Question 1

There is a 15 percent increase in the price of lumber used by a firm that builds new homes. This causes

Accepted Answer

A)  a decrease in the quantity of new homes supplied. 
B)  an increase in the supply of new homes. 
C)  an increase of the quantity supplied of new homes. 
D)  a decrease in the supply of new homes. 
A)  a decrease in the quantity of new homes supplied. 
B)  an increase in the supply of new homes. 
C)  an increase of the quantity supplied of new homes. 
D)  a decrease in the supply of new homes.

Question 2

A subsidy to carrot farmers will

Accepted Answer

A)  increase the quantity of carrots demanded. 
B)  decrease the quantity of carrots supplied. 
C)  increase the supply of carrots. 
D)  leave both the supply and demand of carrots unchanged. 
A)  increase the quantity of carrots demanded. 
B)  decrease the quantity of carrots supplied. 
C)  increase the supply of carrots. 
D)  leave both the supply and demand of carrots unchanged.

Question 3

Equilibrium in a market occurs when

Accepted Answer

A)  demand and supply indicate a small surplus of a good. 
B)  price is at its minimum. 
C)  quantity supplied and quantity demanded are equal at the market clearing price. 
D)  the market price leads to a decrease in quantity demanded. 
A)  demand and supply indicate a small surplus of a good. 
B)  price is at its minimum. 
C)  quantity supplied and quantity demanded are equal at the market clearing price. 
D)  the market price leads to a decrease in quantity demanded.

Question 4

-Refer to the above figure. At a price of $6, excess quantity supplied equals

Accepted Answer

A)  0. 
B)  12. 
C)  15. 
D)  infinity. 
A)  0. 
B)  12. 
C)  15. 
D)  infinity.

Question 5

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

Accepted Answer

A)  an increase in demand. 
B)  a decrease in demand. 
C)  an increase in quantity demanded. 
D)  a decrease in quantity demanded. 
A)  an increase in demand. 
B)  a decrease in demand. 
C)  an increase in quantity demanded. 
D)  a decrease in quantity demanded.

Question 6

The relative price of a textbook is

Accepted Answer

A)  the money price of the textbook divided by the money price of some other good. 
B)  the price of the textbook compared with what students think it should cost. 
C)  the amount it cost to make the textbook. 
D)  what the author earned for writing the textbook. 
A)  the money price of the textbook divided by the money price of some other good. 
B)  the price of the textbook compared with what students think it should cost. 
C)  the amount it cost to make the textbook. 
D)  what the author earned for writing the textbook.

Question 7

-Refer to the above figure for the market of Cheerios. Which diagram depicts the effect of an increase in the price of Cheerios?

Accepted Answer

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

Question 8

Suppose Good A is a normal good. Which of the following will increase the demand for Good A?

Accepted Answer

A)  An increase in the price of its substitutes 
B)  A lower expected future relative price of A 
C)  An increase in the price of its complements 
D)  A decrease in income 
A)  An increase in the price of its substitutes 
B)  A lower expected future relative price of A 
C)  An increase in the price of its complements 
D)  A decrease in income

Question 9

The demand curve is downward sloping because

Accepted Answer

A)  the price must rise to induce firms to increase quantity supplied. 
B)  a reduction in the price of a good causes individuals to increase their purchase of that good. 
C)  an increase in the price will cause a leftward shift in the demand curve. 
D)  all of the above. 
A)  the price must rise to induce firms to increase quantity supplied. 
B)  a reduction in the price of a good causes individuals to increase their purchase of that good. 
C)  an increase in the price will cause a leftward shift in the demand curve. 
D)  all of the above.

Question 10

-Refer to the above table. The market quantity supplied when the price is $7 is

Accepted Answer

A)  0 
B)  20 
C)  29 
D)  38 
A)  0 
B)  20 
C)  29 
D)  38

Question 11

Consider the following:   The relative price of hamburgers this year has

Accepted Answer

A)  increased. 
B)  decreased. 
C)  stayed the same. 
D)  Not enough information has been given to calculate an answer. 
A)  increased. 
B)  decreased. 
C)  stayed the same. 
D)  Not enough information has been given to calculate an answer.

