Question 1

If a vacation in Paris is a normal good, other things being equal, an increase in consumer income will increase the demand for travel to Paris.

Accepted Answer

A) True 
 B)False

Question 2

An increase in the demand for a good means that:

Accepted Answer

A) the demand curve has shifted to the left. 
B) the good's price has fallen and, as a result, consumers are buying more of the good. 
C) the good has become scarce. 
D) consumers are willing to purchase more of the good at each possible price. 
A) the demand curve has shifted to the left. 
B) the good's price has fallen and, as a result, consumers are buying more of the good. 
C) the good has become scarce. 
D) consumers are willing to purchase more of the good at each possible price.

Question 3

If an individual's income increases, then the demand for a normal good will:

Accepted Answer

A) decrease. 
B) increase. 
C) remain constant. 
D) rotate. 
E) fall to zero. 
A) decrease. 
B) increase. 
C) remain constant. 
D) rotate. 
E) fall to zero.

Question 4

Exhibit 3-9 Demand and supply curves   In Exhibit 3-9, if the market price is $20,

Accepted Answer

A) this market will be in equilibrium. 
B) a shortage of 27 units will result. 
C) the price is above the equilibrium price. 
D) a surplus of 26 units will result. 
E) a shortage of 26 units will result. 
A) this market will be in equilibrium. 
B) a shortage of 27 units will result. 
C) the price is above the equilibrium price. 
D) a surplus of 26 units will result. 
E) a shortage of 26 units will result.

Question 5

An increase in the quantity demanded of a good is most often due to:

Accepted Answer

A) current prices. 
B) higher prices. 
C) higher income. 
D) lower prices. 
E) technological change. 
A) current prices. 
B) higher prices. 
C) higher income. 
D) lower prices. 
E) technological change.

Question 6

A rightward shift of a demand curve is called a(n):

Accepted Answer

A) increase in demand. 
B) decrease in demand. 
C) increase in quantity demanded. 
D) decrease in quantity demanded. 
E) increase in supply. 
A) increase in demand. 
B) decrease in demand. 
C) increase in quantity demanded. 
D) decrease in quantity demanded. 
E) increase in supply.

Question 7

Assuming gasoline and oil to be complementary goods, the effect on the oil market of an increase in the price of gasoline (other things being equal)would best be described as a(n):

Accepted Answer

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

Question 8

Two goods that are substitutes are:

Accepted Answer

A) bacon and eggs. 
B) camera and film. 
C) tennis racket and tennis balls. 
D) movie theater tickets and video rentals. 
E) coffee and cream. 
A) bacon and eggs. 
B) camera and film. 
C) tennis racket and tennis balls. 
D) movie theater tickets and video rentals. 
E) coffee and cream.

Question 9

Which of the following will not shift the demand curve for grapefruit?

Accepted Answer

A) An announcement that eating a grapefruit before every meal will induce weight loss. 
B) A technical development that allows machines to replace the workers who harvest grapefruit. 
C) An announcement that eating lots of grapefruit causes skin problems. 
D) A newspaper story reporting that the preference for oranges has skyrocketed. 
E) An announcement that grapefruit will definitely cost more next week. 
A) An announcement that eating a grapefruit before every meal will induce weight loss. 
B) A technical development that allows machines to replace the workers who harvest grapefruit. 
C) An announcement that eating lots of grapefruit causes skin problems. 
D) A newspaper story reporting that the preference for oranges has skyrocketed. 
E) An announcement that grapefruit will definitely cost more next week.

Question 10

Excess quantity demanded for a good creates pressure to push the price of that good down toward the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following would decrease the supply of airline travel?

Accepted Answer

A) Reduced number of airline travelers. 
B) New airline companies beginning operations. 
C) Higher fuel costs. 
D) Lower prices for airline tickets. 
A) Reduced number of airline travelers. 
B) New airline companies beginning operations. 
C) Higher fuel costs. 
D) Lower prices for airline tickets.

Question 12

Which of the following best represents the effects of a decrease in the price of tomato juice, other things being equal?

Accepted Answer

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

Question 13

Consumers buy less of a good as its price increases because:

Accepted Answer

A) production costs have risen. 
B) substitute goods are now relatively cheaper. 
C) the income of consumers has effectively risen. 
D) the higher price will make the good more valuable to each consumer. 
A) production costs have risen. 
B) substitute goods are now relatively cheaper. 
C) the income of consumers has effectively risen. 
D) the higher price will make the good more valuable to each consumer.

