Question 1

The relationship between quantity supplied and price is _____, and the relationship between quantity demanded and price is _____.

Accepted Answer

A)  direct; inverse 
B)  inverse; direct 
C)  inverse; inverse 
D)  direct; direct 
A)  direct; inverse 
B)  inverse; direct 
C)  inverse; inverse 
D)  direct; direct

Question 2

A ceiling price in a competitive market will result in persistent surpluses of a product.

Accepted Answer

A) True 
 B)False

Question 3

Refer to the four graphs above. Select the graph that best shows the changes in demand and supply in the market speciﬁed in the following situation: the market for music CDs sold in stores, if
More consumers switch to music-downloads from the Internet and the cost of making music CDs
Decreases because of technological improvement in production.

Accepted Answer

A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D 
A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D

Question 4

75,

Accepted Answer

A)  a smaller quantity of C will be demanded. 
B)  a larger quantity of C will be demanded. 
C)  the demand for C will increase. 
D)  the demand for C will decrease. 
A)  a smaller quantity of C will be demanded. 
B)  a larger quantity of C will be demanded. 
C)  the demand for C will increase. 
D)  the demand for C will decrease.

Question 5

Refer to the above graph showing the market for a product. Which of the following could not explain the indicated increase in equilibrium price from P1 to P2?

Accepted Answer

A)  an increase in consumer incomes 
B)  an increase in production costs 
C)  a decrease in the price of a complementary product 
D)  an increase in the price of a substitute product 
A)  an increase in consumer incomes 
B)  an increase in production costs 
C)  a decrease in the price of a complementary product 
D)  an increase in the price of a substitute product

Question 6

Refer to the diagram. A shortage of 160 units would be encountered if price was

Accepted Answer

A)  $1.10, that is, $1.60 minus $.50. 
B)  $1.60. 
C)  $1.00. 
D)  $0.50. 
A)  $1.10, that is, $1.60 minus $.50. 
B)  $1.60. 
C)  $1.00. 
D)  $0.50.

Question 7

In which of the following instances is the effect on equilibrium price (whether it rises, falls, or remains unchanged) dependent on the magnitude of the shifts in supply and demand?

Accepted Answer

A)  demand rises and supply rises 
B)  supply falls and demand remains constant 
C)  demand rises and supply falls 
D)  supply rises and demand falls 
A)  demand rises and supply rises 
B)  supply falls and demand remains constant 
C)  demand rises and supply falls 
D)  supply rises and demand falls

Question 8

If consumer incomes increase, the demand for product X

Accepted Answer

A)  will necessarily remain unchanged. 
B)  may shift either to the right or left. 
C)  will necessarily shift to the right. 
D)  will necessarily shift to the left. 
A)  will necessarily remain unchanged. 
B)  may shift either to the right or left. 
C)  will necessarily shift to the right. 
D)  will necessarily shift to the left.

Question 9

If the supply and demand curves for a product both decrease, then equilibrium

Accepted Answer

A)  quantity must fall and equilibrium price must rise. 
B)  price must fall, but equilibrium quantity may rise, fall, or remain unchanged. 
C)  quantity must decline, but equilibrium price may rise, fall, or remain unchanged. 
D)  quantity and equilibrium price must both decline. 
A)  quantity must fall and equilibrium price must rise. 
B)  price must fall, but equilibrium quantity may rise, fall, or remain unchanged. 
C)  quantity must decline, but equilibrium price may rise, fall, or remain unchanged. 
D)  quantity and equilibrium price must both decline.

Question 10

Which of the following is most likely to be an inferior good?

Accepted Answer

A)  smartwatches 
B)  ocean cruises 
C)  used clothing 
D)  steak 
A)  smartwatches 
B)  ocean cruises 
C)  used clothing 
D)  steak

Question 11

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. If demand changes from P = 10 - 0.2Q to P = 7 - 0.3Q, we can
Conclude that

Accepted Answer

A)  demand has increased. 
B)  demand has decreased. 
C)  supply will increase. 
D)  supply will decrease. 
A)  demand has increased. 
B)  demand has decreased. 
C)  supply will increase. 
D)  supply will decrease.

Question 12

$$\begin{array} { | c | c | c | } 
\hline \text { Quantity Demanded } & \text { Price } & \text { Quantity Supplied } \
\hline 52 & \$ 50 & 73 \
\hline 62 & 45 & 62 \
\hline 72 & 40 & 51 \
\hline 82 & 35 & 42 \
\hline 92 & 30 & 33 \
\hline
\end{array}$$ In this market, economists would call a government-set minimum price of $50 a

Accepted Answer

A)  price ceiling. 
B)  price ?oor. 
C)  equilibrium price. 
D)  fair price. 
A)  price ceiling. 
B)  price ?oor. 
C)  equilibrium price. 
D)  fair price.

Question 13

Refer to the diagram. A surplus of 160 units would be encountered if the price was

Accepted Answer

A)  $1.10, that is, $1.60 minus $.50. 
B)  $1.60. 
C)  $1.00. 
D)  $0.50. 
A)  $1.10, that is, $1.60 minus $.50. 
B)  $1.60. 
C)  $1.00. 
D)  $0.50.

Question 14

Which of the diagrams illustrates the effect of an increase in automobile worker wages on the market for automobiles?

Accepted Answer

A)  A only 
B)  B only 
C)  C only 
D)  D only 
A)  A only 
B)  B only 
C)  C only 
D)  D only

Question 15

Consumers buy more of normal goods as their incomes rise.

