Question 1

Which of the following corresponds to the definition of the supply curve?

Accepted Answer

A) It depicts a positive relationship between income and quantity supplied. 
B) It depicts a positive relationship between technology and prices. 
C) It depicts a positive relationship between prices and quantity supplied. 
D) It depicts a negative relationship between prices and quantity supplied. 
E) It depicts a proportional relationship between prices and quantity supplied. 
A) It depicts a positive relationship between income and quantity supplied. 
B) It depicts a positive relationship between technology and prices. 
C) It depicts a positive relationship between prices and quantity supplied. 
D) It depicts a negative relationship between prices and quantity supplied. 
E) It depicts a proportional relationship between prices and quantity supplied.

Question 2

The law of demand indicates that as the price of a good increases:

Accepted Answer

A) suppliers sell less of it. 
B) suppliers sell more of it. 
C) buyers buy less of it. 
D) buyers buy more of it. 
A) suppliers sell less of it. 
B) suppliers sell more of it. 
C) buyers buy less of it. 
D) buyers buy more of it.

Question 3

A normal good is defined by economists to be a good:

Accepted Answer

A) with a negatively-sloped demand curve. 
B) that is purchased by at least 75 percent of the population. 
C) that is bought by consumers with normal tastes. 
D) whose demand increases when incomes increase. 
E) whose demand decreases when incomes increase. 
A) with a negatively-sloped demand curve. 
B) that is purchased by at least 75 percent of the population. 
C) that is bought by consumers with normal tastes. 
D) whose demand increases when incomes increase. 
E) whose demand decreases when incomes increase.

Question 4

Which of the following would most likely increase the demand for televisions?

Accepted Answer

A) A decrease in the price of televisions. 
B) A decline in consumer income. 
C) A decrease in the price of home stereo systems, a substitute for televisions. 
D) A decrease in the price of DVD players, a product that is complementary with televisions. 
A) A decrease in the price of televisions. 
B) A decline in consumer income. 
C) A decrease in the price of home stereo systems, a substitute for televisions. 
D) A decrease in the price of DVD players, a product that is complementary with televisions.

Question 5

Which of the following will cause a movement upward along a supply curve?

Accepted Answer

A) Increases in raw-material costs. 
B) Increases in labor costs. 
C) Increases in the cost of machinery. 
D) Increases in the market price of a good, other things being equal. 
A) Increases in raw-material costs. 
B) Increases in labor costs. 
C) Increases in the cost of machinery. 
D) Increases in the market price of a good, other things being equal.

Question 6

Assume that eggnog and cookies are complements. If the price of eggnog goes up, what happens to the demand for cookies?

Accepted Answer

A) Demand for cookies increases. 
B) Demand for cookies decreases. 
C) Demand for cookies remains unchanged. 
D) The shift in demand will depend on the original price of cookies. 
A) Demand for cookies increases. 
B) Demand for cookies decreases. 
C) Demand for cookies remains unchanged. 
D) The shift in demand will depend on the original price of cookies.

Question 7

Distinguish the laws of demand and supply. How are the laws of demand and supply illustrated graphically?

Accepted Answer

The law of demand states that there is a

Question 8

The horizontal summation of all individual demands at different given prices results in the:

Accepted Answer

A) market supply curve. 
B) individual supply curve. 
C) individual demand curve. 
D) equilibrium demand and supply curves. 
E) market demand curve. 
A) market supply curve. 
B) individual supply curve. 
C) individual demand curve. 
D) equilibrium demand and supply curves. 
E) market demand curve.

Question 9

Exhibit 3-15 Supply and demand curves for good X   In Exhibit 3-15, if the price moves from $2.00 to $1.00, unsold inventories will:

Accepted Answer

A) fall, putting upward pressure on price. 
B) fall, putting less pressure on price. 
C) rise, putting less pressure on price. 
D) rise, putting upward pressure on price. 
A) fall, putting upward pressure on price. 
B) fall, putting less pressure on price. 
C) rise, putting less pressure on price. 
D) rise, putting upward pressure on price.

