Question 1

Suppose that X and Y are complementary goods. If the price of good X decreases, we can expect the:

Accepted Answer

A)  demand for good X to increase. 
B)  quantity demanded of good Y to decrease. 
C)  quantity demanded of good Y to increase. 
D)  demand for good Y to decrease. 
E)  demand for good Y to increase. 
A)  demand for good X to increase. 
B)  quantity demanded of good Y to decrease. 
C)  quantity demanded of good Y to increase. 
D)  demand for good Y to decrease. 
E)  demand for good Y to increase.

Question 2

Which of the following is true about the market equilibrium?

Accepted Answer

A)  As the price increases, the quantity demanded and the quantity supplied increases. 
B)  As the price increases, the quantity demanded and the quantity supplied decreases. 
C)  As the price increases, the quantity demanded increases and the quantity supplied decreases. 
D)  As the price increases, the quantity demanded decreases and the quantity supplied increases. 
E)  As the price increases, neither the quantity demanded nor quantity supplied change. 
A)  As the price increases, the quantity demanded and the quantity supplied increases. 
B)  As the price increases, the quantity demanded and the quantity supplied decreases. 
C)  As the price increases, the quantity demanded increases and the quantity supplied decreases. 
D)  As the price increases, the quantity demanded decreases and the quantity supplied increases. 
E)  As the price increases, neither the quantity demanded nor quantity supplied change.

Question 3

If two goods are complementary, a(n):

Accepted Answer

A)  decrease in the price of one product will cause a decrease in the demand for the other product. 
B)  decrease in the price of one product will cause an increase in the demand for the other product. 
C)  increase in the price of one product will cause an increase in the supply of the other product. 
D)  increase in the price of one product will cause a decrease in the supply of the other product. 
E)  increase in the price of one product will cause an increase in the demand for the other product. 
A)  decrease in the price of one product will cause a decrease in the demand for the other product. 
B)  decrease in the price of one product will cause an increase in the demand for the other product. 
C)  increase in the price of one product will cause an increase in the supply of the other product. 
D)  increase in the price of one product will cause a decrease in the supply of the other product. 
E)  increase in the price of one product will cause an increase in the demand for the other product.

Question 4

Exhibit 3-11  Demand and supply curves   In Exhibit 3-11, in Panel B the movement from A to C describes a(n):

Accepted Answer

A)  increase in demand and a decrease in supply, where the increase in demand is relatively bigger. 
B)  decrease in both demand and supply, where the decrease in supply is relatively bigger. 
C)  increase in demand and a decrease in supply, where the decrease in supply is relatively bigger. 
D)  decrease in demand and increase in supply, where the increase in supply is relatively bigger. 
E)  increase in both demand and supply, where the increase in supply is relatively bigger. 
A)  increase in demand and a decrease in supply, where the increase in demand is relatively bigger. 
B)  decrease in both demand and supply, where the decrease in supply is relatively bigger. 
C)  increase in demand and a decrease in supply, where the decrease in supply is relatively bigger. 
D)  decrease in demand and increase in supply, where the increase in supply is relatively bigger. 
E)  increase in both demand and supply, where the increase in supply is relatively bigger.

Question 5

Three of the four events described below might reasonably be expected to shift the demand curve for beef to a new position. One would not shift that demand curve. The single exception is a(n):

Accepted Answer

A)  change in people's tastes for beef. 
B)  increase in the money incomes of beef consumers. 
C)  fall in the price of beef. 
D)  change in the price of a product competitive with beef (e.g. pork). 
A)  change in people's tastes for beef. 
B)  increase in the money incomes of beef consumers. 
C)  fall in the price of beef. 
D)  change in the price of a product competitive with beef (e.g. pork).

Question 6

The "ceteris paribus" clause in the law of demand does not allow which of the following factors to change?

Accepted Answer

A)  Consumer tastes and preferences. 
B)  The prices of other goods. 
C)  Expectations. 
D)  All of the above. 
A)  Consumer tastes and preferences. 
B)  The prices of other goods. 
C)  Expectations. 
D)  All of the above.

Question 7

Assuming that chicken and beef are substitutes, a decrease in the price of beef, other things being equal, will:

Accepted Answer

A)  decrease the demand for beef. 
B)  increase the demand for chicken. 
C)  decrease the demand for chicken. 
D)  increase the demand for beef. 
A)  decrease the demand for beef. 
B)  increase the demand for chicken. 
C)  decrease the demand for chicken. 
D)  increase the demand for beef.

Question 8

Which of the following is least likely to increase the demand for new tires?

Accepted Answer

A)  a decrease in the price of tires 
B)  a decrease in the price of cars 
C)  an increase in consumer income 
D)  an increase in the number of miles people drive per year 
A)  a decrease in the price of tires 
B)  a decrease in the price of cars 
C)  an increase in consumer income 
D)  an increase in the number of miles people drive per year

Question 9

The price of a good will fall when:

Accepted Answer

A)  there is a shortage of the good. 
B)  there is a surplus of the good. 
C)  demand for the good increases. 
D)  the supply of the good decreases. 
A)  there is a shortage of the good. 
B)  there is a surplus of the good. 
C)  demand for the good increases. 
D)  the supply of the good decreases.

Question 10

Discuss how a market reaches equilibrium. How is it expressed graphically?

Accepted Answer

Equilibrium exists at that one price in

Question 11

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

Accepted Answer

A)  the market price is too low. 
B)  the quantity demanded exceeds the quantity supplied at the current price. 
C)  the quantity supplied exceeds the quantity demanded at the current price. 
D)  there is a shortage of the product. 
E)  there will be a tendency for the price to rise. 
A)  the market price is too low. 
B)  the quantity demanded exceeds the quantity supplied at the current price. 
C)  the quantity supplied exceeds the quantity demanded at the current price. 
D)  there is a shortage of the product. 
E)  there will be a tendency for the price to rise.

