Question 1

When the price of a good is below its equilibrium level, a:

Accepted Answer

A) shortage puts upward pressure on the price. 
B) surplus puts downward pressure on the price. 
C) shortage puts downward pressure on the price. 
D) surplus puts upward pressure on the price. 
A) shortage puts upward pressure on the price. 
B) surplus puts downward pressure on the price. 
C) shortage puts downward pressure on the price. 
D) surplus puts upward pressure on the price.

Question 2

Exhibit 3-15 Supply and demand curves for good X   In the market shown in Exhibit 3-15, the equilibrium price and quantity of good X are:

Accepted Answer

A) $0.50, 250. 
B) $2.00, 300. 
C) $2.00, 100. 
D) $1.00, 200. 
A) $0.50, 250. 
B) $2.00, 300. 
C) $2.00, 100. 
D) $1.00, 200.

Question 3

Exhibit 3-15 Supply and demand curves for good X   In Exhibit 3-15, if the market price of good X is initially $.50, a movement toward equilibrium requires:

Accepted Answer

A) no change, because an equilibrium already exists. 
B) the price to fall below $.50 and both the quantity supplied and the quantity demanded to rise. 
C) the price to remain the same, but the supply curve to shift to the left. 
D) the price to rise above $.50, the quantity supplied to rise, and the quantity demanded to fall. 
A) no change, because an equilibrium already exists. 
B) the price to fall below $.50 and both the quantity supplied and the quantity demanded to rise. 
C) the price to remain the same, but the supply curve to shift to the left. 
D) the price to rise above $.50, the quantity supplied to rise, and the quantity demanded to fall.

Question 4

Assuming steak and potatoes are complements, other things being equal, an increase in the price of steak, will:

Accepted Answer

A) increase the demand for potatoes. 
B) decrease the demand for potatoes. 
C) increase the demand for steak. 
D) decrease the demand for steak. 
A) increase the demand for potatoes. 
B) decrease the demand for potatoes. 
C) increase the demand for steak. 
D) decrease the demand for steak.

Question 5

A demand curve:

Accepted Answer

A) has a positive slope. 
B) illustrates the negative relationship between price and quantity demanded. 
C) illustrates the positive relationship between price and quantity demanded. 
D) is based on the assumption of a stable supply curve. 
E) shifts about in a random fashion. 
A) has a positive slope. 
B) illustrates the negative relationship between price and quantity demanded. 
C) illustrates the positive relationship between price and quantity demanded. 
D) is based on the assumption of a stable supply curve. 
E) shifts about in a random fashion.

Question 6

The price system eliminates scarcity.

Accepted Answer

A) True 
 B)False

Question 7

Demand curves slope downward to the right.

Accepted Answer

A) True 
 B)False

Question 8

Assuming that automobiles are normal goods, a rise in consumer income, other things being equal, will cause:

Accepted Answer

A) the demand curve for automobiles to shift to the left. 
B) the demand curve for automobiles to shift to the right. 
C) a downward movement along the demand curve for automobiles. 
D) an upward movement along the demand curve for automobiles. 
A) the demand curve for automobiles to shift to the left. 
B) the demand curve for automobiles to shift to the right. 
C) a downward movement along the demand curve for automobiles. 
D) an upward movement along the demand curve for automobiles.

Question 9

Demand for a good will always rise when:

Accepted Answer

A) the price of a complementary good falls. 
B) the price of a substitute good falls. 
C) tastes change. 
D) incomes decrease. 
E) the price of the good falls. 
A) the price of a complementary good falls. 
B) the price of a substitute good falls. 
C) tastes change. 
D) incomes decrease. 
E) the price of the good falls.

Question 10

Exhibit 3-5 Supply for Tucker's Cola Data   As shown in Exhibit 3-5, the price and quantity supplied by sellers of Tucker's Cola have a(n)____ relationship.

Accepted Answer

A) direct. 
B) inverse. 
C) negative. 
D) zero. 
A) direct. 
B) inverse. 
C) negative. 
D) zero.

Question 11

According to the law of demand, when will higher corn prices reduce the quantity demanded of corn?

Accepted Answer

A) Always. 
B) When the supply of corn is fixed. 
C) When nonprice determinants, like income and the number of buyers, are unchanged. 
D) When there are no shortages or surpluses of corn. 
A) Always. 
B) When the supply of corn is fixed. 
C) When nonprice determinants, like income and the number of buyers, are unchanged. 
D) When there are no shortages or surpluses of corn.

Question 12

Exhibit 3-15 Supply and demand curves for good X   In Exhibit 3-15, at a price of $.50 the market for good X will experience a:

Accepted Answer

A) shortage of 100 units. 
B) surplus of 100 units. 
C) shortage of 300 units. 
D) surplus of 200 units. 
A) shortage of 100 units. 
B) surplus of 100 units. 
C) shortage of 300 units. 
D) surplus of 200 units.

Question 13

The law of supply states that:

Accepted Answer

A) there is a negative relationship between the price of a good and the quantity of it purchased by suppliers. 
B) there is a positive relationship between the price of a good and the quantity that buyers choose to purchase. 
C) there is a positive relationship between the price of a good and the quantity of it offered for sale by suppliers. 
D) at a lower price, a greater quantity will be supplied. 
A) there is a negative relationship between the price of a good and the quantity of it purchased by suppliers. 
B) there is a positive relationship between the price of a good and the quantity that buyers choose to purchase. 
C) there is a positive relationship between the price of a good and the quantity of it offered for sale by suppliers. 
D) at a lower price, a greater quantity will be supplied.

