Question 1

Suppose that milk producers expect that the price of milk is going to drop next week. This would cause

Accepted Answer

A)  a decrease in the supply of milk today. 
B)  an increase in the supply of milk today. 
C)  an increase in the demand for milk today. 
D)  the selling price of milk to rise today. 
A)  a decrease in the supply of milk today. 
B)  an increase in the supply of milk today. 
C)  an increase in the demand for milk today. 
D)  the selling price of milk to rise today.

Question 2

There is an increase in the demand for cream when the price of coffee falls. Other things constant, we can conclude that coffee and cream are

Accepted Answer

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

Question 3

All of the following cause a shift in the demand curve EXCEPT a change in the

Accepted Answer

A)  price of related goods. 
B)  price of the good or service. 
C)  consumer income. 
D)  number of consumers. 
A)  price of related goods. 
B)  price of the good or service. 
C)  consumer income. 
D)  number of consumers.

Question 4

Suppose an individual experiences a permanent increase in income. As a result of this increased income, further assume that the individual eats dinner at restaurants more frequently each month. This information suggests that dinners at restaurants for this individual are

Accepted Answer

A)  an inferior good. 
B)  a substitute good. 
C)  a normal good. 
D)  both complimentary and inferior. 
A)  an inferior good. 
B)  a substitute good. 
C)  a normal good. 
D)  both complimentary and inferior.

Question 5

An increase in the price of steel to producers of refrigerators will cause

Accepted Answer

A)  the quantity demanded for steel to increase. 
B)  the demand for refrigerators to decrease. 
C)  the quantity supplied of refrigerators to increase. 
D)  the supply curve for refrigerators to shift left. 
A)  the quantity demanded for steel to increase. 
B)  the demand for refrigerators to decrease. 
C)  the quantity supplied of refrigerators to increase. 
D)  the supply curve for refrigerators to shift left.

Question 6

When economists talk about a demand schedule for a product, they mean

Accepted Answer

A)  the amount of a good that consumers intend to purchase at each price in a set of possible prices in a given time period. 
B)  the amount of a good that consumers are able to purchase (though they might not be willing to) at different prices in a given period of time. 
C)  the amount of a good that consumers intend to purchase at only one particular price in a given period of time. 
D)  the amount of a good that producers are willing to make available for sale at a particular price in a given time period. 
A)  the amount of a good that consumers intend to purchase at each price in a set of possible prices in a given time period. 
B)  the amount of a good that consumers are able to purchase (though they might not be willing to) at different prices in a given period of time. 
C)  the amount of a good that consumers intend to purchase at only one particular price in a given period of time. 
D)  the amount of a good that producers are willing to make available for sale at a particular price in a given time period.

Question 7

According to the law of demand, the quantity demanded of a good is related to

Accepted Answer

A)  the average price of all goods. 
B)  income. 
C)  any factor that affects the decision of an individual consumer but not the market. 
D)  the relative price of that good. 
A)  the average price of all goods. 
B)  income. 
C)  any factor that affects the decision of an individual consumer but not the market. 
D)  the relative price of that good.

Question 8

The supply curve shows the relationship between the

Accepted Answer

A)  cost of production and the price of the product. 
B)  cost of resources and cost of production. 
C)  price of the product and quantity supplied. 
D)  quantity demanded and the quantity supplied. 
A)  cost of production and the price of the product. 
B)  cost of resources and cost of production. 
C)  price of the product and quantity supplied. 
D)  quantity demanded and the quantity supplied.

Question 9

Which one of the following would cause a rightward shift in the demand curve of digital cameras?

Accepted Answer

A)  Digital cameras become easier to use. 
B)  The price of digital cameras decreases. 
C)  Production methods are modified to make production of digital cameras more efficient. 
D)  Government regulations are imposed to limit the number of digital cameras imported. 
A)  Digital cameras become easier to use. 
B)  The price of digital cameras decreases. 
C)  Production methods are modified to make production of digital cameras more efficient. 
D)  Government regulations are imposed to limit the number of digital cameras imported.

Question 10

Which of the following will cause a movement along the supply curve for oil?

Accepted Answer

A)  new technology to drill oil underwater in the Gulf of Mexico 
B)  a change in the price of oil 
C)  an increase in the number of oil-producing firms 
D)  government subsidies to oil producers in Wyoming 
A)  new technology to drill oil underwater in the Gulf of Mexico 
B)  a change in the price of oil 
C)  an increase in the number of oil-producing firms 
D)  government subsidies to oil producers in Wyoming

Question 11

A change in the price of a good causes

Accepted Answer

A)  an increase in supply. 
B)  a decrease in supply. 
C)  an increase in demand and a decrease in supply. 
D)  a change in quantity supplied. 
A)  an increase in supply. 
B)  a decrease in supply. 
C)  an increase in demand and a decrease in supply. 
D)  a change in quantity supplied.

Question 12

If the price of Pepsi increases, then there will be ________ of Pepsi.

Accepted Answer

A)  a decrease in the supply 
B)  an increase in the supply 
C)  an increase in the quantity supplied 
D)  a decrease in the quantity supplied 
A)  a decrease in the supply 
B)  an increase in the supply 
C)  an increase in the quantity supplied 
D)  a decrease in the quantity supplied

Question 13

-Refer to the above figure. Other things being equal, if price is at P2 , then we would expect

Accepted Answer

A)  price to decline until an equilibrium is achieved at P0. 
B)  consumers to reduce their offering price for the good. 
C)  an excess quantity demanded to occur. 
D)  consumers to bid against each other for goods and force the price still higher. 
A)  price to decline until an equilibrium is achieved at P0. 
B)  consumers to reduce their offering price for the good. 
C)  an excess quantity demanded to occur. 
D)  consumers to bid against each other for goods and force the price still higher.

