Question 1

Assume that oranges and peaches can both be grown on the same type of land, a decrease in the price of peaches, other things being equal, will cause a(n):

Accepted Answer

A)  upward movement along the supply curve for oranges. 
B)  downward movement along the supply curve for oranges. 
C)  rightward shift of the supply curve for oranges. 
D)  leftward shift of the supply curve for oranges. 
A)  upward movement along the supply curve for oranges. 
B)  downward movement along the supply curve for oranges. 
C)  rightward shift of the supply curve for oranges. 
D)  leftward shift of the supply curve for oranges.

Question 2

A decrease in supply means that:

Accepted Answer

A)  demand will increase by the same amount. 
B)  the quantity demanded will increase. 
C)  there is a movement down and to the left along the supply curve. 
D)  the quantity supplied at every price will decrease. 
E)  the supply curve will shift out and to the right. 
A)  demand will increase by the same amount. 
B)  the quantity demanded will increase. 
C)  there is a movement down and to the left along the supply curve. 
D)  the quantity supplied at every price will decrease. 
E)  the supply curve will shift out and to the right.

Question 3

Other things being equal, a fall in the price of orange juice will decrease the quantity supplied.

Accepted Answer

A) True 
 B)False

Question 4

A surplus means a(n):

Accepted Answer

A)  excess demand for this product. 
B)  situation where the current market price is too low. 
C)  situation where the quantity demanded exceeds the quantity supplied. 
D)  situation where the quantity supplied is less than the quantity demanded. 
E)  excess supply of the product at the current price. 
A)  excess demand for this product. 
B)  situation where the current market price is too low. 
C)  situation where the quantity demanded exceeds the quantity supplied. 
D)  situation where the quantity supplied is less than the quantity demanded. 
E)  excess supply of the product at the current price.

Question 5

When quantity supplied equals quantity demanded, there is:

Accepted Answer

A)  disequilibrium. 
B)  excess quantity supplied. 
C)  a market-clearing price (equilibrium price). 
D)  excess quantity demanded. 
E)  a shortage. 
A)  disequilibrium. 
B)  excess quantity supplied. 
C)  a market-clearing price (equilibrium price). 
D)  excess quantity demanded. 
E)  a shortage.

Question 6

If good X is an inferior good, a decrease in consumer income, other things being equal, will shift the:

Accepted Answer

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

Question 7

Which of the following is closest to the definition of demand?

Accepted Answer

A)  People's willingness to supply goods at specific prices. 
B)  People's willingness to buy goods and services at given prices. 
C)  People's expectations of lower prices of goods and services. 
D)  Producer's expectations of selling more goods. 
E)  The interaction of people's willingness to buy and sell goods. 
A)  People's willingness to supply goods at specific prices. 
B)  People's willingness to buy goods and services at given prices. 
C)  People's expectations of lower prices of goods and services. 
D)  Producer's expectations of selling more goods. 
E)  The interaction of people's willingness to buy and sell goods.

Question 8

The curve that shows the relationship between the price of a good and the quantity that consumers are willing to purchase at each price is the

Accepted Answer

A)  supply curve. 
B)  demand curve. 
C)  production possibilities curve. 
D)  consumption curve. 
A)  supply curve. 
B)  demand curve. 
C)  production possibilities curve. 
D)  consumption curve.

Question 9

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 10

Which of the following will increase the demand for motorcycles?

Accepted Answer

A)  A fall in the price of motorcycles. 
B)  A fall in insurance rates for motorcycles. 
C)  A fall in the price of automobiles. 
D)  A fall in buyers' incomes (assuming motorcycles are a normal good). 
E)  A fall in consumer preference for motorcycles. 
A)  A fall in the price of motorcycles. 
B)  A fall in insurance rates for motorcycles. 
C)  A fall in the price of automobiles. 
D)  A fall in buyers' incomes (assuming motorcycles are a normal good). 
E)  A fall in consumer preference for motorcycles.

Question 11

If pork and beans is an inferior good, other things being equal, an increase in consumer income will decrease the demand for pork and beans.

