Question 1

A substitute good is one that

Accepted Answer

A)  appeals to a wide spectrum of consumers 
B)  is used together with another good 
C)  is exchanged on the black market 
D)  is produced by the same firm as another good 
E)  can be used in place of another good,fulfilling the same basic purpose 
A)  appeals to a wide spectrum of consumers 
B)  is used together with another good 
C)  is exchanged on the black market 
D)  is produced by the same firm as another good 
E)  can be used in place of another good,fulfilling the same basic purpose

Question 2

An increase in the number of buyers in the market causes

Accepted Answer

A)  a decrease in equilibrium quantity 
B)  a decrease in equilibrium price 
C)  an increase in demand 
D)  a decrease in production 
E)  an increase in supply 
A)  a decrease in equilibrium quantity 
B)  a decrease in equilibrium price 
C)  an increase in demand 
D)  a decrease in production 
E)  an increase in supply

Question 3

Because price and quantity demanded are inversely related,

Accepted Answer

A)  the demand curve is usually upward-sloping 
B)  buyers purchase more of the good as the price rises 
C)  the supply curve must be rising 
D)  price and quantity supplied must be positively related 
E)  the demand curve is usually downward-sloping 
A)  the demand curve is usually upward-sloping 
B)  buyers purchase more of the good as the price rises 
C)  the supply curve must be rising 
D)  price and quantity supplied must be positively related 
E)  the demand curve is usually downward-sloping

Question 4

Which of the following would shift the demand curve for the normal good regular vanilla ice cream to the left?

Accepted Answer

A)  reports of health risks as a result of eating vanilla ice cream 
B)  an increase in the price of frozen yogurt 
C)  a decrease in the price of hot fudge sauce 
D)  an increase in the price of regular vanilla ice cream 
E)  an increase in buyers' incomes 
A)  reports of health risks as a result of eating vanilla ice cream 
B)  an increase in the price of frozen yogurt 
C)  a decrease in the price of hot fudge sauce 
D)  an increase in the price of regular vanilla ice cream 
E)  an increase in buyers' incomes

Question 5

$\text { Figure } 3-10$$$\begin{array} { | c c c | }

\hline  \begin{array} { c } 
\text { Price } \
\text { Per Pair }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Demanded }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Supplied }
\end{array} \
\hline \$ 2 & 18 & 3 \
\$ 4 & 14 & 4 \
\$ 6 & 10 & 5 \
\$ 8 & 6 & 6 \
\$ 10 & 2 & 8 \
\hline
\end{array}$$
-In the supply and demand for socks schedules in Figure 3-10,a price of $4 per pair results in

Accepted Answer

A)  equilibrium 
B)  excess supply of 10 pairs 
C)  excess demand of 5 pairs 
D)  excess demand of 13 pairs 
E)  excess demand of 10 pairs 
A)  equilibrium 
B)  excess supply of 10 pairs 
C)  excess demand of 5 pairs 
D)  excess demand of 13 pairs 
E)  excess demand of 10 pairs

Question 6

Evan left a job in which he was earning $75,000 a year for one he liked better but pays only $50,000 a year.Around the same time as the job switch,Evan needed to buy a new car.Had he kept his old job he would have bought a new car but instead he was forced to buy a used car.Therefore

Accepted Answer

A)  used cars are normal goods for Evan 
B)  new cars are inferior goods for Evan 
C)  the supply curve for new cars shifted to the left 
D)  new and used cars are complements 
E)  used cars are inferior goods for Evan 
A)  used cars are normal goods for Evan 
B)  new cars are inferior goods for Evan 
C)  the supply curve for new cars shifted to the left 
D)  new and used cars are complements 
E)  used cars are inferior goods for Evan

Question 7

Suppose that a large dairy farmer is able to raise the market price of milk by withholding milk supply from the market.In this instance,

Accepted Answer

A)  the milk market is perfectly competitive 
B)  buyers will decrease their demand for milk 
C)  buyers will increase their demand for milk 
D)  the milk market is imperfectly competitive 
E)  the milk market will collapse in the long run 
A)  the milk market is perfectly competitive 
B)  buyers will decrease their demand for milk 
C)  buyers will increase their demand for milk 
D)  the milk market is imperfectly competitive 
E)  the milk market will collapse in the long run

Question 8

Which of the following would increase the amount of an inferior good that buyers would like to purchase?

