Question 1

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

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 quantity demanded increases and the quantity supplied increases. 
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 quantity demanded increases and the quantity supplied increases.

Question 2

Suppose we observe a fall in the price of good A and an increase 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 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.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 4

The kitchen manager at an Italian restaurant is deciding what assignments he should give to his two cooks, John and David.John can make 25 pizzas or 40 servings of pasta per hour and David can make 20 pizzas or 30 servings of pasta per hour.Which is the manager's best choice?

Accepted Answer

A) Fire David because he is not as productive as John. John will produce both pasta and pizza. 
B) David will make pizza because he has a comparative advantage in making pizza. 
C) John and David will each spend half their time making pizza and half their time making pasta. 
D) John will make pizza because he has a comparative advantage in making pizza. 
E) Increase David's salary because with encouragement, he can increase his output. 
A) Fire David because he is not as productive as John. John will produce both pasta and pizza. 
B) David will make pizza because he has a comparative advantage in making pizza. 
C) John and David will each spend half their time making pizza and half their time making pasta. 
D) John will make pizza because he has a comparative advantage in making pizza. 
E) Increase David's salary because with encouragement, he can increase his output.

Question 5

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 6

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.A new store opens up on the edge of campus, Great Wild North Sportswear, which has the capacity to do as much business as all the existing businesses.The quantity of t-shirts supplied doubles at each price.This would be represented as a

Accepted Answer

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

Question 7

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.If there is an increase in the wages of farm workers who harvest coffee beans, the equilibrium quantity of coffee

Accepted Answer

A) increases. 
B) decreases. 
C) remains the same. 
D) increases or decreases depending on the slope of the supply and demand curves. 
E) increases or decreases depending on the relative shifts of the supply and demand curves. 
A) increases. 
B) decreases. 
C) remains the same. 
D) increases or decreases depending on the slope of the supply and demand curves. 
E) increases or decreases depending on the relative shifts of the supply and demand curves.

Question 8

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.If the price is set at $80, there will be a

Accepted Answer

A) shortage of 200 units and price will rise. 
B) shortage of 200 units and demand will fall. 
C) surplus of 200 units and demand will rise. 
D) surplus of 200 units and supply will fall. 
E) surplus of 200 units and price will fall. 
A) shortage of 200 units and price will rise. 
B) shortage of 200 units and demand will fall. 
C) surplus of 200 units and demand will rise. 
D) surplus of 200 units and supply will fall. 
E) surplus of 200 units and price will fall.

Question 9

A decrease in the quantity supplied is shown by a

Accepted Answer

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

Question 10

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 11

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 12

Use the table below to answer the following questions.
Table 3.4.1
  
-Refer to Table 3.4.1.If the price is $3, then the shortage is

Accepted Answer

A) zero units. 
B) 1,050 units. 
C) 180 units. 
D) 600 units. 
E) 160 units. 
A) zero units. 
B) 1,050 units. 
C) 180 units. 
D) 600 units. 
E) 160 units.

Question 13

Which one of the following events shifts the demand curve for grape jelly to the right?

Accepted Answer

A) an increase in income if grape jelly is a normal good 
B) a decrease in the price of strawberry preserves, a substitute for grape jelly 
C) a decrease in the price of grape jelly 
D) an increase in the price of peanut butter, a complement of grape jelly 
E) a decrease in the population 
A) an increase in income if grape jelly is a normal good 
B) a decrease in the price of strawberry preserves, a substitute for grape jelly 
C) a decrease in the price of grape jelly 
D) an increase in the price of peanut butter, a complement of grape jelly 
E) a decrease in the population

Question 14

Use the table below to answer the following questions.
Table 3.4.1
  
-Refer to Table 3.4.1.A shortage occurs if

Accepted Answer

A) the price is $7 a unit. 
B) the price is $4 a unit. 
C) the price is $5 a unit. 
D) the price is below $4 a unit. 
E) the price is $6 a unit. 
A) the price is $7 a unit. 
B) the price is $4 a unit. 
C) the price is $5 a unit. 
D) the price is below $4 a unit. 
E) the price is $6 a unit.

