Question 1

If the input costs associated with supplying gasoline increases in Wisconsin, the supply of gasoline in Wisconsin will decrease.

Accepted Answer

A) True 
 B)False

Question 2

Given a supply curve that is positively sloped and a demand curve for a normal good that is negatively sloped, an increase in income will most likely result in:

Accepted Answer

A)  an increase in equilibrium price and quantity. 
B)  a decrease in equilibrium price and an increase in equilibrium quantity. 
C)  a decrease in both equilibrium price and quantity. 
D)  an increase in equilibrium price and a decrease in equilibrium quantity. 
A)  an increase in equilibrium price and quantity. 
B)  a decrease in equilibrium price and an increase in equilibrium quantity. 
C)  a decrease in both equilibrium price and quantity. 
D)  an increase in equilibrium price and a decrease in equilibrium quantity.

Question 3

An ambiguous change in price and a decrease in quantity are most likely caused by:

Accepted Answer

A)  no shift in supply and a shift to the left in demand. 
B)  a shift to the left in supply and a shift to the left in demand. 
C)  a shift to the right in supply and a shift to the left in demand. 
D)  a shift to the left in supply and a shift to the right in demand. 
A)  no shift in supply and a shift to the left in demand. 
B)  a shift to the left in supply and a shift to the left in demand. 
C)  a shift to the right in supply and a shift to the left in demand. 
D)  a shift to the left in supply and a shift to the right in demand.

Question 4

Use the following to answer questions:
Figure: Shifts in Demand and Supply  
-(Figure: Shifts in Demand and Supply) Look at the figure Shifts in Demand and Supply. The graph shows how supply and demand might shift in response to specific events. Suppose a new machine allows restaurants and fast-food outlets to produce french fries at a lower cost. Which panel BEST describes how this will affect the market for french fries?

Accepted Answer

A)  panel A 
B)  panel B 
C)  panel C 
D)  panel D 
A)  panel A 
B)  panel B 
C)  panel C 
D)  panel D

Question 5

Holding all other things constant, if ramen noodles are an inferior good to Vanessa, then as her income increases, her demand curve for ramen noodles:

Accepted Answer

A)  will shift left. 
B)  will shift right. 
C)  will not shift at all. 
D)  may shift left or right, but we're not sure by how much. 
A)  will shift left. 
B)  will shift right. 
C)  will not shift at all. 
D)  may shift left or right, but we're not sure by how much.

Question 6

The cost of sensors used in making digital cameras falls, while a successful ad campaign makes digital cameras more fashionable. As a result, the equilibrium price of digital cameras _____ and the equilibrium quantity _____.

Accepted Answer

A)  increases; increases 
B)  increases; may increase, decrease, or stay the same 
C)  may increase, decrease, or stay the same; increases 
D)  decreases; increases 
A)  increases; increases 
B)  increases; may increase, decrease, or stay the same 
C)  may increase, decrease, or stay the same; increases 
D)  decreases; increases

Question 7

Use the following to answer questions:
Figure: Shifts in Demand and Supply IV  
-(Figure: Shifts in Demand and Supply IV) Look at the figure Shifts in Demand and Supply IV. The figure shows how supply and demand might shift in response to specific events. Suppose the Surgeon General announces that eating chocolate prevents heart disease. Which panel BEST describes how this will affect the market for chocolate?

Accepted Answer

A)  panel A 
B)  panel B 
C)  panel C 
D)  panel D 
A)  panel A 
B)  panel B 
C)  panel C 
D)  panel D

Question 8

The market for lemonade is in equilibrium and the price of lemons rises. In the lemonade market _____ will _____, _____ the price and _____ the quantity.

Accepted Answer

A)  demand; decrease; decreasing; decreasing 
B)  demand; decrease; increasing; decreasing 
C)  supply; increase; decreasing; increasing 
D)  supply; decrease; increasing; decreasing 
A)  demand; decrease; decreasing; decreasing 
B)  demand; decrease; increasing; decreasing 
C)  supply; increase; decreasing; increasing 
D)  supply; decrease; increasing; decreasing

Question 9

How would each of the following events affect the demand for new textbooks?
I. The price of a used textbook rises.
II. The price of college tuition rises.
III. More high school graduates decide to attend college.

Accepted Answer

I. A used textbook is a substitute for a

Question 10

If goods A and B are substitutes, a decrease in the price of good B will:

Accepted Answer

A)  increase the demand for good A. 
B)  increase the demand for good B. 
C)  decrease the demand for good A. 
D)  increase the demand for good B and decrease the demand for good A. 
A)  increase the demand for good A. 
B)  increase the demand for good B. 
C)  decrease the demand for good A. 
D)  increase the demand for good B and decrease the demand for good A.