Question 10

An improvement in a firm's technology that reduces its production costs will result in a(n):

Accepted Answer

A) rightward shift of the supply curve. 
B) increase in supply. 
C) increase in quantity supplied at any given price. 
D) all of these are true. 
A) rightward shift of the supply curve. 
B) increase in supply. 
C) increase in quantity supplied at any given price. 
D) all of these are true.

Question 11

The law of demand is illustrated by a demand curve that is:

Accepted Answer

A) horizontal. 
B) downward-sloping. 
C) vertical. 
D) upward-sloping. 
A) horizontal. 
B) downward-sloping. 
C) vertical. 
D) upward-sloping.

Question 12

Exhibit 3-8 Demand and supply data for Video games   In Exhibit 3-8, at any market price of video games above $50, a(n)____ would result, causing price to ____.

Accepted Answer

A) excess demand; rise 
B) excess supply; rise 
C) excess demand; fall 
D) excess supply; fall 
E) shortage; rise 
A) excess demand; rise 
B) excess supply; rise 
C) excess demand; fall 
D) excess supply; fall 
E) shortage; rise

Question 13

A surplus means that the quantity supplied is greater than the quantity demanded at the prevailing price.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following must be true if good X is a normal good and income increases?

Accepted Answer

A) The demand for X will increase, and thus the price and quantity sold and bought will decrease. 
B) The demand for X will decrease, and thus the price and quantity sold and bought will decrease. 
C) The demand for X will increase, and thus the price and quantity sold and bought will increase. 
D) The demand for X will decrease, and thus the price and quantity sold and bought will increase. 
E) The demand for X will increase, and thus the price and quantity sold and bought will remain the same. 
A) The demand for X will increase, and thus the price and quantity sold and bought will decrease. 
B) The demand for X will decrease, and thus the price and quantity sold and bought will decrease. 
C) The demand for X will increase, and thus the price and quantity sold and bought will increase. 
D) The demand for X will decrease, and thus the price and quantity sold and bought will increase. 
E) The demand for X will increase, and thus the price and quantity sold and bought will remain the same.

Question 15

Which of the following is true about the market equilibrium?

Accepted Answer

A) As the price increases, the quantity demanded and the quantity supplied increases. 
B) As the price increases, the quantity demanded and the quantity supplied decreases. 
C) As the price increases, the quantity demanded increases and the quantity supplied decreases. 
D) As the price increases, the quantity demanded decreases and the quantity supplied increases. 
E) As the price increases, neither the quantity demanded nor quantity supplied change. 
A) As the price increases, the quantity demanded and the quantity supplied increases. 
B) As the price increases, the quantity demanded and the quantity supplied decreases. 
C) As the price increases, the quantity demanded increases and the quantity supplied decreases. 
D) As the price increases, the quantity demanded decreases and the quantity supplied increases. 
E) As the price increases, neither the quantity demanded nor quantity supplied change.

Question 16

Assuming that chicken and beef are substitutes, a decrease in the price of beef, other things being equal, will:

Accepted Answer

A) decrease the demand for beef. 
B) increase the demand for chicken. 
C) decrease the demand for chicken. 
D) increase the demand for beef. 
A) decrease the demand for beef. 
B) increase the demand for chicken. 
C) decrease the demand for chicken. 
D) increase the demand for beef.

Question 17

If consumer tastes are changing more in favor of the consumption of a particular good the:

Accepted Answer

A) market demand curve will shift to the left. 
B) consumer will move up a given demand curve, decreasing the quantity demanded. 
C) consumer would move down a given demand curve, decreasing the quantity demanded. 
D) consumer would move down a given demand curve, increasing the quantity demanded. 
E) market demand curve would shift to the right. 
A) market demand curve will shift to the left. 
B) consumer will move up a given demand curve, decreasing the quantity demanded. 
C) consumer would move down a given demand curve, decreasing the quantity demanded. 
D) consumer would move down a given demand curve, increasing the quantity demanded. 
E) market demand curve would shift to the right.

