Question 1

If an increase in income leads to a decrease in the demand for ground beef, then ground beef is a(n):

Accepted Answer

A) normal good. 
B) complementary good. 
C) substitute good. 
D) inferior good. 
A) normal good. 
B) complementary good. 
C) substitute good. 
D) inferior good.

Question 2

If supply increases and demand decreases, the new equilibrium price will be ________ and the new equilibrium quantity will be ________.

Accepted Answer

A) lower; lower 
B) lower; uncertain 
C) higher; higher 
D) higher; uncertain 
A) lower; lower 
B) lower; uncertain 
C) higher; higher 
D) higher; uncertain

Question 3

For two goods, X and Y, to be classified as substitutes, it must be the case that:

Accepted Answer

A) X and Y are identical. 
B) consumers tend to purchase both items together. 
C) when the price of X rises, the demand for Y decreases. 
D) when the price of X rises, the demand for Y increases. 
A) X and Y are identical. 
B) consumers tend to purchase both items together. 
C) when the price of X rises, the demand for Y decreases. 
D) when the price of X rises, the demand for Y increases.

Question 4

Excess demand occurs:

Accepted Answer

A) whenever the market is in equilibrium. 
B) whenever the market is not in equilibrium. 
C) when price is above the equilibrium price. 
D) when price is below the equilibrium price. 
A) whenever the market is in equilibrium. 
B) whenever the market is not in equilibrium. 
C) when price is above the equilibrium price. 
D) when price is below the equilibrium price.

Question 5

What might cause a decrease in current supply of a product?

Accepted Answer

A) An increase in the product's own price 
B) New information that leads sellers to believe that the product's price will fall in the future 
C) New information that leads sellers to believe that the product's price will rise in the future 
D) A decrease in the price of one of the inputs used to make the product 
A) An increase in the product's own price 
B) New information that leads sellers to believe that the product's price will fall in the future 
C) New information that leads sellers to believe that the product's price will rise in the future 
D) A decrease in the price of one of the inputs used to make the product

Question 6

Suppose that a disease that affects people who consume beef has been discovered in the United States. One likely result is:

Accepted Answer

A) an increase in buyers' reservation prices for beef. 
B) a decrease in demand for chicken. 
C) a decrease in demand for beef. 
D) a decrease in the quantity demanded of beef. 
A) an increase in buyers' reservation prices for beef. 
B) a decrease in demand for chicken. 
C) a decrease in demand for beef. 
D) a decrease in the quantity demanded of beef.

Question 7

Suppose the market demand curve is given by Qᵈ = 80 - 10P, and the market supply curve is given by Qˢ = 10 + 15P. What is the equilibrium price and quantity?

Accepted Answer

A) P* = $2.60 and Q* = 54 
B) P* = $3.00 and Q* = 55 
C) P* = $2.80 and Q* = 52 
D) P* = $2.80 and Q* = 54 
A) P* = $2.60 and Q* = 54 
B) P* = $3.00 and Q* = 55 
C) P* = $2.80 and Q* = 52 
D) P* = $2.80 and Q* = 54

Question 8

A movement along a demand curve from one price-quantity combination to another is called a:

Accepted Answer

A) change in quantity demanded. 
B) shift in the demand curve. 
C) change in demand. 
D) change in quantity supplied. 
A) change in quantity demanded. 
B) shift in the demand curve. 
C) change in demand. 
D) change in quantity supplied.

Question 9

Refer to the accompanying figure. Suppose the solid line represents the current supply of Star Wars action figures. If retailers learn that a new Star Wars movie will be released in several months, this news is likely to cause:

Accepted Answer

A) a decrease in the quantity supplied, but no change in current supply. 
B) neither a change in supply nor a change in quantity supplied since only future demand will change. 
C) current supply to shift to S(
B) in anticipation of higher future prices. 
D) current supply to shift to S(
A) in anticipation of higher future prices. 
A) a decrease in the quantity supplied, but no change in current supply. 
B) neither a change in supply nor a change in quantity supplied since only future demand will change. 
C) current supply to shift to S(
B) in anticipation of higher future prices. 
D) current supply to shift to S(
A) in anticipation of higher future prices.

