Question 1

When economists say the quantity demanded of a product has increased, they mean the:

Accepted Answer

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

Question 2

Which of the following would not cause a shift in the supply curve for a good?

Accepted Answer

A)  An increase in demand for that good. 
B)  An increase in the cost of labor used to produce that good. 
C)  A change in the cost of raw materials used to produce that good. 
D)  A decrease in the cost of machinery used to produce that good. 
A)  An increase in demand for that good. 
B)  An increase in the cost of labor used to produce that good. 
C)  A change in the cost of raw materials used to produce that good. 
D)  A decrease in the cost of machinery used to produce that good.

Question 3

A decrease in quantity demanded is given by a(n):

Accepted Answer

A)  downward shift of the demand curve. 
B)  upward shift of the demand curve. 
C)  downward movement to the right along the demand curve. 
D)  upward movement to the left along the demand curve. 
E)  downward shift of both demand and supply curves. 
A)  downward shift of the demand curve. 
B)  upward shift of the demand curve. 
C)  downward movement to the right along the demand curve. 
D)  upward movement to the left along the demand curve. 
E)  downward shift of both demand and supply curves.

Question 4

Assuming coffee and tea are substitutes, a rise in the price of coffee will have which of the following effects on the market for tea?

Accepted Answer

A)  A movement up along the tea demand curve. 
B)  A movement down along the tea demand curve. 
C)  A leftward shift in the tea demand curve. 
D)  A rightward shift in the tea demand curve. 
A)  A movement up along the tea demand curve. 
B)  A movement down along the tea demand curve. 
C)  A leftward shift in the tea demand curve. 
D)  A rightward shift in the tea demand curve.

Question 5

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

Accepted Answer

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

Question 6

If the current price of a good is the same as that found at the intersection of the market demand and supply curves, then:

Accepted Answer

A)  excess demand exists. 
B)  excess supply exists. 
C)  price will rise. 
D)  price will fall. 
E)  the market is in equilibrium. 
A)  excess demand exists. 
B)  excess supply exists. 
C)  price will rise. 
D)  price will fall. 
E)  the market is in equilibrium.

Question 7

Exhibit 3-12  Supply and demand data   In Exhibit 3-12 the equilibrium price and quantity in the market are:

Accepted Answer

A)  $1.00, 200. 
B)  $1.50, 400. 
C)  $2.00, 100. 
D)  $1.50, 200. 
A)  $1.00, 200. 
B)  $1.50, 400. 
C)  $2.00, 100. 
D)  $1.50, 200.

Question 8

Assuming that hamburgers and hot dogs are substitutes, an increase in the price of hamburgers, other things being equal, results in a:

Accepted Answer

A)  rightward shift in the demand curve for hot dogs. 
B)  leftward shift in the demand curve for hamburgers. 
C)  rightward shift in the demand curve for hamburgers. 
D)  leftward shift in the demand curve for hot dogs. 
A)  rightward shift in the demand curve for hot dogs. 
B)  leftward shift in the demand curve for hamburgers. 
C)  rightward shift in the demand curve for hamburgers. 
D)  leftward shift in the demand curve for hot dogs.

Question 9

Other things being equal, a fall in the price of Coca-Cola will increase the quantity of Coca-Cola demanded.

Accepted Answer

A) True 
 B)False

Question 10

If a shortage exists in a market then:

Accepted Answer

A)  the price is below equilibrium. 
B)  the quantity demanded exceeds the quantity supplied. 
C)  the price will rise in the near future. 
D)  all of the above. 
A)  the price is below equilibrium. 
B)  the quantity demanded exceeds the quantity supplied. 
C)  the price will rise in the near future. 
D)  all of the above.

Question 11

Which of the following is true for the law of demand?

Accepted Answer

A)  Sellers increase the quantity of a good available as the price of the good increases. 
B)  An increase in price results from false needs. 
C)  There is an inverse relationship between the price of a good and the quantity of the good demanded. 
D)  Prices increase as more units of a product are demanded. 
A)  Sellers increase the quantity of a good available as the price of the good increases. 
B)  An increase in price results from false needs. 
C)  There is an inverse relationship between the price of a good and the quantity of the good demanded. 
D)  Prices increase as more units of a product are demanded.