Accepted Answer

A) True 
 B)False

Question 12

According to the law of supply, there is a direct relationship between quantity supplied and:

Accepted Answer

A)  the number of sellers. 
B)  costs of resources. 
C)  technology. 
D)  the price of the good. 
A)  the number of sellers. 
B)  costs of resources. 
C)  technology. 
D)  the price of the good.

Question 13

A curve that depicts the relationship between price and quantity demanded is the:

Accepted Answer

A)  supply curve. 
B)  supply schedule. 
C)  demand curve. 
D)  equilibrium price. 
A)  supply curve. 
B)  supply schedule. 
C)  demand curve. 
D)  equilibrium price.

Question 14

When economists say the quantity supplied of a product has decreased, they mean the:

Accepted Answer

A)  supply curve has shifted to the left. 
B)  supply curve has shifted to the right. 
C)  price of the product has risen, and consequently, suppliers are producing more of it. 
D)  price of the product has fallen, and consequently, suppliers are producing less of it. 
A)  supply curve has shifted to the left. 
B)  supply curve has shifted to the right. 
C)  price of the product has risen, and consequently, suppliers are producing more of it. 
D)  price of the product has fallen, and consequently, suppliers are producing less of it.

Question 15

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 16

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

Accepted Answer

A)  Coca-Cola and Pepsi. 
B)  Computers and computer software. 
C)  Radios and televisions. 
D)  Mass transit and private automobiles. 
E)  Compact discs and cassette tapes. 
A)  Coca-Cola and Pepsi. 
B)  Computers and computer software. 
C)  Radios and televisions. 
D)  Mass transit and private automobiles. 
E)  Compact discs and cassette tapes.

Question 17

Exhibit 3-3  Demand curves   Assume that crackers and soup are complementary goods. Which of the graphs in Exhibit 3-3 depicts the effect of a promotional discount that decreases the price of crackers on the demand for soup?

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 18

A decrease in the number of dry cleaners in an area is represented by a(n):

Accepted Answer

A)  downward movement along the dry cleaning supply curve. 
B)  upward movement along the dry cleaning supply curve. 
C)  leftward shift in the dry cleaning supply curve. 
D)  rightward shift in the dry cleaning supply curve. 
E)  vertical dry cleaning supply curve. 
A)  downward movement along the dry cleaning supply curve. 
B)  upward movement along the dry cleaning supply curve. 
C)  leftward shift in the dry cleaning supply curve. 
D)  rightward shift in the dry cleaning supply curve. 
E)  vertical dry cleaning supply curve.

Question 19

The law of supply states that an increase in supply is represented graphically as a rightward shift of the supply curve.

Accepted Answer

A) True 
 B)False

Question 20

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.

Exam 3: Market Demand and Supply

Assume that oranges and peaches can both be grown on the same type of land, a decrease in the price of peaches, other things being equal, will cause a(n):

A decrease in supply means that:

Other things being equal, a fall in the price of orange juice will decrease the quantity supplied.

A surplus means a(n):

When quantity supplied equals quantity demanded, there is:

If good X is an inferior good, a decrease in consumer income, other things being equal, will shift the:

Which of the following is closest to the definition of demand?

The curve that shows the relationship between the price of a good and the quantity that consumers are willing to purchase at each price is the

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 increase the demand for motorcycles?

If pork and beans is an inferior good, other things being equal, an increase in consumer income will decrease the demand for pork and beans.

According to the law of supply, there is a direct relationship between quantity supplied and:

A curve that depicts the relationship between price and quantity demanded is the:

When economists say the quantity supplied of a product has decreased, they mean the:

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.

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

Exhibit 3-3 Demand curves Assume that crackers and soup are complementary goods. Which of the graphs in Exhibit 3-3 depicts the effect of a promotional discount that decreases the price of crackers on the demand for soup?

A decrease in the number of dry cleaners in an area is represented by a(n):

The law of supply states that an increase in supply is represented graphically as a rightward shift of the supply curve.

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?

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