Question 1

Which one of the following correctly describes how price adjustment eliminates a surplus?

Accepted Answer

A) As the price rises, the quantity demanded decreases and the quantity supplied increases. 
B) As the price rises, the quantity demanded increases and the quantity supplied decreases. 
C) As the price falls, the quantity demanded decreases and the quantity supplied increases. 
D) As the price falls, the quantity demanded increases and the quantity supplied decreases. 
E) As the price falls, the demand for substitutes decreases, which eliminates the surplus. 
A) As the price rises, the quantity demanded decreases and the quantity supplied increases. 
B) As the price rises, the quantity demanded increases and the quantity supplied decreases. 
C) As the price falls, the quantity demanded decreases and the quantity supplied increases. 
D) As the price falls, the quantity demanded increases and the quantity supplied decreases. 
E) As the price falls, the demand for substitutes decreases, which eliminates the surplus.

Question 2

The substitution effect influences food purchases because when the price of a certain food rises, other things remaining the same, ________. Consumers ________.

Accepted Answer

A) the relative price of all food rises; purchase less of the food that has experienced the price increase and more of all other foods 
B) its relative price does not change because most likely the prices of all other foods will also rise; continue to purchase all foods, but in smaller quantities 
C) its relative price rises; purchase more of a different food that is less expensive 
D) the relative price of all food rises; continue to purchase all foods, but in smaller quantities 
E) its relative price rises; purchase less of all foods 
A) the relative price of all food rises; purchase less of the food that has experienced the price increase and more of all other foods 
B) its relative price does not change because most likely the prices of all other foods will also rise; continue to purchase all foods, but in smaller quantities 
C) its relative price rises; purchase more of a different food that is less expensive 
D) the relative price of all food rises; continue to purchase all foods, but in smaller quantities 
E) its relative price rises; purchase less of all foods

Question 3

The price of good X falls and the demand for good Y decreases. We can conclude that

Accepted Answer

A) X and Y are complements. 
B) X and Y are independent of each other. 
C) X is an inferior good. 
D) X is a normal good. 
E) X and Y are substitutes. 
A) X and Y are complements. 
B) X and Y are independent of each other. 
C) X is an inferior good. 
D) X is a normal good. 
E) X and Y are substitutes.

Question 4

Tom and Don have different opportunity costs of producing two goods. If Tom and Don specialize in producing the goods in which each has a comparative advantage and they exchange goods, then

Accepted Answer

A) they each lose because they are no longer able to produce and consume both goods. 
B) one of them will gain and one of them will lose. 
C) each will gain because each can consume a combination of goods that is outside his production possibility frontier. 
D) each will produce a combination of goods that is outside his production possibilities frontier. 
E) each will produce a combination of goods that is inside his production possibilities frontier. 
A) they each lose because they are no longer able to produce and consume both goods. 
B) one of them will gain and one of them will lose. 
C) each will gain because each can consume a combination of goods that is outside his production possibility frontier. 
D) each will produce a combination of goods that is outside his production possibilities frontier. 
E) each will produce a combination of goods that is inside his production possibilities frontier.

Question 5

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 beer. If the price of pizza, a complement of beer rises, what is the new beer 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 6

Use the table below to answer the following questions.
Table 3.4.1
  
-Refer to Table 3.4.1. At a price of $3 a unit

Accepted Answer

A) the market is in equilibrium. 
B) there is a 180-unit surplus. 
C) there is a 180-unit shortage. 
D) there is a tendency for the price to rise. 
E) C and D 
A) the market is in equilibrium. 
B) there is a 180-unit surplus. 
C) there is a 180-unit shortage. 
D) there is a tendency for the price to rise. 
E) C and D

Question 7

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. The equilibrium price is $________ and the equilibrium quantity is ________ t-shirts per month.

