Question 1

Use the table below to answer the following questions.
Table 3.1.1
  
-Refer to Table 3.1.1. In 2012, the relative price of coffee in terms of tea is

Accepted Answer

A) 1.25. 
B) 1.10. 
C) 1.00. 
D) 0.88. 
E) 1.14. 
A) 1.25. 
B) 1.10. 
C) 1.00. 
D) 0.88. 
E) 1.14.

Question 2

The supply curve of a good slopes upward to the right because of

Accepted Answer

A) technological improvements over time. 
B) the law of supply. 
C) the law of demand. 
D) the existence of substitutes in production. 
E) the fact that prices tend to rise over time. 
A) technological improvements over time. 
B) the law of supply. 
C) the law of demand. 
D) the existence of substitutes in production. 
E) the fact that prices tend to rise over time.

Question 3

If a factor of production can be used to produce either good A or good B, then A and B are

Accepted Answer

A) substitutes in production. 
B) complements in production. 
C) substitutes. 
D) complements. 
E) normal goods. 
A) substitutes in production. 
B) complements in production. 
C) substitutes. 
D) complements. 
E) normal goods.

Question 4

If A and B are substitutes in production and the price of A falls, the supply of B

Accepted Answer

A) increases, and the price of B rises. 
B) increases, and the price of B falls. 
C) decreases, and the price of B falls. 
D) decreases, and the price of B rises. 
E) does not change. 
A) increases, and the price of B rises. 
B) increases, and the price of B falls. 
C) decreases, and the price of B falls. 
D) decreases, and the price of B rises. 
E) does not change.

Question 5

If A and B are substitutes and the cost of a factor of production used in the production of A increases, then the price of

Accepted Answer

A) B falls, but the price of A rises. 
B) B rises, but the price of A falls. 
C) A falls, and the price of B will stay unchanged. 
D) A and B fall. 
E) A and B rise. 
A) B falls, but the price of A rises. 
B) B rises, but the price of A falls. 
C) A falls, and the price of B will stay unchanged. 
D) A and B fall. 
E) A and B rise.

Question 6

All grapefruit juice producers have decided to blend tangerine juice with grapefruit juice. This blend results in a higher cost of production, but studies show that consumers prefer the taste of the blend to straight grapefruit juice. What will happen to the equilibrium price and quantity of grapefruit juice?

Accepted Answer

A) The equilibrium price falls and the equilibrium quantity increases. 
B) The equilibrium quantity increases but the effect on the equilibrium price is uncertain. 
C) The equilibrium price rises but the effect on the equilibrium quantity is uncertain. 
D) The equilibrium price rises and the equilibrium quantity increases. 
E) The equilibrium price rises and the equilibrium quantity remains unchanged. 
A) The equilibrium price falls and the equilibrium quantity increases. 
B) The equilibrium quantity increases but the effect on the equilibrium price is uncertain. 
C) The equilibrium price rises but the effect on the equilibrium quantity is uncertain. 
D) The equilibrium price rises and the equilibrium quantity increases. 
E) The equilibrium price rises and the equilibrium quantity remains unchanged.

Question 7

Use the figure below to answer the following questions.
 
Figure 3.5.1
-Initially, the demand curve for good A is D₂ in Figure 3.5.1. Suppose good B is a substitute for good A. If the price of B falls

Accepted Answer

A) the price of A will rise. 
B) there will be a surplus of good A at P₂. 
C) the demand curve for good A will shift from D₂ to D₃. 
D) the equilibrium quantity of good A will increase. 
E) all of the above are true except B. 
A) the price of A will rise. 
B) there will be a surplus of good A at P₂. 
C) the demand curve for good A will shift from D₂ to D₃. 
D) the equilibrium quantity of good A will increase. 
E) all of the above are true except B.

Question 8

Suppose we observe a rise in the price of good A and a decrease in the quantity of good A bought and sold. Which one of the following is a likely explanation?

Accepted Answer

A) The law of supply is violated. 
B) The demand for A decreased. 
C) The demand for A increased. 
D) The supply of A increased. 
E) The supply of A decreased. 
A) The law of supply is violated. 
B) The demand for A decreased. 
C) The demand for A increased. 
D) The supply of A increased. 
E) The supply of A decreased.