Question 12

Substitute goods are goods that are:

Accepted Answer

A)  jointly consumed. 
B)  competing for consumer spending. 
C)  used late in the game. 
D)  inferior. 
E)  normal. 
A)  jointly consumed. 
B)  competing for consumer spending. 
C)  used late in the game. 
D)  inferior. 
E)  normal.

Question 13

Suppose the market price of a good X is below the equilibrium price. The result is a shortage and sellers can be expected to decrease the quantity of that good X supplied.

Accepted Answer

A) True 
 B)False

Question 14

Exhibit 3-13  Supply and demand curves   Which of the graphs in Exhibit 3-13 illustrates a surplus exists at the indicated market price?

Accepted Answer

A)  Diagram A. 
B)  Diagram B. 
C)  Diagram C. 
D)  Diagrams A and C. 
A)  Diagram A. 
B)  Diagram B. 
C)  Diagram C. 
D)  Diagrams A and C.

Question 15

If a shortage of a product currently exists in the market,

Accepted Answer

A)  the market price is too high. 
B)  the quantity demanded is less than the quantity supplied. 
C)  the quantity demanded exceeds the quantity supplied at the market price. 
D)  there is an excess supply of the product. 
E)  there will be a tendency for the price to fall. 
A)  the market price is too high. 
B)  the quantity demanded is less than the quantity supplied. 
C)  the quantity demanded exceeds the quantity supplied at the market price. 
D)  there is an excess supply of the product. 
E)  there will be a tendency for the price to fall.

Question 16

Which of the following would shift the demand curve for autos to the right?

Accepted Answer

A)  A fall in the price of autos. 
B)  A fall in the price of auto insurance. 
C)  A fall in consumers' incomes. 
D)  A fall in the price of steel. 
A)  A fall in the price of autos. 
B)  A fall in the price of auto insurance. 
C)  A fall in consumers' incomes. 
D)  A fall in the price of steel.

Question 17

An equilibrium price is unaffected by nonprice factors.

Accepted Answer

A) True 
 B)False

Question 18

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

Question 19

Which of the following best represents the effects of an increase in the price of coffee, other things being equal?

Accepted Answer

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

Question 20

Which of the following goods are most likely to be substitutes?

Accepted Answer

A)  potato chips and chip dip 
B)  bread and peanut butter 
C)  ketchup and French fries 
D)  bananas and apples 
A)  potato chips and chip dip 
B)  bread and peanut butter 
C)  ketchup and French fries 
D)  bananas and apples

Exam 3: Market Demand and Supply

When economists say the quantity demanded of a product has increased, they mean the:

Which of the following would not cause a shift in the supply curve for a good?

A decrease in quantity demanded is given by a(n):

Assuming coffee and tea are substitutes, a rise in the price of coffee will have which of the following effects on the market for tea?

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

If the current price of a good is the same as that found at the intersection of the market demand and supply curves, then:

Exhibit 3-12 Supply and demand data In Exhibit 3-12 the equilibrium price and quantity in the market are:

Assuming that hamburgers and hot dogs are substitutes, an increase in the price of hamburgers, other things being equal, results in a:

Other things being equal, a fall in the price of Coca-Cola will increase the quantity of Coca-Cola demanded.

If a shortage exists in a market then:

Which of the following is true for the law of demand?

Substitute goods are goods that are:

Suppose the market price of a good X is below the equilibrium price. The result is a shortage and sellers can be expected to decrease the quantity of that good X supplied.

Exhibit 3-13 Supply and demand curves Which of the graphs in Exhibit 3-13 illustrates a surplus exists at the indicated market price?

If a shortage of a product currently exists in the market,

Which of the following would shift the demand curve for autos to the right?

An equilibrium price is unaffected by nonprice factors.

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

Which of the following best represents the effects of an increase in the price of coffee, other things being equal?

Which of the following goods are most likely to be substitutes?

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