Accepted Answer

A) 6; 200 
B) 7; 220 
C) 8; 180 
D) 8; 220 
E) 8; 200 
A) 6; 200 
B) 7; 220 
C) 8; 180 
D) 8; 220 
E) 8; 200

Question 8

Which one of the following will definitely lower 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) a decrease in supply combined with an increase 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) a decrease in supply combined with an increase in demand

Question 9

If both demand and supply increase, then the equilibrium price

Accepted Answer

A) and equilibrium quantity increases. 
B) falls but the equilibrium quantity increases. 
C) could either rise or fall, but the equilibrium quantity increases. 
D) rises, and the equilibrium quantity could either increase or decrease. 
E) falls, and the equilibrium quantity could either increase or decrease. 
A) and equilibrium quantity increases. 
B) falls but the equilibrium quantity increases. 
C) could either rise or fall, but the equilibrium quantity increases. 
D) rises, and the equilibrium quantity could either increase or decrease. 
E) falls, and the equilibrium quantity could either increase or decrease.

Question 10

"As domestic car prices have increased, consumers have found foreign cars to be a better bargain. Consequently, domestic car sales have fallen and foreign car sales have risen." Based on this information alone, there has been a

Accepted Answer

A) shift in the demand curves for both domestic and foreign cars. 
B) shift in the supply curves for both domestic and foreign cars. 
C) movement along the demand curves for both domestic and foreign cars. 
D) movement along the demand curve for domestic cars and a shift of the demand curve for foreign cars. 
E) shift of the demand curve for domestic cars and a movement along the demand curve for foreign cars. 
A) shift in the demand curves for both domestic and foreign cars. 
B) shift in the supply curves for both domestic and foreign cars. 
C) movement along the demand curves for both domestic and foreign cars. 
D) movement along the demand curve for domestic cars and a shift of the demand curve for foreign cars. 
E) shift of the demand curve for domestic cars and a movement along the demand curve for foreign cars.

Question 11

Use the table below to answer the following questions.
Table 3.4.1
  
-In Table 3.4.1, the equilibrium quantity is

Accepted Answer

A) 200 units. 
B) 320 units. 
C) 420 units. 
D) 500 units. 
E) none of the above; there is no equilibrium. 
A) 200 units. 
B) 320 units. 
C) 420 units. 
D) 500 units. 
E) none of the above; there is no equilibrium.

Question 12

When the demand for good A increases,

Accepted Answer

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

Question 13

The Genius Software Company has developed an amazing new software package to be used only with Einstein Computers. As a result, the equilibrium price of

Accepted Answer

A) all computers rises. 
B) rival software packages falls leading to an overall increase in the equilibrium quantity of these packages. 
C) all software packages rises. 
D) Einstein computers rises, accompanied by an increase in the equilibrium quantity. 
E) Einstein computers rises, leading to a decrease in the equilibrium quantity. 
A) all computers rises. 
B) rival software packages falls leading to an overall increase in the equilibrium quantity of these packages. 
C) all software packages rises. 
D) Einstein computers rises, accompanied by an increase in the equilibrium quantity. 
E) Einstein computers rises, leading to a decrease in the equilibrium quantity.

Question 14

Suppose we observe a fall 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 demand 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 demand 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 15

Use the table below to answer the following questions.
Table 3.4.1
  
-In Table 3.4.1, the equilibrium price is

Accepted Answer

A) $7 a unit. 
B) $5 a unit. 
C) $4 a unit. 
D) $3 a unit. 
E) $1 a unit. 
A) $7 a unit. 
B) $5 a unit. 
C) $4 a unit. 
D) $3 a unit. 
E) $1 a unit.

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. If the price is set at $0.80 per cup, there is ________ leading to a price ________.