Accepted Answer

A) True 
 B)False

Question 16

An effective price ﬂoor on wheat will

Accepted Answer

A)  force otherwise proﬁtable farmers out of business. 
B)  result in a shortage of wheat. 
C)  result in a surplus of wheat. 
D)  clear the market for wheat. 
A)  force otherwise proﬁtable farmers out of business. 
B)  result in a shortage of wheat. 
C)  result in a surplus of wheat. 
D)  clear the market for wheat.

Question 17

In competitive markets, a surplus or shortage will

Accepted Answer

A)  never exist because the markets are always at equilibrium. 
B)  cause changes in the quantities demanded and supplied that tend to eliminate the surplus or shortage. 
C)  cause shifts in the demand and supply curves that tend to eliminate the surplus or shortage. 
D)  cause changes in the quantities demanded and supplied that tend to intensify the surplus or shortage. 
A)  never exist because the markets are always at equilibrium. 
B)  cause changes in the quantities demanded and supplied that tend to eliminate the surplus or shortage. 
C)  cause shifts in the demand and supply curves that tend to eliminate the surplus or shortage. 
D)  cause changes in the quantities demanded and supplied that tend to intensify the surplus or shortage.

Question 18

A leftward shift of the supply curve for oil in the United States is most likely to result from

Accepted Answer

A)  a decrease in the fees that oil companies must pay for drilling licenses. 
B)  an increase in the subsidy for oil exploration and drilling. 
C)  a decrease in the world price of oil. 
D)  an increase in the costs of exploration and drilling for oil. 
A)  a decrease in the fees that oil companies must pay for drilling licenses. 
B)  an increase in the subsidy for oil exploration and drilling. 
C)  a decrease in the world price of oil. 
D)  an increase in the costs of exploration and drilling for oil.

Question 19

Increasing marginal cost of production explains

Accepted Answer

A)  the law of demand. 
B)  the income effect. 
C)  why the supply curve is upsloping. 
D)  why the demand curve is downsloping. 
A)  the law of demand. 
B)  the income effect. 
C)  why the supply curve is upsloping. 
D)  why the demand curve is downsloping.

Question 20

In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S)
Of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X.
A reduction in the number of ﬁrms producing X will

Accepted Answer

A)  increase D, increase P, and increase Q. 
B)  increase S, decrease P, and increase Q. 
C)  decrease S, increase P, and decrease Q. 
D)  decrease S, decrease P, and increase Q. 
A)  increase D, increase P, and increase Q. 
B)  increase S, decrease P, and increase Q. 
C)  decrease S, increase P, and decrease Q. 
D)  decrease S, decrease P, and increase Q.

The relationship between quantity supplied and price is _, and the relationship between quantity demanded and price is _.

A ceiling price in a competitive market will result in persistent surpluses of a product.

75,

Refer to the above graph showing the market for a product. Which of the following could not explain the indicated increase in equilibrium price from P1 to P2?

Refer to the diagram. A shortage of 160 units would be encountered if price was

In which of the following instances is the effect on equilibrium price (whether it rises, falls, or remains unchanged) dependent on the magnitude of the shifts in supply and demand?

If consumer incomes increase, the demand for product X

If the supply and demand curves for a product both decrease, then equilibrium

Which of the following is most likely to be an inferior good?

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. If demand changes from P = 10 - 0.2Q to P = 7 - 0.3Q, we can Conclude that

Quantity Demanded Price Quantity Supplied 52 \ 50 73 62 45 62 72 40 51 82 35 42 92 30 33 In this market, economists would call a government-set minimum price of $50 a

Refer to the diagram. A surplus of 160 units would be encountered if the price was

Which of the diagrams illustrates the effect of an increase in automobile worker wages on the market for automobiles?

Consumers buy more of normal goods as their incomes rise.

An effective price ﬂoor on wheat will

In competitive markets, a surplus or shortage will

A leftward shift of the supply curve for oil in the United States is most likely to result from

Increasing marginal cost of production explains

The Market System and the Circular Flow

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

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

Filters

Exam 3: Demand, Supply, and Market Equilibrium

The relationship between quantity supplied and price is _____, and the relationship between quantity demanded and price is _____.

A ceiling price in a competitive market will result in persistent surpluses of a product.

75,

Refer to the above graph showing the market for a product. Which of the following could not explain the indicated increase in equilibrium price from P1 to P2?

Refer to the diagram. A shortage of 160 units would be encountered if price was

In which of the following instances is the effect on equilibrium price (whether it rises, falls, or remains unchanged) dependent on the magnitude of the shifts in supply and demand?

If consumer incomes increase, the demand for product X

If the supply and demand curves for a product both decrease, then equilibrium

Which of the following is most likely to be an inferior good?

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. If demand changes from P = 10 - 0.2Q to P = 7 - 0.3Q, we can Conclude that

Quantity Demanded Price Quantity Supplied 52 \ 50 73 62 45 62 72 40 51 82 35 42 92 30 33 In this market, economists would call a government-set minimum price of $50 a

Refer to the diagram. A surplus of 160 units would be encountered if the price was

Which of the diagrams illustrates the effect of an increase in automobile worker wages on the market for automobiles?

Consumers buy more of normal goods as their incomes rise.

An effective price ﬂoor on wheat will

In competitive markets, a surplus or shortage will

A leftward shift of the supply curve for oil in the United States is most likely to result from

Increasing marginal cost of production explains

The Market System and the Circular Flow

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

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

Filters

The relationship between quantity supplied and price is _, and the relationship between quantity demanded and price is _.