Question 1

How does the increasing use of MP3 players affect the market for compact discs?

Accepted Answer

A) The demand curve for compact discs shifts to the right. 
B) The supply curve for compact discs shifts to the left. 
C) The supply curve for compact discs shifts to the right. 
D) The demand curve for compact discs shifts to the left. 
A) The demand curve for compact discs shifts to the right. 
B) The supply curve for compact discs shifts to the left. 
C) The supply curve for compact discs shifts to the right. 
D) The demand curve for compact discs shifts to the left.

Question 2

Prices of commercial airline tickets (assume that this is a normal good)have fallen in recent months.Over this same period,the price of jet fuel has risen and consumer incomes have fallen.Which of the following best explains the falling prices of airline tickets?

Accepted Answer

A) The supply curve for airline tickets has shifted to the left while the demand curve for airline tickets has shifted to the left. 
B) The demand curve for airline tickets has shifted to the left more than the supply curve has shifted to the left. 
C) The demand curve and the supply curve for airline tickets have both shifted to the right. 
D) The supply curve for airline tickets has shifted to the left more than the demand curve has shifted to the left. 
A) The supply curve for airline tickets has shifted to the left while the demand curve for airline tickets has shifted to the left. 
B) The demand curve for airline tickets has shifted to the left more than the supply curve has shifted to the left. 
C) The demand curve and the supply curve for airline tickets have both shifted to the right. 
D) The supply curve for airline tickets has shifted to the left more than the demand curve has shifted to the left.

Question 3

Market equilibrium occurs where the quantity supplied is equal to the quantity demanded.

Accepted Answer

A) True 
 B)False

Question 4

All else equal,the desired increase in the supply of smart phones for Google would cause the equilibrium price of the smart phones to ________ and the equilibrium quantity of the smart phones to ________.

Accepted Answer

A) increase; increase 
B) increase; decrease 
C) decrease; increase 
D) decrease; decrease 
A) increase; increase 
B) increase; decrease 
C) decrease; increase 
D) decrease; decrease

Question 5

Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln.Which of the following events would cause the price differences in these letters to get smaller?

Accepted Answer

A) The demand for Booth letters decreases. 
B) The supply of Lincoln letters increases. 
C) The demand for Lincoln letters increases and the supply of Booth letters increases. 
D) The demand for Lincoln letters decreases and the demand for Booth letters increases. 
A) The demand for Booth letters decreases. 
B) The supply of Lincoln letters increases. 
C) The demand for Lincoln letters increases and the supply of Booth letters increases. 
D) The demand for Lincoln letters decreases and the demand for Booth letters increases.

Question 6

Table 3-2
 $$\begin{array} { | c | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Caviar } \
\text { Price per oz. } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Ari's } \
\text { Quantity } \
\text { Demanded } \
\text { (oz.) }
\end{array} & \begin{array} { c } 
\text { Sonia's } \
\text { Quantity } \
\text { Demanded } \
\text { (oz.) }
\end{array} & \begin{array} { c } 
\text { Rest of } \
\text { Market } \
\text { Quantity } \
\text { Demanded } \
\text { (oz.) }
\end{array} & \begin{array} { c } 
\text { Market } \
\text { Quantity } \
\text { Demanded } \
\text { (oz.) }
\end{array} \
\hline \$ 75 & 6 & 0 & 46 & \
\hline 65 & 18 & 6 & 64 & \
\hline 55 & 28 & 14 & 136 & \
\hline 45 & 36 & 24 & 170 & \
\hline 35 & 44 & 36 & 220 & \
\hline
\end{array}$$
-Refer to Table 3-2.The table above shows the demand schedules for caviar of two individuals (Ari and Sonia)and the rest of the market.If the price of caviar falls from $45 to $35,the market quantity demanded would

Accepted Answer

A) decrease by 50 oz. 
B) increase by 70 oz. 
C) increase by 50 oz. 
D) decrease by 70 oz. 
A) decrease by 50 oz. 
B) increase by 70 oz. 
C) increase by 50 oz. 
D) decrease by 70 oz.

