Question 1

If demand decreases and supply increases, then the

Accepted Answer

A) equilibrium quantity increases, but the effect on the equilibrium price is unknown. 
B) equilibrium quantity decreases, but the effect on the equilibrium price is unknown. 
C) equilibrium price falls, but the effect on the equilibrium quantity is unknown. 
D) equilibrium price rises, but the effect on the equilibrium quantity is unknown. 
E) effect on both equilibrium price and quantity is unknown. 
A) equilibrium quantity increases, but the effect on the equilibrium price is unknown. 
B) equilibrium quantity decreases, but the effect on the equilibrium price is unknown. 
C) equilibrium price falls, but the effect on the equilibrium quantity is unknown. 
D) equilibrium price rises, but the effect on the equilibrium quantity is unknown. 
E) effect on both equilibrium price and quantity is unknown. C

Question 2

The fact that a fall in the price of a good results in a decrease in the quantity of the good supplied illustrates

Accepted Answer

A) the law of supply. 
B) the law of demand. 
C) a change in supply. 
D) the nature of an inferior good. 
E) technological improvement. 
A) the law of supply. 
B) the law of demand. 
C) a change in supply. 
D) the nature of an inferior good. 
E) technological improvement. A

Question 3

Some sales managers are talking shop. Which one of the following quotations does not refer to a rightward shift of the demand curve?

Accepted Answer

A) "Since our competitors raised their prices, our sales have doubled." 
B) "It has been an unusually harsh winter; our sales of wool scarves are up from last year." 
C) "We decided to cut our prices, and the increase in our sales has been remarkable." 
D) "The Green movement has sparked an increase in our sales of biodegradable products." 
E) "People are expecting a harsh winter next year, so the sales of our winter coats have increased." 
A) "Since our competitors raised their prices, our sales have doubled." 
B) "It has been an unusually harsh winter; our sales of wool scarves are up from last year." 
C) "We decided to cut our prices, and the increase in our sales has been remarkable." 
D) "The Green movement has sparked an increase in our sales of biodegradable products." 
E) "People are expecting a harsh winter next year, so the sales of our winter coats have increased." C

Question 4

"As fewer people buy computers, the demand for Internet service will decrease and the price of Internet service will increase. The rise in the price of Internet service will increase the supply of Internet service." This statement is ________ because ________.

Accepted Answer

A) false; the decrease in the demand for Internet service creates a surplus and to eliminate the surplus, supply increases 
B) true; when the demand for Internet service increases, the supply of Internet service increases so that the price of Internet service does not increase 
C) true, when the demand for Internet service increases, the supply of Internet service increases too so that no surplus occurs 
D) true; the increase in the price of Internet service increases the supply of Internet service to eliminate the shortage 
E) false; a decrease in demand for Internet service does not increase the price of Internet service and an increase in the price of Internet service does not increase the supply of Internet service 
A) false; the decrease in the demand for Internet service creates a surplus and to eliminate the surplus, supply increases 
B) true; when the demand for Internet service increases, the supply of Internet service increases so that the price of Internet service does not increase 
C) true, when the demand for Internet service increases, the supply of Internet service increases too so that no surplus occurs 
D) true; the increase in the price of Internet service increases the supply of Internet service to eliminate the shortage 
E) false; a decrease in demand for Internet service does not increase the price of Internet service and an increase in the price of Internet service does not increase the supply of Internet service

Question 5

Which one of the following would not shift the supply curve of good X to the right?

