Question 1

Which of the following best explains the determination of the equilibrium price of a product?

Accepted Answer

A)  Production costs. 
B)  The supply of a good. 
C)  The interaction of supply and demand. 
D)  The decisions of government. 
A)  Production costs. 
B)  The supply of a good. 
C)  The interaction of supply and demand. 
D)  The decisions of government.

Question 2

Suppose all of the major computer manufacturers announced that beginning next month there would be major price reductions on their computers. This would cause the current demand for computers to:

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain unchanged. 
D)  increase and then decrease. 
A)  increase. 
B)  decrease. 
C)  remain unchanged. 
D)  increase and then decrease.

Question 3

Assuming compact discs and cassettes are substitute goods, a decrease in the price of cassettes will cause the demand curve for compact discs to:

Accepted Answer

A)  shift to the left as consumers switch from buying discs to cassettes. 
B)  shift to the right as consumers switch from buying discs to cassettes. 
C)  shift to the left as producers increase cassette production and reduce disc production. 
D)  remain unchanged since discs and cassettes are sold in separate markets. 
A)  shift to the left as consumers switch from buying discs to cassettes. 
B)  shift to the right as consumers switch from buying discs to cassettes. 
C)  shift to the left as producers increase cassette production and reduce disc production. 
D)  remain unchanged since discs and cassettes are sold in separate markets.

Question 4

To finance medical care, the federal government raises the tax per pack paid by sellers of cigarettes. Other things being equal, the price of cigarettes rises because of a(n):

Accepted Answer

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

Question 5

Exhibit 3-12  Supply and demand data   In Exhibit 3-12, which of the following occurs at a price of $1.00?

Accepted Answer

A)  A shortage puts a downward pressure on price. 
B)  Quantity demanded exceeds quantity supplied, putting upward pressure on price. 
C)  Quantity supplied exceeds quantity demanded, putting upward pressure on price. 
D)  The surplus would be so small that there would be only slight upward pressure on price. 
A)  A shortage puts a downward pressure on price. 
B)  Quantity demanded exceeds quantity supplied, putting upward pressure on price. 
C)  Quantity supplied exceeds quantity demanded, putting upward pressure on price. 
D)  The surplus would be so small that there would be only slight upward pressure on price.

Question 6

The demand schedule for a good shows:

Accepted Answer

A)  the specific quantity of the good that people are willing and able to sell at different prices. 
B)  the positive relationship between the price and the quantity of the good. 
C)  no relationship between the price and the quantity of the good. 
D)  the specific quantity of the good that people are willing and able to buy at different prices. 
E)  the quantity of the good that is sold in the market. 
A)  the specific quantity of the good that people are willing and able to sell at different prices. 
B)  the positive relationship between the price and the quantity of the good. 
C)  no relationship between the price and the quantity of the good. 
D)  the specific quantity of the good that people are willing and able to buy at different prices. 
E)  the quantity of the good that is sold in the market.

Question 7

Sugar and honey are viewed as substitutes for each other in many cooking applications. If the price of sugar rises, we would expect the:

Accepted Answer

A)  demand for honey to increase. 
B)  demand for honey to decrease. 
C)  quantity demanded of honey to decrease. 
D)  price of honey to decrease. 
E)  quantity demanded of honey to increase. 
A)  demand for honey to increase. 
B)  demand for honey to decrease. 
C)  quantity demanded of honey to decrease. 
D)  price of honey to decrease. 
E)  quantity demanded of honey to increase.

Question 8

Exhibit 3-1  Market demand   Suppose there are only three people in the economy: Jane, Harry, and Bob. The individual demand for corn for each of these consumers is given in Exhibit 3-1. The total quantity demanded of corn if the market price is $4 is ____.

Accepted Answer

A)  3 
B)  25 
C)  17 
D)  8 
E)  36 
A)  3 
B)  25 
C)  17 
D)  8 
E)  36

Question 9

Exhibit 3-1  Market demand   Suppose there are only three people in the economy: Jane, Harry, and Bob. The individual demand for corn for each of these consumers is given in Exhibit 3-1.The total quantity demanded of corn if the market price is $5 is ____.

Accepted Answer

A)  3 
B)  25 
C)  17 
D)  8 
E)  26 
A)  3 
B)  25 
C)  17 
D)  8 
E)  26

Question 10

The law of demand indicates that as the price of a good increases:

Accepted Answer

A)  suppliers sell less of it. 
B)  suppliers sell more of it. 
C)  buyers buy less of it. 
D)  buyers buy more of it. 
A)  suppliers sell less of it. 
B)  suppliers sell more of it. 
C)  buyers buy less of it. 
D)  buyers buy more of it.

Question 11

A normal good is defined by economists to be a good:

Accepted Answer

A)  with a negatively-sloped demand curve. 
B)  that is purchased by at least 75 percent of the population. 
C)  that is bought by consumers with normal tastes. 
D)  whose demand increases when incomes increase. 
E)  whose demand decreases when incomes increase. 
A)  with a negatively-sloped demand curve. 
B)  that is purchased by at least 75 percent of the population. 
C)  that is bought by consumers with normal tastes. 
D)  whose demand increases when incomes increase. 
E)  whose demand decreases when incomes increase.

Question 12

Exhibit 3-3  Demand curves   Assume that consumers expect the price of gasoline to rise sharply in the future. Which of the graphs in Exhibit 3-3 depicts this effect?

