Question 1

The use of a price system eliminates:

Accepted Answer

A)  scarcity. 
B)  equilibrium. 
C)  shortages and surpluses. 
D)  changes in supply and demand. 
A)  scarcity. 
B)  equilibrium. 
C)  shortages and surpluses. 
D)  changes in supply and demand.

Question 2

The law of supply indicates that an increase in price will cause an increase in supply which is reflected graphically as a rightward shift of the supply curve.

Accepted Answer

A) True 
 B)False

Question 3

An increase in demand is reflected as a rightward (outward) shift of the demand curve and is caused by an increase in price.

Accepted Answer

A) True 
 B)False

Question 4

In a market, competitive forces guarantee that any price other than the equilibrium price is:

Accepted Answer

A)  market-clearing. 
B)  stable. 
C)  temporary. 
D)  unaffordable. 
A)  market-clearing. 
B)  stable. 
C)  temporary. 
D)  unaffordable.

Question 5

Which of the following situations results from a ticket price to a concert set below the equilibrium price?

Accepted Answer

A)  A long line of people wanting to purchase tickets to the concert. 
B)  No line of people wanting to buy tickets to the concert. 
C)  Tickets available at the box office, but no line of people wanting to buy them. 
D)  None of the above. 
A)  A long line of people wanting to purchase tickets to the concert. 
B)  No line of people wanting to buy tickets to the concert. 
C)  Tickets available at the box office, but no line of people wanting to buy them. 
D)  None of the above.

Question 6

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 7

Which of the following will increase the supply of a good?

Accepted Answer

A)  An increase in the price of another good that producers could produce. 
B)  A lower price paid for resources used in the production of the good. 
C)  A decrease in the number of sellers. 
D)  An increase in taxes paid to the government by producers. 
A)  An increase in the price of another good that producers could produce. 
B)  A lower price paid for resources used in the production of the good. 
C)  A decrease in the number of sellers. 
D)  An increase in taxes paid to the government by producers.

Question 8

A baby boom will have what immediate effect on the disposable diaper market?

Accepted Answer

A)  Supply decreases. 
B)  Supply increases. 
C)  Demand decreases. 
D)  Demand increases. 
E)  Supply and demand remains the same. 
A)  Supply decreases. 
B)  Supply increases. 
C)  Demand decreases. 
D)  Demand increases. 
E)  Supply and demand remains the same.

Question 9

An increase in the cost of chicken feed will reduce the supply of eggs.

Accepted Answer

A) True 
 B)False

Question 10

If an individual's income increases, then the demand for a normal good will:

Accepted Answer

A)  decrease. 
B)  increase. 
C)  remain constant. 
D)  rotate. 
E)  fall to zero. 
A)  decrease. 
B)  increase. 
C)  remain constant. 
D)  rotate. 
E)  fall to zero.

Question 11

Exhibit 3-8  Demand and supply data for radios   In Exhibit 3-8, if there is a shortage of radios of 200 units, the current price of radios must be:

Accepted Answer

A)  $60. 
B)  $55. 
C)  $50. 
D)  $45. 
E)  $40. 
A)  $60. 
B)  $55. 
C)  $50. 
D)  $45. 
E)  $40.

Question 12

Exhibit 3-16  Supply and demand curves for chairs   In Exhibit 3-16, assume that the market price of chairs is $5 each. This price is:

Accepted Answer

A)  an equilibrium price. 
B)  not an equilibrium price, since there is an excess supply at a price of $5. 
C)  not an equilibrium price, since there is an excess demand at a price of $5. 
D)  not an equilibrium price, since the rate at which chairs are being supplied is great than the rate at which they are being demanded. 
A)  an equilibrium price. 
B)  not an equilibrium price, since there is an excess supply at a price of $5. 
C)  not an equilibrium price, since there is an excess demand at a price of $5. 
D)  not an equilibrium price, since the rate at which chairs are being supplied is great than the rate at which they are being demanded.

Question 13

When the price of a good is above its equilibrium price, a:

Accepted Answer

A)  surplus puts upward pressure on the price. 
B)  surplus puts downward pressure on the price. 
C)  shortage puts upward pressure on the price. 
D)  shortage puts downward pressure on the price. 
A)  surplus puts upward pressure on the price. 
B)  surplus puts downward pressure on the price. 
C)  shortage puts upward pressure on the price. 
D)  shortage puts downward pressure on the price.

Question 14

A surplus occurs when the:

Accepted Answer

A)  quantity demanded exceeds the quantity supplied. 
B)  price is below the equilibrium price. 
C)  price is at the equilibrium. 
D)  price is above the equilibrium. 
A)  quantity demanded exceeds the quantity supplied. 
B)  price is below the equilibrium price. 
C)  price is at the equilibrium. 
D)  price is above the equilibrium.

