Question 1

Which of the following would likely cause an increase in the supply of espresso coffee makers?

Accepted Answer

A)  an increase in the number of business firms demanding espresso makers 
B)  an increase in the price of espresso makers 
C)  an increase in the cost of manufacturing espresso makers 
D)  a widespread expectation that the price of espresso makers will fall in the future 
A)  an increase in the number of business firms demanding espresso makers 
B)  an increase in the price of espresso makers 
C)  an increase in the cost of manufacturing espresso makers 
D)  a widespread expectation that the price of espresso makers will fall in the future

Question 2

Which of the following is a determinant of consumer demand?

Accepted Answer

A)  Expectation of the future relative price of a product 
B)  Taxes imposed on firms that sell the product 
C)  Cost of inputs used to produce the product 
D)  Number of firms that produce the product 
A)  Expectation of the future relative price of a product 
B)  Taxes imposed on firms that sell the product 
C)  Cost of inputs used to produce the product 
D)  Number of firms that produce the product

Question 3

Which of the following are substitute goods?

Accepted Answer

A)  margarine and butter 
B)  peanut butter and jelly 
C)  pizza and beer 
D)  sports utility vehicles and gasoline 
A)  margarine and butter 
B)  peanut butter and jelly 
C)  pizza and beer 
D)  sports utility vehicles and gasoline

Question 4

According to the law of supply,

Accepted Answer

A)  people buy more of a good when the price increases. 
B)  people buy less of a good when the price decreases. 
C)  producers provide more of a good when the price decreases. 
D)  producers provide less of a good when the price decreases. 
A)  people buy more of a good when the price increases. 
B)  people buy less of a good when the price decreases. 
C)  producers provide more of a good when the price decreases. 
D)  producers provide less of a good when the price decreases.

Question 5

-Refer to the above figure. Which panel demonstrates the law of demand?

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 6

The price of an MP3 music player increased from $50 to $70 while the price of a music download increased from $1 to $2. The relative price of an MP3 music player in terms of music downloads

Accepted Answer

A)  increased from 0.04 to 0.05. 
B)  decreased from 50 to 35. 
C)  increased, but we need more information to know by how much. 
D)  decreased, but we need more information to know by how much. 
A)  increased from 0.04 to 0.05. 
B)  decreased from 50 to 35. 
C)  increased, but we need more information to know by how much. 
D)  decreased, but we need more information to know by how much.

Question 7

The law of demand implies that the demand curve

Accepted Answer

A)  has a negative slope. 
B)  has a positive slope. 
C)  shifts to the right when the price of a good increases. 
D)  shifts to the left when the price of a good decreases. 
A)  has a negative slope. 
B)  has a positive slope. 
C)  shifts to the right when the price of a good increases. 
D)  shifts to the left when the price of a good decreases.

Question 8

If the price of personal computers were to rise, then the demand for printers would decrease because personal computers and printers are

Accepted Answer

A)  complementary goods. 
B)  consumer goods. 
C)  inferior goods. 
D)  substitute goods. 
A)  complementary goods. 
B)  consumer goods. 
C)  inferior goods. 
D)  substitute goods.

Question 9

The price of a phone call at a pay phone was 5 cents in 1950 and the price of a first-class stamp was 3 cents. In 2010, the pay phone costs 50 cents for a call and a first-class stamp costs 44 cents. We know that

Accepted Answer

A)  both the nominal and the relative price of phone calls increased from 1950 to 2010. 
B)  both the nominal prices of phone calls and first-class stamps increased from 1950 to 2010, but the relative price of stamps increased and the relative price of phone calls decreased from 1950 to 2010. 
C)  all prices increased from 1950 to 2010: Nominal prices of phone calls, first-class stamps, and the relative prices of phone calls and first-class stamps. 
D)  both the nominal prices of phone calls and first-class stamps increased from 1950 to 2010, but we can't tell if the relative prices increased or decreased without more information. 
A)  both the nominal and the relative price of phone calls increased from 1950 to 2010. 
B)  both the nominal prices of phone calls and first-class stamps increased from 1950 to 2010, but the relative price of stamps increased and the relative price of phone calls decreased from 1950 to 2010. 
C)  all prices increased from 1950 to 2010: Nominal prices of phone calls, first-class stamps, and the relative prices of phone calls and first-class stamps. 
D)  both the nominal prices of phone calls and first-class stamps increased from 1950 to 2010, but we can't tell if the relative prices increased or decreased without more information.

Question 10

If a decrease in the price of good A causes a decrease in demand for good B, the two goods are

Accepted Answer

A)  substitutes. 
B)  complements. 
C)  normal. 
D)  inferior. 
A)  substitutes. 
B)  complements. 
C)  normal. 
D)  inferior.

