Question 1

If the price of good X increases and this causes an increase in the demand for good Y, then goods X and Y are substitute goods.

Accepted Answer

A) True 
 B)False

Question 2

An increase in the demand for peanut butter, a normal good, can be caused by a(n):

Accepted Answer

A) decrease in consumer income. 
B) increase in the price of jams, jellies, and preserves. 
C) decrease in the price of bread. 
D) drought in Georgia that destroyed 30 percent of the peanut crop. 
E) decrease in the price of bologna. 
A) decrease in consumer income. 
B) increase in the price of jams, jellies, and preserves. 
C) decrease in the price of bread. 
D) drought in Georgia that destroyed 30 percent of the peanut crop. 
E) decrease in the price of bologna.

Question 3

Which of the following can bring about a change in the quantity demanded?

Accepted Answer

A) Change in supply. 
B) Change in quality. 
C) Change in income. 
D) Change in product price. 
E) Change in taste. 
A) Change in supply. 
B) Change in quality. 
C) Change in income. 
D) Change in product price. 
E) Change in taste.

Question 4

Surpluses cause prices to rise while shortages cause prices to fall.

Accepted Answer

A) True 
 B)False

Question 5

Interpret what an increase in demand and an increase in supply mean. Discuss the causes of an increase in demand and an increase in supply. How are increases in demand and supply expressed graphically?

Accepted Answer

An increase in demand means buyers will

Question 6

Exhibit 3-13 Supply and demand curves   Which of the graphs in Exhibit 3-13 illustrates a shortage exists at the indicated market price?

Accepted Answer

A) Diagram A. 
B) Diagram B. 
C) Diagram C. 
D) Diagrams A and B. 
A) Diagram A. 
B) Diagram B. 
C) Diagram C. 
D) Diagrams A and B.

Question 7

Tasha decides that when homes in her neighborhood are selling for $150,000 she will not sell her home. When average prices rise to $175,000, she decides that she will put her home on the market. This is an example of:

Accepted Answer

A) market demand. 
B) market-day supply. 
C) an excess supply of homes. 
D) a positively-sloped supply curve. 
E) a negatively-sloped supply curve. 
A) market demand. 
B) market-day supply. 
C) an excess supply of homes. 
D) a positively-sloped supply curve. 
E) a negatively-sloped supply curve.

Question 8

The most important characteristic of the equilibrium price is that it:

Accepted Answer

A) guarantees that producers earn profit. 
B) clears the market. 
C) increases the quantity demanded. 
D) decreases the quantity demanded. 
A) guarantees that producers earn profit. 
B) clears the market. 
C) increases the quantity demanded. 
D) decreases the quantity demanded.

Question 9

A technological improvement in the production of good X causes the:

Accepted Answer

A) demand curve for X to shift to the right. 
B) demand curve for X to shift to the left. 
C) supply curve for X to shift to the right. 
D) supply curve for X to shift to the left. 
A) demand curve for X to shift to the right. 
B) demand curve for X to shift to the left. 
C) supply curve for X to shift to the right. 
D) supply curve for X to shift to the left.

Question 10

Which of the following will reduce the supply of motorcycles?

Accepted Answer

A) An increase in the population age 16 to 35, the primary consumers of motorcycles. 
B) An increase in taxes imposed on motorcycle producers. 
C) A technological improvement reducing the production costs of motorcycles. 
D) A government study that reveals motorcycle riders, on average, live 10 years longer than those who don't ride motorcycles. 
A) An increase in the population age 16 to 35, the primary consumers of motorcycles. 
B) An increase in taxes imposed on motorcycle producers. 
C) A technological improvement reducing the production costs of motorcycles. 
D) A government study that reveals motorcycle riders, on average, live 10 years longer than those who don't ride motorcycles.

Question 11

If the current price of a good is the same as that found at the intersection of the market demand and supply curves, then:

Accepted Answer

A) excess demand exists. 
B) excess supply exists. 
C) price will rise. 
D) price will fall. 
E) the market is in equilibrium. 
A) excess demand exists. 
B) excess supply exists. 
C) price will rise. 
D) price will fall. 
E) the market is in equilibrium.

Question 12

Which of the following best explains the determination of the equilibrium price of a product?

Accepted Answer

A) Production costs. 
B) The supply of a good. 
C) The interaction of supply and demand. 
D) The decisions of government. 
A) Production costs. 
B) The supply of a good. 
C) The interaction of supply and demand. 
D) The decisions of government.