Question 12

Market equilibrium is:

Accepted Answer

A)  defined as the condition in which there is neither a shortage or surplus. 
B)  defined as the condition under which the separately formulated plans of buyers and sellers exactly mesh when tested in the market. 
C)  represented graphically by the intersection of the supply and demand curves. 
D)  all of the above. 
A)  defined as the condition in which there is neither a shortage or surplus. 
B)  defined as the condition under which the separately formulated plans of buyers and sellers exactly mesh when tested in the market. 
C)  represented graphically by the intersection of the supply and demand curves. 
D)  all of the above.

Question 13

Exhibit 3-15  Supply and demand curves for good X   In Exhibit 3-15, if the price moves from $2.00 to $1.00, unsold inventories will:

Accepted Answer

A)  fall, putting upward pressure on price. 
B)  fall, putting less pressure on price. 
C)  rise, putting less pressure on price. 
D)  rise, putting upward pressure on price. 
A)  fall, putting upward pressure on price. 
B)  fall, putting less pressure on price. 
C)  rise, putting less pressure on price. 
D)  rise, putting upward pressure on price.

Question 14

The law of demand shows that:

Accepted Answer

A)  there is an inverse relationship between price and quantity demanded. 
B)  the demand curve is positively sloped. 
C)  when the price of a good increases, the quantity demanded increases. 
D)  the supply curve is vertical. 
E)  individual demand is the same as market demand. 
A)  there is an inverse relationship between price and quantity demanded. 
B)  the demand curve is positively sloped. 
C)  when the price of a good increases, the quantity demanded increases. 
D)  the supply curve is vertical. 
E)  individual demand is the same as market demand.

Question 15

An increase in the demand for a product means that the:

Accepted Answer

A)  demand curve shifts to the left. 
B)  demand curve shifts to the right. 
C)  supply curve shifts to the right. 
D)  supply curve shifts to the left. 
E)  quantity supplied has increased. 
A)  demand curve shifts to the left. 
B)  demand curve shifts to the right. 
C)  supply curve shifts to the right. 
D)  supply curve shifts to the left. 
E)  quantity supplied has increased.

Question 16

The law of demand is the principle that there is ____ relationship between the price of a good and the quantity buyers are willing to purchase in a defined time period, ceteris paribus.

Accepted Answer

A)  a direct 
B)  no 
C)  an inverse 
D)  independent 
A)  a direct 
B)  no 
C)  an inverse 
D)  independent

Question 17

In economics, the term "shortage" means that the quantity demanded is greater than the quantity supplied at the existing price.

Accepted Answer

A) True 
 B)False

Question 18

If the price of hot dogs increases, what will happen in the market for potato chips, a complementary good?

Accepted Answer

A)  Demand will increase. 
B)  Quantity demanded will increase. 
C)  Demand will decrease. 
D)  Quantity demanded will decrease. 
E)  Supply will decrease. 
A)  Demand will increase. 
B)  Quantity demanded will increase. 
C)  Demand will decrease. 
D)  Quantity demanded will decrease. 
E)  Supply will decrease.

Question 19

The law of demand is graphically demonstrated by a(n):

Accepted Answer

A)  perfectly vertical demand curve. 
B)  perfectly horizontal demand curve. 
C)  downward-sloping demand curve. 
D)  upward-sloping demand curve. 
E)  curved demand line. 
A)  perfectly vertical demand curve. 
B)  perfectly horizontal demand curve. 
C)  downward-sloping demand curve. 
D)  upward-sloping demand curve. 
E)  curved demand line.

Question 20

If people expect the price of packaged coffee to rise next week, coffee demand will:

Accepted Answer

A)  decrease now. 
B)  increase now. 
C)  stay the same now and increase next week. 
D)  stay the same now and decrease next week. 
E)  stay the same now and next week. 
A)  decrease now. 
B)  increase now. 
C)  stay the same now and increase next week. 
D)  stay the same now and decrease next week. 
E)  stay the same now and next week.

Exam 3: Market Demand and Supply

Suppose that X and Y are complementary goods. If the price of good X decreases, we can expect the:

Which of the following is true about the market equilibrium?

If two goods are complementary, a(n):

Exhibit 3-11 Demand and supply curves In Exhibit 3-11, in Panel B the movement from A to C describes a(n):

Three of the four events described below might reasonably be expected to shift the demand curve for beef to a new position. One would not shift that demand curve. The single exception is a(n):

The "ceteris paribus" clause in the law of demand does not allow which of the following factors to change?

Assuming that chicken and beef are substitutes, a decrease in the price of beef, other things being equal, will:

Which of the following is least likely to increase the demand for new tires?

The price of a good will fall when:

Discuss how a market reaches equilibrium. How is it expressed graphically?

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

Market equilibrium is:

Exhibit 3-15 Supply and demand curves for good X In Exhibit 3-15, if the price moves from $2.00 to $1.00, unsold inventories will:

The law of demand shows that:

An increase in the demand for a product means that the:

The law of demand is the principle that there is ____ relationship between the price of a good and the quantity buyers are willing to purchase in a defined time period, ceteris paribus.

In economics, the term "shortage" means that the quantity demanded is greater than the quantity supplied at the existing price.

If the price of hot dogs increases, what will happen in the market for potato chips, a complementary good?

The law of demand is graphically demonstrated by a(n):

If people expect the price of packaged coffee to rise next week, coffee demand will:

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