Question 9

Table 3.4.2
  
-Refer to Table 3.4.2. The table shows the demand and supply schedules for shampoo. If the price is $6 a bottle, there is a ________ of shampoo. So the price of a bottle of shampoo ________, the quantity demanded ________ and the quantity supplied ________. The market moves to equilibrium.

Accepted Answer

A) shortage; rises; decreases; increases 
B) shortage; falls; decreases; increases 
C) surplus; rises; increases; decreases 
D) surplus; falls; increases; decreases 
E) shortage; rises; increases; decreases 
A) shortage; rises; decreases; increases 
B) shortage; falls; decreases; increases 
C) surplus; rises; increases; decreases 
D) surplus; falls; increases; decreases 
E) shortage; rises; increases; decreases

Question 10

Crude oil is a very important factor of production used in the production of gasoline. If the price of crude oil rises, we would expect the

Accepted Answer

A) price of gasoline to rise due to an increase in demand. 
B) price of gasoline to fall due to an increase in demand. 
C) price of gasoline to rise due to a decrease in supply. 
D) equilibrium quantity of gasoline to fall due to an increase in supply. 
E) equilibrium quantity of gasoline to rise due to an increase in demand. 
A) price of gasoline to rise due to an increase in demand. 
B) price of gasoline to fall due to an increase in demand. 
C) price of gasoline to rise due to a decrease in supply. 
D) equilibrium quantity of gasoline to fall due to an increase in supply. 
E) equilibrium quantity of gasoline to rise due to an increase in demand.

Question 11

If goods X and Y are substitutes in production, then a rise in the price of good X

Accepted Answer

A) increases the demand for good Y. 
B) decreases the demand for good Y. 
C) increases the supply of good Y. 
D) decreases the supply of good Y. 
E) might change the supply of Y; it depends on whether X and Y are also substitutes. 
A) increases the demand for good Y. 
B) decreases the demand for good Y. 
C) increases the supply of good Y. 
D) decreases the supply of good Y. 
E) might change the supply of Y; it depends on whether X and Y are also substitutes.

Question 12

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 and the quantity of coffee demanded at each price doubles. The new equilibrium price is $________, and the new equilibrium quantity is ________ cups a day.

Accepted Answer

A) 1.20; 1,000 
B) 1.30; 1,200 
C) 1.50; 1,600 
D) 1.40; 1,400 
E) 2.20; 800 
A) 1.20; 1,000 
B) 1.30; 1,200 
C) 1.50; 1,600 
D) 1.40; 1,400 
E) 2.20; 800

Question 13

The Government of Canada promises to produce more defence goods without any decrease in the production of other goods. This promise is valid

Accepted Answer

A) if Canada is producing at a point outside its PPF. 
B) if Canada is producing at a point on its PPF. 
C) if Canada is producing at a point inside its PPF. 
D) only if the PPF shifts rightward. 
E) only if technology advances or capital increases. 
A) if Canada is producing at a point outside its PPF. 
B) if Canada is producing at a point on its PPF. 
C) if Canada is producing at a point inside its PPF. 
D) only if the PPF shifts rightward. 
E) only if technology advances or capital increases.

Question 14

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 cola in terms of tea is

Accepted Answer

A) 1.00. 
B) 1.20. 
C) 0.83. 
D) 1.25. 
E) unknown without more information. 
A) 1.00. 
B) 1.20. 
C) 0.83. 
D) 1.25. 
E) unknown without more information.

Question 15

If the market for Twinkies is in equilibrium, then

Accepted Answer

A) Twinkies must be a normal good. 
B) producers would like to sell less at the current price. 
C) consumers would like to buy less at the current price. 
D) the quantity supplied equals the quantity demanded. 
E) the supply of Twinkies will never increase and the demand for Twinkies will never decrease. 
A) Twinkies must be a normal good. 
B) producers would like to sell less at the current price. 
C) consumers would like to buy less at the current price. 
D) the quantity supplied equals the quantity demanded. 
E) the supply of Twinkies will never increase and the demand for Twinkies will never decrease.

Question 16

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. The equilibrium price is $________ and the equilibrium quantity is ________ cups a day.

Accepted Answer

A) 1.30; 1200 
B) 0.90; 1000 
C) 1.10; 900 
D) 1.10; 800 
E) 1.00; 800 
A) 1.30; 1200 
B) 0.90; 1000 
C) 1.10; 900 
D) 1.10; 800 
E) 1.00; 800

Question 17

All shredded wheat producers have decided to add a new ingredient, the "crunch enhancer" to shredded wheat. Crunch enhancer keeps cereals crisper longer in milk and, as a result, consumers decide they like shredded wheat more than before. What happens to the supply and demand curves for shredded wheat now that it costs more to produce and consumers like it better?