Question 13

The most plausible reason why changes in the price of cotton can cause shifts in the supply curve for tobacco is:

Accepted Answer

A) cigarette smokers often wear cotton shirts. 
B) when incomes rise, people consume more cotton and tobacco. 
C) firms can switch from growing tobacco to cotton and vice versa. 
D) tobacco is an input in the production of cotton. 
E) cotton and tobacco are unrelated markets in all ways. 
A) cigarette smokers often wear cotton shirts. 
B) when incomes rise, people consume more cotton and tobacco. 
C) firms can switch from growing tobacco to cotton and vice versa. 
D) tobacco is an input in the production of cotton. 
E) cotton and tobacco are unrelated markets in all ways.

Question 14

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

Accepted Answer

A) An increase in the price of televisions. 
B) An increase in consumer income. 
C) An increase in the price of radios (a substitute). 
D) An increase in the price of cable service (a complement). 
A) An increase in the price of televisions. 
B) An increase in consumer income. 
C) An increase in the price of radios (a substitute). 
D) An increase in the price of cable service (a complement).

Question 15

There is news that the price of Tucker's Root Beer will increase significantly next week. If the demand for Tucker's Root Beer reacts only to this factor and shifts to the right, the position of this demand curve has reacted to a change in:

Accepted Answer

A) tastes. 
B) income levels. 
C) the price of other goods. 
D) the number of buyers. 
E) expectations. 
A) tastes. 
B) income levels. 
C) the price of other goods. 
D) the number of buyers. 
E) expectations.

Question 16

A change in demand cannot be caused by a change in:

Accepted Answer

A) tastes. 
B) population. 
C) the prices of other goods. 
D) expectations of future prices. 
E) the price of the good itself. 
A) tastes. 
B) population. 
C) the prices of other goods. 
D) expectations of future prices. 
E) the price of the good itself.

Question 17

Supply curves slope upward because:

Accepted Answer

A) the quality is assumed to vary with price. 
B) technology improves over time, increasing the ability of firms to produce more at each possible price. 
C) increases in the price of a good lead to rightward shifts of the supply curve. 
D) rising prides provide producers with the incentives needed to increase the quantity supplied. 
A) the quality is assumed to vary with price. 
B) technology improves over time, increasing the ability of firms to produce more at each possible price. 
C) increases in the price of a good lead to rightward shifts of the supply curve. 
D) rising prides provide producers with the incentives needed to increase the quantity supplied.

Question 18

Exhibit 3-1 Market Demand   Suppose there are only three people in the economy: Jane, Harry, and Bob. The individual demand for corn for each of these consumers is given in Exhibit 3-1. The total quantity demanded of corn if the market price is $4 is ____.

Accepted Answer

A) 3 
B) 25 
C) 17 
D) 8 
E) 36 
A) 3 
B) 25 
C) 17 
D) 8 
E) 36

Question 19

A technological improvement in producing good A would be a shift in the:

Accepted Answer

A) supply curve for A to the right. 
B) supply curve for A to the left. 
C) demand curve for A to the right. 
D) demand curve for A to the left. 
A) supply curve for A to the right. 
B) supply curve for A to the left. 
C) demand curve for A to the right. 
D) demand curve for A to the left.

Question 20

Which of the following best represents the effects of a decrease 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.

Exam 3: Market Demand and Supply

If the price of good X increases and this causes an increase in the demand for good Y, then goods X and Y are substitute goods.

An increase in the demand for peanut butter, a normal good, can be caused by a(n):

Which of the following can bring about a change in the quantity demanded?

Surpluses cause prices to rise while shortages cause prices to fall.

Interpret what an increase in demand and an increase in supply mean. Discuss the causes of an increase in demand and an increase in supply. How are increases in demand and supply expressed graphically?

Exhibit 3-13 Supply and demand curves Which of the graphs in Exhibit 3-13 illustrates a shortage exists at the indicated market price?

Tasha decides that when homes in her neighborhood are selling for $150,000 she will not sell her home. When average prices rise to $175,000, she decides that she will put her home on the market. This is an example of:

The most important characteristic of the equilibrium price is that it:

A technological improvement in the production of good X causes the:

Which of the following will reduce the supply of motorcycles?

If the current price of a good is the same as that found at the intersection of the market demand and supply curves, then:

Which of the following best explains the determination of the equilibrium price of a product?

The most plausible reason why changes in the price of cotton can cause shifts in the supply curve for tobacco is:

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

There is news that the price of Tucker's Root Beer will increase significantly next week. If the demand for Tucker's Root Beer reacts only to this factor and shifts to the right, the position of this demand curve has reacted to a change in:

A change in demand cannot be caused by a change in:

Supply curves slope upward because:

Exhibit 3-1 Market Demand Suppose there are only three people in the economy: Jane, Harry, and Bob. The individual demand for corn for each of these consumers is given in Exhibit 3-1. The total quantity demanded of corn if the market price is $4 is ____.

A technological improvement in producing good A would be a shift in the:

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

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