Question 1

Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market

Accepted Answer

A)  the equilibrium position has shifted from M to K. 
B)  an increase in demand has been more than offset by an increase in supply. 
C)  the new equilibrium price and quantity are both greater than originally. 
D)  point M shows the new equilibrium position. 
A)  the equilibrium position has shifted from M to K. 
B)  an increase in demand has been more than offset by an increase in supply. 
C)  the new equilibrium price and quantity are both greater than originally. 
D)  point M shows the new equilibrium position.

Question 2

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

Accepted Answer

A)  the number of ﬁrms producing this good 
B)  expectations about the future price of the product 
C)  techniques used in producing this product 
D)  the price of the product itself 
A)  the number of ﬁrms producing this good 
B)  expectations about the future price of the product 
C)  techniques used in producing this product 
D)  the price of the product itself

Question 3

A higher price reduces the quantity demanded for a product because

Accepted Answer

A)  the purchasing power of individuals increases. 
B)  the ﬁnancial assets of individuals increase. 
C)  individuals will buy more of the product and less of its substitutes. 
D)  individuals can afford less of the product and will switch to substitutes. 
A)  the purchasing power of individuals increases. 
B)  the ﬁnancial assets of individuals increase. 
C)  individuals will buy more of the product and less of its substitutes. 
D)  individuals can afford less of the product and will switch to substitutes.

Question 4

$$\begin{array} { | c | r | c | } 
\hline \text { Quantity Demanded } & \text { Price } & \text { Quantity Supplied } \
\hline 52 & \$ 50 & 73 \
\hline 62 & 45 & 62 \
\hline 72 & 40 & 51 \
\hline 82 & 35 & 42 \
\hline 92 & 30 & 33 \
\hline
\end{array}$$ If government set a minimum price of $50 in the market, a

Accepted Answer

A)  shortage of 21 units would occur. 
B)  shortage of 125 units would occur. 
C)  surplus of 21 units would occur. 
D)  surplus of 125 units would occur. 
A)  shortage of 21 units would occur. 
B)  shortage of 125 units would occur. 
C)  surplus of 21 units would occur. 
D)  surplus of 125 units would occur.

Question 5

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 6

By an "increase in demand," economists mean that

Accepted Answer

A)  product price has fallen, so consumers move down to a new point on the demand curve. 
B)  the quantity demanded at each price in a set of prices is greater. 
C)  the quantity demanded at each price in a set of prices is smaller. 
D)  a leftward shift of the demand curve has occurred. 
A)  product price has fallen, so consumers move down to a new point on the demand curve. 
B)  the quantity demanded at each price in a set of prices is greater. 
C)  the quantity demanded at each price in a set of prices is smaller. 
D)  a leftward shift of the demand curve has occurred.

Question 7

An increase in the price of product B leads to an increase in the demand for product C. This indicates that products B and C are

Accepted Answer

A)  complementary goods. 
B)  substitute goods. 
C)  inferior goods. 
D)  normal goods. 
A)  complementary goods. 
B)  substitute goods. 
C)  inferior goods. 
D)  normal goods.

Question 8

In the diagrams below, the subscript "1" refers to the initial position of the curve, while the subscript "2" refers to the ﬁnal position after the curve shifts.
  Which diagram illustrates the effects on the peanut butter market, if severe ﬂooding destroys a large
Portion of the peanut crop in the economy?

Accepted Answer

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

Question 9

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 10

Toothpaste and toothbrushes are substitute goods.

Accepted Answer

A) True 
 B)False

Question 11

Refer to the above diagram of the market for corn. There will be a surplus of 8 thousand bushels at the price of

Accepted Answer

A)  $4/bushel. 
B)  $3/bushel. 
C)  $2/bushel. 
D)  $5/bushel. 
A)  $4/bushel. 
B)  $3/bushel. 
C)  $2/bushel. 
D)  $5/bushel.

Question 12

(Advanced analysis) The equation for the demand curve in the diagram shown.

Accepted Answer

A)  is P = 70 - Q. 
B)  is P = 35 - 2Q. 
C)  is P = 35 - .5Q. 
D)  cannot be determined from the information given. 
A)  is P = 70 - Q. 
B)  is P = 35 - 2Q. 
C)  is P = 35 - .5Q. 
D)  cannot be determined from the information given.

Question 13

Over time, the equilibrium price of a gigabyte of computer memory has fallen, while the equilibrium quantity purchased has increased. Based on this we can conclude that

Accepted Answer

A)  decreases in the demand for computer memory have exceeded increases in supply. 
B)  decreases in the supply of computer memory have exceeded increases in demand. 
C)  increases in the demand for computer memory have exceeded increases in supply. 
D)  increases in the supply of computer memory have exceeded increases in demand. 
A)  decreases in the demand for computer memory have exceeded increases in supply. 
B)  decreases in the supply of computer memory have exceeded increases in demand. 
C)  increases in the demand for computer memory have exceeded increases in supply. 
D)  increases in the supply of computer memory have exceeded increases in demand.

Question 14

The rationing function of prices refers to the

Accepted Answer

A)  tendency of supply and demand to shift in opposite directions. 
B)  fact that ration coupons are needed to alleviate wartime shortages of goods. 
C)  capacity of a competitive market to equalize quantity demanded and quantity supplied. 
D)  ability of the market system to generate an equitable distribution of income. 
A)  tendency of supply and demand to shift in opposite directions. 
B)  fact that ration coupons are needed to alleviate wartime shortages of goods. 
C)  capacity of a competitive market to equalize quantity demanded and quantity supplied. 
D)  ability of the market system to generate an equitable distribution of income.