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 13

Which of the following will cause a movement along the supply curve?

Accepted Answer

A)  An increase or decrease in the raw materials costs. 
B)  An increase in labor costs. 
C)  Changes in the cost of the machinery used to make a good. 
D)  Changes in the market price of a good, other things held constant. 
A)  An increase or decrease in the raw materials costs. 
B)  An increase in labor costs. 
C)  Changes in the cost of the machinery used to make a good. 
D)  Changes in the market price of a good, other things held constant.

Question 14

Assume that peanut butter and jelly are complementary goods. A decrease in the number of peanut butter suppliers will cause the:

Accepted Answer

A)  demand for peanut butter to increase. 
B)  supply of peanut butter to increase. 
C)  demand for jelly to increase. 
D)  demand for jelly to decrease. 
E)  supply of jelly to decrease. 
A)  demand for peanut butter to increase. 
B)  supply of peanut butter to increase. 
C)  demand for jelly to increase. 
D)  demand for jelly to decrease. 
E)  supply of jelly to decrease.

Question 15

When economists say the quantity supplied of a product has increased, 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 16

The law of demand refers to the:

Accepted Answer

A)  tendency of prices to increase as more units of a product are demanded. 
B)  increase in price that results from an increase in demand for a good with a limited supply. 
C)  inverse relationship between the price of a good and the quantity of the good demanded. 
D)  increase in the quantity of a good available as the price of the good increases. 
A)  tendency of prices to increase as more units of a product are demanded. 
B)  increase in price that results from an increase in demand for a good with a limited supply. 
C)  inverse relationship between the price of a good and the quantity of the good demanded. 
D)  increase in the quantity of a good available as the price of the good increases.

Question 17

"Because of unseasonable cold weather, much of the peach crop has been destroyed." This statement indicates that the:

Accepted Answer

A)  price of peaches will fall. 
B)  quantity of peaches that will be available at any given price has decreased. 
C)  demand for peaches will shift to the left. 
D)  quantity of peaches that will be available at any given price have increased. 
A)  price of peaches will fall. 
B)  quantity of peaches that will be available at any given price has decreased. 
C)  demand for peaches will shift to the left. 
D)  quantity of peaches that will be available at any given price have increased.

Question 18

A supply curve shows the various quantities of a product that consumers are willing to purchase at possible prices during a specified period of time, ceteris paribus.

Accepted Answer

A) True 
 B)False

Question 19

If quantity demanded is greater than quantity supplied, then according to the market process:

Accepted Answer

A)  an excess supply exists. 
B)  the market is in equilibrium. 
C)  the price will rise. 
D)  the supply curve must be vertical. 
E)  there will be no tendency for the situation to change. 
A)  an excess supply exists. 
B)  the market is in equilibrium. 
C)  the price will rise. 
D)  the supply curve must be vertical. 
E)  there will be no tendency for the situation to change.

Question 20

Which of the following causes the demand for veggie burgers to increase?

Accepted Answer

A)  A decline in the price of veggie burgers. 
B)  An increase in the price of tofu burgers, perceived as a substitute by veggie-burger consumers. 
C)  An increase in the price of burger buns. 
D)  A technological innovation that lowers the cost of producing veggie burgers. 
A)  A decline in the price of veggie burgers. 
B)  An increase in the price of tofu burgers, perceived as a substitute by veggie-burger consumers. 
C)  An increase in the price of burger buns. 
D)  A technological innovation that lowers the cost of producing veggie burgers.

Exam 3: Market Demand and Supply

Which of the following best explains the determination of the equilibrium price of a product?

Suppose all of the major computer manufacturers announced that beginning next month there would be major price reductions on their computers. This would cause the current demand for computers to:

Assuming compact discs and cassettes are substitute goods, a decrease in the price of cassettes will cause the demand curve for compact discs to:

To finance medical care, the federal government raises the tax per pack paid by sellers of cigarettes. Other things being equal, the price of cigarettes rises because of a(n):

Exhibit 3-12 Supply and demand data In Exhibit 3-12, which of the following occurs at a price of $1.00?

The demand schedule for a good shows:

Sugar and honey are viewed as substitutes for each other in many cooking applications. If the price of sugar rises, we would expect the:

Exhibit 3-1 Market demand Suppose there are only three people in the economy: Jane, Harry, and Bob. The individual demand for corn for each of these consumers is given in Exhibit 3-1. The total quantity demanded of corn if the market price is $4 is ____.

Exhibit 3-1 Market demand Suppose there are only three people in the economy: Jane, Harry, and Bob. The individual demand for corn for each of these consumers is given in Exhibit 3-1.The total quantity demanded of corn if the market price is $5 is ____.

The law of demand indicates that as the price of a good increases:

A normal good is defined by economists to be a good:

Exhibit 3-3 Demand curves Assume that consumers expect the price of gasoline to rise sharply in the future. Which of the graphs in Exhibit 3-3 depicts this effect?

Which of the following will cause a movement along the supply curve?

Assume that peanut butter and jelly are complementary goods. A decrease in the number of peanut butter suppliers will cause the:

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

The law of demand refers to the:

"Because of unseasonable cold weather, much of the peach crop has been destroyed." This statement indicates that the:

A supply curve shows the various quantities of a product that consumers are willing to purchase at possible prices during a specified period of time, ceteris paribus.

If quantity demanded is greater than quantity supplied, then according to the market process:

Which of the following causes the demand for veggie burgers to increase?

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