Question 11

The supply curve will shift to the left when

Accepted Answer

A)  the supply of the product increases. 
B)  the demand for the product decreases. 
C)  some producers leave the industry. 
D)  the product becomes fashionable. 
A)  the supply of the product increases. 
B)  the demand for the product decreases. 
C)  some producers leave the industry. 
D)  the product becomes fashionable.

Question 12

When income rises,

Accepted Answer

A)  demand for a normal good rises. 
B)  demand for a normal good falls. 
C)  demand for an inferior good rises. 
D)  quantity of a normal good demanded rises. 
A)  demand for a normal good rises. 
B)  demand for a normal good falls. 
C)  demand for an inferior good rises. 
D)  quantity of a normal good demanded rises.

Question 13

An expected future increase in the price of gasoline may

Accepted Answer

A)  increase the demand for gasoline now. 
B)  decrease the demand for gasoline now. 
C)  increase the supply of gasoline now. 
D)  make gasoline an inferior good. 
A)  increase the demand for gasoline now. 
B)  decrease the demand for gasoline now. 
C)  increase the supply of gasoline now. 
D)  make gasoline an inferior good.

Question 14

The law of demand states that

Accepted Answer

A)  people demand less at lower prices. 
B)  the quantity demanded is directly related to price. 
C)  the quantity demanded is inversely related to price. 
D)  changes in price and changes in quantity demanded move in the same direction. 
A)  people demand less at lower prices. 
B)  the quantity demanded is directly related to price. 
C)  the quantity demanded is inversely related to price. 
D)  changes in price and changes in quantity demanded move in the same direction.

Question 15

-Refer to the above figure. A surplus will exist when

Accepted Answer

A)  the price is between $0 and $6. 
B)  the price equals $6. 
C)  the price equals $10. 
D)  quantity demanded equals 15. 
A)  the price is between $0 and $6. 
B)  the price equals $6. 
C)  the price equals $10. 
D)  quantity demanded equals 15.

Question 16

According to the law of demand,

Accepted Answer

A)  people buy more of a good when the price rises. 
B)  people buy more of a good when their income rises. 
C)  people buy more of a good when the relative price rises. 
D)  people buy more of a good when the price falls. 
A)  people buy more of a good when the price rises. 
B)  people buy more of a good when their income rises. 
C)  people buy more of a good when the relative price rises. 
D)  people buy more of a good when the price falls.

Question 17

-Refer to the above figure. Which diagram shows the effect on the market of Corn Flakes when the demand for Corn Flakes has increased?

Accepted Answer

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

Question 18

Which of the following will cause an outward (rightward) shift in the supply curve?

Accepted Answer

A)  A reduction in the price of the good 
B)  An increase in the price of labor input 
C)  An increase in the number of consumers 
D)  Technological progress 
A)  A reduction in the price of the good 
B)  An increase in the price of labor input 
C)  An increase in the number of consumers 
D)  Technological progress

Question 19

How is the equilibrium price determined? What happens if the price is above the equilibrium price? What happens if the price is below the equilibrium price?

Accepted Answer

The equilibrium price is determined by t

Question 20

The equilibrium or market clearing price occurs at the point at which

Accepted Answer

A)  quantity demanded equals quantity supplied. 
B)  the supply curve intersects the horizontal axis. 
C)  the demand curve intersects the vertical axis. 
D)  there is a shortage of the desired good. 
A)  quantity demanded equals quantity supplied. 
B)  the supply curve intersects the horizontal axis. 
C)  the demand curve intersects the vertical axis. 
D)  there is a shortage of the desired good.

Exam 3: Demand and Supply

Which of the following would likely cause an increase in the supply of espresso coffee makers?

Which of the following is a determinant of consumer demand?

Which of the following are substitute goods?

According to the law of supply,

-Refer to the above figure. Which panel demonstrates the law of demand?

The price of an MP3 music player increased from $50 to $70 while the price of a music download increased from $1 to $2. The relative price of an MP3 music player in terms of music downloads

The law of demand implies that the demand curve

If the price of personal computers were to rise, then the demand for printers would decrease because personal computers and printers are

The price of a phone call at a pay phone was 5 cents in 1950 and the price of a first-class stamp was 3 cents. In 2010, the pay phone costs 50 cents for a call and a first-class stamp costs 44 cents. We know that

If a decrease in the price of good A causes a decrease in demand for good B, the two goods are

The supply curve will shift to the left when

When income rises,

An expected future increase in the price of gasoline may

The law of demand states that

-Refer to the above figure. A surplus will exist when

According to the law of demand,

-Refer to the above figure. Which diagram shows the effect on the market of Corn Flakes when the demand for Corn Flakes has increased?

Which of the following will cause an outward (rightward) shift in the supply curve?

How is the equilibrium price determined? What happens if the price is above the equilibrium price? What happens if the price is below the equilibrium price?

The equilibrium or market clearing price occurs at the point at which

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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