Question 1

Total market supply can be derived by

Accepted Answer

A) horizontally summing individual supply curves at each and every price level. 
B) vertically summing individual supply curves at the current technology level. 
C) adding up the largest quantity demanded at various prices. 
D) looking at the changes in the price of raw materials needed to produce the product. 
A) horizontally summing individual supply curves at each and every price level. 
B) vertically summing individual supply curves at the current technology level. 
C) adding up the largest quantity demanded at various prices. 
D) looking at the changes in the price of raw materials needed to produce the product.

Question 2

The law of demand states that

Accepted Answer

A) consumers will exhaust their incomes as they purchase goods and services at given absolute prices. 
B) the quantity demanded of a good is higher at a lower relative price than at a higher relative price. 
C) there is a direct positive relationship between relative price and quantity demanded. 
D) if the price of a good increases both relatively and absolutely, there will be no change in quantity demanded. 
A) consumers will exhaust their incomes as they purchase goods and services at given absolute prices. 
B) the quantity demanded of a good is higher at a lower relative price than at a higher relative price. 
C) there is a direct positive relationship between relative price and quantity demanded. 
D) if the price of a good increases both relatively and absolutely, there will be no change in quantity demanded.

Question 3

State the law of demand and illustrate it. Explain what is meant by the term "price" in the law of demand.

Accepted Answer

The law of demand states that when the p

Question 4

Which of the following best represents the law of demand?

Accepted Answer

A) As the price of a good decreases, the demand for the good increases. 
B) As the price of a good increases, the quantity demanded of that good decreases. 
C) As the demand for a good increases, the price of that good increases. 
D) As the price of a good decreases, the demand curve for that good shifts to the right. 
A) As the price of a good decreases, the demand for the good increases. 
B) As the price of a good increases, the quantity demanded of that good decreases. 
C) As the demand for a good increases, the price of that good increases. 
D) As the price of a good decreases, the demand curve for that good shifts to the right.

Question 5

Assume that coffee and tea are substitutes. Given a downward sloping demand curve for tea, an increase in the price of tea will cause

Accepted Answer

A) an increase in the demand for coffee. 
B) a decrease in the demand for coffee. 
C) a leftward shift of the demand curve for tea. 
D) a leftward shift in the demand for coffee. 
A) an increase in the demand for coffee. 
B) a decrease in the demand for coffee. 
C) a leftward shift of the demand curve for tea. 
D) a leftward shift in the demand for coffee.

Question 6

When income rises

Accepted Answer

A) demand for a normal good rises. 
B) demand for a normal good falls. 
C) demand for an inferior good rises. 
D) quantity of a normal good demanded rises. 
A) demand for a normal good rises. 
B) demand for a normal good falls. 
C) demand for an inferior good rises. 
D) quantity of a normal good demanded rises.

Question 7

-According to the above figure, equilibrium is at point

Accepted Answer

A) E. 
B) B. 
C) C. 
D) D. 
A) E. 
B) B. 
C) C. 
D) D.

Question 8

The relative price of a good is that price

Accepted Answer

A) expressed in today's dollars. 
B) expressed in constant 2012 dollars. 
C) expressed in terms of the price of another good. 
D) that is equal to the equilibrium price. 
A) expressed in today's dollars. 
B) expressed in constant 2012 dollars. 
C) expressed in terms of the price of another good. 
D) that is equal to the equilibrium price.

Question 9

-Refer to the above figure. At a price of $2, excess quantity demanded equals

Accepted Answer

A) 0. 
B) 3. 
C) 12. 
D) 15. 
A) 0. 
B) 3. 
C) 12. 
D) 15.

Question 10

The money price of a good is also known as its

Accepted Answer

A) relative price. 
B) case price. 
C) absolute price. 
D) subjective price. 
A) relative price. 
B) case price. 
C) absolute price. 
D) subjective price.

Question 11

An increase in the relative price of a good cannot be caused by

Accepted Answer

A) an increase in the nominal price of the good that is greater than the increase in the nominal price of the other good. 
B) a decrease in the nominal price of the good that is less than the decrease in the nominal price of the other good. 
C) a decrease in the nominal price of the other good while the price of the good itself remains constant. 
D) an increase in the nominal price of the other good while the price of the good itself remains constant. 
A) an increase in the nominal price of the good that is greater than the increase in the nominal price of the other good. 
B) a decrease in the nominal price of the good that is less than the decrease in the nominal price of the other good. 
C) a decrease in the nominal price of the other good while the price of the good itself remains constant. 
D) an increase in the nominal price of the other good while the price of the good itself remains constant.

Question 12

Which one of the following is NOT a determinant of demand?

Accepted Answer

A) prices of related goods 
B) cost of inputs in production 
C) income 
D) future price expectations 
A) prices of related goods 
B) cost of inputs in production 
C) income 
D) future price expectations

Question 13

If the price of margarine falls, the demand for butter will

Accepted Answer

A) remain unchanged. 
B) increase. 
C) decrease. 
D) rise at first and then fall. 
A) remain unchanged. 
B) increase. 
C) decrease. 
D) rise at first and then fall.

