Question 1

Which of the following is a non-price determinant of supply?

Accepted Answer

A)  the price of related goods consumers may buy 
B)  technological advances in production 
C)  consumers' incomes 
D)  the number of consumers 
A)  the price of related goods consumers may buy 
B)  technological advances in production 
C)  consumers' incomes 
D)  the number of consumers

Question 2

Which of the following is true of the activities of ticket scalpers?

Accepted Answer

A)  These activities cannot generate profits for the scalpers unless ticket prices are currently below market clearing levels. 
B)  These activities help reduce the quantities of excess tickets supplied for events in which ticket surpluses currently exist. 
C)  Engaging in these activities enable scalpers to push the price above the market clearing level. 
D)  Engaging in these activities enable scalpers to push the price below the market clearing level. 
A)  These activities cannot generate profits for the scalpers unless ticket prices are currently below market clearing levels. 
B)  These activities help reduce the quantities of excess tickets supplied for events in which ticket surpluses currently exist. 
C)  Engaging in these activities enable scalpers to push the price above the market clearing level. 
D)  Engaging in these activities enable scalpers to push the price below the market clearing level.

Question 3

Which of the following will NOT lead to a decrease in demand for a normal good?

Accepted Answer

A)  An increase in income 
B)  An increase in the price of an input 
C)  A decrease in the price of a complement good 
D)  An increase in the number of consumers 
A)  An increase in income 
B)  An increase in the price of an input 
C)  A decrease in the price of a complement good 
D)  An increase in the number of consumers

Question 4

-If the market price falls from P0 to P1 in the above figure, then

Accepted Answer

A)  a new equilibrium quantity is established. 
B)  there is a shortage equal to the distance EF. 
C)  there will be a further tendency for price to fall. 
D)  there is a surplus of goods on the market equal to the distance Q1, Q2. 
A)  a new equilibrium quantity is established. 
B)  there is a shortage equal to the distance EF. 
C)  there will be a further tendency for price to fall. 
D)  there is a surplus of goods on the market equal to the distance Q1, Q2.

Question 5

What situation gives rise to a surplus?

Accepted Answer

A)  The market clearing price of the good is too high. 
B)  The current price of the good is below its market clearing price. 
C)  The current price of the good is above its market clearing price. 
D)  Supply of the good decreases, but the market price is not permitted to change. 
A)  The market clearing price of the good is too high. 
B)  The current price of the good is below its market clearing price. 
C)  The current price of the good is above its market clearing price. 
D)  Supply of the good decreases, but the market price is not permitted to change.

Question 6

Which of the following occurs when a market is in equilibrium?

Accepted Answer

A)  quantity supplied is equal to quantity demanded 
B)  supply is equal to demand. 
C)  the price of the good will tend to rise, all else held constant. 
D)  the price of the good will tend to fall, all else held constant. 
A)  quantity supplied is equal to quantity demanded 
B)  supply is equal to demand. 
C)  the price of the good will tend to rise, all else held constant. 
D)  the price of the good will tend to fall, all else held constant.

Question 7

-Refer to the above figure. The market clearing price is

Accepted Answer

A)  $2. 
B)  $6. 
C)  $8. 
D)  $10. 
A)  $2. 
B)  $6. 
C)  $8. 
D)  $10.

Question 8

-Refer to the above table. The equilibrium price of tablets is

Accepted Answer

A)  $500. 
B)  $550. 
C)  $650. 
D)  $700. 
A)  $500. 
B)  $550. 
C)  $650. 
D)  $700.

Question 9

Other things being equal, an increase in the price of a good leads to an increase in the amount produced. This is known as

Accepted Answer

A)  the law of demand. 
B)  the law of supply. 
C)  ceteris paribus. 
D)  equilibrium. 
A)  the law of demand. 
B)  the law of supply. 
C)  ceteris paribus. 
D)  equilibrium.

Question 10

Which of the following are complementary goods?

Accepted Answer

A)  sport utility vehicles and gasoline 
B)  butter and margarine 
C)  beer and wine 
D)  DVDs and videocassettes 
A)  sport utility vehicles and gasoline 
B)  butter and margarine 
C)  beer and wine 
D)  DVDs and videocassettes

Question 11

If there is a shortage in a free market, then

Accepted Answer

A)  consumers will offer to pay a lower price for the good, and the price will fall toward the equilibrium level. 
B)  consumers will offer to pay a higher price for the good, and the price will rise toward the equilibrium level. 
C)  suppliers will decrease their output to match demand. 
D)  suppliers will accept any price below equilibrium. 
A)  consumers will offer to pay a lower price for the good, and the price will fall toward the equilibrium level. 
B)  consumers will offer to pay a higher price for the good, and the price will rise toward the equilibrium level. 
C)  suppliers will decrease their output to match demand. 
D)  suppliers will accept any price below equilibrium.