Question 18

Exhibit 3-7 Demand and supply curves   In Exhibit 3-7, if price happened to currently be $25 in this market, a ____ would result, causing a(n)____ in price.

Accepted Answer

A) shortage; increase 
B) shortage; decrease 
C) surplus; increase 
D) surplus; decrease 
E) scarcity; stabilization 
A) shortage; increase 
B) shortage; decrease 
C) surplus; increase 
D) surplus; decrease 
E) scarcity; stabilization

Question 19

Exhibit 3-14 Supply and demand curves   In Exhibit 3-14, if the market price of compact discs is initially $15, a movement toward equilibrium would require:

Accepted Answer

A) no change, because an equilibrium already exists. 
B) the price to fall below $15 and both the quantity supplied and the quantity demanded to fall. 
C) the price to remain the same, but the supply curve to shift to the left. 
D) the price to fall below $15, the quantity supplied to fall, and the quantity demanded to rise. 
A) no change, because an equilibrium already exists. 
B) the price to fall below $15 and both the quantity supplied and the quantity demanded to fall. 
C) the price to remain the same, but the supply curve to shift to the left. 
D) the price to fall below $15, the quantity supplied to fall, and the quantity demanded to rise.

Question 20

Which of the following would not cause a shift in the supply curve for a good?

Accepted Answer

A) An increase in demand for that good. 
B) An increase in the cost of labor used to produce that good. 
C) A change in the cost of raw materials used to produce that good. 
D) A decrease in the cost of machinery used to produce that good. 
A) An increase in demand for that good. 
B) An increase in the cost of labor used to produce that good. 
C) A change in the cost of raw materials used to produce that good. 
D) A decrease in the cost of machinery used to produce that good.

Exam 3: Market Demand and Supply

Which of the following corresponds to the definition of the supply curve?

The law of demand indicates that as the price of a good increases:

A normal good is defined by economists to be a good:

Which of the following would most likely increase the demand for televisions?

Which of the following will cause a movement upward along a supply curve?

Assume that eggnog and cookies are complements. If the price of eggnog goes up, what happens to the demand for cookies?

Distinguish the laws of demand and supply. How are the laws of demand and supply illustrated graphically?

The horizontal summation of all individual demands at different given prices results in the:

Exhibit 3-15 Supply and demand curves for good X In Exhibit 3-15, if the price moves from $2.00 to $1.00, unsold inventories will:

An improvement in a firm's technology that reduces its production costs will result in a(n):

The law of demand is illustrated by a demand curve that is:

Exhibit 3-8 Demand and supply data for Video games In Exhibit 3-8, at any market price of video games above $50, a(n)____ would result, causing price to ____.

A surplus means that the quantity supplied is greater than the quantity demanded at the prevailing price.

Which of the following must be true if good X is a normal good and income increases?

Which of the following is true about the market equilibrium?

Assuming that chicken and beef are substitutes, a decrease in the price of beef, other things being equal, will:

If consumer tastes are changing more in favor of the consumption of a particular good the:

Exhibit 3-7 Demand and supply curves In Exhibit 3-7, if price happened to currently be $25 in this market, a ____ would result, causing a(n)____ in price.

Exhibit 3-14 Supply and demand curves In Exhibit 3-14, if the market price of compact discs is initially $15, a movement toward equilibrium would require:

Which of the following would not cause a shift in the supply curve for a good?

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Markets in Action

Gross Domestic Product

Business Cycles and Unemployment

Inflation

The Keynesian Model

The Keynesian Model in Action

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

The Phillips Curve and Expectations Theory

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Applying Graphs to Economics

Consumer Surplus, Producer Surplus, and Market Efficiency

the Self-Correcting Aggregate Demand and Supply Model

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

Filters

Exhibit 3-8 Demand and supply data for Video games In Exhibit 3-8, at any market price of video games above $50, a(n) would result, causing price to .

Exhibit 3-7 Demand and supply curves In Exhibit 3-7, if price happened to currently be $25 in this market, a would result, causing a(n) in price.