Question 1

Compared to higher-income families, low-income families would demand proportionately more of which of the following kinds of goods?

Accepted Answer

A)  Luxury goods. 
B)  Substitute goods. 
C)  Normal goods. 
D)  Inferior goods. 
A)  Luxury goods. 
B)  Substitute goods. 
C)  Normal goods. 
D)  Inferior goods.

Question 2

The fact that price and quantity demanded are related negatively illustrates the:

Accepted Answer

A)  law of supply. 
B)  law of quantity supply. 
C)  law of demand. 
D)  law of quantity demanded. 
E)  point that some facts are unobservable. 
A)  law of supply. 
B)  law of quantity supply. 
C)  law of demand. 
D)  law of quantity demanded. 
E)  point that some facts are unobservable.

Question 3

Supply curves slope upward because:

Accepted Answer

A)  the quality is assumed to vary with price. 
B)  technology improves over time, increasing the ability of firms to produce more at each possible price. 
C)  increases in the price of a good lead to rightward shifts of the supply curve. 
D)  rising prides provide producers with the incentives needed to increase the quantity supplied. 
A)  the quality is assumed to vary with price. 
B)  technology improves over time, increasing the ability of firms to produce more at each possible price. 
C)  increases in the price of a good lead to rightward shifts of the supply curve. 
D)  rising prides provide producers with the incentives needed to increase the quantity supplied.

Question 4

According to the law of demand, if:

Accepted Answer

A)  product price increases, quantity demanded will decrease. 
B)  consumer income increases, quantity demanded will increase. 
C)  product price increases, quantity demanded will increase. 
D)  consumer income increases, quantity demanded will decrease. 
E)  supply increases, demand will increase. 
A)  product price increases, quantity demanded will decrease. 
B)  consumer income increases, quantity demanded will increase. 
C)  product price increases, quantity demanded will increase. 
D)  consumer income increases, quantity demanded will decrease. 
E)  supply increases, demand will increase.

Question 5

Exhibit 3-5  Supply for Tucker's Cola Data   In reference to Exhibit 3-5, assume the price of Tucker's Cola is $1.00 per gallon. If the price were to rise to $3.00 per gallon, and all other factors, such as taxes, etc. remained constant, the result would be a(n):

Accepted Answer

A)  decrease in supply. 
B)  increase in supply. 
C)  decrease in quantity supplied. 
D)  increase in quantity supplied. 
A)  decrease in supply. 
B)  increase in supply. 
C)  decrease in quantity supplied. 
D)  increase in quantity supplied.

Question 6

An increase in the quantity demanded of a good is most often due to:

Accepted Answer

A)  current prices. 
B)  higher prices. 
C)  higher income. 
D)  lower prices. 
E)  technological change. 
A)  current prices. 
B)  higher prices. 
C)  higher income. 
D)  lower prices. 
E)  technological change.

Question 7

A curve that is derived by summing horizontally individual demand curves is called:

Accepted Answer

A)  aggregate supply. 
B)  market supply. 
C)  aggregate demand. 
D)  market demand. 
A)  aggregate supply. 
B)  market supply. 
C)  aggregate demand. 
D)  market demand.

Question 8

If the demand for a good increases when the price of another good increases, then these goods are:

Accepted Answer

A)  complementary in consumption. 
B)  complementary in production. 
C)  substitute in production. 
D)  substitute in consumption. 
E)  neither substitutes nor complementary. 
A)  complementary in consumption. 
B)  complementary in production. 
C)  substitute in production. 
D)  substitute in consumption. 
E)  neither substitutes nor complementary.

Question 9

If income increases, then with regard to expensive cuts of steak, it is likely that the demand curve:

Accepted Answer

A)  shifts to the right. 
B)  shifts to the left. 
C)  becomes steeper. 
D)  does not change. 
E)  becomes flatter. 
A)  shifts to the right. 
B)  shifts to the left. 
C)  becomes steeper. 
D)  does not change. 
E)  becomes flatter.

Question 10

Which of the following will not cause a movement along the supply curve?

Accepted Answer

A)  Changes in the sellers' expectations. 
B)  Increases in taxes per unit of output. 
C)  Advances in technology. 
D)  All of the above. 
A)  Changes in the sellers' expectations. 
B)  Increases in taxes per unit of output. 
C)  Advances in technology. 
D)  All of the above.

Question 11

Exhibit 3-8  Demand and supply data for radios   In Exhibit 3-8, at any market price of radios below $50, a(n) ____ would result, causing price to ____.

Accepted Answer

A)  excess demand; rise 
B)  excess supply; rise 
C)  excess demand; fall 
D)  excess supply; fall 
E)  surplus; rise 
A)  excess demand; rise 
B)  excess supply; rise 
C)  excess demand; fall 
D)  excess supply; fall 
E)  surplus; rise

Question 12

Exhibit 3-4  Supply curves   In Exhibit 3-4, which of the following could have caused the shift in the supply curve from S1 to S2?

Accepted Answer

A)  Increase in demand. 
B)  Decrease in demand. 
C)  Decrease in the number of suppliers in the market. 
D)  Decrease in wage rates. 
E)  Increase in materials cost. 
A)  Increase in demand. 
B)  Decrease in demand. 
C)  Decrease in the number of suppliers in the market. 
D)  Decrease in wage rates. 
E)  Increase in materials cost.