Question 14

Which of the following would most likely not cause market demand for a normal good to decline?

Accepted Answer

A) An increase in the price of a substitute. 
B) An increase in the price of a complement. 
C) A decline in consumer income. 
D) Consumer expectations that the good will go on sale in the near future. 
E) An announcement by the Surgeon General that the product contributes to premature death.death. 
A) An increase in the price of a substitute. 
B) An increase in the price of a complement. 
C) A decline in consumer income. 
D) Consumer expectations that the good will go on sale in the near future. 
E) An announcement by the Surgeon General that the product contributes to premature death.death.

Question 15

An increase in the number of producers will:

Accepted Answer

A) increase the market supply, because the price will rise. 
B) increase the market supply only when market demand increases too. 
C) increase the market supply, because market supply is the sum of all individual supply curves. 
D) increase the market supply only if each supplier has an identical supply curve. 
E) decrease the market supply, because firms compete with each other and each firm will supply more. 
A) increase the market supply, because the price will rise. 
B) increase the market supply only when market demand increases too. 
C) increase the market supply, because market supply is the sum of all individual supply curves. 
D) increase the market supply only if each supplier has an identical supply curve. 
E) decrease the market supply, because firms compete with each other and each firm will supply more.

Question 16

Which of the following best represents the effects of an increase in the price of coffee, other things being equal?

Accepted Answer

A) A leftward shift in the demand curve for coffee. 
B) A downward movement along the demand curve for coffee. 
C) A rightward shift in the demand curve for coffee. 
D) An upward movement along the demand curve for coffee. 
A) A leftward shift in the demand curve for coffee. 
B) A downward movement along the demand curve for coffee. 
C) A rightward shift in the demand curve for coffee. 
D) An upward movement along the demand curve for coffee.

Question 17

Assume that crackers and soup are complementary goods. The effect on the soup market of an increase in the price of crackers (other things being equal)would best be described as a(n):

Accepted Answer

A) decrease in the quantity of soup demanded. 
B) decrease in the demand for soup. 
C) increase in the quantity of soup demanded. 
D) increase in the demand for soup. 
A) decrease in the quantity of soup demanded. 
B) decrease in the demand for soup. 
C) increase in the quantity of soup demanded. 
D) increase in the demand for soup.

Question 18

Two goods are considered substitutes only if a(n):

Accepted Answer

A) decrease in the demand for one leads to a decrease in the supply of the other. 
B) increase in the demand for one leads to a decrease in the supply of the other. 
C) increase in the price of one leads to an increase in the demand for the other. 
D) decrease in the price of one leads to an increase in the demand for the other. 
E) decrease in the supply of one leads producers to switch to production of the other. 
A) decrease in the demand for one leads to a decrease in the supply of the other. 
B) increase in the demand for one leads to a decrease in the supply of the other. 
C) increase in the price of one leads to an increase in the demand for the other. 
D) decrease in the price of one leads to an increase in the demand for the other. 
E) decrease in the supply of one leads producers to switch to production of the other.

Question 19

Exhibit 3-10 Demand and supply curves   In Exhibit 3-10, which of the following points represents an excess quantity supplied?

Accepted Answer

A) Point E. 
B) Point B. 
C) Point C. 
D) Point F. 
E) Point A. 
A) Point E. 
B) Point B. 
C) Point C. 
D) Point F. 
E) Point A.

Question 20

A shift occurs in the supply curve for salt when:

Accepted Answer

A) the price of salt increases. 
B) improvements are made in the production process. 
C) salt is found to be associated with high blood pressure. 
D) consumers expect the price of salt to increase in the future. 
A) the price of salt increases. 
B) improvements are made in the production process. 
C) salt is found to be associated with high blood pressure. 
D) consumers expect the price of salt to increase in the future.

Exam 3: Market Demand and Supply

When the price of a good is below its equilibrium level, a:

Exhibit 3-15 Supply and demand curves for good X In the market shown in Exhibit 3-15, the equilibrium price and quantity of good X are:

Exhibit 3-15 Supply and demand curves for good X In Exhibit 3-15, if the market price of good X is initially $.50, a movement toward equilibrium requires:

Assuming steak and potatoes are complements, other things being equal, an increase in the price of steak, will:

A demand curve:

The price system eliminates scarcity.

Demand curves slope downward to the right.

Assuming that automobiles are normal goods, a rise in consumer income, other things being equal, will cause:

Demand for a good will always rise when:

Exhibit 3-5 Supply for Tucker's Cola Data As shown in Exhibit 3-5, the price and quantity supplied by sellers of Tucker's Cola have a(n)____ relationship.

According to the law of demand, when will higher corn prices reduce the quantity demanded of corn?

Exhibit 3-15 Supply and demand curves for good X In Exhibit 3-15, at a price of $.50 the market for good X will experience a:

The law of supply states that:

Which of the following would most likely not cause market demand for a normal good to decline?

An increase in the number of producers will:

Which of the following best represents the effects of an increase in the price of coffee, other things being equal?

Assume that crackers and soup are complementary goods. The effect on the soup market of an increase in the price of crackers (other things being equal)would best be described as a(n):

Two goods are considered substitutes only if a(n):

Exhibit 3-10 Demand and supply curves In Exhibit 3-10, which of the following points represents an excess quantity supplied?

A shift occurs in the supply curve for salt when:

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

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