Accepted Answer

A) a shortage; rise 
B) a shortage; fall 
C) a surplus; rise 
D) a surplus; fall 
E) an equilibrium; rise 
A) a shortage; rise 
B) a shortage; fall 
C) a surplus; rise 
D) a surplus; fall 
E) an equilibrium; rise

Question 17

Since 1980, there has been a dramatic increase in the number of working mothers. Based on this information alone, we can predict that the market for child care services has experienced

Accepted Answer

A) an increase in demand. 
B) a decrease in demand. 
C) an increase in quantity demanded. 
D) a decrease in quantity supplied. 
E) an increase in supply. 
A) an increase in demand. 
B) a decrease in demand. 
C) an increase in quantity demanded. 
D) a decrease in quantity supplied. 
E) an increase in supply.

Question 18

Which market is an example of a market for factors of production?

Accepted Answer

A) furniture market 
B) apple market 
C) automobile market 
D) haircut market 
E) labour market 
A) furniture market 
B) apple market 
C) automobile market 
D) haircut market 
E) labour market

Question 19

The price at which sellers are not willing to supply a good is $700 per unit. If the supply curve passes through the point (3,718), what is the equation of the supply curve?

Accepted Answer

A) P = 700 + 6QS 
B) QS = 700 - 6P 
C) P = 718 + 3QS 
D) QS = 718 + 3P 
E) QS = 718 - 6P 
A) P = 700 + 6QS 
B) QS = 700 - 6P 
C) P = 718 + 3QS 
D) QS = 718 + 3P 
E) QS = 718 - 6P

Question 20

Use the figure below to answer the following questions.
   
Figure 3.2.1
-Which one of the following would result in a movement from point A to point B in Figure 3.2.1?

Accepted Answer

A) a fall in the price of apples 
B) a rise in the price of oranges 
C) an increase in population size 
D) public concern about chemicals sprayed on apples 
E) a rise in the price of bananas 
A) a fall in the price of apples 
B) a rise in the price of oranges 
C) an increase in population size 
D) public concern about chemicals sprayed on apples 
E) a rise in the price of bananas

Exam 3: Demand and Supply

Which one of the following correctly describes how price adjustment eliminates a surplus?

The substitution effect influences food purchases because when the price of a certain food rises, other things remaining the same, ________. Consumers ________.

The price of good X falls and the demand for good Y decreases. We can conclude that

Tom and Don have different opportunity costs of producing two goods. If Tom and Don specialize in producing the goods in which each has a comparative advantage and they exchange goods, then

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 beer. If the price of pizza, a complement of beer rises, what is the new beer equilibrium, ceteris paribus?

Use the table below to answer the following questions. Table 3.4.1 -Refer to Table 3.4.1. At a price of $3 a unit

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. The equilibrium price is $________ and the equilibrium quantity is ________ t-shirts per month.

Which one of the following will definitely lower the equilibrium price?

If both demand and supply increase, then the equilibrium price

"As domestic car prices have increased, consumers have found foreign cars to be a better bargain. Consequently, domestic car sales have fallen and foreign car sales have risen." Based on this information alone, there has been a

Use the table below to answer the following questions. Table 3.4.1 -In Table 3.4.1, the equilibrium quantity is

When the demand for good A increases,

The Genius Software Company has developed an amazing new software package to be used only with Einstein Computers. As a result, the equilibrium price of

Suppose we observe a fall 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?

Use the table below to answer the following questions. Table 3.4.1 -In Table 3.4.1, the equilibrium price is

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. If the price is set at $0.80 per cup, there is ________ leading to a price ________.

Since 1980, there has been a dramatic increase in the number of working mothers. Based on this information alone, we can predict that the market for child care services has experienced

Which market is an example of a market for factors of production?

The price at which sellers are not willing to supply a good is $700 per unit. If the supply curve passes through the point (3,718), what is the equation of the supply curve?

Use the figure below to answer the following questions. Figure 3.2.1 -Which one of the following would result in a movement from point A to point B in Figure 3.2.1?

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 substitution effect influences food purchases because when the price of a certain food rises, other things remaining the same, . Consumers .

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. The equilibrium price is $ and the equilibrium quantity is t-shirts per month.

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. If the price is set at $0.80 per cup, there is leading to a price .