Question 7

Select the phrase that correctly completes the following statement."A decrease in the number of manufacturers caused a decrease in the supply of sailboats.As a result

Accepted Answer

A) the price of sailboats increased and the demand for sailboats decreased. 
B) the equilibrium quantity of sailboats increased. 
C) the price of sailboats increased and the quantity demanded of sailboats decreased. 
D) the price of sailboats increased.The higher price caused the supply of sailboats to increase. 
A) the price of sailboats increased and the demand for sailboats decreased. 
B) the equilibrium quantity of sailboats increased. 
C) the price of sailboats increased and the quantity demanded of sailboats decreased. 
D) the price of sailboats increased.The higher price caused the supply of sailboats to increase.

Question 8

Figure 3-4
  
-Refer to Figure 3-4.If the price is $15

Accepted Answer

A) there would be a surplus of 300 units. 
B) there would be a shortage of 300 units. 
C) there would be a surplus of 400 units. 
D) there would be a shortage of 400 units. 
A) there would be a surplus of 300 units. 
B) there would be a shortage of 300 units. 
C) there would be a surplus of 400 units. 
D) there would be a shortage of 400 units.

Question 9

Studies have shown that drinking one glass of red wine per day may help prevent heart disease.Assume this is true,and a fungal disease destroys a large portion of the grape harvest of California vineyards.In the market for red wine,these two developments would

Accepted Answer

A) increase demand and increase supply, resulting in an increase in the equilibrium quantity and a decrease in the equilibrium price of red wine. 
B) increase demand and decrease supply resulting in a decrease in both the equilibrium quantity and the equilibrium price of red wine. 
C) increase demand and decrease supply, resulting in an increase in the equilibrium price and an uncertain effect on the equilibrium quantity of red wine. 
D) increase demand and decrease supply, resulting in an increase in both the equilibrium price and the equilibrium quantity of red wine. 
A) increase demand and increase supply, resulting in an increase in the equilibrium quantity and a decrease in the equilibrium price of red wine. 
B) increase demand and decrease supply resulting in a decrease in both the equilibrium quantity and the equilibrium price of red wine. 
C) increase demand and decrease supply, resulting in an increase in the equilibrium price and an uncertain effect on the equilibrium quantity of red wine. 
D) increase demand and decrease supply, resulting in an increase in both the equilibrium price and the equilibrium quantity of red wine.

Question 10

Which of the following describes a characteristic of a perfectly competitive market?

Accepted Answer

A) There are many buyers but few sellers. 
B) There are many sellers but few buyers. 
C) There are many buyers and sellers. 
D) Equilibrium is achieved when demand for the product sold in the market equals the supply. 
A) There are many buyers but few sellers. 
B) There are many sellers but few buyers. 
C) There are many buyers and sellers. 
D) Equilibrium is achieved when demand for the product sold in the market equals the supply.

Question 11

All else equal,as the price of a product falls,the quantity supplied increases.

Accepted Answer

A) True 
 B)False

Question 12

Danielle Ocean pays for monthly pool maintenance for her home swimming pool.Last week the owner of the pool service informed Danielle that he will have to raise his monthly service fee because of increases in the price of pool chemicals.How is the market for pool maintenance services affected by this?

Accepted Answer

A) There is an increase in the supply of pool maintenance services. 
B) There is a decrease in the demand for pool maintenance services. 
C) There is a decrease in the quantity of pool maintenance services supplied. 
D) There is a decrease in the supply of pool maintenance services. 
A) There is an increase in the supply of pool maintenance services. 
B) There is a decrease in the demand for pool maintenance services. 
C) There is a decrease in the quantity of pool maintenance services supplied. 
D) There is a decrease in the supply of pool maintenance services.

Question 13

"The price of compact fluorescent light bulbs fell because of improvements in production technology.As a result,the demand for incandescent light bulbs decreased.This caused the price of incandescent light bulbs to fall; as the price of incandescent light bulbs fell the demand for incandescent light bulbs decreased even further." Evaluate this statement.

