Question 1

If Canadians suddenly develop a strong urge to escape the cold winter by taking vacations in Hawaii, the

Accepted Answer

A) price of a vacation in Hawaii rises and the quantity demanded of Hawaiian vacations decreases. 
B) price of a skiing vacation in the mountains rises. 
C) initial result of the change is a surplus of vacations in Hawaii, leading to a price rise. 
D) price of airline tickets falls as ticket agents make deals in response to this change. 
E) price of luggage will rise, because luggage and vacations are complements. 
A) price of a vacation in Hawaii rises and the quantity demanded of Hawaiian vacations decreases. 
B) price of a skiing vacation in the mountains rises. 
C) initial result of the change is a surplus of vacations in Hawaii, leading to a price rise. 
D) price of airline tickets falls as ticket agents make deals in response to this change. 
E) price of luggage will rise, because luggage and vacations are complements.

Question 2

If a producer can use its factors of production to produce either good A or good B, then a rise in the price of A

Accepted Answer

A) increases the supply of B. 
B) decreases the supply of A. 
C) increases the supply of A. 
D) decreases the supply of B. 
E) increases the demand for A. 
A) increases the supply of B. 
B) decreases the supply of A. 
C) increases the supply of A. 
D) decreases the supply of B. 
E) increases the demand for A.

Question 3

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. In addition, a premature frost destroys half the coffee trees and the supply of coffee is cut in half. The new equilibrium price is $________ and the new equilibrium quantity is ________ cups a day.

Accepted Answer

A) 1.10; 400 
B) 1.10; 1,600 
C) 1.10; 800 
D) 1.50; 800 
E) 1.50; 400. 
A) 1.10; 400 
B) 1.10; 1,600 
C) 1.10; 800 
D) 1.50; 800 
E) 1.50; 400.

Question 4

Complete the following sentence. A surplus

Accepted Answer

A) exists if the price is above the equilibrium price. 
B) is the amount by which the quantity demanded exceeds the quantity supplied. 
C) is the amount by which the quantity demanded exceeds the equilibrium quantity. 
D) is the amount by which the quantity supplied exceeds the equilibrium quantity. 
E) will lead to rising prices. 
A) exists if the price is above the equilibrium price. 
B) is the amount by which the quantity demanded exceeds the quantity supplied. 
C) is the amount by which the quantity demanded exceeds the equilibrium quantity. 
D) is the amount by which the quantity supplied exceeds the equilibrium quantity. 
E) will lead to rising prices.

Question 5

In April 2014, the money price of a litre of milk was $2.01 and the money price of a litre of gasoline was $1.30. The real price of a litre of gasoline in terms of milk was

Accepted Answer

A) $0.65. 
B) 0.65 litres of milk. 
C) 2.61 litres of milk. 
D) 1.54 litres of milk. 
E) $0.71. 
A) $0.65. 
B) 0.65 litres of milk. 
C) 2.61 litres of milk. 
D) 1.54 litres of milk. 
E) $0.71.

Question 6

The demand curve is P = 700 - 10QD. The supply curve is P = 400 + 5QS. At market equilibrium, the equilibrium quantity is ________ and the equilibrium price is ________.

Accepted Answer

A) 20; 500 
B) 5; 0.05 
C) 0.05; 5 
D) 500; 20 
E) 300; 15 
A) 20; 500 
B) 5; 0.05 
C) 0.05; 5 
D) 500; 20 
E) 300; 15

Question 7

Which one of the following would lead to an increase in the demand for hamburgers?

Accepted Answer

A) a new fad hamburger diet 
B) a decrease in population size 
C) a rise in the price of French fries, a complement of hamburgers 
D) a decrease in consumer income if hamburgers are a normal good 
E) a news report that hamburgers can cause skin diseases 
A) a new fad hamburger diet 
B) a decrease in population size 
C) a rise in the price of French fries, a complement of hamburgers 
D) a decrease in consumer income if hamburgers are a normal good 
E) a news report that hamburgers can cause skin diseases

Question 8

Some producers are chatting over a beer. Which one of the following quotations refers to a rightward shift of the supply curve?

Accepted Answer

A) "Wage increases have forced us to raise our prices." 
B) "Our new, sophisticated equipment will enable us to undercut our competitors." 
C) "Raw material prices have sky-rocketed; we will have to pass the cost on to our customers." 
D) "We anticipate a big increase in demand. Our product price should rise, so we are planning for an increase in output." 
E) "Competitors are leaving the industry." 
A) "Wage increases have forced us to raise our prices." 
B) "Our new, sophisticated equipment will enable us to undercut our competitors." 
C) "Raw material prices have sky-rocketed; we will have to pass the cost on to our customers." 
D) "We anticipate a big increase in demand. Our product price should rise, so we are planning for an increase in output." 
E) "Competitors are leaving the industry."