Accepted Answer

A)  an increase in buyers' incomes 
B)  an increase in the price of a complement 
C)  a decrease in the price of a substitute 
D)  a decrease in buyers' incomes 
E)  a decrease in its expected future price 
A)  an increase in buyers' incomes 
B)  an increase in the price of a complement 
C)  a decrease in the price of a substitute 
D)  a decrease in buyers' incomes 
E)  a decrease in its expected future price

Question 9

In a market system,prices are determined by

Accepted Answer

A)  corporate executives 
B)  government bureaucrats 
C)  supply and demand 
D)  total market demand 
E)  production costs 
A)  corporate executives 
B)  government bureaucrats 
C)  supply and demand 
D)  total market demand 
E)  production costs

Question 10

Studies show that the supply curve for bananas has shifted.All of the following could be possible explanations for the shift,except one.Which is the exception?

Accepted Answer

A)  The price of land for growing bananas has risen. 
B)  Weather conditions in banana-growing countries have worsened. 
C)  The price of apples has fallen. 
D)  The price of bananas has risen. 
E)  The salaries paid to banana growers has risen. 
A)  The price of land for growing bananas has risen. 
B)  Weather conditions in banana-growing countries have worsened. 
C)  The price of apples has fallen. 
D)  The price of bananas has risen. 
E)  The salaries paid to banana growers has risen.

Question 11

-In Figure 3-4,the equilibrium price is

Accepted Answer

A)  $5 
B)  $4 
C)  $3 
D)  $1 
E)  $0 
A)  $5 
B)  $4 
C)  $3 
D)  $1 
E)  $0

Question 12

An increase in the population will lead to

Accepted Answer

A)  a rightward shift in every individual's demand curve 
B)  no shift in the market demand curve 
C)  a rightward shift in the market demand curve 
D)  a rightward movement along every individual's demand curve 
E)  a rightward movement along the market demand curve 
A)  a rightward shift in every individual's demand curve 
B)  no shift in the market demand curve 
C)  a rightward shift in the market demand curve 
D)  a rightward movement along every individual's demand curve 
E)  a rightward movement along the market demand curve

Question 13

Oil and Natural Gas can each be used as a source of energy and are,for many purposes interchangeable.Which of the following best explains the increase in the price of natural gas that accompanied the increase in the price of oil during the 1990-1991 Persian Gulf War?

Accepted Answer

A)  Increased oil prices raised demand for natural gas,a substitute good. 
B)  Increased oil prices raised the quantity demanded of natural gas by movement along the natural gas demand curve. 
C)  Increased oil prices reduced supply of natural gas,a substitute good. 
D)  Increased oil prices reduced supply of natural gas,an alternate good. 
E)  Increased oil prices raised supply of natural gas,a substitute good. 
A)  Increased oil prices raised demand for natural gas,a substitute good. 
B)  Increased oil prices raised the quantity demanded of natural gas by movement along the natural gas demand curve. 
C)  Increased oil prices reduced supply of natural gas,a substitute good. 
D)  Increased oil prices reduced supply of natural gas,an alternate good. 
E)  Increased oil prices raised supply of natural gas,a substitute good.

Question 14

The law of demand says that

Accepted Answer

A)  the customer is always right 
B)  quantity supplied equals quantity demanded 
C)  price and quantity supplied are inversely related 
D)  price and quantity demanded are inversely related 
E)  income and quantity demanded are directly related 
A)  the customer is always right 
B)  quantity supplied equals quantity demanded 
C)  price and quantity supplied are inversely related 
D)  price and quantity demanded are inversely related 
E)  income and quantity demanded are directly related

Question 15

If a supply curve shifts rightward along a downward sloping demand curve

Accepted Answer

A)  the quantity supplied will increase 
B)  the quantity supplied will decrease 
C)  it makes no sense to talk about a change in quantity supplied 
D)  the quantity demanded will decrease 
E)  the price will increase 
A)  the quantity supplied will increase 
B)  the quantity supplied will decrease 
C)  it makes no sense to talk about a change in quantity supplied 
D)  the quantity demanded will decrease 
E)  the price will increase

Question 16

-In Figure 3-11,suppose that initially the market is in equilibrium as defined by the demand and supply curves D₁ and S₁.Which price/quantity combination could result from an increase in consumers' incomes coupled with an improvement in technology?