Accepted Answer

A) The statement is false.A decrease in the price of compact fluorescent light bulbs would decrease the demand for incandescent light bulbs, but a decrease in the price of incandescent light bulbs would not cause the demand for incandescent light bulbs to decrease. 
B) The statement is false because the demand for incandescent light bulbs would increase as the price of compact fluorescent light bulbs fell. 
C) The statement is false because compact fluorescent light bulbs producers would not reduce their prices as a result of improvements in technology; doing so would reduce their profits. 
D) The statement is false because it confuses the law of demand with the law of supply. 
A) The statement is false.A decrease in the price of compact fluorescent light bulbs would decrease the demand for incandescent light bulbs, but a decrease in the price of incandescent light bulbs would not cause the demand for incandescent light bulbs to decrease. 
B) The statement is false because the demand for incandescent light bulbs would increase as the price of compact fluorescent light bulbs fell. 
C) The statement is false because compact fluorescent light bulbs producers would not reduce their prices as a result of improvements in technology; doing so would reduce their profits. 
D) The statement is false because it confuses the law of demand with the law of supply.

Question 14

If the price of gasoline decreases,what will be the impact in the market for public transportation?

Accepted Answer

A) The demand curve for public transportation shifts to the right. 
B) The quantity of public transportation demanded increases. 
C) The demand curve for public transportation shifts to the left. 
D) The quantity of public transportation demanded decreases. 
A) The demand curve for public transportation shifts to the right. 
B) The quantity of public transportation demanded increases. 
C) The demand curve for public transportation shifts to the left. 
D) The quantity of public transportation demanded decreases.

Question 15

Figure 3-5
  
-Refer to Figure 3-5.At a price of $5

Accepted Answer

A) there would be a surplus of 4 units. 
B) there would be a scarcity of 4 units. 
C) there would be a shortage of 6 units. 
D) there would be a shortage of 4 units. 
A) there would be a surplus of 4 units. 
B) there would be a scarcity of 4 units. 
C) there would be a shortage of 6 units. 
D) there would be a shortage of 4 units.

Question 16

If in the market for bananas the supply curve has shifted to the right,then

Accepted Answer

A) the supply of bananas increased. 
B) the quantity of bananas supplied has increased. 
C) the supply of bananas has decreases. 
D) the quantity of bananas supplied has decreased. 
A) the supply of bananas increased. 
B) the quantity of bananas supplied has increased. 
C) the supply of bananas has decreases. 
D) the quantity of bananas supplied has decreased.

Question 17

In October 2005,the U.S.Fish and Wildlife Service banned the importation of beluga caviar,the most prized of caviars,from the Caspian Sea.What happened in the market for caviar in the U.S.?

Accepted Answer

A) The supply curve shifted to the left. 
B) The supply curve shifted to the right. 
C) The demand curve shifted to the right. 
D) The demand curve shifted to the left. 
A) The supply curve shifted to the left. 
B) The supply curve shifted to the right. 
C) The demand curve shifted to the right. 
D) The demand curve shifted to the left.

Question 18

Which of the following would cause a decrease in the supply of milk?

Accepted Answer

A) an increase in the price of cookies (assuming that milk and cookies are complements) 
B) a decrease in the price of milk 
C) an increase the price of a product that producers sell instead of milk 
D) an increase in the number of firms that produce milk 
A) an increase in the price of cookies (assuming that milk and cookies are complements) 
B) a decrease in the price of milk 
C) an increase the price of a product that producers sell instead of milk 
D) an increase in the number of firms that produce milk

Question 19

Which of the following would shift the supply curve for MP3 players to the left?