Question 9

The price of a good will tend to fall if

Accepted Answer

A) there is a surplus at the current price. 
B) the current price is below the equilibrium price. 
C) the quantity supplied exceeds the quantity demanded at the current price. 
D) Both A and C are true. 
E) None of the above are true. 
A) there is a surplus at the current price. 
B) the current price is below the equilibrium price. 
C) the quantity supplied exceeds the quantity demanded at the current price. 
D) Both A and C are true. 
E) None of the above are true.

Question 10

Consider the market for cell phones. Suppose the price of a cell phone falls. Explain the effect of this event on the quantity of cell phones demanded and on the demand for cell phones.

Accepted Answer

A) The quantity of cell phones demanded is unchanged and the demand for cell phones increases. 
B) The quantity of cell phones demanded decreases and the demand for cell phones is unchanged. 
C) The quantity of cell phones demanded increases and the demand for cell phones is unchanged. 
D) The quantity of cell phones demanded increases and the demand for cell phones also increases. 
E) The quantity of cell phones demanded is unchanged and the demand for cell phones decreases. 
A) The quantity of cell phones demanded is unchanged and the demand for cell phones increases. 
B) The quantity of cell phones demanded decreases and the demand for cell phones is unchanged. 
C) The quantity of cell phones demanded increases and the demand for cell phones is unchanged. 
D) The quantity of cell phones demanded increases and the demand for cell phones also increases. 
E) The quantity of cell phones demanded is unchanged and the demand for cell phones decreases.

Question 11

The fish stocks in the Atlantic fishing industry have decreased. As a result, we would expect

Accepted Answer

A) an increase in the demand for meat (e.g., beef)because meat is a complement of fish. 
B) a fall in the price of fish, leading to a decrease in the demand for meat, because meat and fish are substitutes. 
C) a fall in the price of fish, leading to an increase in the demand for meat, because meat and fish are substitutes. 
D) an increase in the demand for meat because meat is a substitute for fish. 
E) a rise in the price of fish, leading to a decrease in the demand for meat, because meat and fish are complements. 
A) an increase in the demand for meat (e.g., beef)because meat is a complement of fish. 
B) a fall in the price of fish, leading to a decrease in the demand for meat, because meat and fish are substitutes. 
C) a fall in the price of fish, leading to an increase in the demand for meat, because meat and fish are substitutes. 
D) an increase in the demand for meat because meat is a substitute for fish. 
E) a rise in the price of fish, leading to a decrease in the demand for meat, because meat and fish are complements.

Question 12

Some producers are chatting over a beer. Which one of the following quotations refers to a leftward shift of the supply curve?

Accepted Answer

A) "Wage increases have forced us to raise our prices." 
B) "Our new, sophisticated equipment will enable us to undercut our competitors." 
C) "Raw material prices have sky-rocketed; we will have to pass the cost on to our customers." 
D) "We anticipate a big increase in demand. Our product price should rise, so we are planning for an increase in output." 
E) Both A and C 
A) "Wage increases have forced us to raise our prices." 
B) "Our new, sophisticated equipment will enable us to undercut our competitors." 
C) "Raw material prices have sky-rocketed; we will have to pass the cost on to our customers." 
D) "We anticipate a big increase in demand. Our product price should rise, so we are planning for an increase in output." 
E) Both A and C

Question 13

The law of demand states that, other things remaining the same,

Accepted Answer

A) the higher the price of a good, the smaller is the quantity demanded. 
B) the higher the price of a good, the smaller is the quantity supplied. 
C) price and quantity supplied are positively related. 
D) as income increases, willingness to pay for the last unit increases. 
E) the higher the price of a good, the greater is the quantity demanded. 
A) the higher the price of a good, the smaller is the quantity demanded. 
B) the higher the price of a good, the smaller is the quantity supplied. 
C) price and quantity supplied are positively related. 
D) as income increases, willingness to pay for the last unit increases. 
E) the higher the price of a good, the greater is the quantity demanded.