Accepted Answer

A)  $100 and 75,000 
B)  $100 and 100,000 
C)  $100 and 50,000 
D)  $120 and 75,000 
E)  $120 and 100,000 
A)  $100 and 75,000 
B)  $100 and 100,000 
C)  $100 and 50,000 
D)  $120 and 75,000 
E)  $120 and 100,000

Question 17

Which of the following would shift the entire supply curve for electricity to the left?

Accepted Answer

A)  a decrease in the price per unit of electricity 
B)  a decrease in the price of coal used to generate electricity 
C)  new EPA regulations that force the closing of the worst polluting coal-burning power plants 
D)  a decrease in the price of alternative forms of energy 
E)  a technological improvement that reduces the cost of producing electricity 
A)  a decrease in the price per unit of electricity 
B)  a decrease in the price of coal used to generate electricity 
C)  new EPA regulations that force the closing of the worst polluting coal-burning power plants 
D)  a decrease in the price of alternative forms of energy 
E)  a technological improvement that reduces the cost of producing electricity

Question 18

If the price of orange juice rises,the demand for grapefruit juice will

Accepted Answer

A)  increase because the two goods are substitutes 
B)  increase because it is a complement 
C)  decrease because the two goods are substitutes 
D)  decrease because the two goods are complements 
E)  not change unless the price of grapefruit juice also changes 
A)  increase because the two goods are substitutes 
B)  increase because it is a complement 
C)  decrease because the two goods are substitutes 
D)  decrease because the two goods are complements 
E)  not change unless the price of grapefruit juice also changes

Question 19

Excess demand occurs when

Accepted Answer

A)  the actual price is greater than the equilibrium price 
B)  equilibrium is undefined 
C)  consumer wants are unlimited 
D)  the actual price is less than the equilibrium price 
E)  the market is in equilibrium 
A)  the actual price is greater than the equilibrium price 
B)  equilibrium is undefined 
C)  consumer wants are unlimited 
D)  the actual price is less than the equilibrium price 
E)  the market is in equilibrium

Question 20

-In Figure 3-8,using the supply and demand curves denoted S₁ and D₁,respectively,if demand were to increase to D₂ and the equilibrium price stayed the same there would be a

Accepted Answer

A)  surplus 
B)  new equilibrium at 50,000 
C)  shortage 
D)  new equilibrium at 100,000 
E)  new equilibrium at 75,000 
A)  surplus 
B)  new equilibrium at 50,000 
C)  shortage 
D)  new equilibrium at 100,000 
E)  new equilibrium at 75,000

A substitute good is one that

An increase in the number of buyers in the market causes

Because price and quantity demanded are inversely related,

Which of the following would shift the demand curve for the normal good regular vanilla ice cream to the left?

$\text { Figure } 3-10$ Price Per Pair Quantity Demanded Quantity Supplied \ 2 18 3 \ 4 14 4 \ 6 10 5 \ 8 6 6 \ 10 2 8 -In the supply and demand for socks schedules in Figure 3-10,a price of $4 per pair results in

Evan left a job in which he was earning $75,000 a year for one he liked better but pays only $50,000 a year.Around the same time as the job switch,Evan needed to buy a new car.Had he kept his old job he would have bought a new car but instead he was forced to buy a used car.Therefore

Suppose that a large dairy farmer is able to raise the market price of milk by withholding milk supply from the market.In this instance,

Which of the following would increase the amount of an inferior good that buyers would like to purchase?

In a market system,prices are determined by

Studies show that the supply curve for bananas has shifted.All of the following could be possible explanations for the shift,except one.Which is the exception?