Question 12

The money price of a good is that price

Accepted Answer

A)  expressed in constant 2005 dollars. 
B)  expressed in purchasing power against a common item like bread. 
C)  expressed in today's dollars. 
D)  that would clear the market. 
A)  expressed in constant 2005 dollars. 
B)  expressed in purchasing power against a common item like bread. 
C)  expressed in today's dollars. 
D)  that would clear the market.

Question 13

Assume that coffee and tea are substitutes. Given a downward sloping demand curve for tea, an increase in the price of tea will cause

Accepted Answer

A)  an increase in the demand for coffee. 
B)  a decrease in the demand for coffee. 
C)  a leftward shift of the demand curve for tea. 
D)  a leftward shift in the demand for coffee. 
A)  an increase in the demand for coffee. 
B)  a decrease in the demand for coffee. 
C)  a leftward shift of the demand curve for tea. 
D)  a leftward shift in the demand for coffee.

Question 14

Briefly discuss the determinants of supply other than price.

Accepted Answer

An increase in the costs of inputs used

Question 15

A per-unit government subsidy to producers of a good tends to

Accepted Answer

A)  reduce the supply of the good. 
B)  increase the supply of the good. 
C)  shift the supply curve to the left. 
D)  not have any effect on the good's supply. 
A)  reduce the supply of the good. 
B)  increase the supply of the good. 
C)  shift the supply curve to the left. 
D)  not have any effect on the good's supply.

Question 16

An increase in demand is shown graphically by

Accepted Answer

A)  a shift of the demand curve to the left. 
B)  a movement up along the existing curve. 
C)  a shift of the demand curve to the right. 
D)  a movement down the existing curve. 
A)  a shift of the demand curve to the left. 
B)  a movement up along the existing curve. 
C)  a shift of the demand curve to the right. 
D)  a movement down the existing curve.

Question 17

If the price of an item can freely adjust, a market will

Accepted Answer

A)  always move towards equilibrium. 
B)  always have an excess quantity demanded. 
C)  always have an excess quantity supplied. 
D)  never move towards equilibrium because prices are always increasing. 
A)  always move towards equilibrium. 
B)  always have an excess quantity demanded. 
C)  always have an excess quantity supplied. 
D)  never move towards equilibrium because prices are always increasing.

Question 18

The money price of a good is also known as its

Accepted Answer

A)  relative price. 
B)  case price. 
C)  absolute price. 
D)  subjective price. 
A)  relative price. 
B)  case price. 
C)  absolute price. 
D)  subjective price.

Question 19

If the price of a product increases, we would expect

Accepted Answer

A)  the level of demand to decrease. 
B)  quantity supplied to increase. 
C)  the level of supply to increase. 
D)  an increase in quantity demanded. 
A)  the level of demand to decrease. 
B)  quantity supplied to increase. 
C)  the level of supply to increase. 
D)  an increase in quantity demanded.

Question 20

Which of the following factors will lead to a shift in the demand curve?

Accepted Answer

A)  Changes in the costs of inputs 
B)  Changes in technology 
C)  Changes in the price of the good 
D)  Changes in consumers' tastes and preferences 
A)  Changes in the costs of inputs 
B)  Changes in technology 
C)  Changes in the price of the good 
D)  Changes in consumers' tastes and preferences

Exam 3: Demand and Supply

There is a 15 percent increase in the price of lumber used by a firm that builds new homes. This causes

A subsidy to carrot farmers will

Equilibrium in a market occurs when

-Refer to the above figure. At a price of $6, excess quantity supplied equals

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

The relative price of a textbook is

-Refer to the above figure for the market of Cheerios. Which diagram depicts the effect of an increase in the price of Cheerios?

Suppose Good A is a normal good. Which of the following will increase the demand for Good A?

The demand curve is downward sloping because

-Refer to the above table. The market quantity supplied when the price is $7 is

Consider the following: The relative price of hamburgers this year has

The money price of a good is that price

Assume that coffee and tea are substitutes. Given a downward sloping demand curve for tea, an increase in the price of tea will cause

Briefly discuss the determinants of supply other than price.

A per-unit government subsidy to producers of a good tends to

An increase in demand is shown graphically by

If the price of an item can freely adjust, a market will

The money price of a good is also known as its

If the price of a product increases, we would expect

Which of the following factors will lead to a shift in the demand curve?

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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