Question 14

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 $10. 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 15

Bottled water and health club memberships are

Accepted Answer

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

Question 16

If Hamburger Helper is an inferior good, then, ceteris paribus, a decrease in income will lead to

Accepted Answer

A) a leftward shift of the demand curve for Hamburger Helper. 
B) a rightward shift of the demand curve for Hamburger Helper. 
C) a movement up along the demand curve for Hamburger Helper. 
D) a movement down along the demand curve for Hamburger Helper. 
E) an initial movement up and then down along the demand curve for Hamburger Helper. 
A) a leftward shift of the demand curve for Hamburger Helper. 
B) a rightward shift of the demand curve for Hamburger Helper. 
C) a movement up along the demand curve for Hamburger Helper. 
D) a movement down along the demand curve for Hamburger Helper. 
E) an initial movement up and then down along the demand curve for Hamburger Helper.

Question 17

Use the figure below to answer the following questions.
   
Figure 3.4.2
-Refer to Figure 3.4.2. When the price is $10 a unit,

Accepted Answer

A) consumers will buy only 100 units of output. 
B) consumers will buy 500 units of output. 
C) consumers will buy nothing. 
D) a shortage occurs. 
E) the surplus is zero. 
A) consumers will buy only 100 units of output. 
B) consumers will buy 500 units of output. 
C) consumers will buy nothing. 
D) a shortage occurs. 
E) the surplus is zero.

Question 18

An increase in the price of ground beef

Accepted Answer

A) increases the demand for chicken, a substitute for ground beef. 
B) increases the demand for hamburger buns, a complement of ground beef. 
C) increases the quantity demanded of ground beef. 
D) decreases the quantity demanded of ground beef. 
E) both A and D 
A) increases the demand for chicken, a substitute for ground beef. 
B) increases the demand for hamburger buns, a complement of ground beef. 
C) increases the quantity demanded of ground beef. 
D) decreases the quantity demanded of ground beef. 
E) both A and D

Question 19

Which of the following will definitely result in an increase in the equilibrium price?

Accepted Answer

A) an increase in both demand and supply 
B) a decrease in both demand and supply 
C) an increase in demand combined with a decrease in supply 
D) a decrease in demand combined with an increase in supply 
E) an increase in supply combined with a decrease in demand 
A) an increase in both demand and supply 
B) a decrease in both demand and supply 
C) an increase in demand combined with a decrease in supply 
D) a decrease in demand combined with an increase in supply 
E) an increase in supply combined with a decrease in demand

Question 20

Use the figure below to answer the following questions.
   
Figure 3.2.1
-Given Figure 3.2.1, under what condition are consumers willing to buy more than 9,000 apples per week?

Accepted Answer

A) if the price is above $1 
B) if the price is between $1 and $0.50 
C) if the price is below $0.50 
D) if the price is between $1 and $1.50 
E) if the price is $0.75 
A) if the price is above $1 
B) if the price is between $1 and $0.50 
C) if the price is below $0.50 
D) if the price is between $1 and $1.50 
E) if the price is $0.75

Exam 3: Demand and Supply

If Canadians suddenly develop a strong urge to escape the cold winter by taking vacations in Hawaii, the

If a producer can use its factors of production to produce either good A or good B, then a rise in the price of A

Complete the following sentence. A surplus

In April 2014, the money price of a litre of milk was $2.01 and the money price of a litre of gasoline was $1.30. The real price of a litre of gasoline in terms of milk was

The demand curve is P = 700 - 10QD. The supply curve is P = 400 + 5QS. At market equilibrium, the equilibrium quantity is ________ and the equilibrium price is ________.

Which one of the following would lead to an increase in the demand for hamburgers?

Some producers are chatting over a beer. Which one of the following quotations refers to a rightward shift of the supply curve?

The price of a good will tend to fall if

Consider the market for cell phones. Suppose the price of a cell phone falls. Explain the effect of this event on the quantity of cell phones demanded and on the demand for cell phones.

The fish stocks in the Atlantic fishing industry have decreased. As a result, we would expect

Some producers are chatting over a beer. Which one of the following quotations refers to a leftward shift of the supply curve?

The law of demand states that, other things remaining the same,

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 $10. The market has ________ leading to ________.

Bottled water and health club memberships are

If Hamburger Helper is an inferior good, then, ceteris paribus, a decrease in income will lead to

Use the figure below to answer the following questions. Figure 3.4.2 -Refer to Figure 3.4.2. When the price is $10 a unit,

An increase in the price of ground beef

Which of the following will definitely result in an increase in the equilibrium price?

Use the figure below to answer the following questions. Figure 3.2.1 -Given Figure 3.2.1, under what condition are consumers willing to buy more than 9,000 apples per week?

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

The demand curve is P = 700 - 10QD. The supply curve is P = 400 + 5QS. At market equilibrium, the equilibrium quantity is and the equilibrium price 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 $10. The market has leading to .