Question 1

A surplus in a market exists when there is an excess quantity demanded.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following would 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. 
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.

Question 3

A movement along the demand curve for automobiles is caused by a change in:

Accepted Answer

A)  the price of automobiles. 
B)  the price of gasoline. 
C)  the price of steel. 
D)  consumers' incomes. 
A)  the price of automobiles. 
B)  the price of gasoline. 
C)  the price of steel. 
D)  consumers' incomes.

Question 4

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 5

The law of demand is illustrated by a demand curve that is:

Accepted Answer

A)  horizontal. 
B)  downward-sloping. 
C)  vertical. 
D)  upward-sloping. 
A)  horizontal. 
B)  downward-sloping. 
C)  vertical. 
D)  upward-sloping.

Question 6

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 7

When economists say the demand for a product has increased, they mean the:

Accepted Answer

A)  demand curve has shifted to the right. 
B)  price of the product has fallen, and consequently, consumers are buying more of it. 
C)  cost of producing the product has risen. 
D)  amount of the product that consumers are willing to purchase at various prices has decreased. 
A)  demand curve has shifted to the right. 
B)  price of the product has fallen, and consequently, consumers are buying more of it. 
C)  cost of producing the product has risen. 
D)  amount of the product that consumers are willing to purchase at various prices has decreased.

Question 8

A demand curve for The Steel Porcupines' concert tickets would show the:

Accepted Answer

A)  number of tickets the box office is willing to sell at various prices. 
B)  number of people who need tickets. 
C)  quality of people who want to buy these concert tickets. 
D)  number of tickets that will be purchased at various prices. 
A)  number of tickets the box office is willing to sell at various prices. 
B)  number of people who need tickets. 
C)  quality of people who want to buy these concert tickets. 
D)  number of tickets that will be purchased at various prices.

Question 9

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 
E)  100 
A)  700 
B)  1,200 
C)  400 
D)  1,000 
E)  100

Question 10

In economics, the demand for a good refers to the amount of the good people:

Accepted Answer

A)  would like to have if the good were free. 
B)  are willing to buy at various prices. 
C)  need to achieve a minimum standard of living. 
D)  will buy at alternative income levels. 
A)  would like to have if the good were free. 
B)  are willing to buy at various prices. 
C)  need to achieve a minimum standard of living. 
D)  will buy at alternative income levels.

Question 11

Assuming that bus travel is an inferior good, a decrease in consumer income, other things being equal, will cause:

Accepted Answer

A)  a downward movement along the demand curve for bus travel. 
B)  no change in the demand curve for bus travel. 
C)  an upward movement along the demand curve for air travel. 
D)  a rightward shift in the demand curve for bus travel. 
A)  a downward movement along the demand curve for bus travel. 
B)  no change in the demand curve for bus travel. 
C)  an upward movement along the demand curve for air travel. 
D)  a rightward shift in the demand curve for bus travel.

Question 12

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 13

Three of the four events described below might reasonably be expected to shift the demand curve for Tacos to a new position. One would not shift the demand curve. The single exception is:

Accepted Answer

A)  a change in people's tastes with respect to Tacos. 
B)  an increase in the money income of beef consumers. 
C)  a widespread advertising campaign undertaken by the producers of a product competitive with Tacos. 
D)  a fall in the price of Tacos. 
A)  a change in people's tastes with respect to Tacos. 
B)  an increase in the money income of beef consumers. 
C)  a widespread advertising campaign undertaken by the producers of a product competitive with Tacos. 
D)  a fall in the price of Tacos.

Question 14

Market equilibrium occurs when the quantity supplied is greater than the quantity demanded.

Accepted Answer

A) True 
 B)False

Question 15

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

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 16

Which of the following could cause the supply of carrots to decrease?

Accepted Answer

A)  Consumers' incomes decrease. 
B)  There is a technological advance in carrot production. 
C)  Fertilizer costs increase. 
D)  The number of farmers growing carrots increases. 
E)  The price of carrots decreases. 
A)  Consumers' incomes decrease. 
B)  There is a technological advance in carrot production. 
C)  Fertilizer costs increase. 
D)  The number of farmers growing carrots increases. 
E)  The price of carrots decreases.

Question 17

Exhibit 3-16  Supply and demand curves for chairs   In Exhibit 3-16, if the market price of chairs is initially $15, a movement toward equilibrium would require:

Accepted Answer

A)  no change, because an equilibrium already exists. 
B)  the price to fall below $15 and both the quantity supplied and the quantity demanded to fall. 
C)  the price to remain the same, but the supply curve to shift to the left. 
D)  the price to fall below $15, the quantity supplied to fall, and the quantity demanded to rise. 
A)  no change, because an equilibrium already exists. 
B)  the price to fall below $15 and both the quantity supplied and the quantity demanded to fall. 
C)  the price to remain the same, but the supply curve to shift to the left. 
D)  the price to fall below $15, the quantity supplied to fall, and the quantity demanded to rise.

Question 18

The law of demand indicates that:

Accepted Answer

A)  every physical good has a use. 
B)  when people want a good badly enough, they will find a way to pay for it. 
C)  the desire for a good is unrelated to its price. 
D)  the quantity of a good that people will buy is inversely related to the price of the good. 
A)  every physical good has a use. 
B)  when people want a good badly enough, they will find a way to pay for it. 
C)  the desire for a good is unrelated to its price. 
D)  the quantity of a good that people will buy is inversely related to the price of the good.

Question 19

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)  increase 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)  increase in the quantity of oil demanded

Question 20

A supply curve:

Accepted Answer

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

Exam 3: Market Demand and Supply

A surplus in a market exists when there is an excess quantity demanded.

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

A movement along the demand curve for automobiles is caused by a change in:

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

The law of demand is illustrated by a demand curve that is:

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.

When economists say the demand for a product has increased, they mean the:

A demand curve for The Steel Porcupines' concert tickets would show the:

In economics, the demand for a good refers to the amount of the good people:

Assuming that bus travel is an inferior good, a decrease in consumer income, other things being equal, will cause:

A demand curve:

Three of the four events described below might reasonably be expected to shift the demand curve for Tacos to a new position. One would not shift the demand curve. The single exception is:

Market equilibrium occurs when the quantity supplied is greater than the quantity demanded.

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

Which of the following could cause the supply of carrots to decrease?

Exhibit 3-16 Supply and demand curves for chairs In Exhibit 3-16, if the market price of chairs is initially $15, a movement toward equilibrium would require:

The law of demand indicates that:

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):

A supply curve:

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