Accepted Answer

A) an increase in the price of an input used to produce MP3 players 
B) a decrease in consumer tastes for MP3 players 
C) an increase in the number of firms that produce MP3 players 
D) an increase in the productivity of the workers who produce MP3 players 
A) an increase in the price of an input used to produce MP3 players 
B) a decrease in consumer tastes for MP3 players 
C) an increase in the number of firms that produce MP3 players 
D) an increase in the productivity of the workers who produce MP3 players

Question 20

A change in which variable will change the market demand for a product?

Accepted Answer

A) the price of the product 
B) expected future prices 
C) the number of firms in the market 
D) the quantity supplied of the product 
A) the price of the product 
B) expected future prices 
C) the number of firms in the market 
D) the quantity supplied of the product

How does the increasing use of MP3 players affect the market for compact discs?

Prices of commercial airline tickets (assume that this is a normal good)have fallen in recent months.Over this same period,the price of jet fuel has risen and consumer incomes have fallen.Which of the following best explains the falling prices of airline tickets?

Market equilibrium occurs where the quantity supplied is equal to the quantity demanded.

All else equal,the desired increase in the supply of smart phones for Google would cause the equilibrium price of the smart phones to and the equilibrium quantity of the smart phones to .

Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln.Which of the following events would cause the price differences in these letters to get smaller?

Select the phrase that correctly completes the following statement."A decrease in the number of manufacturers caused a decrease in the supply of sailboats.As a result

Figure 3-4 -Refer to Figure 3-4.If the price is $15

Studies have shown that drinking one glass of red wine per day may help prevent heart disease.Assume this is true,and a fungal disease destroys a large portion of the grape harvest of California vineyards.In the market for red wine,these two developments would

Which of the following describes a characteristic of a perfectly competitive market?

All else equal,as the price of a product falls,the quantity supplied increases.

If the price of gasoline decreases,what will be the impact in the market for public transportation?

Figure 3-5 -Refer to Figure 3-5.At a price of $5

If in the market for bananas the supply curve has shifted to the right,then

In October 2005,the U.S.Fish and Wildlife Service banned the importation of beluga caviar,the most prized of caviars,from the Caspian Sea.What happened in the market for caviar in the U.S.?

Which of the following would cause a decrease in the supply of milk?

Which of the following would shift the supply curve for MP3 players to the left?

A change in which variable will change the market demand for a product?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Exam 3: Where Prices Come From: the Interaction of Demand and Supply

How does the increasing use of MP3 players affect the market for compact discs?

Prices of commercial airline tickets (assume that this is a normal good)have fallen in recent months.Over this same period,the price of jet fuel has risen and consumer incomes have fallen.Which of the following best explains the falling prices of airline tickets?

Market equilibrium occurs where the quantity supplied is equal to the quantity demanded.

All else equal,the desired increase in the supply of smart phones for Google would cause the equilibrium price of the smart phones to ________ and the equilibrium quantity of the smart phones to ________.

Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln.Which of the following events would cause the price differences in these letters to get smaller?

Select the phrase that correctly completes the following statement."A decrease in the number of manufacturers caused a decrease in the supply of sailboats.As a result

Figure 3-4 -Refer to Figure 3-4.If the price is $15

Studies have shown that drinking one glass of red wine per day may help prevent heart disease.Assume this is true,and a fungal disease destroys a large portion of the grape harvest of California vineyards.In the market for red wine,these two developments would

Which of the following describes a characteristic of a perfectly competitive market?

All else equal,as the price of a product falls,the quantity supplied increases.

If the price of gasoline decreases,what will be the impact in the market for public transportation?

Figure 3-5 -Refer to Figure 3-5.At a price of $5

If in the market for bananas the supply curve has shifted to the right,then

In October 2005,the U.S.Fish and Wildlife Service banned the importation of beluga caviar,the most prized of caviars,from the Caspian Sea.What happened in the market for caviar in the U.S.?

Which of the following would cause a decrease in the supply of milk?

Which of the following would shift the supply curve for MP3 players to the left?

A change in which variable will change the market demand for a product?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

All else equal,the desired increase in the supply of smart phones for Google would cause the equilibrium price of the smart phones to and the equilibrium quantity of the smart phones to .