-In Figure 3-4,the equilibrium price is

An increase in the population will lead to

Oil and Natural Gas can each be used as a source of energy and are,for many purposes interchangeable.Which of the following best explains the increase in the price of natural gas that accompanied the increase in the price of oil during the 1990-1991 Persian Gulf War?

The law of demand says that

If a supply curve shifts rightward along a downward sloping demand curve

-In Figure 3-11,suppose that initially the market is in equilibrium as defined by the demand and supply curves D₁ and S₁.Which price/quantity combination could result from an increase in consumers' incomes coupled with an improvement in technology?

Which of the following would shift the entire supply curve for electricity to the left?

If the price of orange juice rises,the demand for grapefruit juice will

Excess demand occurs when

-In Figure 3-8,using the supply and demand curves denoted S₁ and D₁,respectively,if demand were to increase to D₂ and the equilibrium price stayed the same there would be a

What is Economics?

Scarcity, Choice, and Economic Systems

Working With Supply and Demand

What Macroeconomics Tries to Explain

Production, Income, and Employment

The Price Level and Inflation

The Classical Long run Model

Economic Growth and Rising Living Standards

Economic Fluctuations

The Short-run Macro Model

Fiscal Policy

Money, Banks, and the Federal Reserve

The Money Market and Monetary Policy

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Filters

Exam 3: Supply and Demand

A substitute good is one that

An increase in the number of buyers in the market causes

Because price and quantity demanded are inversely related,

Which of the following would shift the demand curve for the normal good regular vanilla ice cream to the left?

Figure 3−10\text { Figure } 3-10 Figure 3−10 Price Per Pair Quantity Demanded Quantity Supplied \ 2 18 3 \ 4 14 4 \ 6 10 5 \ 8 6 6 \ 10 2 8 -In the supply and demand for socks schedules in Figure 3-10,a price of $4 per pair results in

Evan left a job in which he was earning $75,000 a year for one he liked better but pays only $50,000 a year.Around the same time as the job switch,Evan needed to buy a new car.Had he kept his old job he would have bought a new car but instead he was forced to buy a used car.Therefore

Suppose that a large dairy farmer is able to raise the market price of milk by withholding milk supply from the market.In this instance,

Which of the following would increase the amount of an inferior good that buyers would like to purchase?

In a market system,prices are determined by

Studies show that the supply curve for bananas has shifted.All of the following could be possible explanations for the shift,except one.Which is the exception?

-In Figure 3-4,the equilibrium price is

An increase in the population will lead to

Oil and Natural Gas can each be used as a source of energy and are,for many purposes interchangeable.Which of the following best explains the increase in the price of natural gas that accompanied the increase in the price of oil during the 1990-1991 Persian Gulf War?

The law of demand says that

If a supply curve shifts rightward along a downward sloping demand curve

-In Figure 3-11,suppose that initially the market is in equilibrium as defined by the demand and supply curves D₁ and S₁.Which price/quantity combination could result from an increase in consumers' incomes coupled with an improvement in technology?

Which of the following would shift the entire supply curve for electricity to the left?

If the price of orange juice rises,the demand for grapefruit juice will

Excess demand occurs when

-In Figure 3-8,using the supply and demand curves denoted S₁ and D₁,respectively,if demand were to increase to D₂ and the equilibrium price stayed the same there would be a

What is Economics?

Scarcity, Choice, and Economic Systems

Working With Supply and Demand

What Macroeconomics Tries to Explain

Production, Income, and Employment

The Price Level and Inflation

The Classical Long run Model

Economic Growth and Rising Living Standards

Economic Fluctuations

The Short-run Macro Model

Fiscal Policy

Money, Banks, and the Federal Reserve

The Money Market and Monetary Policy

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Filters

$\text { Figure } 3-10$ Price Per Pair Quantity Demanded Quantity Supplied \ 2 18 3 \ 4 14 4 \ 6 10 5 \ 8 6 6 \ 10 2 8 -In the supply and demand for socks schedules in Figure 3-10,a price of $4 per pair results in