Question 1

If the price of good X increases and this causes an increase in the demand for good Y,then goods X and Y are substitute goods.

Accepted Answer

A) True 
 B)False

Question 2

The price of a good will rise when:

Accepted Answer

A)  there is a shortage of the good. 
B)  there is a surplus of the good. 
C)  demand for the good decreases. 
D)  the supply of the good increases. 
A)  there is a shortage of the good. 
B)  there is a surplus of the good. 
C)  demand for the good decreases. 
D)  the supply of the good increases.

Question 3

In economics,the term "surplus" means an excess quantity supplied.

Accepted Answer

A) True 
 B)False

Question 4

Exhibit 3-8 Demand and supply data for radios
  
-In Exhibit 3-9,if the market price is $20,

Accepted Answer

A)  this market will be in equilibrium. 
B)  a shortage of 27 units will result. 
C)  the price is above the equilibrium price. 
D)  a surplus of 26 units will result. 
E)  a shortage of 26 units will result. 
A)  this market will be in equilibrium. 
B)  a shortage of 27 units will result. 
C)  the price is above the equilibrium price. 
D)  a surplus of 26 units will result. 
E)  a shortage of 26 units will result.

Question 5

At any price below the equilibrium price,the:

Accepted Answer

A)  demand is greater than supply. 
B)  supply is greater than demand. 
C)  quantity demanded is greater than quantity supplied. 
D)  quantity supplied is greater than quantity demanded. 
A)  demand is greater than supply. 
B)  supply is greater than demand. 
C)  quantity demanded is greater than quantity supplied. 
D)  quantity supplied is greater than quantity demanded.

Question 6

A shortage means that the quantity demanded is greater than the quantity supplied at the prevailing price.

Accepted Answer

A) True 
 B)False

Question 7

If X and Y are substitutes,the demand curve for X will shift to the right when the price of Y decreases.

Accepted Answer

A) True 
 B)False

Question 8

The law of demand is the principle that there is an inverse between the price of a good and the quantity that buyers are willing to purchase in a defined time period,ceteris paribus.

Accepted Answer

A) True 
 B)False

Question 9

If a shortage of a product currently exists in the market,

Accepted Answer

A)  the market price is too high. 
B)  the quantity demanded is less than the quantity supplied. 
C)  the quantity demanded exceeds the quantity supplied at the market price. 
D)  there is an excess supply of the product. 
E)  there will be a tendency for the price to fall. 
A)  the market price is too high. 
B)  the quantity demanded is less than the quantity supplied. 
C)  the quantity demanded exceeds the quantity supplied at the market price. 
D)  there is an excess supply of the product. 
E)  there will be a tendency for the price to fall.

Question 10

According to the law of demand,if the price of a good increases,other things being equal,the quantity demanded will decrease.

Accepted Answer

A) True 
 B)False

Question 11

Other things being equal,a fall in the price of orange juice will decrease the quantity supplied.

Accepted Answer

A) True 
 B)False

Question 12

Exhibit 3-6 Milk market
  
-In Exhibit 3-6,which of the following is true about the milk market?

Accepted Answer

A)  At price 0.60 there is an excess demand of milk. 
B)  At price 0.40 there is an excess supply of milk. 
C)  At price 0.30 there is an excess supply of milk. 
D)  At price 0.50 there is an excess demand of milk. 
E)  At price 0.70 there is an excess supply of milk. 
A)  At price 0.60 there is an excess demand of milk. 
B)  At price 0.40 there is an excess supply of milk. 
C)  At price 0.30 there is an excess supply of milk. 
D)  At price 0.50 there is an excess demand of milk. 
E)  At price 0.70 there is an excess supply of milk.

Question 13

Exhibit 3-8 Demand and supply data for radios
  
-In Exhibit 3-8,if the price of radios was currently $45,there would be an ____ of ____ radios in this market.

Accepted Answer

A)  Excess demand; 700 
B)  Excess demand; 500 
C)  Excess supply; 100 
D)  Excess supply; 600 
E)  Excess demand; 100 
A)  Excess demand; 700 
B)  Excess demand; 500 
C)  Excess supply; 100 
D)  Excess supply; 600 
E)  Excess demand; 100

Question 14

Suppose A and B are complementary goods.Other things being equal,the demand curve for A will shift to the right when the price of B goes down.