Question 14

Assume Congress passes a new tax of $2.00 per pack on cigarettes. The effect on the supply curve is a(n):

Accepted Answer

A) decrease in supply. 
B) increase in supply. 
C) decrease in quantity supplied. 
D) increase in quantity supplied. 
A) decrease in supply. 
B) increase in supply. 
C) decrease in quantity supplied. 
D) increase in quantity supplied.

Question 15

Which of the following pairs is the best example of substitutes?

Accepted Answer

A) Coffee and cream. 
B) Honey and biscuits. 
C) Tortillas and salsa. 
D) Hiking boots and athletic shoes. 
A) Coffee and cream. 
B) Honey and biscuits. 
C) Tortillas and salsa. 
D) Hiking boots and athletic shoes.

Question 16

Which of the following would shift the demand curve for autos to the right?

Accepted Answer

A) A fall in the price of autos. 
B) A fall in the price of auto insurance. 
C) A fall in consumers' incomes. 
D) A fall in the price of steel. 
A) A fall in the price of autos. 
B) A fall in the price of auto insurance. 
C) A fall in consumers' incomes. 
D) A fall in the price of steel.

Question 17

If more people enter medical school, we can expect:

Accepted Answer

A) the demand for doctors to increase. 
B) the supply of doctors to increase. 
C) the demand for doctors to decrease. 
D) the supply of doctors to decrease. 
E) no effect on the supply or demand of doctors ¾ just a movement along the curves. 
A) the demand for doctors to increase. 
B) the supply of doctors to increase. 
C) the demand for doctors to decrease. 
D) the supply of doctors to decrease. 
E) no effect on the supply or demand of doctors ¾ just a movement along the curves.

Question 18

The law of demand shows that:

Accepted Answer

A) there is an inverse relationship between price and quantity demanded. 
B) the demand curve is positively sloped. 
C) when the price of a good increases, the quantity demanded increases. 
D) the supply curve is vertical. 
E) individual demand is the same as market demand. 
A) there is an inverse relationship between price and quantity demanded. 
B) the demand curve is positively sloped. 
C) when the price of a good increases, the quantity demanded increases. 
D) the supply curve is vertical. 
E) individual demand is the same as market demand.

Question 19

An advance in technology results in:

Accepted Answer

A) suppliers offering a larger quantity than before at each given price. 
B) suppliers offering the same quantity as before at a lower price. 
C) a rightward shift of the supply curve. 
D) an increase in supply. 
E) all of these. 
A) suppliers offering a larger quantity than before at each given price. 
B) suppliers offering the same quantity as before at a lower price. 
C) a rightward shift of the supply curve. 
D) an increase in supply. 
E) all of these.

Question 20

Exhibit 3-14 Supply and demand curves   In Exhibit 3-14, assume that the market price of compact discs is $15 each. This price is:

Accepted Answer

A) an equilibrium price. 
B) not an equilibrium price because there is an excess quantity demanded at a price of $15. 
C) an equilibrium price because suppliers can store inventories in their warehouses. 
D) not an equilibrium price because the quantity supplied of compact discs is greater than the quantity demanded. 
A) an equilibrium price. 
B) not an equilibrium price because there is an excess quantity demanded at a price of $15. 
C) an equilibrium price because suppliers can store inventories in their warehouses. 
D) not an equilibrium price because the quantity supplied of compact discs is greater than the quantity demanded.

Exam 3: Market Demand and Supply

If a vacation in Paris is a normal good, other things being equal, an increase in consumer income will increase the demand for travel to Paris.

An increase in the demand for a good means that:

If an individual's income increases, then the demand for a normal good will:

Exhibit 3-9 Demand and supply curves In Exhibit 3-9, if the market price is $20,

An increase in the quantity demanded of a good is most often due to:

A rightward shift of a demand curve is called a(n):

Assuming gasoline and oil to be complementary goods, the effect on the oil market of an increase in the price of gasoline (other things being equal)would best be described as a(n):

Two goods that are substitutes are:

Which of the following will not shift the demand curve for grapefruit?

Excess quantity demanded for a good creates pressure to push the price of that good down toward the equilibrium price.

Which of the following would decrease the supply of airline travel?

Which of the following best represents the effects of a decrease in the price of tomato juice, other things being equal?

Consumers buy less of a good as its price increases because:

Assume Congress passes a new tax of $2.00 per pack on cigarettes. The effect on the supply curve is a(n):

Which of the following pairs is the best example of substitutes?

Which of the following would shift the demand curve for autos to the right?

If more people enter medical school, we can expect:

The law of demand shows that:

An advance in technology results in:

Exhibit 3-14 Supply and demand curves In Exhibit 3-14, assume that the market price of compact discs is $15 each. This price is:

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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