Accepted Answer

A) a fall in the price of the factors of production used in producing X 
B) an improvement in technology used in the production of X 
C) a rise in the price of X 
D) an increase in the price of Y, a complement in production of X 
E) a fall in the price of Y, a substitute in production of X 
A) a fall in the price of the factors of production used in producing X 
B) an improvement in technology used in the production of X 
C) a rise in the price of X 
D) an increase in the price of Y, a complement in production of X 
E) a fall in the price of Y, a substitute in production of X

Question 6

Use the figure below to answer the following questions.
Table 3.5.2
Demand and Supply Schedules for Cups of Coffee each day at CoolU
  
-Refer to Table 3.5.2. Professor Hyper publishes a new study, showing that coffee raises the test performance of students. Students double their demand for coffee. This change would be represented as a

Accepted Answer

A) leftward shift of the demand curve. 
B) rightward shift of the demand curve. 
C) leftward shift of the supply curve. 
D) rightward shift of the supply curve. 
E) movement up along the demand curve. 
A) leftward shift of the demand curve. 
B) rightward shift of the demand curve. 
C) leftward shift of the supply curve. 
D) rightward shift of the supply curve. 
E) movement up along the demand curve.

Question 7

The law of supply tells us that other things remaining the same, as the

Accepted Answer

A) price of gasoline falls, the quantity of gasoline supplied decreases. 
B) price of gasoline rises, the quantity of gasoline supplied decreases. 
C) supply of gasoline increases, the price of gasoline falls. 
D) cost of producing gasoline falls, the supply of gasoline will increase. 
E) cost of producing gasoline increases, the price of gasoline rises. 
A) price of gasoline falls, the quantity of gasoline supplied decreases. 
B) price of gasoline rises, the quantity of gasoline supplied decreases. 
C) supply of gasoline increases, the price of gasoline falls. 
D) cost of producing gasoline falls, the supply of gasoline will increase. 
E) cost of producing gasoline increases, the price of gasoline rises.

Question 8

Which market is an example of a market for services?

Accepted Answer

A) orange market 
B) tennis lessons market 
C) manufactured input market 
D) energy market 
E) labour market 
A) orange market 
B) tennis lessons market 
C) manufactured input market 
D) energy market 
E) labour market

Question 9

Use the figure below to answer the following questions.
   
Figure 3.4.1
-At price P₃ in Figure 3.4.1,

Accepted Answer

A) this market is in equilibrium. 
B) there is a shortage in the amount of Q5 - Q₁. 
C) there is a tendency for the price to rise. 
D) equilibrium quantity is Q5. 
E) there is a surplus in the amount of Q5 - Q₁. 
A) this market is in equilibrium. 
B) there is a shortage in the amount of Q5 - Q₁. 
C) there is a tendency for the price to rise. 
D) equilibrium quantity is Q5. 
E) there is a surplus in the amount of Q5 - Q₁.

Question 10

Use the table below to answer the following questions.
Table 3.5.1
The Market for Car-Seat Heaters
  
-Refer to Table 3.5.1. Suppose a problem develops with car-seat heaters - they malfunction and occasionally cause serious burns. As a result, demand decreases by 100 heaters at each price. Simultaneously, the cost of production rises, and supply decreases by 100 heaters at each price. The new equilibrium price is $________ and the new equilibrium quantity is ________ heaters per month.

Accepted Answer

A) 70; 450 
B) 70; 350 
C) 50; 450 
D) 50; 350 
E) 60; 300 
A) 70; 450 
B) 70; 350 
C) 50; 450 
D) 50; 350 
E) 60; 300

Question 11

Use the information below to answer the following questions.
Fact 3.5.1
The market for coffee is initially in equilibrium. Pepsi is a substitute for coffee; cream is a complement of coffee. Consider the market for coffee. Assume that all ceteris paribus assumptions continue to hold except for the event listed.
-Refer to Fact 3.5.1. A technological improvement lowers the cost of producing coffee. At the same time, preferences for coffee decrease. The equilibrium quantity of coffee

Accepted Answer

A) increases. 
B) decreases. 
C) remains the same. 
D) increases or decreases depending on whether the price of coffee falls or rises. 
E) increases, decreases, or remains the same depending on the relative shifts of the demand and supply curves. 
A) increases. 
B) decreases. 
C) remains the same. 
D) increases or decreases depending on whether the price of coffee falls or rises. 
E) increases, decreases, or remains the same depending on the relative shifts of the demand and supply curves.

