Question 1

Demand curves are negatively sloped when people buy:

Accepted Answer

A)  less as the price decreases. 
B)  more as the price increases. 
C)  the same amount as the price changes. 
D)  more as the price decreases. 
E)  less as incomes decrease. 
A)  less as the price decreases. 
B)  more as the price increases. 
C)  the same amount as the price changes. 
D)  more as the price decreases. 
E)  less as incomes decrease. D

Question 2

Farmers can choose to produce eggs or milk. If there is an increase in the price of milk then what will be the effect in the egg market?

Accepted Answer

A)  The quantity of eggs demanded will increase. 
B)  Egg demand will decrease. 
C)  Egg supply will increase. 
D)  Egg supply will decrease. 
A)  The quantity of eggs demanded will increase. 
B)  Egg demand will decrease. 
C)  Egg supply will increase. 
D)  Egg supply will decrease. D

Question 3

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. C

Question 4

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 5

Under the law of demand, any increase in price will cause ____ in quantity demanded.

Accepted Answer

A)  a decrease 
B)  an increase 
C)  no change 
D)  constant change 
A)  a decrease 
B)  an increase 
C)  no change 
D)  constant change

Question 6

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 7

Which of the following pairs of goods would be considered substitutes?

Accepted Answer

A)  Milk and cookies. 
B)  Tires and automobiles. 
C)  Ink and pens. 
D)  Coca-Cola and Pepsi. 
E)  Computers and computer software. 
A)  Milk and cookies. 
B)  Tires and automobiles. 
C)  Ink and pens. 
D)  Coca-Cola and Pepsi. 
E)  Computers and computer software.

Question 8

All of the following apply to the description of a market in equilibrium except:

Accepted Answer

A)  quantity supplied equals quantity demanded. 
B)  the intersection of the supply and demand curves. 
C)  no excess supply exists. 
D)  no excess demand exists. 
E)  the price of the good is falling. 
A)  quantity supplied equals quantity demanded. 
B)  the intersection of the supply and demand curves. 
C)  no excess supply exists. 
D)  no excess demand exists. 
E)  the price of the good is falling.

Question 9

When economists say the supply of a product has decreased, they mean that:

Accepted Answer

A)  the supply curve has shifted to the left. 
B)  the product price has decreased, and as a consequence, suppliers are producing less of the product. 
C)  producers are now willing to sell more of this product at each possible price. 
D)  the supply curve has shifted to the right. 
A)  the supply curve has shifted to the left. 
B)  the product price has decreased, and as a consequence, suppliers are producing less of the product. 
C)  producers are now willing to sell more of this product at each possible price. 
D)  the supply curve has shifted to the right.

Question 10

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.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

If the price of tea is below its equilibrium level, then:

Accepted Answer

A)  the demand for tea will decrease. 
B)  the market for tea has cleared. 
C)  sellers will be stuck with unsold tea. 
D)  there is a shortage of tea. 
A)  the demand for tea will decrease. 
B)  the market for tea has cleared. 
C)  sellers will be stuck with unsold tea. 
D)  there is a shortage of tea.

Question 13

The price of a good will fall if:

Accepted Answer

A)  there is an excess demand of the good. 
B)  demand and supply of the good are the same. 
C)  there is an excess supply of the good. 
D)  the price is below the equilibrium price. 
E)  the price is near the equilibrium price. 
A)  there is an excess demand of the good. 
B)  demand and supply of the good are the same. 
C)  there is an excess supply of the good. 
D)  the price is below the equilibrium price. 
E)  the price is near the equilibrium price.

Question 14

If input prices increase, the supply curve for cheese will shift to the right.

Accepted Answer

A) True 
 B)False

Question 15

Other things being equal, the effects of an increase in the price of orange juice would best be represented by a(n):

Accepted Answer

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

Question 16

The supply curve reflects the:

Accepted Answer

A)  inverse relationship between price and quantity offered. 
B)  positive relationship between demand and supply. 
C)  negative relationship between price and quantity bought. 
D)  positive relationship between price and quantity bought. 
E)  positive relationship between price and quantity offered. 
A)  inverse relationship between price and quantity offered. 
B)  positive relationship between demand and supply. 
C)  negative relationship between price and quantity bought. 
D)  positive relationship between price and quantity bought. 
E)  positive relationship between price and quantity offered.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

An improvement in a firm's technology that improves productivity results in a(n):

Accepted Answer

A)  leftward shift of the supply curve. 
B)  upward movement along the supply curve. 
C)  willingness to supply a larger quantity than before at any given price. 
D)  downward movement along the supply curve. 
A)  leftward shift of the supply curve. 
B)  upward movement along the supply curve. 
C)  willingness to supply a larger quantity than before at any given price. 
D)  downward movement along the supply curve.

Question 19

A supply schedule shows the relationship between:

Accepted Answer

A)  demand and supply. 
B)  supply and income. 
C)  price and income. 
D)  quantity supplied and price. 
E)  income and quantity supplied. 
A)  demand and supply. 
B)  supply and income. 
C)  price and income. 
D)  quantity supplied and price. 
E)  income and quantity supplied.

Question 20

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.

Exam 3: Market Demand and Supply

Demand curves are negatively sloped when people buy:

Farmers can choose to produce eggs or milk. If there is an increase in the price of milk then what will be the effect in the egg market?

An increase in the number of producers will:

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

Under the law of demand, any increase in price will cause ____ in quantity demanded.

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

Which of the following pairs of goods would be considered substitutes?

All of the following apply to the description of a market in equilibrium except:

When economists say the supply of a product has decreased, they mean that:

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:

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

If the price of tea is below its equilibrium level, then:

The price of a good will fall if:

If input prices increase, the supply curve for cheese will shift to the right.

Other things being equal, the effects of an increase in the price of orange juice would best be represented by a(n):

The supply curve reflects the:

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

An improvement in a firm's technology that improves productivity results in a(n):

A supply schedule shows the relationship between:

The law of supply states that:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

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

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Filters