Question 1

According to the law of supply:

Accepted Answer

A)  more of a good is desired by consumers as the price falls. 
B)  less of a good is desired by consumers as the price rises. 
C)  more of a good will be offered by suppliers as the price rises. 
D)  less of a good will be offered by suppliers as the price rises. 
A)  more of a good is desired by consumers as the price falls. 
B)  less of a good is desired by consumers as the price rises. 
C)  more of a good will be offered by suppliers as the price rises. 
D)  less of a good will be offered by suppliers as the price rises.

Question 2

Exhibit 3-3 Demand curves
 
-Which of the graphs in Exhibit 3-3 depicts the effect of a decrease in the price of pizza on the demand curve for pizza?

Accepted Answer

A)  Graph A. 
B)  Graph B 
C)  Graph C. 
D)  Graph D. 
A)  Graph A. 
B)  Graph B 
C)  Graph C. 
D)  Graph D.

Question 3

Sugar and honey are viewed as substitutes for each other in many cooking applications. If the price of sugar rises, we would expect the:

Accepted Answer

A)  demand for honey to increase. 
B)  demand for honey to decrease. 
C)  quantity demanded of honey to decrease. 
D)  price of honey to decrease. 
A)  demand for honey to increase. 
B)  demand for honey to decrease. 
C)  quantity demanded of honey to decrease. 
D)  price of honey to decrease.

Question 4

Ceteris paribus , which of the following would cause a decrease in the demand for HD TVs, a normal good?

Accepted Answer

A)  decline in the price of HD TVs. 
B)  increase in the price of HD TVs. 
C)  increase in consumers' income. 
D)  decrease in consumers' income. 
A)  decline in the price of HD TVs. 
B)  increase in the price of HD TVs. 
C)  increase in consumers' income. 
D)  decrease in consumers' income.

Question 5

Assuming that travel from New York to Los Angeles is a normal good, a decrease in consumer income, other things being equal, will:

Accepted Answer

A)  decrease the quantity demanded of travel to Los Angeles. 
B)  increase the demand for travel to Los Angeles. 
C)  decrease the demand for travel to Los Angeles. 
D)  increase the quantity of travel to Los Angeles demanded. 
A)  decrease the quantity demanded of travel to Los Angeles. 
B)  increase the demand for travel to Los Angeles. 
C)  decrease the demand for travel to Los Angeles. 
D)  increase the quantity of travel to Los Angeles demanded.

Question 6

If people expect the price of packaged coffee to rise next week, coffee demand will:

Accepted Answer

A)  decrease now. 
B)  increase now. 
C)  stay the same now and increase next week. 
D)  stay the same now and decrease next week. 
A)  decrease now. 
B)  increase now. 
C)  stay the same now and increase next week. 
D)  stay the same now and decrease next week.

Question 7

The market demand is the:

Accepted Answer

A)  horizontal sum of all individual demand curves in a market. 
B)  horizontal sum of all individual prices in a market. 
C)  sum of all individual demand curves and supplies in a market. 
D)  vertical sum of all individual demand curves. 
A)  horizontal sum of all individual demand curves in a market. 
B)  horizontal sum of all individual prices in a market. 
C)  sum of all individual demand curves and supplies in a market. 
D)  vertical sum of all individual demand curves.

Question 8

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

Accepted Answer

A)  An increase or decrease in the raw materials costs. 
B)  An increase in labor costs. 
C)  Changes in the cost of the machinery used to make a good. 
D)  Changes in the market price of a good, other things held constant. 
A)  An increase or decrease in the raw materials costs. 
B)  An increase in labor costs. 
C)  Changes in the cost of the machinery used to make a good. 
D)  Changes in the market price of a good, other things held constant.

Question 9

Which of the following is true if the price of coffee increases?

Accepted Answer

A)  The demand for tea, a substitute good, will decrease. 
B)  The demand for coffee will increase. 
C)  The demand for tea, a substitute good, will increase. 
D)  Both the demand for coffee and tea will increase. 
A)  The demand for tea, a substitute good, will decrease. 
B)  The demand for coffee will increase. 
C)  The demand for tea, a substitute good, will increase. 
D)  Both the demand for coffee and tea will increase.

Question 10

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)  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)  the price of the good falls.

Question 11

A surplus of wheat:

Accepted Answer

A)  is impossible if people are hungry. 
B)  is impossible if the price of wheat is below equilibrium. 
C)  will result when the quantity demanded exceeds the quantity supplied at the current price. 
D)  is unlikely to cause any change in the price of wheat. 
A)  is impossible if people are hungry. 
B)  is impossible if the price of wheat is below equilibrium. 
C)  will result when the quantity demanded exceeds the quantity supplied at the current price. 
D)  is unlikely to cause any change in the price of wheat.