Question 12

Use the table below to answer the following questions.
Table 3.1.1
  
-Refer to Table 3.1.1. In 2014, the relative price of coffee in terms of cola is

Accepted Answer

A) 1.25. 
B) 1.00. 
C) 0.67. 
D) 1.56. 
E) unknown without more information. 
A) 1.25. 
B) 1.00. 
C) 0.67. 
D) 1.56. 
E) unknown without more information.

Question 13

Use the table below to answer the following questions.
Table 3.5.3
Demand and supply schedules for designer sport t-shirts at CoolU
  
-Refer to Table 3.5.3. Suppose that the price of a designer sport t-shirt is $6. The market has ________ leading to ________.

Accepted Answer

A) an equilibrium; no change in the price 
B) a shortage; a fall in the price 
C) a shortage; a rise in the price 
D) a surplus; a fall in the price 
E) a surplus; a rise in the price 
A) an equilibrium; no change in the price 
B) a shortage; a fall in the price 
C) a shortage; a rise in the price 
D) a surplus; a fall in the price 
E) a surplus; a rise in the price

Question 14

Use the figure below to answer the following questions.
   
Figure 3.4.1
-At price P₂ in Figure 3.4.1, which one of the following is not true?

Accepted Answer

A) This market is in equilibrium. 
B) The quantity demanded is equal to the quantity supplied. 
C) The quantity demanded is Q₁. 
D) There is no surplus. 
E) The quantity supplied is Q₃. 
A) This market is in equilibrium. 
B) The quantity demanded is equal to the quantity supplied. 
C) The quantity demanded is Q₁. 
D) There is no surplus. 
E) The quantity supplied is Q₃.

Question 15

The following events occur one at a time: I. The price of crude oil rises.
II. The price of a car rises.
III. All speed limits on highways are abolished.
IV. Robots cut car production costs.
The quantity of gasoline supplied

Accepted Answer

A) increases when all speed limits on highways are abolished. 
B) increases when the price of crude oil rises. 
C) decreases when robots cut car production costs. 
D) increases when the price of a car rises. 
E) decreases when the price of crude oil rises. 
A) increases when all speed limits on highways are abolished. 
B) increases when the price of crude oil rises. 
C) decreases when robots cut car production costs. 
D) increases when the price of a car rises. 
E) decreases when the price of crude oil rises.

Question 16

When the supply of good A decreases,

Accepted Answer

A) the equilibrium price and the equilibrium quantity will increase. 
B) the equilibrium price will increase, but the equilibrium quantity will decrease. 
C) the equilibrium price and the equilibrium quantity will decrease. 
D) the equilibrium price will decrease, but the equilibrium quantity will increase. 
E) a surplus will result. 
A) the equilibrium price and the equilibrium quantity will increase. 
B) the equilibrium price will increase, but the equilibrium quantity will decrease. 
C) the equilibrium price and the equilibrium quantity will decrease. 
D) the equilibrium price will decrease, but the equilibrium quantity will increase. 
E) a surplus will result.

Question 17

The cost of producing aspirin increases at the same time as doctors discover that taking one aspirin per day reduces the risk of heart attacks. As a result, the

Accepted Answer

A) supply of aspirin decreases and the demand for aspirin increases. 
B) supply of aspirin decreases by more than the demand for aspirin increases. 
C) supply of aspirin increases and the demand for aspirin decreases. 
D) equilibrium quantity of aspirin increases and the equilibrium price of aspirin rises. 
E) equilibrium quantity of aspirin decreases and the equilibrium price of aspirin rises. 
A) supply of aspirin decreases and the demand for aspirin increases. 
B) supply of aspirin decreases by more than the demand for aspirin increases. 
C) supply of aspirin increases and the demand for aspirin decreases. 
D) equilibrium quantity of aspirin increases and the equilibrium price of aspirin rises. 
E) equilibrium quantity of aspirin decreases and the equilibrium price of aspirin rises.

Question 18

Use the figure below to answer the following questions.
   
