Question 1

Which of the following will cause a movement along the demand curve instead of a shift of the demand curve?

Accepted Answer

A)  Income 
B)  Tastes and preferences 
C)  Expectations of the future price of a good 
D)  none of the above 
A)  Income 
B)  Tastes and preferences 
C)  Expectations of the future price of a good 
D)  none of the above

Question 2

What information is provided by a demand curve? What variables are measured along the axes of the graph?

Accepted Answer

The demand curve is a graphical represen

Question 3

In economic terminology, a normal good is a good

Accepted Answer

A)  on which a monetary value cannot be placed. 
B)  that is liked only by normal people. 
C)  for which demand increases when price increases. 
D)  for which demand increases when income increases. 
A)  on which a monetary value cannot be placed. 
B)  that is liked only by normal people. 
C)  for which demand increases when price increases. 
D)  for which demand increases when income increases.

Question 4

What would happen in the market for prescription drugs if people begin to view over-the-counter remedies as a good substitute for prescription medications?

Accepted Answer

A)  Prescription medications will become an inferior good. 
B)  There is an upward movement along the demand curve for prescription medications. 
C)  There is a downward movement along the demand curve for prescription medications. 
D)  The demand for prescription medications will decrease. 
A)  Prescription medications will become an inferior good. 
B)  There is an upward movement along the demand curve for prescription medications. 
C)  There is a downward movement along the demand curve for prescription medications. 
D)  The demand for prescription medications will decrease.

Question 5

Other things being constant, the only way to move along a given supply curve for a product is for

Accepted Answer

A)  the product's relative price to change. 
B)  the future relative price of related goods to change. 
C)  the number of sellers to change. 
D)  technological changes to occur. 
A)  the product's relative price to change. 
B)  the future relative price of related goods to change. 
C)  the number of sellers to change. 
D)  technological changes to occur.

Question 6

A change in the ceteris paribus conditions for supply will lead to a

Accepted Answer

A)  change in quantity supplied. 
B)  change in supply. 
C)  change in quantity supplied and a change in supply. 
D)  change in how consumers view the quality of the good. 
A)  change in quantity supplied. 
B)  change in supply. 
C)  change in quantity supplied and a change in supply. 
D)  change in how consumers view the quality of the good.

Question 7

Sugar is an input used to produce cereal. Suppose that the price of sugar rises. As a result,

Accepted Answer

A)  the supply curve for sugar will shift to the right. 
B)  the supply curve for sugar will shift to the left. 
C)  the supply curve for cereal will shift to the right. 
D)  the supply curve for cereal will shift to the left. 
A)  the supply curve for sugar will shift to the right. 
B)  the supply curve for sugar will shift to the left. 
C)  the supply curve for cereal will shift to the right. 
D)  the supply curve for cereal will shift to the left.

Question 8

The relationship between quantity supplied and the price of output is such that

Accepted Answer

A)  an increase in quantity will automatically lead to a reduction in price. 
B)  an increase in price will lead to an increase in quantity supplied. 
C)  an increase in price will produce an inward shift in the supply curve. 
D)  quantity will decrease as the number of firms increases. 
A)  an increase in quantity will automatically lead to a reduction in price. 
B)  an increase in price will lead to an increase in quantity supplied. 
C)  an increase in price will produce an inward shift in the supply curve. 
D)  quantity will decrease as the number of firms increases.

Question 9

When there is an excess quantity of a product supplied, there will be

Accepted Answer

A)  a tendency for price of the product to increase. 
B)  a tendency for price of the product to fall. 
C)  incentives for consumers to leave the market. 
D)  upward pressure on the price of labor. 
A)  a tendency for price of the product to increase. 
B)  a tendency for price of the product to fall. 
C)  incentives for consumers to leave the market. 
D)  upward pressure on the price of labor.

Question 10

-Using the above figure, at which price is there neither excess quantity demanded nor excess quantity supplied?

Accepted Answer

A)  P1 
B)  P2 
C)  P3 
D)  none of these 
A)  P1 
B)  P2 
C)  P3 
D)  none of these

Question 11

-Refer to the above figure. Which panel best demonstrates the demand curve?

Accepted Answer

A)  Panel A. 
B)  Panel B. 
C)  Panel C. 
D)  Panel D. 
A)  Panel A. 
B)  Panel B. 
C)  Panel C. 
D)  Panel D.

Question 12

An increase in the price of corn will lead to

Accepted Answer

A)  an upward (and leftward) movement along the demand curve for corn. 
B)  a leftward shift in the demand curve for corn. 
C)  a rightward shift in the supply curve for corn. 
D)  an increase in the quantity of corn consumed. 
A)  an upward (and leftward) movement along the demand curve for corn. 
B)  a leftward shift in the demand curve for corn. 
C)  a rightward shift in the supply curve for corn. 
D)  an increase in the quantity of corn consumed.

Question 13

The fact that when the price of a good goes up, people buy less of it is known as the

Accepted Answer

A)  law of supply. 
B)  law of demand. 
C)  concept of market equilibrium. 
D)  need for inferior goods. 
A)  law of supply. 
B)  law of demand. 
C)  concept of market equilibrium. 
D)  need for inferior goods.

Question 14

A surplus exists

Accepted Answer

A)  in equilibrium. 
B)  when quantity supplied is greater than quantity demanded. 
C)  when quantity supplied is less that quantity demanded. 
D)  at the market clearing price. 
A)  in equilibrium. 
B)  when quantity supplied is greater than quantity demanded. 
C)  when quantity supplied is less that quantity demanded. 
D)  at the market clearing price.

Question 15

At the market clearing price,

Accepted Answer

A)  there is neither a shortage nor a surplus. 
B)  quantity supplied equals quantity demanded. 
C)  the supply and demand curves intersect. 
D)  All of the above are correct. 
A)  there is neither a shortage nor a surplus. 
B)  quantity supplied equals quantity demanded. 
C)  the supply and demand curves intersect. 
D)  All of the above are correct.

Question 16

Which of the following is a determinant of supply?

Accepted Answer

A)  Tastes and preferences of consumers 
B)  Technology 
C)  Consumer income 
D)  Number of consumers 
A)  Tastes and preferences of consumers 
B)  Technology 
C)  Consumer income 
D)  Number of consumers

Question 17

Briefly discuss the determinants of demand other than price.

Accepted Answer

An increase in income causes demand of a

Question 18

Graphically, the market supply curve is obtained by

Accepted Answer

A)  changing the ceteris paribus conditions. 
B)  a change in quantity supplied. 
C)  horizontally summing quantity supplied at various prices for individual producers. 
D)  vertically summing quantity supplied at various prices for individual producers. 
A)  changing the ceteris paribus conditions. 
B)  a change in quantity supplied. 
C)  horizontally summing quantity supplied at various prices for individual producers. 
D)  vertically summing quantity supplied at various prices for individual producers.

Question 19

A supply curve

Accepted Answer

A)  has an indirect or negative relationship between price and quantity supplied. 
B)  has a direct or positive relationship between price and quantity supplied. 
C)  shows the relationship between quantity supplied and income. 
D)  shows the relationship between complements. 
A)  has an indirect or negative relationship between price and quantity supplied. 
B)  has a direct or positive relationship between price and quantity supplied. 
C)  shows the relationship between quantity supplied and income. 
D)  shows the relationship between complements.

Question 20

A market demand schedule for a product indicates that

Accepted Answer

A)  as the product's price falls, consumers buy less of the good. 
B)  there is a positive relationship between price and quantity demanded. 
C)  as a product's price rises, consumers buy more of the good. 
D)  there is a negative relationship between price and quantity demanded. 
A)  as the product's price falls, consumers buy less of the good. 
B)  there is a positive relationship between price and quantity demanded. 
C)  as a product's price rises, consumers buy more of the good. 
D)  there is a negative relationship between price and quantity demanded.

Exam 3: Demand and Supply

Which of the following will cause a movement along the demand curve instead of a shift of the demand curve?

What information is provided by a demand curve? What variables are measured along the axes of the graph?

In economic terminology, a normal good is a good

What would happen in the market for prescription drugs if people begin to view over-the-counter remedies as a good substitute for prescription medications?

Other things being constant, the only way to move along a given supply curve for a product is for

A change in the ceteris paribus conditions for supply will lead to a

Sugar is an input used to produce cereal. Suppose that the price of sugar rises. As a result,

The relationship between quantity supplied and the price of output is such that

When there is an excess quantity of a product supplied, there will be

-Using the above figure, at which price is there neither excess quantity demanded nor excess quantity supplied?

-Refer to the above figure. Which panel best demonstrates the demand curve?

An increase in the price of corn will lead to

The fact that when the price of a good goes up, people buy less of it is known as the

A surplus exists

At the market clearing price,

Which of the following is a determinant of supply?

Briefly discuss the determinants of demand other than price.

Graphically, the market supply curve is obtained by

A supply curve

A market demand schedule for a product indicates that

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

Measuring the Economys Performance

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

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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