectations effect. 
B) diminishing marginal utility. 
C) income effect. 
D) substitution effect. 
A) expectations effect. 
B) diminishing marginal utility. 
C) income effect. 
D) substitution effect.

Question 11

Which statement best illustrates the concept of diminishing marginal utility?

Accepted Answer

A) As one consumes more hamburgers per week, one would be willing to pay a higher price for additional hamburgers. 
B) Some consumers will receive less satisfaction from consuming hamburgers than from consuming fried chicken. 
C) A typical consumer will receive less satisfaction from consuming the fourth hamburger than from the third hamburger in a week. 
D) A decrease in the price of hamburgers will cause consumers to buy more hamburgers because they can afford to buy more. 
A) As one consumes more hamburgers per week, one would be willing to pay a higher price for additional hamburgers. 
B) Some consumers will receive less satisfaction from consuming hamburgers than from consuming fried chicken. 
C) A typical consumer will receive less satisfaction from consuming the fourth hamburger than from the third hamburger in a week. 
D) A decrease in the price of hamburgers will cause consumers to buy more hamburgers because they can afford to buy more.

Question 12

An improvement in production technology will

Accepted Answer

A) increase equilibrium price. 
B) shift the supply curve to the left. 
C) shift the supply curve to the right. 
D) shift the demand curve to the left. 
A) increase equilibrium price. 
B) shift the supply curve to the left. 
C) shift the supply curve to the right. 
D) shift the demand curve to the left.

Question 13

When economists speak of "demand" in a particular market, they refer to

Accepted Answer

A) the whole demand curve or schedule. 
B) one point on the demand curve. 
C) one price-quantity combination on the demand schedule. 
D) how much of an item buyers want to buy at a given price. 
A) the whole demand curve or schedule. 
B) one point on the demand curve. 
C) one price-quantity combination on the demand schedule. 
D) how much of an item buyers want to buy at a given price.

Question 14

In order to derive the market supply curve from individual supply curves, we add up the

Accepted Answer

A) various prices that individual sellers are charging for the product. 
B) various quantities that individual sellers want to sell at specific price levels. 
C) total number of sellers in the market at a given time. 
D) costs that all individual sellers incur in producing the product. 
A) various prices that individual sellers are charging for the product. 
B) various quantities that individual sellers want to sell at specific price levels. 
C) total number of sellers in the market at a given time. 
D) costs that all individual sellers incur in producing the product.

Question 15

In moving along a demand curve, which of the following is not held constant?

Accepted Answer

A) the price of the product itself. 
B) price expectations 
C) consumer incomes 
D) prices of complementary goods 
A) the price of the product itself. 
B) price expectations 
C) consumer incomes 
D) prices of complementary goods

Question 16

Suppose that in the clothing market, production costs have fallen, but the equilibrium price and quantity purchased have both increased.Based on this information we can conclude that

Accepted Answer

A) the supply of clothing has grown faster than the demand for clothing. 
B) demand for clothing has grown faster than the supply of clothing. 
C) the supply of and demand for clothing have grown by the same proportion. 
D) there is no way to determine what has happened to supply and demand with this information. 
A) the supply of clothing has grown faster than the demand for clothing. 
B) demand for clothing has grown faster than the supply of clothing. 
C) the supply of and demand for clothing have grown by the same proportion. 
D) there is no way to determine what has happened to supply and demand with this information.

Question 17

If there's a huge increase in the number of Americans traveling to Europe (say, for the Olympics), then the effect on the foreign exchange market is that the

Accepted Answer

A) demand for euros would increase. 
B) supply of euros would increase. 
C) demand for euros would decrease. 
D) supply of euros would decrease. 
A) demand for euros would increase. 
B) supply of euros would increase. 
C) demand for euros would decrease. 
D) supply of euros would decrease.

Question 18

If the price of gasoline increases significantly, then we'd expect the demand curve for large trucks and SUVs to

Accepted Answer

A) shift to the right. 
B) shift to the left. 
C) become upward-sloping. 
D) not shift, but there will be a movement along that demand curve. 
A) shift to the right. 
B) shift to the left. 
C) become upward-sloping. 
D) not shift, but there will be a movement along that demand curve.

Question 19

There is a surplus of tomatoes in the market.This implies that

Accepted Answer

A) the current price is set above the equilibrium level. 
B) the price will be rising, as a result. 
C) supply of tomatoes is more than the demand. 
D) quantity demanded is more than quantity supplied. 
A) the current price is set above the equilibrium level. 
B) the price will be rising, as a result. 
C) supply of tomatoes is more than the demand. 
D) quantity demanded is more than quantity supplied.

Question 20

When economists describe "a market," they mean

Accepted Answer

A) a place where stocks and bonds are traded. 
B) a communication network that allow individuals to keep in touch with each other. 
C) a hypothetical place where the production of goods and services takes place. 
D) a system that allows buyers and sellers to interact with one another. 
A) a place where stocks and bonds are traded. 
B) a communication network that allow individuals to keep in touch with each other. 
C) a hypothetical place where the production of goods and services takes place. 
D) a system that allows buyers and sellers to interact with one another.

Exam 3: Demand, Supply, and Market Equilibrium

If demand increases and supply simultaneously decreases, equilibrium price will rise.

If there is a surplus in a market, competition among the sellers will drive price down.

If market demand increases and market supply decreases, the change in equilibrium price is unpredictable without first knowing the exact magnitudes of the demand and supply changes.

A television station reports that the price of orange juice has declined but the quantity traded has increased.This situation could be caused by a(n)

At the current price, there is a shortage of a product.We would expect price to

For most products, purchases tend to fall with decreases in buyers' incomes.Such products are known as

An increase in product price will cause

In the dollar-euro foreign exchange market, if many financial investors become worried about the stability of the euro and thus invest in U.S.financial assets instead of in European assets, then the

A television station reports that the price of coffee has increased and the quantity traded in the market has decreased.This situation would be caused by a(n)

The following are explanations of the Law of Demand, except

Which statement best illustrates the concept of diminishing marginal utility?

An improvement in production technology will

When economists speak of "demand" in a particular market, they refer to

In order to derive the market supply curve from individual supply curves, we add up the

In moving along a demand curve, which of the following is not held constant?

Suppose that in the clothing market, production costs have fallen, but the equilibrium price and quantity purchased have both increased.Based on this information we can conclude that

If there's a huge increase in the number of Americans traveling to Europe (say, for the Olympics), then the effect on the foreign exchange market is that the

If the price of gasoline increases significantly, then we'd expect the demand curve for large trucks and SUVs to

There is a surplus of tomatoes in the market.This implies that

When economists describe "a market," they mean

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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