Question 11

High-fructose corn syrup, which is derived from corn, is an important ingredient in the production of many soft drinks. If the price of corn increases, one would expect:

Accepted Answer

A)  the supply curve for soft drinks to shift left. 
B)  the quantity supplied of soft drinks to increase. 
C)  the demand for soft drinks to increase. 
D)  the supply curve for soft drinks to shift right. 
A)  the supply curve for soft drinks to shift left. 
B)  the quantity supplied of soft drinks to increase. 
C)  the demand for soft drinks to increase. 
D)  the supply curve for soft drinks to shift right.

Question 12

Use the following to answer questions:
Figure: Demand and Supply of Gasoline  
-(Figure: Demand and Supply of Gasoline) Look at the figure Demand and Supply of Gasoline. A factor that may have changed supply from S1 to S2 is:

Accepted Answer

A)  better technology in the production of gasoline. 
B)  increased demand. 
C)  lower labor productivity in gasoline production. 
D)  increased prices of substitutes in production for gasoline. 
A)  better technology in the production of gasoline. 
B)  increased demand. 
C)  lower labor productivity in gasoline production. 
D)  increased prices of substitutes in production for gasoline.

Question 13

An increase in income will always shift the demand curve to the right.

Accepted Answer

A) True 
 B)False

Question 14

Assume that corn is an input in the production of beef but not in the production of pork. Further, beef and pork are substitutes in consumption. A decrease in the price of corn will _____ the supply of beef and _____ the demand for pork.

Accepted Answer

A)  increase; increase 
B)  decrease; increase 
C)  decrease; decrease 
D)  increase; decrease 
A)  increase; increase 
B)  decrease; increase 
C)  decrease; decrease 
D)  increase; decrease

Question 15

In August 2005, Hurricane Katrina damaged or destroyed oil platforms in the Gulf of Mexico, refineries along the Gulf coast, and the pipeline infrastructure that transports oil and gas to customers across the eastern United States. The winter of 2006 was unusually cold in many parts of the country. How did these events affect the market for natural gas?

Accepted Answer

The supply of natural gas was severely d

Question 16

Good X and good Y are related goods. Holding everything else constant, if the price of X decreases and the demand for Y increases, X and Y are probably:

Accepted Answer

A)  complements. 
B)  substitutes. 
C)  inferior. 
D)  normal. 
A)  complements. 
B)  substitutes. 
C)  inferior. 
D)  normal.

Question 17

Customers used to pay inside before pumping gas. When gas stations introduced paying at the pump, thus decreasing production costs, there was a shift to the _____ in the _____ curve and _____ pressure on gas prices _____.

Accepted Answer

A)  right; supply; eased 
B)  left; supply; increased 
C)  right; demand; increased 
D)  left; demand; eased 
A)  right; supply; eased 
B)  left; supply; increased 
C)  right; demand; increased 
D)  left; demand; eased

Question 18

Use the following to answer questions:
Figure: The DVD Rental Market  
-(Figure: The DVD Rental Market) Look at the figure The DVD Rental Market. At a rental price of $6, there will be:

Accepted Answer

A)  equilibrium in the rental market for DVDs. 
B)  a decrease in demand. 
C)  an excess supply of 20 DVD rentals. 
D)  an excess demand of 20 DVD rentals. 
A)  equilibrium in the rental market for DVDs. 
B)  a decrease in demand. 
C)  an excess supply of 20 DVD rentals. 
D)  an excess demand of 20 DVD rentals.

Question 19

Use the following to answer questions:
Figure: Shifts in Demand and Supply II  
-(Figure: Shifts in Demand and Supply II) Look at the figure Shifts in Demand and Supply II. The graph shows how supply and demand might shift in response to specific events. Suppose a drought destroys one-third of the nation's peanut crop. Which panel BEST describes how this will affect the market for peanuts?

Accepted Answer

A)  panel A 
B)  panel B 
C)  panel C 
D)  panel D 
A)  panel A 
B)  panel B 
C)  panel C 
D)  panel D

Question 20

Which of the following would result in a movement along the demand curve?

Accepted Answer

A)  a change in preferences 
B)  an increase in the number of buyers 
C)  an increase in the number of suppliers 
D)  a decrease in income 
A)  a change in preferences 
B)  an increase in the number of buyers 
C)  an increase in the number of suppliers 
D)  a decrease in income

If the input costs associated with supplying gasoline increases in Wisconsin, the supply of gasoline in Wisconsin will decrease.

Given a supply curve that is positively sloped and a demand curve for a normal good that is negatively sloped, an increase in income will most likely result in:

An ambiguous change in price and a decrease in quantity are most likely caused by:

Holding all other things constant, if ramen noodles are an inferior good to Vanessa, then as her income increases, her demand curve for ramen noodles:

The cost of sensors used in making digital cameras falls, while a successful ad campaign makes digital cameras more fashionable. As a result, the equilibrium price of digital cameras _ and the equilibrium quantity _.

