Question 1

We know that products G and H are related goods, because when the price of G increases,

Accepted Answer

A)  the demand curve for H will shift to the right, because G and H are complementary goods. 
B)  the quantity of H demanded will shift along its demand curve, because G and H are complementary goods. 
C)  the demand curve for H will shift to the left, because G and H are complementary goods. 
D)  the demand curve for H will remain unchanged because G and H are substitute goods. 
A)  the demand curve for H will shift to the right, because G and H are complementary goods. 
B)  the quantity of H demanded will shift along its demand curve, because G and H are complementary goods. 
C)  the demand curve for H will shift to the left, because G and H are complementary goods. 
D)  the demand curve for H will remain unchanged because G and H are substitute goods.

Question 2

Scalping and other black market activities arise when

Accepted Answer

A)  the prices of goods are allowed to adjust to their equilibrium levels. 
B)  the quantities of goods demanded and supplied are allowed to adjust to their equilibrium levels. 
C)  the prices of goods are restricted to levels above equilibrium prices. 
D)  the prices of goods are restricted to levels below equilibrium prices. 
A)  the prices of goods are allowed to adjust to their equilibrium levels. 
B)  the quantities of goods demanded and supplied are allowed to adjust to their equilibrium levels. 
C)  the prices of goods are restricted to levels above equilibrium prices. 
D)  the prices of goods are restricted to levels below equilibrium prices.

Question 3

-Refer to the above figure. Suppose that Cheerios and Apple Jacks are substitutes. Which diagram shows the effect on the demand for Cheerios when the price of Apple Jacks cereal has decreased?

Accepted Answer

A)  A 
B)  B 
C)  neither graph 
D)  both graphs 
A)  A 
B)  B 
C)  neither graph 
D)  both graphs

Question 4

Demand is defined as

Accepted Answer

A)  a schedule of how much of an item people will purchase at any particular price of that item during a specified time period, other things being constant. 
B)  a specific quantity of an item that people want at a particular price of that item during a specified time period, other things being constant. 
C)  a schedule of how much of a good or service people will purchase at any particular price of a different item during the specified time period, other things being constant. 
D)  a specific quantity of a good or service that people will purchase at one particular price of another item during a specified time period, other things being constant. 
A)  a schedule of how much of an item people will purchase at any particular price of that item during a specified time period, other things being constant. 
B)  a specific quantity of an item that people want at a particular price of that item during a specified time period, other things being constant. 
C)  a schedule of how much of a good or service people will purchase at any particular price of a different item during the specified time period, other things being constant. 
D)  a specific quantity of a good or service that people will purchase at one particular price of another item during a specified time period, other things being constant.

Question 5

-Refer to the above figure for a particular good. The rightward shift of the curve could have been caused by

Accepted Answer

A)  a decrease in the price of an input. 
B)  a decrease in the price of that good. 
C)  an increase in the price of a complementary good. 
D)  an increase in the price of a substitute good. 
A)  a decrease in the price of an input. 
B)  a decrease in the price of that good. 
C)  an increase in the price of a complementary good. 
D)  an increase in the price of a substitute good.

Question 6

The price of a new car is $40,000 while the price of a five-year old car of the same brand is $16,000. The next year the price of the new car increases to $44,000 and the price of a five-year old car of the same brand is $17,600. The relative price of the used car

Accepted Answer

A)  decreased by $2,400. 
B)  decreased by 10 percent. 
C)  increased by 10 percent. 
D)  remained constant at 0.4. 
A)  decreased by $2,400. 
B)  decreased by 10 percent. 
C)  increased by 10 percent. 
D)  remained constant at 0.4.

Question 7

The law of demand states that

Accepted Answer

A)  consumers have unlimited demands for a good. 
B)  a higher price will lead to increased sales. 
C)  the price can never be too high for some consumers. 
D)  quantity demanded will vary inversely with the price of the good. 
A)  consumers have unlimited demands for a good. 
B)  a higher price will lead to increased sales. 
C)  the price can never be too high for some consumers. 
D)  quantity demanded will vary inversely with the price of the good.

Question 8

An increase in supply will occur when

Accepted Answer

A)  the supply curve shifts downward to the right. 
B)  the supply curve shifts upward to the left. 
C)  the demand curve shifts downward to the left. 
D)  the demand curve shifts upward to the right. 
A)  the supply curve shifts downward to the right. 
B)  the supply curve shifts upward to the left. 
C)  the demand curve shifts downward to the left. 
D)  the demand curve shifts upward to the right.

Question 9

-Refer to the above figure. At a price of four cents, the quantity of bubble gum supplied will be

Accepted Answer

A)  3. 
B)  2. 
C)  4. 
D)  5. 
A)  3. 
B)  2. 
C)  4. 
D)  5.

Question 10

Which of the following causes an increase in demand for a normal good?