Figure 3.4.1
-At price P₁ in Figure 3.4.1

Accepted Answer

A) there is a surplus in the amount of Q₄ - Q₂. 
B) there is a shortage in the amount of Q₄ - Q₂. 
C) there is a tendency for the price to fall. 
D) the equilibrium quantity is Q₂. 
E) the equilibrium quantity is Q₄. 
A) there is a surplus in the amount of Q₄ - Q₂. 
B) there is a shortage in the amount of Q₄ - Q₂. 
C) there is a tendency for the price to fall. 
D) the equilibrium quantity is Q₂. 
E) the equilibrium quantity is Q₄.

Question 19

The y- axis intercept of the demand curve is 60 and the slope is - 8. The equation of the demand curve is

Accepted Answer

A) P = 8 - 60QD. 
B) P = 60 - 8QD. 
C) QD = 60 - 8P. 
D) P = 60 + 8QD. 
E) QD = 60 + 8P. 
A) P = 8 - 60QD. 
B) P = 60 - 8QD. 
C) QD = 60 - 8P. 
D) P = 60 + 8QD. 
E) QD = 60 + 8P.

Question 20

Consider a graph that shows an upward-sloping supply curve and a downward-sloping demand curve. The equilibrium price and equilibrium quantity are found at the

Accepted Answer

A) horizontal intercept of the demand curve. 
B) vertical intercept of the supply curve. 
C) lowest possible price. 
D) point at which demand equals supply. 
E) point at which the quantity demanded equals the quantity supplied. 
A) horizontal intercept of the demand curve. 
B) vertical intercept of the supply curve. 
C) lowest possible price. 
D) point at which demand equals supply. 
E) point at which the quantity demanded equals the quantity supplied.

Exam 3: Demand and Supply

If demand decreases and supply increases, then the

The fact that a fall in the price of a good results in a decrease in the quantity of the good supplied illustrates

Some sales managers are talking shop. Which one of the following quotations does not refer to a rightward shift of the demand curve?

"As fewer people buy computers, the demand for Internet service will decrease and the price of Internet service will increase. The rise in the price of Internet service will increase the supply of Internet service." This statement is ________ because ________.

Which one of the following would not shift the supply curve of good X to the right?

The law of supply tells us that other things remaining the same, as the

Which market is an example of a market for services?

Use the figure below to answer the following questions. Figure 3.4.1 -At price P₃ in Figure 3.4.1,

Use the table below to answer the following questions. Table 3.1.1 -Refer to Table 3.1.1. In 2014, the relative price of coffee in terms of cola is

Use the table below to answer the following questions. Table 3.5.3 Demand and supply schedules for designer sport t-shirts at CoolU -Refer to Table 3.5.3. Suppose that the price of a designer sport t-shirt is $6. The market has ________ leading to ________.

Use the figure below to answer the following questions. Figure 3.4.1 -At price P₂ in Figure 3.4.1, which one of the following is not true?

The following events occur one at a time: I. The price of crude oil rises. II. The price of a car rises. III. All speed limits on highways are abolished. IV. Robots cut car production costs. The quantity of gasoline supplied

When the supply of good A decreases,

The cost of producing aspirin increases at the same time as doctors discover that taking one aspirin per day reduces the risk of heart attacks. As a result, the

Use the figure below to answer the following questions. Figure 3.4.1 -At price P₁ in Figure 3.4.1

The y- axis intercept of the demand curve is 60 and the slope is - 8. The equation of the demand curve is

Consider a graph that shows an upward-sloping supply curve and a downward-sloping demand curve. The equilibrium price and equilibrium quantity are found at the

What Is Economics

The Economic Problem

Elasticity

Efficiency and Equity

Governments Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

Macro Only: International Trade Policy

Filters

"As fewer people buy computers, the demand for Internet service will decrease and the price of Internet service will increase. The rise in the price of Internet service will increase the supply of Internet service." This statement is because .

Use the table below to answer the following questions. Table 3.5.3 Demand and supply schedules for designer sport t-shirts at CoolU -Refer to Table 3.5.3. Suppose that the price of a designer sport t-shirt is $6. The market has leading to .