Question 14

According to the law of demand, other things being equal

Accepted Answer

A) when the price a good goes up, then people buy more of that good. 
B) when the price a good goes up, then people buy less of that good. 
C) when people's income goes up, then they buy more of a good. 
D) when people's income goes up, then they buy less of a good. 
A) when the price a good goes up, then people buy more of that good. 
B) when the price a good goes up, then people buy less of that good. 
C) when people's income goes up, then they buy more of a good. 
D) when people's income goes up, then they buy less of a good.

Question 15

A demand curve is derived from

Accepted Answer

A) the production possibilities curve. 
B) consumer's income. 
C) a demand schedule. 
D) an equilibrium. 
A) the production possibilities curve. 
B) consumer's income. 
C) a demand schedule. 
D) an equilibrium.

Question 16

-Refer to the above figure. The arrows show the direction of a shift in the demand curve of Good A. Which of the following would be the most likely reason for the shift in the demand curve if Good A is an inferior good?

Accepted Answer

A) an increase in the price of Good A 
B) a decrease in the price of Good A 
C) a decrease in consumers' income 
D) an increase in consumers' income 
A) an increase in the price of Good A 
B) a decrease in the price of Good A 
C) a decrease in consumers' income 
D) an increase in consumers' income

Question 17

-In the above figure, a surplus exists in the gasoline market when the price is

Accepted Answer

A) $1/gallon. 
B) $2/gallon. 
C) $4/gallon. 
D) below $2/gallon. 
A) $1/gallon. 
B) $2/gallon. 
C) $4/gallon. 
D) below $2/gallon.

Question 18

Which of the following does NOT cause a rightward shift in the supply curve?

Accepted Answer

A) a reduction in resource costs 
B) an increase in technology 
C) a reduction in the price of the good 
D) a reduction in the expected future price of the good 
A) a reduction in resource costs 
B) an increase in technology 
C) a reduction in the price of the good 
D) a reduction in the expected future price of the good

Question 19

Which of the following statements is consistent with a decrease in supply?

Accepted Answer

A) Prices of raw material inputs have increased. 
B) There has been an advance in technology. 
C) Consumers' incomes have increased. 
D) The market price has decreased. 
A) Prices of raw material inputs have increased. 
B) There has been an advance in technology. 
C) Consumers' incomes have increased. 
D) The market price has decreased.

Question 20

The law of demand tells us that people will buy more of a good if

Accepted Answer

A) the price of that good decreases. 
B) the prices of other goods decrease. 
C) people's income increases. 
D) every factor that can affect people's buying decisions changes. 
A) the price of that good decreases. 
B) the prices of other goods decrease. 
C) people's income increases. 
D) every factor that can affect people's buying decisions changes.

Total market supply can be derived by

The law of demand states that

State the law of demand and illustrate it. Explain what is meant by the term "price" in the law of demand.

Which of the following best represents the law of demand?

Assume that coffee and tea are substitutes. Given a downward sloping demand curve for tea, an increase in the price of tea will cause

When income rises

-According to the above figure, equilibrium is at point

The relative price of a good is that price

-Refer to the above figure. At a price of $2, excess quantity demanded equals

The money price of a good is also known as its

An increase in the relative price of a good cannot be caused by

Which one of the following is NOT a determinant of demand?

If the price of margarine falls, the demand for butter will

According to the law of demand, other things being equal

A demand curve is derived from

-Refer to the above figure. The arrows show the direction of a shift in the demand curve of Good A. Which of the following would be the most likely reason for the shift in the demand curve if Good A is an inferior good?

-In the above figure, a surplus exists in the gasoline market when the price is

Which of the following does NOT cause a rightward shift in the supply curve?

Which of the following statements is consistent with a decrease in supply?

The law of demand tells us that people will buy more of a good if

The Nature of Economics

Scarcity and the World of Trade-Offs

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 3: Demand and Supply

Total market supply can be derived by

The law of demand states that

State the law of demand and illustrate it. Explain what is meant by the term "price" in the law of demand.

Which of the following best represents the law of demand?

Assume that coffee and tea are substitutes. Given a downward sloping demand curve for tea, an increase in the price of tea will cause

When income rises

-According to the above figure, equilibrium is at point

The relative price of a good is that price

-Refer to the above figure. At a price of $2, excess quantity demanded equals

The money price of a good is also known as its

An increase in the relative price of a good cannot be caused by

Which one of the following is NOT a determinant of demand?

If the price of margarine falls, the demand for butter will

According to the law of demand, other things being equal

A demand curve is derived from

-Refer to the above figure. The arrows show the direction of a shift in the demand curve of Good A. Which of the following would be the most likely reason for the shift in the demand curve if Good A is an inferior good?

-In the above figure, a surplus exists in the gasoline market when the price is

Which of the following does NOT cause a rightward shift in the supply curve?

Which of the following statements is consistent with a decrease in supply?

The law of demand tells us that people will buy more of a good if

The Nature of Economics

Scarcity and the World of Trade-Offs

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters