Question 1

-Refer to the above figure. Moving from point A to point B indicates

Accepted Answer

A)  An increase in supply. 
B)  An increase in quantity supplied. 
C)  A decrease in supply. 
D)  A decrease in quantity supplied. 
A)  An increase in supply. 
B)  An increase in quantity supplied. 
C)  A decrease in supply. 
D)  A decrease in quantity supplied.

Question 2

-In the above figure, if the price is equal to $50, there is

Accepted Answer

A)  a surplus of 200 units. 
B)  a shortage of 100 units. 
C)  an excess quantity demanded of 50 units. 
D)  an inadequate supply of 100 units. 
A)  a surplus of 200 units. 
B)  a shortage of 100 units. 
C)  an excess quantity demanded of 50 units. 
D)  an inadequate supply of 100 units.

Question 3

Which of the following statements is FALSE about the demand curve?

Accepted Answer

A)  An increase in demand shifts the demand curve to the left, closer to the price axis. 
B)  When only the price of a good changes, there is movement along the demand curve but no change in demand. 
C)  A change in demand is graphically shown by shifting the entire demand curve. 
D)  When demand decreases, there is a drop in the quantity demanded at each price. 
A)  An increase in demand shifts the demand curve to the left, closer to the price axis. 
B)  When only the price of a good changes, there is movement along the demand curve but no change in demand. 
C)  A change in demand is graphically shown by shifting the entire demand curve. 
D)  When demand decreases, there is a drop in the quantity demanded at each price.

Question 4

The price of a new textbook is $60 in one year and $75 two years later, while the price of a used copy of the textbook increased from $25 to $37.50. The relative price of a new textbook

Accepted Answer

A)  increased by 25 percent. 
B)  increased from 2.4 to 3. 
C)  decreased from 2.4 to 2.0. 
D)  decreased from 1.4 to 1.25 
A)  increased by 25 percent. 
B)  increased from 2.4 to 3. 
C)  decreased from 2.4 to 2.0. 
D)  decreased from 1.4 to 1.25

Question 5

A schedule of amounts of a good that people will purchase at various prices during a specific time period holding other factors constant is

Accepted Answer

A)  a market. 
B)  supply. 
C)  demand. 
D)  the market clearing price. 
A)  a market. 
B)  supply. 
C)  demand. 
D)  the market clearing price.

Question 6

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 7

According to the law of demand

Accepted Answer

A)  price and quantity demanded move in the same direction. 
B)  price and quantity demanded move in opposite directions. 
C)  ceteris paribus does not apply. 
D)  price and quantity demanded are unrelated. 
A)  price and quantity demanded move in the same direction. 
B)  price and quantity demanded move in opposite directions. 
C)  ceteris paribus does not apply. 
D)  price and quantity demanded are unrelated.

Question 8

Suppose a concert by Lady Gaga and a basketball game played by the L.A. Lakers are substitutes, then which of the following is true?

Accepted Answer

A)  If the price of a ticket to a Lakers game increases, then the demand for Lady Gaga tickets will fall. 
B)  If the price of a ticket to a Lakers game decreases, the quantity of Lakers tickets demanded will increase. 
C)  If the price of a ticket to a Lakers game increases, then the demand for Lady Gaga tickets will remain unchanged. 
D)  The price of a ticket to a Lakers game will always equal the price of a ticket to a Lady Gaga concert. 
A)  If the price of a ticket to a Lakers game increases, then the demand for Lady Gaga tickets will fall. 
B)  If the price of a ticket to a Lakers game decreases, the quantity of Lakers tickets demanded will increase. 
C)  If the price of a ticket to a Lakers game increases, then the demand for Lady Gaga tickets will remain unchanged. 
D)  The price of a ticket to a Lakers game will always equal the price of a ticket to a Lady Gaga concert.

Question 9

Four points on a demand schedule are given: $12, 2 units; $10, 1 unit; $15, 1.5 units; and $2, 4 units. Which combination is inconsistent with the law of demand?

Accepted Answer

A)  $12 and 2 units 
B)  $10 and 1 unit 
C)  $15 and 1.5 units 
D)  $2 and 4 units 
A)  $12 and 2 units 
B)  $10 and 1 unit 
C)  $15 and 1.5 units 
D)  $2 and 4 units

Question 10

A shortage will occur whenever

Accepted Answer

A)  price is below the equilibrium price. 
B)  price is above the equilibrium price. 
C)  price is equal to the equilibrium price. 
D)  the supply curve is upward sloping. 
A)  price is below the equilibrium price. 
B)  price is above the equilibrium price. 
C)  price is equal to the equilibrium price. 
D)  the supply curve is upward sloping.

Question 11

Which one of the following statements is FALSE?

Accepted Answer

A)  There is an inverse (negative) relationship between product price and quantity supplied. 
B)  There is some price at which quantity supplied of a product is zero. 
C)  As product price increases, producers are willing to put more of the good on the market for sale. 
D)  In order to entice producers to offer more of a product on the market for sale, product price must rise. 
A)  There is an inverse (negative) relationship between product price and quantity supplied. 
B)  There is some price at which quantity supplied of a product is zero. 
C)  As product price increases, producers are willing to put more of the good on the market for sale. 
D)  In order to entice producers to offer more of a product on the market for sale, product price must rise.

