Question 1

A decrease in the price of multi-touch screens for electronic tablets will increase the supply of electronic tablets.

Accepted Answer

A) True 
 B)False

Question 2

An increase in demand for oil along with a simultaneous increase in supply of oil will

Accepted Answer

A)  decrease price and increase quantity. 
B)  increase price and decrease quantity. 
C)  increase quantity, but whether it increases price depends on how much each curve shifts. 
D)  increase price, but whether it increases quantity depends on how much each curve shifts. 
A)  decrease price and increase quantity. 
B)  increase price and decrease quantity. 
C)  increase quantity, but whether it increases price depends on how much each curve shifts. 
D)  increase price, but whether it increases quantity depends on how much each curve shifts.

Question 3

In moving along a supply curve, which of the following is not held constant?

Accepted Answer

A)  the number of firms producing this good 
B)  expectations about the future price of the product 
C)  techniques used in producing this product 
D)  the price of the product itself. 
A)  the number of firms producing this good 
B)  expectations about the future price of the product 
C)  techniques used in producing this product 
D)  the price of the product itself.

Question 4

If the demand for electronic readers and tablets increases, then their supply will increase as price rises.

Accepted Answer

A) True 
 B)False

Question 5

A fall in the price of milk, used in the production of ice cream, will

Accepted Answer

A)  decrease the supply of ice cream. 
B)  increase the supply of ice cream. 
C)  cause a movement along the supply curve of ice cream. 
D)  have no effect on the supply of ice cream. 
A)  decrease the supply of ice cream. 
B)  increase the supply of ice cream. 
C)  cause a movement along the supply curve of ice cream. 
D)  have no effect on the supply of ice cream.

Question 6

An effective price ceiling will lower the equilibrium price and cause a surplus.

Accepted Answer

A) True 
 B)False

Question 7

At the current price, there is a shortage of a product. We would expect price to

Accepted Answer

A)  increase, quantity demanded to increase, and quantity supplied to decrease. 
B)  increase, quantity demanded to decrease, and quantity supplied to increase. 
C)  increase, quantity demanded to increase, and quantity supplied to increase. 
D)  decrease, quantity demanded to increase, and quantity supplied to decrease. 
A)  increase, quantity demanded to increase, and quantity supplied to decrease. 
B)  increase, quantity demanded to decrease, and quantity supplied to increase. 
C)  increase, quantity demanded to increase, and quantity supplied to increase. 
D)  decrease, quantity demanded to increase, and quantity supplied to decrease.

Question 8

The presence of ticket scalpers in popular events like concerts will hurt consumers who buy from the scalpers.

Accepted Answer

A) True 
 B)False

Question 9

A normal good is one

Accepted Answer

A)  whose amount demanded will increase as its price decreases. 
B)  whose amount demanded will increase as its price increases. 
C)  whose demand curve will shift leftward as incomes rise. 
D)  for which the consumption varies directly with income. 
A)  whose amount demanded will increase as its price decreases. 
B)  whose amount demanded will increase as its price increases. 
C)  whose demand curve will shift leftward as incomes rise. 
D)  for which the consumption varies directly with income.

Question 10

In a competitive market, every consumer willing to pay the market price can buy a product and every producer willing to sell the product at that price can sell it.

Accepted Answer

A) True 
 B)False

Question 11

A price floor means that

Accepted Answer

A)  inflation is severe in this particular market. 
B)  sellers are artificially restricting supply to raise price. 
C)  government is imposing a maximum legal price that is typically below the equilibrium price. 
D)  government is imposing a minimum legal price that is typically above the equilibrium price. 
A)  inflation is severe in this particular market. 
B)  sellers are artificially restricting supply to raise price. 
C)  government is imposing a maximum legal price that is typically below the equilibrium price. 
D)  government is imposing a minimum legal price that is typically above the equilibrium price.

Question 12

Camille's Creations and Julia's Jewels both sell beads in a competitive market. If at the market price of $5 both are running out of beads to sell (they can't keep up with the quantity demanded at that price), then we would expect both Camille's and Julia's to

Accepted Answer

A)  raise their price and reduce their quantity supplied. 
B)  raise their price and increase their quantity supplied. 
C)  lower their price and reduce their quantity supplied. 
D)  lower their price and increase their quantity supplied. 
A)  raise their price and reduce their quantity supplied. 
B)  raise their price and increase their quantity supplied. 
C)  lower their price and reduce their quantity supplied. 
D)  lower their price and increase their quantity supplied.