Question 14

Demand applies to which of the following?

Accepted Answer

A)  Fast food 
B)  Criminal activity 
C)  Labor market 
D)  All of the above 
A)  Fast food 
B)  Criminal activity 
C)  Labor market 
D)  All of the above

Question 15

If the demand of a good is inversely related to income, it must be

Accepted Answer

A)  a bad good. 
B)  an inferior good. 
C)  a normal good. 
D)  an everyday product. 
A)  a bad good. 
B)  an inferior good. 
C)  a normal good. 
D)  an everyday product.

Question 16

Jane has noticed that she used to pay $2 for coffee and now she pays $2.50. Which of the following statements is true?

Accepted Answer

A)  The relative price of coffee has increased compared to tea. 
B)  The money price of coffee has increased. 
C)  The law of supply explains why the price of coffee has increased. 
D)  Jane will stop consuming coffee. 
A)  The relative price of coffee has increased compared to tea. 
B)  The money price of coffee has increased. 
C)  The law of supply explains why the price of coffee has increased. 
D)  Jane will stop consuming coffee.

Question 17

The price of a first-class stamp in 1957 was 3 cents, and it is 45 cents in 2012. From this we know that

Accepted Answer

A)  both the relative and the absolute price of first-class stamps increased from 1957 to 2012. 
B)  the money price of first-class stamps increased from 1957 to 2012 but the absolute price of first-class stamps stayed constant. 
C)  the money price of first-class stamps increased from 1957 to 2012 and the relative price of first-class stamps decreased. 
D)  the money price of first-class stamps increased from 1957 to 2012, but we can't tell if the relative price of first-class stamps increased or decreased without more information. 
A)  both the relative and the absolute price of first-class stamps increased from 1957 to 2012. 
B)  the money price of first-class stamps increased from 1957 to 2012 but the absolute price of first-class stamps stayed constant. 
C)  the money price of first-class stamps increased from 1957 to 2012 and the relative price of first-class stamps decreased. 
D)  the money price of first-class stamps increased from 1957 to 2012, but we can't tell if the relative price of first-class stamps increased or decreased without more information.

Question 18

Markets are

Accepted Answer

A)  a mechanism through which prices of goods and services are determined by the forces of supply and demand. 
B)  specific geographic locations. 
C)  hypothetical constructs used to analyze how people form their tastes and preferences. 
D)  places where people can inspect goods and services carefully. 
A)  a mechanism through which prices of goods and services are determined by the forces of supply and demand. 
B)  specific geographic locations. 
C)  hypothetical constructs used to analyze how people form their tastes and preferences. 
D)  places where people can inspect goods and services carefully.

Question 19

Suppose that, at an official ticket price of $480, there are 6,000 Justin Timberlake fans wanting to attend his concert, but only 4,000 ticketed seats are available. Which one of the following statements is then true?

Accepted Answer

A)  There will be scalpers outside the arena selling tickets for $480. 
B)  There will be a surplus of tickets. 
C)  The market clearing price of the tickets is less than $480. 
D)  The market clearing price of the tickets is more than $480. 
A)  There will be scalpers outside the arena selling tickets for $480. 
B)  There will be a surplus of tickets. 
C)  The market clearing price of the tickets is less than $480. 
D)  The market clearing price of the tickets is more than $480.

Question 20

Suppose that, at a rental rate of $1000 per month, 650 residents wish to rent apartments and that landlords offer 800 apartments available for rent. Which one of the following statements is then true?

Accepted Answer

A)  There is a shortage of 150 apartments. 
B)  There is an excess demand for apartments. 
C)  The market clearing rental price of apartments is too low. 
D)  The market clearing rental price of apartments is less than $1000 per month. 
A)  There is a shortage of 150 apartments. 
B)  There is an excess demand for apartments. 
C)  The market clearing rental price of apartments is too low. 
D)  The market clearing rental price of apartments is less than $1000 per month.

Exam 3: Demand and Supply

Suppose that milk producers expect that the price of milk is going to drop next week. This would cause

There is an increase in the demand for cream when the price of coffee falls. Other things constant, we can conclude that coffee and cream are

All of the following cause a shift in the demand curve EXCEPT a change in the

Suppose an individual experiences a permanent increase in income. As a result of this increased income, further assume that the individual eats dinner at restaurants more frequently each month. This information suggests that dinners at restaurants for this individual are

An increase in the price of steel to producers of refrigerators will cause

When economists talk about a demand schedule for a product, they mean

According to the law of demand, the quantity demanded of a good is related to

The supply curve shows the relationship between the

Which one of the following would cause a rightward shift in the demand curve of digital cameras?

Which of the following will cause a movement along the supply curve for oil?

A change in the price of a good causes

If the price of Pepsi increases, then there will be ________ of Pepsi.

-Refer to the above figure. Other things being equal, if price is at P2 , then we would expect

Demand applies to which of the following?

If the demand of a good is inversely related to income, it must be

Jane has noticed that she used to pay $2 for coffee and now she pays $2.50. Which of the following statements is true?

The price of a first-class stamp in 1957 was 3 cents, and it is 45 cents in 2012. From this we know that

Markets are

Suppose that, at an official ticket price of $480, there are 6,000 Justin Timberlake fans wanting to attend his concert, but only 4,000 ticketed seats are available. Which one of the following statements is then true?

Suppose that, at a rental rate of $1000 per month, 650 residents wish to rent apartments and that landlords offer 800 apartments available for rent. Which one of the following statements is then true?

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

-Refer to the above figure. Other things being equal, if price is at P₂ , then we would expect