Accepted Answer

A) The supply and demand curves both shift rightward. 
B) The supply curve shifts rightward and the demand curve remains unchanged. 
C) The supply curve shifts leftward and the demand curve shifts rightward. 
D) The supply curve shifts leftward and the demand curve remains unchanged. 
E) Neither curve changes but a movement occurs up along the demand curve and a movement occurs up along the supply curve. 
A) The supply and demand curves both shift rightward. 
B) The supply curve shifts rightward and the demand curve remains unchanged. 
C) The supply curve shifts leftward and the demand curve shifts rightward. 
D) The supply curve shifts leftward and the demand curve remains unchanged. 
E) Neither curve changes but a movement occurs up along the demand curve and a movement occurs up along the supply curve.

Question 18

Use the figure below to answer the following questions.
   
Figure 3.5.2
Original equilibrium at 1.
-Refer to Figure 3.5.2, which represents the market for beans. If the price of peas, a substitute for beans rises, what is the new beans equilibrium, ceteris paribus?

Accepted Answer

A) 8 
B) 3 
C) 9 
D) 5 
E) 6 
A) 8 
B) 3 
C) 9 
D) 5 
E) 6

Question 19

The opportunity cost of a hot dog in terms of hamburgers is

Accepted Answer

A) the ratio of the slope of the supply curve of hot dogs to the slope of the supply curve of hamburgers. 
B) the ratio of the money price of a hot dog to the money price of a hamburger. 
C) the ratio of the slope of the demand curve for hot dogs to the slope of the demand curve for hamburgers. 
D) the money price of a hot dog minus the money price of a hamburger. 
E) smaller in the winter than in the summer. 
A) the ratio of the slope of the supply curve of hot dogs to the slope of the supply curve of hamburgers. 
B) the ratio of the money price of a hot dog to the money price of a hamburger. 
C) the ratio of the slope of the demand curve for hot dogs to the slope of the demand curve for hamburgers. 
D) the money price of a hot dog minus the money price of a hamburger. 
E) smaller in the winter than in the summer.

Question 20

An increase in income

Accepted Answer

A) increases the demand for turnips if a turnip is an inferior good. 
B) increases the demand for turnips if a turnip is a normal good. 
C) increases the supply of turnips. 
D) decreases the demand for turnips if turnips have a very low price. 
E) decreases the supply of turnips. 
A) increases the demand for turnips if a turnip is an inferior good. 
B) increases the demand for turnips if a turnip is a normal good. 
C) increases the supply of turnips. 
D) decreases the demand for turnips if turnips have a very low price. 
E) decreases the supply of turnips.

Exam 3: Demand and Supply

Use the table below to answer the following questions. Table 3.1.1 -Refer to Table 3.1.1. In 2012, the relative price of coffee in terms of tea is

The supply curve of a good slopes upward to the right because of

If a factor of production can be used to produce either good A or good B, then A and B are

If A and B are substitutes in production and the price of A falls, the supply of B

If A and B are substitutes and the cost of a factor of production used in the production of A increases, then the price of

Use the figure below to answer the following questions. Figure 3.5.1 -Initially, the demand curve for good A is D₂ in Figure 3.5.1. Suppose good B is a substitute for good A. If the price of B falls

Suppose we observe a rise in the price of good A and a decrease in the quantity of good A bought and sold. Which one of the following is a likely explanation?

Crude oil is a very important factor of production used in the production of gasoline. If the price of crude oil rises, we would expect the

If goods X and Y are substitutes in production, then a rise in the price of good X

The Government of Canada promises to produce more defence goods without any decrease in the production of other goods. This promise is valid

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 cola in terms of tea is

If the market for Twinkies is in equilibrium, then

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. The equilibrium price is $________ and the equilibrium quantity is ________ cups a day.

Use the figure below to answer the following questions. Figure 3.5.2 Original equilibrium at 1. -Refer to Figure 3.5.2, which represents the market for beans. If the price of peas, a substitute for beans rises, what is the new beans equilibrium, ceteris paribus?

The opportunity cost of a hot dog in terms of hamburgers is

An increase in income

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

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. The equilibrium price is $ and the equilibrium quantity is cups a day.