Question 1

The fact that price and quantity demanded are related negatively illustrates the:

Accepted Answer

A)  law of supply. 
B)  law of quantity supply. 
C)  law of demand. 
D)  law of quantity demanded. 
E)  point that some facts are unobservable. 
A)  law of supply. 
B)  law of quantity supply. 
C)  law of demand. 
D)  law of quantity demanded. 
E)  point that some facts are unobservable.

Question 2

Farmers can produce wheat and/or rice.What will happen in the wheat market if there is an increase in the price of rice?

Accepted Answer

A)  Wheat supply will increase. 
B)  Wheat supply will decrease. 
C)  Wheat demand will increase. 
D)  Wheat demand will decrease. 
A)  Wheat supply will increase. 
B)  Wheat supply will decrease. 
C)  Wheat demand will increase. 
D)  Wheat demand will decrease.

Question 3

An increase in the quantity demanded of a good is most often due to:

Accepted Answer

A)  current prices. 
B)  higher prices. 
C)  higher income. 
D)  lower prices. 
E)  technological change. 
A)  current prices. 
B)  higher prices. 
C)  higher income. 
D)  lower prices. 
E)  technological change.

Question 4

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

Accepted Answer

A)  a direct 
B)  no 
C)  an inverse 
D)  independent 
A)  a direct 
B)  no 
C)  an inverse 
D)  independent

Question 5

At a price of $5,Sam buys 10 units of a product; when the price increases to $6,Sam buys 8 units.Martha says Sam's demand has decreased.Is Martha correct?

Accepted Answer

A)  Yes, Martha is correct. Sam's demand has decreased. 
B)  No, Martha is incorrect. Sam's demand has increased. 
C)  No, Martha is incorrect. Sam's quantity demanded has decreased, and his demand has not changed. 
D)  No, Martha is incorrect. Sam's quantity demanded has increased, and his demand has increased. 
E)  No, Martha is incorrect. Sam's demand has increased, and his quantity demanded has decreased. 
A)  Yes, Martha is correct. Sam's demand has decreased. 
B)  No, Martha is incorrect. Sam's demand has increased. 
C)  No, Martha is incorrect. Sam's quantity demanded has decreased, and his demand has not changed. 
D)  No, Martha is incorrect. Sam's quantity demanded has increased, and his demand has increased. 
E)  No, Martha is incorrect. Sam's demand has increased, and his quantity demanded has decreased.

Question 6

An increase in the supply of the product implies:

Accepted Answer

A)  producers will now charge a higher price for a given quantity of output. 
B)  the supply curve will shift to the left. 
C)  some producers are dropping out of this market. 
D)  producers will now charge a lower price for a given quantity of output. 
E)  the price of this product has increased. 
A)  producers will now charge a higher price for a given quantity of output. 
B)  the supply curve will shift to the left. 
C)  some producers are dropping out of this market. 
D)  producers will now charge a lower price for a given quantity of output. 
E)  the price of this product has increased.

Question 7

Other things being equal,the effect of an increase in the price of Coca-Cola would cause a(n):

Accepted Answer

A)  upward movement along the demand curve for Coca-Cola. 
B)  leftward shift in the demand curve for Coca-Cola. 
C)  downward movement along the demand curve for Coca-Cola. 
D)  rightward shift in the demand curve for Coca-Cola. 
A)  upward movement along the demand curve for Coca-Cola. 
B)  leftward shift in the demand curve for Coca-Cola. 
C)  downward movement along the demand curve for Coca-Cola. 
D)  rightward shift in the demand curve for Coca-Cola.

Question 8

Which of the following best represents the effects of an increase in the price of coffee,other things being equal?

Accepted Answer

A)  A leftward shift in the demand curve for coffee. 
B)  A downward movement along the demand curve for coffee. 
C)  A rightward shift in the demand curve for coffee. 
D)  An upward movement along the demand curve for coffee. 
A)  A leftward shift in the demand curve for coffee. 
B)  A downward movement along the demand curve for coffee. 
C)  A rightward shift in the demand curve for coffee. 
D)  An upward movement along the demand curve for coffee.

Question 9

An advance in technology results in:

Accepted Answer

A)  suppliers offering a larger quantity than before at each given price. 
B)  suppliers offering the same quantity as before at a lower price. 
C)  a rightward shift of the supply curve. 
D)  an increase in supply. 
E)  all of the above. 
A)  suppliers offering a larger quantity than before at each given price. 
B)  suppliers offering the same quantity as before at a lower price. 
C)  a rightward shift of the supply curve. 
D)  an increase in supply. 
E)  all of the above.

Question 10

Assuming that chicken and beef are substitutes,a decrease in the price of beef,other things being equal,will:

Accepted Answer

A)  decrease the demand for beef. 
B)  increase the demand for chicken. 
C)  decrease the demand for chicken. 
D)  increase the demand for beef. 
A)  decrease the demand for beef. 
B)  increase the demand for chicken. 
C)  decrease the demand for chicken. 
D)  increase the demand for beef.

Question 11

Assuming that dry cleaning is a normal good,an increase in consumer income,other things being equal,will:

Accepted Answer

A)  increase the demand for dry cleaning. 
B)  decrease the demand for dry cleaning. 
C)  increase the quantity demanded of dry cleaning. 
D)  decrease the quantity of dry cleaning demanded. 
A)  increase the demand for dry cleaning. 
B)  decrease the demand for dry cleaning. 
C)  increase the quantity demanded of dry cleaning. 
D)  decrease the quantity of dry cleaning demanded.

