Question 1

In order to increase the supply of a good, producers must

Accepted Answer

A)  convince consumers to reduce the quantity demanded. 
B)  see an increase in quantity supplied by competitors. 
C)  reduce their per-unit costs of producing the good. 
D)  cut back on labor to reduce production costs. 
A)  convince consumers to reduce the quantity demanded. 
B)  see an increase in quantity supplied by competitors. 
C)  reduce their per-unit costs of producing the good. 
D)  cut back on labor to reduce production costs.

Question 2

The relationship between quantity supplied and price is usually

Accepted Answer

A)  an inverse relationship. 
B)  a direct relationship. 
C)  a negative relationship. 
D)  impossible to determine. 
A)  an inverse relationship. 
B)  a direct relationship. 
C)  a negative relationship. 
D)  impossible to determine.

Question 3

The price of a new textbook is $120 in one year and is $150 two years later, while the price of a used copy of the text increased from $40 to $60. The relative price of a new textbook

Accepted Answer

A)  increased from 3 to 4.5. 
B)  decreased from 0.8 to 0.67. 
C)  decreased from 3 to 2.5. 
D)  remained constant. 
A)  increased from 3 to 4.5. 
B)  decreased from 0.8 to 0.67. 
C)  decreased from 3 to 2.5. 
D)  remained constant.

Question 4

Which of the following will shift the supply curve for laptop computers to the left?

Accepted Answer

A)  development of a cheaper microchip used in laptop computer production 
B)  a subsidy to the laptop computer industry 
C)  expectations of a future decline in laptop computer prices 
D)  a reduction of the number of firms that make laptop computers 
A)  development of a cheaper microchip used in laptop computer production 
B)  a subsidy to the laptop computer industry 
C)  expectations of a future decline in laptop computer prices 
D)  a reduction of the number of firms that make laptop computers

Question 5

A shortage exists

Accepted Answer

A)  in equilibrium. 
B)  when quantity supplied is greater than quantity demanded. 
C)  when quantity supplied is less than quantity demanded. 
D)  at the market clearing price. 
A)  in equilibrium. 
B)  when quantity supplied is greater than quantity demanded. 
C)  when quantity supplied is less than quantity demanded. 
D)  at the market clearing price.

Question 6

Which of the following illustrates the law of demand?

Accepted Answer

A)  More people watch college basketball in March than in November. 
B)  The number of long distance calls in the United States is greater on Christmas than on Valentine's Day. 
C)  College enrollment increases when federal tuition grants are readily available to students. 
D)  The prevailing wage rate in an industry determines how many people choose to work in the industry. 
A)  More people watch college basketball in March than in November. 
B)  The number of long distance calls in the United States is greater on Christmas than on Valentine's Day. 
C)  College enrollment increases when federal tuition grants are readily available to students. 
D)  The prevailing wage rate in an industry determines how many people choose to work in the industry.

Question 7

Last year there were 6 pizza shops in town. This year there are only 4. Other things being equal, the decrease in the number of suppliers will

Accepted Answer

A)  cause the market supply curve to shift to the right. 
B)  increase the market demand for pizza. 
C)  cause a decrease in the quantity supplied at each price. 
D)  have no impact on market supply as long as the demand for pizza remains strong. 
A)  cause the market supply curve to shift to the right. 
B)  increase the market demand for pizza. 
C)  cause a decrease in the quantity supplied at each price. 
D)  have no impact on market supply as long as the demand for pizza remains strong.

Question 8

All of the following will cause the supply curve of good A to shift rightward EXCEPT

Accepted Answer

A)  a reduction in the prices of inputs used to produce good A. 
B)  an increase in the number of firms in the industry producing good A. 
C)  a decrease in the per-unit tax on good A which producers must pay. 
D)  an increase in the market price of good A. 
A)  a reduction in the prices of inputs used to produce good A. 
B)  an increase in the number of firms in the industry producing good A. 
C)  a decrease in the per-unit tax on good A which producers must pay. 
D)  an increase in the market price of good A.

Question 9

The price of a loaf of bread is $1.50, the price of a gallon of milk is $3.00, and the price of a pound of butter is $2.40. The price of a loaf of bread relative to a gallon of milk is ________, while the price of a gallon of milk relative to a pound of butter is ________.

Accepted Answer

A)  0.5; 0.8. 
B)  0.5; 1.25. 
C)  2.0; 1.25. 
D)  2.0; 0.8. 
A)  0.5; 0.8. 
B)  0.5; 1.25. 
C)  2.0; 1.25. 
D)  2.0; 0.8.

Question 10

Which of the following pairs of goods is least likely to be a pair of complements?

Accepted Answer

A)  Gasoline and motor oil 
B)  Hot dog buns and hot dogs 
C)  Beer and wine 
D)  Razors and razor blades 
A)  Gasoline and motor oil 
B)  Hot dog buns and hot dogs 
C)  Beer and wine 
D)  Razors and razor blades

Question 11

If two goods, J and K, are complements, then which of the following statements is FALSE?

Accepted Answer

A)  They are consumed together. 
B)  An increase in the price of J causes the demand for K to rise. 
C)  When the quantity demanded of J increases, the demand for K increases. 
D)  A decrease in the price of K causes an increase in the demand for J. 
A)  They are consumed together. 
B)  An increase in the price of J causes the demand for K to rise. 
C)  When the quantity demanded of J increases, the demand for K increases. 
D)  A decrease in the price of K causes an increase in the demand for J.

Question 12

-According to the above table, at a price of $8 per unit, other things constant,

Accepted Answer

A)  consumers will continue to bid prices upward. 
B)  there will be no tendency for the market to approach an equilibrium. 
C)  a surplus of 100 units will exist. 
D)  a shortage of 80 units will exist. 
A)  consumers will continue to bid prices upward. 
B)  there will be no tendency for the market to approach an equilibrium. 
C)  a surplus of 100 units will exist. 
D)  a shortage of 80 units will exist.