Question 10

Refer to the accompanying figure, which shows the market for cups of coffee. If all buyers' reservation prices increase by $1.00, then the equilibrium price of coffee would:

Accepted Answer

A) increase by $1.00. 
B) increase by less than $1.00. 
C) increase by more than $1.00. 
D) would not change. 
A) increase by $1.00. 
B) increase by less than $1.00. 
C) increase by more than $1.00. 
D) would not change.

Question 11

Refer to the accompanying figure. Assume the market is originally at point W. Movement to point X is the result of:

Accepted Answer

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

Question 12

Suppose that Tom bought a bike from Helen for $195. If Helen's reservation price was $185, and Tom's reservation price was $215, the seller's surplus from this transaction was:

Accepted Answer

A) $195 
B) $10 
C) $20 
D) $215 
A) $195 
B) $10 
C) $20 
D) $215

Question 13

If the price of doughnuts decreases, then one would expect the:

Accepted Answer

A) supply of doughnuts to decrease. 
B) quantity of doughnuts supplied to decrease. 
C) supply of doughnuts to increase. 
D) quantity of doughnuts supplied to increase. 
A) supply of doughnuts to decrease. 
B) quantity of doughnuts supplied to decrease. 
C) supply of doughnuts to increase. 
D) quantity of doughnuts supplied to increase.

Question 14

Efficiency occurs if the:

Accepted Answer

A) market is in equilibrium. 
B) socially optimal quantity of goods and services is being produced. 
C) individually rational quantity of goods and services is being produced. 
D) government does not interfere with market prices. 
A) market is in equilibrium. 
B) socially optimal quantity of goods and services is being produced. 
C) individually rational quantity of goods and services is being produced. 
D) government does not interfere with market prices.

Question 15

Assume the demand for sugar decreases and the supply of sugar increases. Which of the following outcomes is certain to occur?

Accepted Answer

A) The equilibrium price of sugar will rise. 
B) The equilibrium quantity of sugar will rise. 
C) The equilibrium price of sugar will fall. 
D) The equilibrium quantity of sugar will fall. 
A) The equilibrium price of sugar will rise. 
B) The equilibrium quantity of sugar will rise. 
C) The equilibrium price of sugar will fall. 
D) The equilibrium quantity of sugar will fall.

Question 16

At the beginning of the fall semester, college towns experience large increases in their populations, causing a(n):

Accepted Answer

A) decrease in the quantity of apartments demanded. 
B) increase in the supply of apartments. 
C) increase in the demand for apartments. 
D) decrease in the quantity of apartments supplied. 
A) decrease in the quantity of apartments demanded. 
B) increase in the supply of apartments. 
C) increase in the demand for apartments. 
D) decrease in the quantity of apartments supplied.

Question 17

Suppose you bought three tickets to a concert in advance at the University ticket window. At the last minute one friend cancelled, so you could use only two of the tickets. You sold the third ticket just outside the entrance to the concert for more than the price you had originally paid. Which transaction occurred in a market?

Accepted Answer

A) The advance purchase at the University was the only market transaction. 
B) The sale that occurred at the concert entrance was the only market transaction. 
C) Both the purchase at the University ticket window and the sale at the concert entrance were market transactions. 
D) Neither the purchase at the University ticket window nor the sale at the concert entrance was a market transaction. 
A) The advance purchase at the University was the only market transaction. 
B) The sale that occurred at the concert entrance was the only market transaction. 
C) Both the purchase at the University ticket window and the sale at the concert entrance were market transactions. 
D) Neither the purchase at the University ticket window nor the sale at the concert entrance was a market transaction.