Question 12

When a shortage exists,

Accepted Answer

A)  the price is below the market clearing price. 
B)  quantity demanded exceeds quantity supplied. 
C)  an excess quantity demanded exists. 
D)  all of the above 
A)  the price is below the market clearing price. 
B)  quantity demanded exceeds quantity supplied. 
C)  an excess quantity demanded exists. 
D)  all of the above

Question 13

The market demand curve for a particular good

Accepted Answer

A)  is the horizontal sum of all individual demand curves for the good. 
B)  may be less than an individual demand curve for the good. 
C)  may or may not show a direct relationship between price and quantity demanded. 
D)  will not be affected by any of the determinants of individual demand. 
A)  is the horizontal sum of all individual demand curves for the good. 
B)  may be less than an individual demand curve for the good. 
C)  may or may not show a direct relationship between price and quantity demanded. 
D)  will not be affected by any of the determinants of individual demand.

Question 14

If consumers expect that the price of pretzels will decrease next week, what would happen today?

Accepted Answer

A)  Demand today for pretzels would decrease. 
B)  Demand today for pretzels would increase. 
C)  Demand today for pretzels would be unaffected. 
D)  Supply today of pretzels would decrease. 
A)  Demand today for pretzels would decrease. 
B)  Demand today for pretzels would increase. 
C)  Demand today for pretzels would be unaffected. 
D)  Supply today of pretzels would decrease.

Question 15

If we are comparing the price of regular gasoline with the price of super gasoline, then an increase in the relative price of regular gasoline implies that

Accepted Answer

A)  the nominal price of regular gasoline increased. 
B)  the nominal price of super gasoline decreased. 
C)  the relative price of super gasoline decreased. 
D)  the relative price of regular gasoline increased. 
A)  the nominal price of regular gasoline increased. 
B)  the nominal price of super gasoline decreased. 
C)  the relative price of super gasoline decreased. 
D)  the relative price of regular gasoline increased.

Question 16

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 17

-According to the above figure for a gasoline market, what happens when the price per gallon of gasoline jumps from $1 to $4?

Accepted Answer

A)  A gasoline surplus is replaces by a gas shortage. 
B)  The market moves from a shortage of 40 million gallons/day to a surplus of 50 million gallons/day. 
C)  The market shortage is replaced by market equilibrium. 
D)  A surplus of 40 million gallons/day results. 
A)  A gasoline surplus is replaces by a gas shortage. 
B)  The market moves from a shortage of 40 million gallons/day to a surplus of 50 million gallons/day. 
C)  The market shortage is replaced by market equilibrium. 
D)  A surplus of 40 million gallons/day results.

Question 18

As John's income has increased, he has purchased fewer hamburgers. Hamburgers are

Accepted Answer

A)  a normal good for John. 
B)  an inferior good for John. 
C)  not following the law of demand. 
D)  leading to a rightward shift in John's demand curve for hamburgers. 
A)  a normal good for John. 
B)  an inferior good for John. 
C)  not following the law of demand. 
D)  leading to a rightward shift in John's demand curve for hamburgers.

Question 19

Which of the following will cause a rightward shift of the demand curve?

Accepted Answer

A)  a decrease in the cost of production 
B)  a decrease in the price of the good 
C)  an increase in the expected future price of the good 
D)  all of the above 
A)  a decrease in the cost of production 
B)  a decrease in the price of the good 
C)  an increase in the expected future price of the good 
D)  all of the above

Question 20

An expected increase in the future price of automobiles will lead to

Accepted Answer

A)  an outward shift in demand for automobiles today. 
B)  a reduction in the demand for gasoline today. 
C)  a movement down the demand schedule for automobiles. 
D)  no predictable impact on today's demand for automobiles. 
A)  an outward shift in demand for automobiles today. 
B)  a reduction in the demand for gasoline today. 
C)  a movement down the demand schedule for automobiles. 
D)  no predictable impact on today's demand for automobiles.

Exam 3: Demand and Supply

-Refer to the above figure. Moving from point A to point B indicates

-In the above figure, if the price is equal to $50, there is

Which of the following statements is FALSE about the demand curve?

The price of a new textbook is $60 in one year and $75 two years later, while the price of a used copy of the textbook increased from $25 to $37.50. The relative price of a new textbook

A schedule of amounts of a good that people will purchase at various prices during a specific time period holding other factors constant is

A demand curve is derived from

According to the law of demand

Suppose a concert by Lady Gaga and a basketball game played by the L.A. Lakers are substitutes, then which of the following is true?

Four points on a demand schedule are given: $12, 2 units; $10, 1 unit; $15, 1.5 units; and $2, 4 units. Which combination is inconsistent with the law of demand?

A shortage will occur whenever

Which one of the following statements is FALSE?

When a shortage exists,

The market demand curve for a particular good

If consumers expect that the price of pretzels will decrease next week, what would happen today?

If we are comparing the price of regular gasoline with the price of super gasoline, then an increase in the relative price of regular gasoline implies that

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

-According to the above figure for a gasoline market, what happens when the price per gallon of gasoline jumps from $1 to $4?

As John's income has increased, he has purchased fewer hamburgers. Hamburgers are

Which of the following will cause a rightward shift of the demand curve?

An expected increase in the future price of automobiles will lead to

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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