Question 13

Consumers buy more of normal goods as their incomes rise.

Accepted Answer

A) True 
 B)False

Question 14

Assume that the graphs show a competitive market for the product stated in the question.     Select the graph above that best shows the change in the market specified in the following situation: the market for leather coats, when leather coats become more fashionable among young consumers.

Accepted Answer

A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D 
A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D

Question 15

Price floors and ceiling prices both

Accepted Answer

A)  cause shortages. 
B)  cause surpluses. 
C)  cause the supply and demand curves to shift until equilibrium is established. 
D)  interfere with the rationing function of prices. 
A)  cause shortages. 
B)  cause surpluses. 
C)  cause the supply and demand curves to shift until equilibrium is established. 
D)  interfere with the rationing function of prices.

Question 16

In 2007, the price of oil increased, which in turn caused the price of natural gas to rise. This can best be explained by saying that oil and natural gas are

Accepted Answer

A)  complementary goods, and the higher price for oil increased the demand for natural gas. 
B)  substitute goods, and the higher price for oil increased the demand for natural gas. 
C)  complementary goods, and the higher price for oil decreased the supply of natural gas. 
D)  substitute goods, and the higher price for oil decreased the supply of natural gas. 
A)  complementary goods, and the higher price for oil increased the demand for natural gas. 
B)  substitute goods, and the higher price for oil increased the demand for natural gas. 
C)  complementary goods, and the higher price for oil decreased the supply of natural gas. 
D)  substitute goods, and the higher price for oil decreased the supply of natural gas.

Question 17

If the price of Pepsi decreases, other factors constant, then we'd expect to see a consequent shift of the demand curve for

Accepted Answer

A)  Coke to the left. 
B)  Coke to the right. 
C)  Pepsi to the left. 
D)  Pepsi to the right. 
A)  Coke to the left. 
B)  Coke to the right. 
C)  Pepsi to the left. 
D)  Pepsi to the right.

Question 18

A surplus indicates that the quantity demanded is greater than the quantity supplied at that price.

Accepted Answer

A) True 
 B)False

Question 19

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. The equilibrium quantity is

Accepted Answer

A)  10. 
B)  20. 
C)  15. 
D)  30. 
A)  10. 
B)  20. 
C)  15. 
D)  30.

Exam 3: Demand, Supply, and Market Equilibrium

A decrease in the price of multi-touch screens for electronic tablets will increase the supply of electronic tablets.

An increase in demand for oil along with a simultaneous increase in supply of oil will

In moving along a supply curve, which of the following is not held constant?

If the demand for electronic readers and tablets increases, then their supply will increase as price rises.

A fall in the price of milk, used in the production of ice cream, will

An effective price ceiling will lower the equilibrium price and cause a surplus.

At the current price, there is a shortage of a product. We would expect price to

The presence of ticket scalpers in popular events like concerts will hurt consumers who buy from the scalpers.

A normal good is one

In a competitive market, every consumer willing to pay the market price can buy a product and every producer willing to sell the product at that price can sell it.

A price floor means that

Camille's Creations and Julia's Jewels both sell beads in a competitive market. If at the market price of $5 both are running out of beads to sell (they can't keep up with the quantity demanded at that price), then we would expect both Camille's and Julia's to

Consumers buy more of normal goods as their incomes rise.

Assume that the graphs show a competitive market for the product stated in the question. Select the graph above that best shows the change in the market specified in the following situation: the market for leather coats, when leather coats become more fashionable among young consumers.

Price floors and ceiling prices both

In 2007, the price of oil increased, which in turn caused the price of natural gas to rise. This can best be explained by saying that oil and natural gas are

If the price of Pepsi decreases, other factors constant, then we'd expect to see a consequent shift of the demand curve for

A surplus indicates that the quantity demanded is greater than the quantity supplied at that price.

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. The equilibrium quantity is

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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