Question 15

According to the law of supply a(n):

Accepted Answer

A)  producer is willing to supply larger amounts of a good as its price increases. 
B)  direct relationship exists between the price of a good and the amount buyers buy. 
C)  inverse relationship exists between the price of a good and the amount buyers buy. 
D)  inverse relationship exists between the price of a good and the amount producers supply. 
A)  producer is willing to supply larger amounts of a good as its price increases. 
B)  direct relationship exists between the price of a good and the amount buyers buy. 
C)  inverse relationship exists between the price of a good and the amount buyers buy. 
D)  inverse relationship exists between the price of a good and the amount producers supply.

Question 16

Exhibit 3-12  Supply and demand data   In Exhibit 3-12, at a price of $2.00 the market will experience a(n):

Accepted Answer

A)  shortage of 150 units. 
B)  surplus of 100 units. 
C)  shortage of 100 units. 
D)  equilibrium. 
A)  shortage of 150 units. 
B)  surplus of 100 units. 
C)  shortage of 100 units. 
D)  equilibrium.

Question 17

Assuming that wine is a normal good, an increase in consumer income, other things being equal, will:

Accepted Answer

A)  cause an upward movement along the demand curve for wine. 
B)  shift the demand curve for wine to the left. 
C)  cause a downward movement along the demand curve for wine. 
D)  shift the demand curve for wine to the right. 
A)  cause an upward movement along the demand curve for wine. 
B)  shift the demand curve for wine to the left. 
C)  cause a downward movement along the demand curve for wine. 
D)  shift the demand curve for wine to the right.

Question 18

Exhibit 3-2  Demand curves   In Exhibit 3-2, which of the following could not have caused the shift in the demand curve from D1 to D2?

Accepted Answer

A)  Decrease in the number of consumers. 
B)  Increase in expected future prices. 
C)  Increase in the price of a substitute. 
D)  Decrease in the price of a complement. 
E)  Increase in income. 
A)  Decrease in the number of consumers. 
B)  Increase in expected future prices. 
C)  Increase in the price of a substitute. 
D)  Decrease in the price of a complement. 
E)  Increase in income.

Question 19

Assuming that Pepsi-Cola and Coca-Cola are substitutes, a rise in the price of Pepsi-Cola, other things being equal, results in a(n):

Accepted Answer

A)  upward movement along the demand curve for Coca-Cola. 
B)  downward movement along the demand curve for Coca-Cola. 
C)  leftward shift in the demand curve for Coca-Cola. 
D)  rightward shift in the demand curve for Coca-Cola. 
A)  upward movement along the demand curve for Coca-Cola. 
B)  downward movement along the demand curve for Coca-Cola. 
C)  leftward shift in the demand curve for Coca-Cola. 
D)  rightward shift in the demand curve for Coca-Cola.

Question 20

Assuming that soybeans and tobacco can both be grown on the same land, a decrease in the price of tobacco, other things being equal, causes a(n):

Accepted Answer

A)  rightward shift of the supply curve for tobacco. 
B)  upward movement along the supply curve for soybeans. 
C)  rightward shift in the supply curve for soybeans. 
D)  leftward shift in the supply curve for soybeans. 
A)  rightward shift of the supply curve for tobacco. 
B)  upward movement along the supply curve for soybeans. 
C)  rightward shift in the supply curve for soybeans. 
D)  leftward shift in the supply curve for soybeans.

Exam 3: Market Demand and Supply

The use of a price system eliminates:

The law of supply indicates that an increase in price will cause an increase in supply which is reflected graphically as a rightward shift of the supply curve.

An increase in demand is reflected as a rightward (outward) shift of the demand curve and is caused by an increase in price.

In a market, competitive forces guarantee that any price other than the equilibrium price is:

Which of the following situations results from a ticket price to a concert set below the equilibrium price?

Which of the following will reduce the supply of motorcycles?

Which of the following will increase the supply of a good?

A baby boom will have what immediate effect on the disposable diaper market?

An increase in the cost of chicken feed will reduce the supply of eggs.

If an individual's income increases, then the demand for a normal good will:

Exhibit 3-8 Demand and supply data for radios In Exhibit 3-8, if there is a shortage of radios of 200 units, the current price of radios must be:

Exhibit 3-16 Supply and demand curves for chairs In Exhibit 3-16, assume that the market price of chairs is $5 each. This price is:

When the price of a good is above its equilibrium price, a:

A surplus occurs when the:

According to the law of supply a(n):

Exhibit 3-12 Supply and demand data In Exhibit 3-12, at a price of $2.00 the market will experience a(n):

Assuming that wine is a normal good, an increase in consumer income, other things being equal, will:

Exhibit 3-2 Demand curves In Exhibit 3-2, which of the following could not have caused the shift in the demand curve from D1 to D2?

Assuming that Pepsi-Cola and Coca-Cola are substitutes, a rise in the price of Pepsi-Cola, other things being equal, results in a(n):

Assuming that soybeans and tobacco can both be grown on the same land, a decrease in the price of tobacco, other things being equal, causes a(n):

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