Question 13

Assume that Coca-Cola and Pepsi-Cola are substitutes. A rise in the price of Coca-Cola will have which of the following effects on the market for Pepsi?

Accepted Answer

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

Question 14

An increase in the demand for peanut butter, a normal good, can be caused by a(n):

Accepted Answer

A)  decrease in consumer income. 
B)  increase in the price of jams, jellies, and preserves. 
C)  decrease in the price of bread. 
D)  drought in Georgia that destroyed 30 percent of the peanut crop. 
E)  decrease in the price of bologna. 
A)  decrease in consumer income. 
B)  increase in the price of jams, jellies, and preserves. 
C)  decrease in the price of bread. 
D)  drought in Georgia that destroyed 30 percent of the peanut crop. 
E)  decrease in the price of bologna.

Question 15

The equilibrium price is best defined as the price at which:

Accepted Answer

A)  demand is smaller than supply. 
B)  suppliers want to supply more goods. 
C)  demanders want to buy more goods. 
D)  quantity demanded is equal to quantity supplied. 
E)  the quantity demanded increases 
A)  demand is smaller than supply. 
B)  suppliers want to supply more goods. 
C)  demanders want to buy more goods. 
D)  quantity demanded is equal to quantity supplied. 
E)  the quantity demanded increases

Question 16

If X and Y are substitutes, the demand curve for X will shift to the right when the price of Y decreases.

Accepted Answer

A) True 
 B)False

Question 17

Two goods that are complementary are:

Accepted Answer

A)  wrapping paper and scotch tape. 
B)  letter and fax. 
C)  beef and chicken. 
D)  bicycle and motorcycle. 
E)  Coke and Pepsi. 
A)  wrapping paper and scotch tape. 
B)  letter and fax. 
C)  beef and chicken. 
D)  bicycle and motorcycle. 
E)  Coke and Pepsi.

Question 18

Which of the following corresponds to the definition of the supply curve?

Accepted Answer

A)  It depicts a positive relationship between income and quantity supplied. 
B)  It depicts a positive relationship between technology and prices. 
C)  It depicts a positive relationship between prices and quantity supplied. 
D)  It depicts a negative relationship between prices and quantity supplied. 
E)  It depicts a proportional relationship between prices and quantity supplied. 
A)  It depicts a positive relationship between income and quantity supplied. 
B)  It depicts a positive relationship between technology and prices. 
C)  It depicts a positive relationship between prices and quantity supplied. 
D)  It depicts a negative relationship between prices and quantity supplied. 
E)  It depicts a proportional relationship between prices and quantity supplied.

Question 19

In general, supply curves slope upward because:

Accepted Answer

A)  increases in the price of a good result in lower opportunity costs. 
B)  rising prices provide producers with a greater profit incentive. 
C)  consumers buy a greater quantity. 
D)  technology improves the ability of firms to produce more at each possible price. 
A)  increases in the price of a good result in lower opportunity costs. 
B)  rising prices provide producers with a greater profit incentive. 
C)  consumers buy a greater quantity. 
D)  technology improves the ability of firms to produce more at each possible price.

Question 20

If people buy more of a generic brand when consumer income falls, it is an inferior good.

Accepted Answer

A) True 
 B)False

Exam 3: Market Demand and Supply

Compared to higher-income families, low-income families would demand proportionately more of which of the following kinds of goods?

The fact that price and quantity demanded are related negatively illustrates the:

Supply curves slope upward because:

According to the law of demand, if:

Exhibit 3-5 Supply for Tucker's Cola Data In reference to Exhibit 3-5, assume the price of Tucker's Cola is $1.00 per gallon. If the price were to rise to $3.00 per gallon, and all other factors, such as taxes, etc. remained constant, the result would be a(n):

An increase in the quantity demanded of a good is most often due to:

A curve that is derived by summing horizontally individual demand curves is called:

If the demand for a good increases when the price of another good increases, then these goods are:

If income increases, then with regard to expensive cuts of steak, it is likely that the demand curve:

Which of the following will not cause a movement along the supply curve?

Exhibit 3-8 Demand and supply data for radios In Exhibit 3-8, at any market price of radios below $50, a(n) ____ would result, causing price to ____.

Exhibit 3-4 Supply curves In Exhibit 3-4, which of the following could have caused the shift in the supply curve from S1 to S2?

Assume that Coca-Cola and Pepsi-Cola are substitutes. A rise in the price of Coca-Cola will have which of the following effects on the market for Pepsi?

An increase in the demand for peanut butter, a normal good, can be caused by a(n):

The equilibrium price is best defined as the price at which:

If X and Y are substitutes, the demand curve for X will shift to the right when the price of Y decreases.

Two goods that are complementary are:

Which of the following corresponds to the definition of the supply curve?

In general, supply curves slope upward because:

If people buy more of a generic brand when consumer income falls, it is an inferior good.

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

Exhibit 3-8 Demand and supply data for radios In Exhibit 3-8, at any market price of radios below $50, a(n) would result, causing price to .

Exhibit 3-4 Supply curves In Exhibit 3-4, which of the following could have caused the shift in the supply curve from S₁ to S₂?