Question 12

According to the law of demand, other things being equal,

Accepted Answer

A)  when the price a good goes up, then people buy more of that good. 
B)  when the price a good goes up, then people buy less of that good. 
C)  when people's income goes up, then they buy more of a good. 
D)  when people's income goes up, then they buy less of a good. 
A)  when the price a good goes up, then people buy more of that good. 
B)  when the price a good goes up, then people buy less of that good. 
C)  when people's income goes up, then they buy more of a good. 
D)  when people's income goes up, then they buy less of a good.

Question 13

Total market supply can be derived by

Accepted Answer

A)  horizontally summing individual supply curves at each and every price level. 
B)  vertically summing individual supply curves at the current technology level. 
C)  adding up the largest quantity demanded at various prices. 
D)  looking at the changes in the price of raw materials needed to produce the product. 
A)  horizontally summing individual supply curves at each and every price level. 
B)  vertically summing individual supply curves at the current technology level. 
C)  adding up the largest quantity demanded at various prices. 
D)  looking at the changes in the price of raw materials needed to produce the product.

Question 14

When the price of tablets goes up and fewer tablets are purchased, this is representative of the

Accepted Answer

A)  law of demand. 
B)  law of supply. 
C)  law of market operations. 
D)  law of increasing costs. 
A)  law of demand. 
B)  law of supply. 
C)  law of market operations. 
D)  law of increasing costs.

Question 15

If the price of apples goes down, then the demand for pears will

Accepted Answer

A)  increase, assuming apples and pears are substitutes. 
B)  decrease, assuming apples and pears are substitutes. 
C)  decrease, assuming apples and pears are complements. 
D)  remain constant, assuming apples and pears are related goods. 
A)  increase, assuming apples and pears are substitutes. 
B)  decrease, assuming apples and pears are substitutes. 
C)  decrease, assuming apples and pears are complements. 
D)  remain constant, assuming apples and pears are related goods.

Question 16

-Refer to the above figure. For a normal good, the rightward shift of the curve could have been caused by

Accepted Answer

A)  a technological improvement. 
B)  an increase in the cost of inputs. 
C)  an increase in income. 
D)  a decrease in income. 
A)  a technological improvement. 
B)  an increase in the cost of inputs. 
C)  an increase in income. 
D)  a decrease in income.

Question 17

An increase in the price of input used to produce a product will lead to

Accepted Answer

A)  a decrease in the demand for that product. 
B)  a decrease in quantity supplied of that product 
C)  a decrease in the supply of that product. 
D)  an increase in the supply of that product. 
A)  a decrease in the demand for that product. 
B)  a decrease in quantity supplied of that product 
C)  a decrease in the supply of that product. 
D)  an increase in the supply of that product.

Question 18

There will be an increase in supply when

Accepted Answer

A)  a consumer's income increases. 
B)  there is an improvement in technology. 
C)  the demand curve shifts. 
D)  the market price rises from $3 to $4. 
A)  a consumer's income increases. 
B)  there is an improvement in technology. 
C)  the demand curve shifts. 
D)  the market price rises from $3 to $4.

Question 19

Which of the following will NOT affect the position of the market supply curve for a good?

Accepted Answer

A)  The government grants a subsidy to the producers for each unit of a good that they produce. 
B)  The price of the good increases. 
C)  The number of sellers in the market increases. 
D)  There is an increase in the prices of the inputs used in production. 
A)  The government grants a subsidy to the producers for each unit of a good that they produce. 
B)  The price of the good increases. 
C)  The number of sellers in the market increases. 
D)  There is an increase in the prices of the inputs used in production.

Question 20

The alternative quantities demanded for a given time period at different possible prices is known as

Accepted Answer

A)  absolute demand. 
B)  a demand schedule. 
C)  real demand. 
D)  constant demand. 
A)  absolute demand. 
B)  a demand schedule. 
C)  real demand. 
D)  constant demand.

Exam 3: Demand and Supply

Which of the following is a non-price determinant of supply?

Which of the following is true of the activities of ticket scalpers?

Which of the following will NOT lead to a decrease in demand for a normal good?

-If the market price falls from P0 to P1 in the above figure, then

What situation gives rise to a surplus?

Which of the following occurs when a market is in equilibrium?

-Refer to the above figure. The market clearing price is

-Refer to the above table. The equilibrium price of tablets is

Other things being equal, an increase in the price of a good leads to an increase in the amount produced. This is known as

Which of the following are complementary goods?

If there is a shortage in a free market, then

According to the law of demand, other things being equal,

Total market supply can be derived by

When the price of tablets goes up and fewer tablets are purchased, this is representative of the

If the price of apples goes down, then the demand for pears will

-Refer to the above figure. For a normal good, the rightward shift of the curve could have been caused by

An increase in the price of input used to produce a product will lead to

There will be an increase in supply when

Which of the following will NOT affect the position of the market supply curve for a good?

The alternative quantities demanded for a given time period at different possible prices is known as

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

Filters

-If the market price falls from P₀ to P₁ in the above figure, then