Question 12

Which of the following will cause a shift to the left of the supply curve?

Accepted Answer

A)  Increases in the market price of the good being supplied, other things being equal. 
B)  Increases in taxes per unit of output. 
C)  Advances in technology. 
D)  Decreases in input prices. 
A)  Increases in the market price of the good being supplied, other things being equal. 
B)  Increases in taxes per unit of output. 
C)  Advances in technology. 
D)  Decreases in input prices.

Question 13

Which of the following is most likely to increase the supply of corn?

Accepted Answer

A)  The farm worker's union successfully negotiates a pay increase for corn harvest workers. 
B)  The Surgeon General announces that eating corn bread contributes to baldness in men. 
C)  Congress and the President eliminate subsidies formerly paid to corn farmers. 
D)  Farmers that grow soybeans can also grow corn, and the price of soybeans drops by 75 percent. 
A)  The farm worker's union successfully negotiates a pay increase for corn harvest workers. 
B)  The Surgeon General announces that eating corn bread contributes to baldness in men. 
C)  Congress and the President eliminate subsidies formerly paid to corn farmers. 
D)  Farmers that grow soybeans can also grow corn, and the price of soybeans drops by 75 percent.

Question 14

When there is a surplus of a product in a market the:

Accepted Answer

A)  price will rise. 
B)  price must be above the equilibrium price. 
C)  producers will expand output and sales will rise. 
D)  price must be below the equilibrium price. 
A)  price will rise. 
B)  price must be above the equilibrium price. 
C)  producers will expand output and sales will rise. 
D)  price must be below the equilibrium price.

Question 15

Which of the following will cause the demand curve for a good to shift to the right?

Accepted Answer

A)  Decrease in income for a normal good. 
B)  Increase in the price of a complementary good. 
C)  Decrease in the price of the good. 
D)  Increase in the price of a substitute good. 
A)  Decrease in income for a normal good. 
B)  Increase in the price of a complementary good. 
C)  Decrease in the price of the good. 
D)  Increase in the price of a substitute good.

Question 16

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

Accepted Answer

A)  resource prices. 
B)  technology. 
C)  the number of suppliers. 
D)  the price of the good itself. 
A)  resource prices. 
B)  technology. 
C)  the number of suppliers. 
D)  the price of the good itself.

Question 17

Suppose there are 100 consumers with identical individual demand curves. When the price of a movie ticket is $8, the quantity demanded for each person is 5. When the price is $4, the quantity demanded for each person is 9. Assuming the law of demand holds, which of the following choices is the most likely quantity demanded in the market when the price is $6?

Accepted Answer

A)  700 
B)  1,200 
C)  400 
D)  1,000 
A)  700 
B)  1,200 
C)  400 
D)  1,000

Question 18

Discuss how a market reaches equilibrium. How is it expressed graphically?

Accepted Answer

Equilibrium exists at that one price in

Question 19

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 20

An increase in the supply of the product implies:

Accepted Answer

A)  producers will now charge a higher price for a given quantity of output. 
B)  the supply curve will shift to the left. 
C)  the price of this product has increased. 
D)  producers will now charge a lower price for a given quantity of output. 
A)  producers will now charge a higher price for a given quantity of output. 
B)  the supply curve will shift to the left. 
C)  the price of this product has increased. 
D)  producers will now charge a lower price for a given quantity of output.

Exam 3: Market Demand and Supply

According to the law of supply:

Exhibit 3-3 Demand curves -Which of the graphs in Exhibit 3-3 depicts the effect of a decrease in the price of pizza on the demand curve for pizza?

Sugar and honey are viewed as substitutes for each other in many cooking applications. If the price of sugar rises, we would expect the:

Ceteris paribus , which of the following would cause a decrease in the demand for HD TVs, a normal good?

Assuming that travel from New York to Los Angeles is a normal good, a decrease in consumer income, other things being equal, will:

If people expect the price of packaged coffee to rise next week, coffee demand will:

The market demand is the:

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

Which of the following is true if the price of coffee increases?

Demand for a good will always rise when:

A surplus of wheat:

Which of the following will cause a shift to the left of the supply curve?

Which of the following is most likely to increase the supply of corn?

When there is a surplus of a product in a market the:

Which of the following will cause the demand curve for a good to shift to the right?

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

Discuss how a market reaches equilibrium. How is it expressed graphically?

An increase in the demand for a good means that:

An increase in the supply of the product implies:

Introducing the Economic Way of Thinking

Production Possibilities Opportunity Cost and Economic Growth

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution Poverty and Discrimination

Antitrust and Regulation

Environmental Economics

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

Understanding Direct and Inverse Relationships between Variables

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