Question 18

A market equilibrium:

Accepted Answer

A) is socially optimal. 
B) leaves unexploited opportunities for individuals. 
C) might not maximize total economic surplus. 
D) is never socially optimal. 
A) is socially optimal. 
B) leaves unexploited opportunities for individuals. 
C) might not maximize total economic surplus. 
D) is never socially optimal.

Question 19

If supply and demand both decrease, the new equilibrium price will be ________ and the new equilibrium quantity will be ________.

Accepted Answer

A) lower; lower 
B) lower; uncertain 
C) higher; higher 
D) uncertain; lower 
A) lower; lower 
B) lower; uncertain 
C) higher; higher 
D) uncertain; lower

Question 20

If the demand for a good decreases as income decreases, then the good is a(n):

Accepted Answer

A) complementary good. 
B) normal good. 
C) inferior good. 
D) substitute good. 
A) complementary good. 
B) normal good. 
C) inferior good. 
D) substitute good.

Exam 3: Supply and Demand

If an increase in income leads to a decrease in the demand for ground beef, then ground beef is a(n):

If supply increases and demand decreases, the new equilibrium price will be ________ and the new equilibrium quantity will be ________.

For two goods, X and Y, to be classified as substitutes, it must be the case that:

Excess demand occurs:

What might cause a decrease in current supply of a product?

Suppose that a disease that affects people who consume beef has been discovered in the United States. One likely result is:

Suppose the market demand curve is given by Qᵈ = 80 - 10P, and the market supply curve is given by Qˢ = 10 + 15P. What is the equilibrium price and quantity?

A movement along a demand curve from one price-quantity combination to another is called a:

Refer to the accompanying figure. Suppose the solid line represents the current supply of Star Wars action figures. If retailers learn that a new Star Wars movie will be released in several months, this news is likely to cause:

Refer to the accompanying figure, which shows the market for cups of coffee. If all buyers' reservation prices increase by $1.00, then the equilibrium price of coffee would:

Refer to the accompanying figure. Assume the market is originally at point W. Movement to point X is the result of:

Suppose that Tom bought a bike from Helen for $195. If Helen's reservation price was $185, and Tom's reservation price was $215, the seller's surplus from this transaction was:

If the price of doughnuts decreases, then one would expect the:

Efficiency occurs if the:

Assume the demand for sugar decreases and the supply of sugar increases. Which of the following outcomes is certain to occur?

At the beginning of the fall semester, college towns experience large increases in their populations, causing a(n):

A market equilibrium:

If supply and demand both decrease, the new equilibrium price will be ________ and the new equilibrium quantity will be ________.

If the demand for a good decreases as income decreases, then the good is a(n):

Thinking Like an Economist

Comparative Advantage

Elasticity

Demand

Perfectly Competitive Supply

Efficiency, Exchange, and the Invisible Hand in Action

Monopoly, Oligopoly, and Monopolistic Competition

Games and Strategic Behavior

An Introduction to Behavioral Economics

Externalities, Property Rights, and the Environment

The Economics of Information

Labor Markets, Poverty, and Income Distribution

Public Goods and Tax Policy

International Trade and Trade Policy

Macroeconomics: The Birds Eye View of the Economy

Measuring Economic Activity: GDP and Unemployment

Measuring the Price Level and Inflation

Economic Growth, Productivity, and Living Standards

The Labor Market: Workers, Wages, and Unemployment

Saving and Capital Formation

Money Prices and the Federal Reserve

Financial Markets and International Capital Flows

Short-Term Economic Fluctuations: An Introduction

Spending and Output in the Short Run

Stabilizing the Economy: The Role of the Fed

Aggregate Demand, Aggregate Supply, and Inflation

Exchange Rates and the Open Economy

Filters

If supply increases and demand decreases, the new equilibrium price will be and the new equilibrium quantity will be .

If supply and demand both decrease, the new equilibrium price will be and the new equilibrium quantity will be .