Question 15

When the price of Nike soccer balls fell, Ronaldo purchased more Nike soccer balls and fewer adidas soccer balls. Which of the following best explains Ronaldo's decision to buy more Nike
Soccer balls?

Accepted Answer

A)  the substitution effect 
B)  the income effect 
C)  an increase in the demand for Nike soccer balls 
D)  the price effect 
A)  the substitution effect 
B)  the income effect 
C)  an increase in the demand for Nike soccer balls 
D)  the price effect

Question 16

Suppose that in 2017, Ford sold 500,000 Mustangs at an average price of $28,800 per car; in 2018, 600,000 Mustangs were sold at an average price of $29,500 per car. These statements

Accepted Answer

A)  suggest that the demand for Mustangs decreased between 2017 and 2018. 
B)  suggest that the supply of Mustangs must have increased between 2017 and 2018. 
C)  suggest that the demand for Mustangs increased between 2017 and 2018. 
D)  constitute an exception to the law of demand in that they suggest an upsloping demand curve. 
A)  suggest that the demand for Mustangs decreased between 2017 and 2018. 
B)  suggest that the supply of Mustangs must have increased between 2017 and 2018. 
C)  suggest that the demand for Mustangs increased between 2017 and 2018. 
D)  constitute an exception to the law of demand in that they suggest an upsloping demand curve.

Question 17

At the point where the demand and supply curves for a product intersect,

Accepted Answer

A)  the selling price and the buying price need not be equal. 
B)  the market may, or may not, be in equilibrium. 
C)  either a shortage or a surplus of the product might exist, depending on the degree of competition. 
D)  the quantity that consumers want to purchase and the amount producers choose to sell are the same. 
A)  the selling price and the buying price need not be equal. 
B)  the market may, or may not, be in equilibrium. 
C)  either a shortage or a surplus of the product might exist, depending on the degree of competition. 
D)  the quantity that consumers want to purchase and the amount producers choose to sell are the same.

Question 18

Refer to the diagram. The equilibrium price and quantity in this market will be

Accepted Answer

A)  $1.00 and 200. 
B)  $1.60 and 130. 
C)  $0.50 and 130. 
D)  $1.60 and 290. 
A)  $1.00 and 200. 
B)  $1.60 and 130. 
C)  $0.50 and 130. 
D)  $1.60 and 290.

Question 19

A price ﬂoor in a competitive market will result in persistent shortages of a product.

Accepted Answer

A) True 
 B)False

Question 20

When high-school and college graduates apply for jobs in the labor markets,

Accepted Answer

A)  job applicants are the "buyers" while employers are the "sellers." 
B)  job applicants are the "sellers" while employers are the "buyers." 
C)  job applicants and employers are both "sellers" in the market. 
D)  job applicants and employers are both "buyers" in the market. 
A)  job applicants are the "buyers" while employers are the "sellers." 
B)  job applicants are the "sellers" while employers are the "buyers." 
C)  job applicants and employers are both "sellers" in the market. 
D)  job applicants and employers are both "buyers" in the market.

Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market

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

A higher price reduces the quantity demanded for a product because

Quantity Demanded Price Quantity Supplied 52 \ 50 73 62 45 62 72 40 51 82 35 42 92 30 33 If government set a minimum price of $50 in the market, a

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

By an "increase in demand," economists mean that

An increase in the price of product B leads to an increase in the demand for product C. This indicates that products B and C are

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

Toothpaste and toothbrushes are substitute goods.

Refer to the above diagram of the market for corn. There will be a surplus of 8 thousand bushels at the price of

(Advanced analysis) The equation for the demand curve in the diagram shown.

Over time, the equilibrium price of a gigabyte of computer memory has fallen, while the equilibrium quantity purchased has increased. Based on this we can conclude that

The rationing function of prices refers to the

When the price of Nike soccer balls fell, Ronaldo purchased more Nike soccer balls and fewer adidas soccer balls. Which of the following best explains Ronaldo's decision to buy more Nike Soccer balls?

Suppose that in 2017, Ford sold 500,000 Mustangs at an average price of $28,800 per car; in 2018, 600,000 Mustangs were sold at an average price of $29,500 per car. These statements

At the point where the demand and supply curves for a product intersect,

Refer to the diagram. The equilibrium price and quantity in this market will be

A price ﬂoor in a competitive market will result in persistent shortages of a product.

When high-school and college graduates apply for jobs in the labor markets,

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

Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market

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

A higher price reduces the quantity demanded for a product because

Quantity Demanded Price Quantity Supplied 52 \ 50 73 62 45 62 72 40 51 82 35 42 92 30 33 If government set a minimum price of $50 in the market, a

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

By an "increase in demand," economists mean that

An increase in the price of product B leads to an increase in the demand for product C. This indicates that products B and C are

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

Toothpaste and toothbrushes are substitute goods.

Refer to the above diagram of the market for corn. There will be a surplus of 8 thousand bushels at the price of

(Advanced analysis) The equation for the demand curve in the diagram shown.

Over time, the equilibrium price of a gigabyte of computer memory has fallen, while the equilibrium quantity purchased has increased. Based on this we can conclude that

The rationing function of prices refers to the

When the price of Nike soccer balls fell, Ronaldo purchased more Nike soccer balls and fewer adidas soccer balls. Which of the following best explains Ronaldo's decision to buy more Nike Soccer balls?

Suppose that in 2017, Ford sold 500,000 Mustangs at an average price of $28,800 per car; in 2018, 600,000 Mustangs were sold at an average price of $29,500 per car. These statements

At the point where the demand and supply curves for a product intersect,

Refer to the diagram. The equilibrium price and quantity in this market will be

A price ﬂoor in a competitive market will result in persistent shortages of a product.

When high-school and college graduates apply for jobs in the labor markets,

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