Accepted Answer

A) True 
 B)False

Question 15

Exhibit 3-11 Demand and supply curves
  
-In Exhibit 3-11,in Panel A the movement from A to B describes a(n):

Accepted Answer

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

Question 16

In a market,competitive forces guarantee that any price other than the equilibrium price is:

Accepted Answer

A)  market-clearing. 
B)  stable. 
C)  temporary. 
D)  unaffordable. 
A)  market-clearing. 
B)  stable. 
C)  temporary. 
D)  unaffordable.

Question 17

When the price of a good is below its equilibrium level,a:

Accepted Answer

A)  shortage puts upward pressure on the price. 
B)  surplus puts downward pressure on the price. 
C)  shortage puts downward pressure on the price. 
D)  surplus puts upward pressure on the price. 
A)  shortage puts upward pressure on the price. 
B)  surplus puts downward pressure on the price. 
C)  shortage puts downward pressure on the price. 
D)  surplus puts upward pressure on the price.

Question 18

Higher milk prices reduce the demand for milk.

Accepted Answer

A) True 
 B)False

Question 19

Exhibit 3-16 Supply and demand curves for chairs
  
-In Exhibit 3-16,assume that the market price of chairs is $5 each.This price is:

Accepted Answer

A)  an equilibrium price. 
B)  not an equilibrium price, since there is an excess supply at a price of $5. 
C)  not an equilibrium price, since there is an excess demand at a price of $5. 
D)  not an equilibrium price, since the rate at which chairs are being supplied is great than the rate at which they are being demanded. 
A)  an equilibrium price. 
B)  not an equilibrium price, since there is an excess supply at a price of $5. 
C)  not an equilibrium price, since there is an excess demand at a price of $5. 
D)  not an equilibrium price, since the rate at which chairs are being supplied is great than the rate at which they are being demanded.

Question 20

An increase in the cost of chicken feed will reduce the supply of eggs.

Accepted Answer

A) True 
 B)False

Exam 3: Part 2: Market Demand and Supply

If the price of good X increases and this causes an increase in the demand for good Y,then goods X and Y are substitute goods.

The price of a good will rise when:

In economics,the term "surplus" means an excess quantity supplied.

Exhibit 3-8 Demand and supply data for radios -In Exhibit 3-9,if the market price is $20,

At any price below the equilibrium price,the:

A shortage means that the quantity demanded is greater than the quantity supplied at the prevailing price.

If X and Y are substitutes,the demand curve for X will shift to the right when the price of Y decreases.

The law of demand is the principle that there is an inverse between the price of a good and the quantity that buyers are willing to purchase in a defined time period,ceteris paribus.

If a shortage of a product currently exists in the market,

According to the law of demand,if the price of a good increases,other things being equal,the quantity demanded will decrease.

Other things being equal,a fall in the price of orange juice will decrease the quantity supplied.

Exhibit 3-6 Milk market -In Exhibit 3-6,which of the following is true about the milk market?

Exhibit 3-8 Demand and supply data for radios -In Exhibit 3-8,if the price of radios was currently $45,there would be an ____ of ____ radios in this market.

Suppose A and B are complementary goods.Other things being equal,the demand curve for A will shift to the right when the price of B goes down.

Exhibit 3-11 Demand and supply curves -In Exhibit 3-11,in Panel A the movement from A to B describes a(n):

In a market,competitive forces guarantee that any price other than the equilibrium price is:

When the price of a good is below its equilibrium level,a:

Higher milk prices reduce the demand for milk.

Exhibit 3-16 Supply and demand curves for chairs -In Exhibit 3-16,assume that the market price of chairs is $5 each.This price is:

An increase in the cost of chicken feed will reduce the supply of eggs.

Introducing the Economic Way of Thinking

A: Appendix: Applying Graphs to Economics

Production Possibilities,Opportunity Cost,and Economic Growth

Part 1: Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

A: Appendix: The Self-Correcting Aggregate Demand and Supply Model

Fiscal Policy

The Public Sector

Federal Deficits,Surpluses,and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

A: Appendix: Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Filters

Exhibit 3-8 Demand and supply data for radios -In Exhibit 3-8,if the price of radios was currently $45,there would be an of radios in this market.