Accepted Answer

A)  Increase in the price of a substitute 
B)  Increase in the price of a complement 
C)  Decrease in price 
D)  Decrease in income 
A)  Increase in the price of a substitute 
B)  Increase in the price of a complement 
C)  Decrease in price 
D)  Decrease in income

Question 11

A market requires

Accepted Answer

A)  sellers only. 
B)  buyers and sellers. 
C)  government intervention. 
D)  buyers only. 
A)  sellers only. 
B)  buyers and sellers. 
C)  government intervention. 
D)  buyers only.

Question 12

Which of the following will NOT cause a rightward shift in the supply curve?

Accepted Answer

A)  an improvement in technology 
B)  a reduction in resource costs 
C)  a reduction in the expected future price 
D)  none of the above 
A)  an improvement in technology 
B)  a reduction in resource costs 
C)  a reduction in the expected future price 
D)  none of the above

Question 13

Explain how a market demand curve is found.

Accepted Answer

The market demand curve is the horizonta

Question 14

An increase in demand for a good can be caused by

Accepted Answer

A)  a decrease in the price of a substitute good. 
B)  a reduction in income if the good is a normal good. 
C)  a decrease in the price of a complementary good. 
D)  an increase in price of a complementary good. 
A)  a decrease in the price of a substitute good. 
B)  a reduction in income if the good is a normal good. 
C)  a decrease in the price of a complementary good. 
D)  an increase in price of a complementary good.

Question 15

A normal good is one for which

Accepted Answer

A)  demand increases as income increases. 
B)  demand increases as income decreases. 
C)  the demand curve is horizontal. 
D)  demand increases as the price of a substitute increases. 
A)  demand increases as income increases. 
B)  demand increases as income decreases. 
C)  the demand curve is horizontal. 
D)  demand increases as the price of a substitute increases.

Question 16

The only variable that can affect a movement along the demand curve is

Accepted Answer

A)  income levels. 
B)  the price of the good itself. 
C)  the number of buyers. 
D)  the number of substitutes. 
A)  income levels. 
B)  the price of the good itself. 
C)  the number of buyers. 
D)  the number of substitutes.

Question 17

-According to the market data for good X in the above table, a stable equilibrium price is established at

Accepted Answer

A)  $2. 
B)  $4. 
C)  $6. 
D)  $8. 
A)  $2. 
B)  $4. 
C)  $6. 
D)  $8.

Question 18

-In the above figure, what are the equilibrium price and quantity?

Accepted Answer

A)  $40 and 200 units 
B)  $50 and 100 units 
C)  $10 and 200 units 
D)  $30 and 100 units 
A)  $40 and 200 units 
B)  $50 and 100 units 
C)  $10 and 200 units 
D)  $30 and 100 units

Question 19

If one day a terrible disease were to wipe out over one-half of the world's lime trees, which of the following would likely result?

Accepted Answer

A)  The supply curve of lime juice would shift downward and to the right. 
B)  The supply curve of lime juice would shift upward and to the left. 
C)  The demand curve for lime juice would shift to the right. 
D)  The demand curve for lime juice would shift to the left. 
A)  The supply curve of lime juice would shift downward and to the right. 
B)  The supply curve of lime juice would shift upward and to the left. 
C)  The demand curve for lime juice would shift to the right. 
D)  The demand curve for lime juice would shift to the left.

Question 20

-Refer to the above figure. A movement from point A to point B for a good is most likely a result of

Accepted Answer

A)  an increase in the price of that good. 
B)  a decrease in the price of that good. 
C)  an expectation of an increase in the relative price of that good. 
D)  an expectation of a decrease in the relative price of that good. 
A)  an increase in the price of that good. 
B)  a decrease in the price of that good. 
C)  an expectation of an increase in the relative price of that good. 
D)  an expectation of a decrease in the relative price of that good.

Exam 3: Demand and Supply

We know that products G and H are related goods, because when the price of G increases,

Scalping and other black market activities arise when

-Refer to the above figure. Suppose that Cheerios and Apple Jacks are substitutes. Which diagram shows the effect on the demand for Cheerios when the price of Apple Jacks cereal has decreased?

Demand is defined as

-Refer to the above figure for a particular good. The rightward shift of the curve could have been caused by

The price of a new car is $40,000 while the price of a five-year old car of the same brand is $16,000. The next year the price of the new car increases to $44,000 and the price of a five-year old car of the same brand is $17,600. The relative price of the used car

The law of demand states that

An increase in supply will occur when

-Refer to the above figure. At a price of four cents, the quantity of bubble gum supplied will be

Which of the following causes an increase in demand for a normal good?

A market requires

Which of the following will NOT cause a rightward shift in the supply curve?

Explain how a market demand curve is found.

An increase in demand for a good can be caused by

A normal good is one for which

The only variable that can affect a movement along the demand curve is

-According to the market data for good X in the above table, a stable equilibrium price is established at

-In the above figure, what are the equilibrium price and quantity?

If one day a terrible disease were to wipe out over one-half of the world's lime trees, which of the following would likely result?

-Refer to the above figure. A movement from point A to point B for a good is most likely a result of

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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