Question 15

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 16

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 17

"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 18

People buy more of good 1 when the price of good 2 rises.Good 1 and good 2 are

Accepted Answer

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

Question 19

Which of the following will shift the supply curve of good X rightward?

Accepted Answer

A) a decrease in the wages of workers employed to produce good X 
B) an increase in the cost of capital used to produce good X 
C) an increase in the price of energy 
D) a decrease in the number of suppliers of good X 
E) the price of Y, a substitute in production for good X, rises 
A) a decrease in the wages of workers employed to produce good X 
B) an increase in the cost of capital used to produce good X 
C) an increase in the price of energy 
D) a decrease in the number of suppliers of good X 
E) the price of Y, a substitute in production for good X, rises

Question 20

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 the cost of production rises, causing supply to decrease by 100 units at each price.The new equilibrium price is $________ and equilibrium quantity is ________ units.

Accepted Answer

A) 70; 450 
B) 70; 350 
C) 50; 450 
D) 50; 350 
E) 60; 400 
A) 70; 450 
B) 70; 350 
C) 50; 450 
D) 50; 350 
E) 60; 400

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

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

The kitchen manager at an Italian restaurant is deciding what assignments he should give to his two cooks, John and David.John can make 25 pizzas or 40 servings of pasta per hour and David can make 20 pizzas or 30 servings of pasta per hour.Which is the manager's best choice?

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 3.5.1 The Market for Car-Seat Heaters -Refer to Table 3.5.1.If the price is set at $80, there will be a

A decrease in the quantity supplied is shown by a

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?

Which market is an example of a market for services?

Use the table below to answer the following questions. Table 3.4.1 -Refer to Table 3.4.1.If the price is $3, then the shortage is

Which one of the following events shifts the demand curve for grape jelly to the right?

Use the table below to answer the following questions. Table 3.4.1 -Refer to Table 3.4.1.A shortage occurs if

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

"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

People buy more of good 1 when the price of good 2 rises.Good 1 and good 2 are

Which of the following will shift the supply curve of good X rightward?

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 the cost of production rises, causing supply to decrease by 100 units at each price.The new equilibrium price is $ and equilibrium quantity is units.

What Is Economics

The Economic Problem

Elasticity

Efficiency and Equity

Government 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

Filters

Exam 3: Demand and Supply

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

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

The kitchen manager at an Italian restaurant is deciding what assignments he should give to his two cooks, John and David.John can make 25 pizzas or 40 servings of pasta per hour and David can make 20 pizzas or 30 servings of pasta per hour.Which is the manager's best choice?

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 3.5.1 The Market for Car-Seat Heaters -Refer to Table 3.5.1.If the price is set at $80, there will be a

A decrease in the quantity supplied is shown by a

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?

Which market is an example of a market for services?

Use the table below to answer the following questions. Table 3.4.1 -Refer to Table 3.4.1.If the price is $3, then the shortage is

Which one of the following events shifts the demand curve for grape jelly to the right?

Use the table below to answer the following questions. Table 3.4.1 -Refer to Table 3.4.1.A shortage occurs if

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

"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

People buy more of good 1 when the price of good 2 rises.Good 1 and good 2 are

Which of the following will shift the supply curve of good X rightward?

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 the cost of production rises, causing supply to decrease by 100 units at each price.The new equilibrium price is $________ and equilibrium quantity is ________ units.

What Is Economics

The Economic Problem

Elasticity

Efficiency and Equity

Government 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

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 3.5.1 The Market for Car-Seat Heaters -Refer to Table 3.5.1.Suppose the cost of production rises, causing supply to decrease by 100 units at each price.The new equilibrium price is $ and equilibrium quantity is units.