Question 12

An increase in the expected future price of a good will cause the current demand for the good to:

Accepted Answer

A)  decrease, which is a shift to the left of the demand curve. 
B)  decrease, which is a shift to the right of the demand curve. 
C)  increase, which is a shift to the left of the demand curve. 
D)  increase, which is a shift to the right of the demand curve. 
A)  decrease, which is a shift to the left of the demand curve. 
B)  decrease, which is a shift to the right of the demand curve. 
C)  increase, which is a shift to the left of the demand curve. 
D)  increase, which is a shift to the right of the demand curve.

Question 13

Which of the following pairs is the best example of substitutes?

Accepted Answer

A)  Coffee and cream. 
B)  Honey and biscuits. 
C)  Tortillas and salsa. 
D)  Hiking boots and athletic shoes. 
A)  Coffee and cream. 
B)  Honey and biscuits. 
C)  Tortillas and salsa. 
D)  Hiking boots and athletic shoes.

Question 14

"Because of unseasonable cold weather,much of the peach crop has been destroyed." This statement indicates that the:

Accepted Answer

A)  price of peaches will fall. 
B)  quantity of peaches that will be available at any given price has decreased. 
C)  demand for peaches will shift to the left. 
D)  quantity of peaches that will be available at any given price have increased. 
A)  price of peaches will fall. 
B)  quantity of peaches that will be available at any given price has decreased. 
C)  demand for peaches will shift to the left. 
D)  quantity of peaches that will be available at any given price have increased.

Question 15

Supply curves slope upward because:

Accepted Answer

A)  the quality is assumed to vary with price. 
B)  technology improves over time, increasing the ability of firms to produce more at each possible price. 
C)  increases in the price of a good lead to rightward shifts of the supply curve. 
D)  rising prides provide producers with the incentives needed to increase the quantity supplied. 
A)  the quality is assumed to vary with price. 
B)  technology improves over time, increasing the ability of firms to produce more at each possible price. 
C)  increases in the price of a good lead to rightward shifts of the supply curve. 
D)  rising prides provide producers with the incentives needed to increase the quantity supplied.

Question 16

The supply curve reflects the:

Accepted Answer

A)  inverse relationship between price and quantity offered. 
B)  positive relationship between demand and supply. 
C)  negative relationship between price and quantity bought. 
D)  positive relationship between price and quantity bought. 
E)  positive relationship between price and quantity offered. 
A)  inverse relationship between price and quantity offered. 
B)  positive relationship between demand and supply. 
C)  negative relationship between price and quantity bought. 
D)  positive relationship between price and quantity bought. 
E)  positive relationship between price and quantity offered.

Question 17

Which of the following will cause a movement along the supply curve?

Accepted Answer

A)  An increase or decrease in the raw materials costs. 
B)  An increase in labor costs. 
C)  Changes in the cost of the machinery used to make a good. 
D)  Changes in the market price of a good, other things held constant. 
A)  An increase or decrease in the raw materials costs. 
B)  An increase in labor costs. 
C)  Changes in the cost of the machinery used to make a good. 
D)  Changes in the market price of a good, other things held constant.

Question 18

A movement along the demand curve for automobiles is caused by a change in:

Accepted Answer

A)  the price of automobiles. 
B)  the price of gasoline. 
C)  the price of steel. 
D)  consumers' incomes. 
A)  the price of automobiles. 
B)  the price of gasoline. 
C)  the price of steel. 
D)  consumers' incomes.

Question 19

An increase in demand:

Accepted Answer

A)  results in a leftward shift of the demand curve. 
B)  could be caused by a decrease in the price of the good. 
C)  could be caused by an increase in the price of a substitute good. 
D)  is shown as movement down along a demand curve. 
A)  results in a leftward shift of the demand curve. 
B)  could be caused by a decrease in the price of the good. 
C)  could be caused by an increase in the price of a substitute good. 
D)  is shown as movement down along a demand curve.

Question 20

Assuming that bus travel is an inferior good,an increase in consumer income,other things being equal,will cause a(n):

Accepted Answer

A)  upward movement along the demand curve for bus travel. 
B)  downward movement along the demand curve for bus travel. 
C)  rightward shift in the demand curve for bus travel. 
D)  leftward shift in the demand curve for bus travel. 
A)  upward movement along the demand curve for bus travel. 
B)  downward movement along the demand curve for bus travel. 
C)  rightward shift in the demand curve for bus travel. 
D)  leftward shift in the demand curve for bus travel.

Exam 3: Part 1: Market Demand and Supply

The fact that price and quantity demanded are related negatively illustrates the:

Farmers can produce wheat and/or rice.What will happen in the wheat market if there is an increase in the price of rice?

An increase in the quantity demanded of a good is most often due to:

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

At a price of $5,Sam buys 10 units of a product; when the price increases to $6,Sam buys 8 units.Martha says Sam's demand has decreased.Is Martha correct?

An increase in the supply of the product implies:

Other things being equal,the effect of an increase in the price of Coca-Cola would cause a(n):

Which of the following best represents the effects of an increase in the price of coffee,other things being equal?

An advance in technology results in:

Assuming that chicken and beef are substitutes,a decrease in the price of beef,other things being equal,will:

Assuming that dry cleaning is a normal good,an increase in consumer income,other things being equal,will:

An increase in the expected future price of a good will cause the current demand for the good to:

Which of the following pairs is the best example of substitutes?

"Because of unseasonable cold weather,much of the peach crop has been destroyed." This statement indicates that the:

Supply curves slope upward because:

The supply curve reflects the:

Which of the following will cause a movement along the supply curve?

A movement along the demand curve for automobiles is caused by a change in:

An increase in demand:

Assuming that bus travel is an inferior good,an increase in consumer income,other things being equal,will cause a(n):

Introducing the Economic Way of Thinking

A: Appendix: Applying Graphs to Economics

Production Possibilities,Opportunity Cost,and Economic Growth

Part 2: 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