The market for lemonade is in equilibrium and the price of lemons rises. In the lemonade market ___ will _, _ the price and ___ the quantity.

How would each of the following events affect the demand for new textbooks? I. The price of a used textbook rises. II. The price of college tuition rises. III. More high school graduates decide to attend college.

If goods A and B are substitutes, a decrease in the price of good B will:

High-fructose corn syrup, which is derived from corn, is an important ingredient in the production of many soft drinks. If the price of corn increases, one would expect:

Use the following to answer questions: Figure: Demand and Supply of Gasoline -(Figure: Demand and Supply of Gasoline) Look at the figure Demand and Supply of Gasoline. A factor that may have changed supply from S₁ to S₂ is:

An increase in income will always shift the demand curve to the right.

Assume that corn is an input in the production of beef but not in the production of pork. Further, beef and pork are substitutes in consumption. A decrease in the price of corn will _ the supply of beef and _ the demand for pork.

Good X and good Y are related goods. Holding everything else constant, if the price of X decreases and the demand for Y increases, X and Y are probably:

Customers used to pay inside before pumping gas. When gas stations introduced paying at the pump, thus decreasing production costs, there was a shift to the ___ in the _ curve and _ pressure on gas prices ___.

Use the following to answer questions: Figure: The DVD Rental Market -(Figure: The DVD Rental Market) Look at the figure The DVD Rental Market. At a rental price of $6, there will be:

Which of the following would result in a movement along the demand curve?

First Principles

Economic Models: Trade-Offs and Trade 25

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Exam 3: Supply and Demand

If the input costs associated with supplying gasoline increases in Wisconsin, the supply of gasoline in Wisconsin will decrease.

Given a supply curve that is positively sloped and a demand curve for a normal good that is negatively sloped, an increase in income will most likely result in:

An ambiguous change in price and a decrease in quantity are most likely caused by:

Holding all other things constant, if ramen noodles are an inferior good to Vanessa, then as her income increases, her demand curve for ramen noodles:

The cost of sensors used in making digital cameras falls, while a successful ad campaign makes digital cameras more fashionable. As a result, the equilibrium price of digital cameras _____ and the equilibrium quantity _____.

The market for lemonade is in equilibrium and the price of lemons rises. In the lemonade market _____ will _____, _____ the price and _____ the quantity.

How would each of the following events affect the demand for new textbooks? I. The price of a used textbook rises. II. The price of college tuition rises. III. More high school graduates decide to attend college.

If goods A and B are substitutes, a decrease in the price of good B will:

High-fructose corn syrup, which is derived from corn, is an important ingredient in the production of many soft drinks. If the price of corn increases, one would expect:

Use the following to answer questions: Figure: Demand and Supply of Gasoline -(Figure: Demand and Supply of Gasoline) Look at the figure Demand and Supply of Gasoline. A factor that may have changed supply from S1 to S2 is:

An increase in income will always shift the demand curve to the right.

Assume that corn is an input in the production of beef but not in the production of pork. Further, beef and pork are substitutes in consumption. A decrease in the price of corn will _____ the supply of beef and _____ the demand for pork.

Good X and good Y are related goods. Holding everything else constant, if the price of X decreases and the demand for Y increases, X and Y are probably:

Customers used to pay inside before pumping gas. When gas stations introduced paying at the pump, thus decreasing production costs, there was a shift to the _____ in the _____ curve and _____ pressure on gas prices _____.

Use the following to answer questions: Figure: The DVD Rental Market -(Figure: The DVD Rental Market) Look at the figure The DVD Rental Market. At a rental price of $6, there will be:

Which of the following would result in a movement along the demand curve?

First Principles

Economic Models: Trade-Offs and Trade 25

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

The cost of sensors used in making digital cameras falls, while a successful ad campaign makes digital cameras more fashionable. As a result, the equilibrium price of digital cameras _ and the equilibrium quantity _.

The market for lemonade is in equilibrium and the price of lemons rises. In the lemonade market ___ will _, _ the price and ___ the quantity.

Use the following to answer questions: Figure: Demand and Supply of Gasoline -(Figure: Demand and Supply of Gasoline) Look at the figure Demand and Supply of Gasoline. A factor that may have changed supply from S₁ to S₂ is:

Assume that corn is an input in the production of beef but not in the production of pork. Further, beef and pork are substitutes in consumption. A decrease in the price of corn will _ the supply of beef and _ the demand for pork.

Customers used to pay inside before pumping gas. When gas stations introduced paying at the pump, thus decreasing production costs, there was a shift to the ___ in the _ curve and _ pressure on gas prices ___.