Question 13

More cattle are found to have mad cow disease. As a result, consumer confidence in the safety of beef is shaken. What would an economist predict will happen in the beef market?

Accepted Answer

A)  As consumer preferences move away from beef, there is an upward movement along the beef demand curve. 
B)  The demand curve will shift to the left. 
C)  The demand curve does not shift but consumers move to a point lower down the curve. 
D)  Absolutely no change in either the quantity demand or the demand for beef. 
A)  As consumer preferences move away from beef, there is an upward movement along the beef demand curve. 
B)  The demand curve will shift to the left. 
C)  The demand curve does not shift but consumers move to a point lower down the curve. 
D)  Absolutely no change in either the quantity demand or the demand for beef.

Question 14

A movement along a supply curve is induced by a change in

Accepted Answer

A)  input prices. 
B)  taxes and subsidies. 
C)  price expectations. 
D)  the product's own price. 
A)  input prices. 
B)  taxes and subsidies. 
C)  price expectations. 
D)  the product's own price.

Question 15

How does a change in quantity supplied differ from a change in supply?

Accepted Answer

A)  A change in quantity supplied shifts the supply curve; a change in supply is a movement along the curve. 
B)  A change in one of the ceteris paribus conditions affects quantity supplied, not supply. 
C)  A change in the price affects quantity supplied, not supply. 
D)  There is no difference. 
A)  A change in quantity supplied shifts the supply curve; a change in supply is a movement along the curve. 
B)  A change in one of the ceteris paribus conditions affects quantity supplied, not supply. 
C)  A change in the price affects quantity supplied, not supply. 
D)  There is no difference.

Question 16

If the price of butter increases, the demand for margarine

Accepted Answer

A)  will be unchanged. 
B)  will shift outward. 
C)  will shift inward. 
D)  will kink into an S-curve. 
A)  will be unchanged. 
B)  will shift outward. 
C)  will shift inward. 
D)  will kink into an S-curve.

Question 17

Which of the following will NOT affect the supply of cars?

Accepted Answer

A)  an increase in the price of steel 
B)  an improvement in automobile production technology 
C)  an increase in the productivity of auto workers 
D)  a decrease in the price of cars 
A)  an increase in the price of steel 
B)  an improvement in automobile production technology 
C)  an increase in the productivity of auto workers 
D)  a decrease in the price of cars

Question 18

If the price of margarine falls, the demand for butter will

Accepted Answer

A)  remain unchanged. 
B)  increase. 
C)  decrease. 
D)  rise at first and then fall. 
A)  remain unchanged. 
B)  increase. 
C)  decrease. 
D)  rise at first and then fall.

Question 19

Which of the following statements is correct?

Accepted Answer

A)  A shortage and scarcity are the same thing. 
B)  A shortage occurs when the quantity demanded is less than the quantity supplied at a price below the market clearing price. 
C)  A shortage occurs when the quantity demanded is greater than the quantity supplied at a price below the market clearing price. 
D)  A shortage occurs when the quantity demanded is less than the quantity supplied at a price above the market clearing price. 
A)  A shortage and scarcity are the same thing. 
B)  A shortage occurs when the quantity demanded is less than the quantity supplied at a price below the market clearing price. 
C)  A shortage occurs when the quantity demanded is greater than the quantity supplied at a price below the market clearing price. 
D)  A shortage occurs when the quantity demanded is less than the quantity supplied at a price above the market clearing price.

Question 20

The law of demand tells us that people will buy more of a good if

Accepted Answer

A)  the price of that good decreases. 
B)  the prices of other goods decrease. 
C)  people's income increases. 
D)  every factor that can affect people's buying decisions changes. 
A)  the price of that good decreases. 
B)  the prices of other goods decrease. 
C)  people's income increases. 
D)  every factor that can affect people's buying decisions changes.

Exam 3: Demand and Supply

In order to increase the supply of a good, producers must

The relationship between quantity supplied and price is usually

The price of a new textbook is $120 in one year and is $150 two years later, while the price of a used copy of the text increased from $40 to $60. The relative price of a new textbook

Which of the following will shift the supply curve for laptop computers to the left?

A shortage exists

Which of the following illustrates the law of demand?

Last year there were 6 pizza shops in town. This year there are only 4. Other things being equal, the decrease in the number of suppliers will

All of the following will cause the supply curve of good A to shift rightward EXCEPT

The price of a loaf of bread is $1.50, the price of a gallon of milk is $3.00, and the price of a pound of butter is $2.40. The price of a loaf of bread relative to a gallon of milk is ________, while the price of a gallon of milk relative to a pound of butter is ________.

Which of the following pairs of goods is least likely to be a pair of complements?

If two goods, J and K, are complements, then which of the following statements is FALSE?

-According to the above table, at a price of $8 per unit, other things constant,

More cattle are found to have mad cow disease. As a result, consumer confidence in the safety of beef is shaken. What would an economist predict will happen in the beef market?

A movement along a supply curve is induced by a change in

How does a change in quantity supplied differ from a change in supply?

If the price of butter increases, the demand for margarine

Which of the following will NOT affect the supply of cars?

If the price of margarine falls, the demand for butter will

Which of the following statements is correct?

The law of demand tells us that people will buy more of a good if

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

The price of a loaf of bread is $1.50, the price of a gallon of milk is $3.00, and the price of a pound of butter is $2.40. The price of a loaf of bread relative to a gallon of milk is , while the price of a gallon of milk relative to a pound of butter is .