Question 1

When the price of oil declines significantly,the price of gasoline also declines.The latter occurs because of a(n):

Accepted Answer

A)  increase in the demand for gasoline. 
B)  decrease in the demand for gasoline. 
C)  increase in the supply of gasoline. 
D)  decrease in the supply of gasoline. 
A)  increase in the demand for gasoline. 
B)  decrease in the demand for gasoline. 
C)  increase in the supply of gasoline. 
D)  decrease in the supply of gasoline.

Question 2

In the following question you are asked to determine,other things equal,the effects of a given change in a determinant of demand or supply for product X upon (1)the demand (D)for,or supply (S)of,X; (2)the equilibrium price (P)of X;and (3)the equilibrium quantity (Q)of X. Refer to the given information.Consumer expectations that the price of X will rise sharply in the future will:

Accepted Answer

A)  increase S,increase P,and increase Q. 
B)  increase D,increase P,and increase Q. 
C)  decrease S,increase P,and increase Q. 
D)  increase D,decrease P,and increase Q. 
A)  increase S,increase P,and increase Q. 
B)  increase D,increase P,and increase Q. 
C)  decrease S,increase P,and increase Q. 
D)  increase D,decrease P,and increase Q.

Question 3

An increase in the excise tax on cigarettes raises the price of cigarettes by shifting the:

Accepted Answer

A)  demand curve for cigarettes rightward. 
B)  demand curve for cigarettes leftward. 
C)  supply curve for cigarettes rightward. 
D)  supply curve for cigarettes leftward. 
A)  demand curve for cigarettes rightward. 
B)  demand curve for cigarettes leftward. 
C)  supply curve for cigarettes rightward. 
D)  supply curve for cigarettes leftward.

Question 4

Suppose product X is an input in the production of product Y.Product Y in turn is a substitute for product Z.An increase in the price of X can be expected to:

Accepted Answer

A)  decrease the demand for Z. 
B)  increase the demand for Z. 
C)  have no effect on the demand for Z. 
D)  decrease the supply of Z. 
A)  decrease the demand for Z. 
B)  increase the demand for Z. 
C)  have no effect on the demand for Z. 
D)  decrease the supply of Z.

Question 5

A product market is in equilibrium:

Accepted Answer

A)  whenever there is no surplus of the product. 
B)  whenever there is no shortage of the product. 
C)  when consumers want to buy more of the product than producers offer for sale. 
D)  where the demand and supply curves intersect. 
A)  whenever there is no surplus of the product. 
B)  whenever there is no shortage of the product. 
C)  when consumers want to buy more of the product than producers offer for sale. 
D)  where the demand and supply curves intersect.

Question 6

The demand for most products varies directly with changes in consumer incomes.Such products are known as:

Accepted Answer

A)  complementary goods. 
B)  competitive goods. 
C)  inferior goods. 
D)  normal goods. 
A)  complementary goods. 
B)  competitive goods. 
C)  inferior goods. 
D)  normal goods.

Question 7

Suppose that in the clothing market,production costs have fallen,but the equilibrium price and quantity purchased have both increased.Based on this information we can conclude that:

Accepted Answer

A)  the supply of clothing has grown faster than the demand for clothing. 
B)  demand for clothing has grown faster than the supply of clothing. 
C)  the supply of and demand for clothing have grown by the same proportion. 
D)  there is no way to determine what has happened to supply and demand with this information. 
A)  the supply of clothing has grown faster than the demand for clothing. 
B)  demand for clothing has grown faster than the supply of clothing. 
C)  the supply of and demand for clothing have grown by the same proportion. 
D)  there is no way to determine what has happened to supply and demand with this information.

Question 8

Which of the following is a consequence of rent controls established to keep housing affordable for the poor?

Accepted Answer

A)  Less rental housing is available as prospective landlords find it unprofitable to rent at restricted prices. 
B)  The quality of rental housing declines as landlords lack the funds and incentive to maintain properties. 
C)  Apartment buildings are torn down in favor of office buildings,shopping malls,and other buildings where rents are not controlled. 
D)  All of these are consequences of rent controls. 
A)  Less rental housing is available as prospective landlords find it unprofitable to rent at restricted prices. 
B)  The quality of rental housing declines as landlords lack the funds and incentive to maintain properties. 
C)  Apartment buildings are torn down in favor of office buildings,shopping malls,and other buildings where rents are not controlled. 
D)  All of these are consequences of rent controls.

Question 9

Which of the following statements is correct?

Accepted Answer

A)  If demand increases and supply decreases,equilibrium price will fall. 
B)  If supply increases and demand decreases,equilibrium price will fall. 
C)  If demand decreases and supply increases,equilibrium price will rise. 
D)  If supply declines and demand remains constant,equilibrium price will fall. 
A)  If demand increases and supply decreases,equilibrium price will fall. 
B)  If supply increases and demand decreases,equilibrium price will fall. 
C)  If demand decreases and supply increases,equilibrium price will rise. 
D)  If supply declines and demand remains constant,equilibrium price will fall.

Question 10

A firm's supply curve is upsloping because:

Accepted Answer

A)  the expansion of production necessitates the use of qualitatively inferior inputs. 
B)  mass production economies are associated with larger levels of output. 
C)  consumers envision a positive relationship between price and quality. 
D)  beyond some point the production costs of additional units of output will rise. 
A)  the expansion of production necessitates the use of qualitatively inferior inputs. 
B)  mass production economies are associated with larger levels of output. 
C)  consumers envision a positive relationship between price and quality. 
D)  beyond some point the production costs of additional units of output will rise.

Question 11

A decrease in supply of X increases the equilibrium price of X,which reduces the demand for X and automatically returns the price of X to its initial level.

Accepted Answer

A) True 
 B)False

Question 12

Other things equal,if the price of a key resource used to produce product X falls,the:

Accepted Answer

A)  product supply curve of X will shift to the right. 
B)  product demand curve of X will shift to the right. 
C)  product supply curve of X will shift to the left. 
D)  product supply curve of X will not shift. 
A)  product supply curve of X will shift to the right. 
B)  product demand curve of X will shift to the right. 
C)  product supply curve of X will shift to the left. 
D)  product supply curve of X will not shift.

Question 13

At the equilibrium price:

Accepted Answer

A)  quantity supplied may exceed quantity demanded or vice versa. 
B)  there are no pressures on price to either rise or fall. 
C)  there are forces that cause price to rise. 
D)  there are forces that cause price to fall. 
A)  quantity supplied may exceed quantity demanded or vice versa. 
B)  there are no pressures on price to either rise or fall. 
C)  there are forces that cause price to rise. 
D)  there are forces that cause price to fall.

Question 14

Because of unseasonably cold weather,the supply of oranges has substantially decreased.This statement indicates the:

Accepted Answer

A)  demand for oranges will necessarily rise. 
B)  equilibrium quantity of oranges will rise. 
C)  amount of oranges that will be available at various prices has declined. 
D)  price of oranges will fall. 
A)  demand for oranges will necessarily rise. 
B)  equilibrium quantity of oranges will rise. 
C)  amount of oranges that will be available at various prices has declined. 
D)  price of oranges will fall.

Question 15

Tennis rackets and ballpoint pens are:

Accepted Answer

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

Question 16

(Advanced analysis)The equation for the demand curve in the below diagram:

Accepted Answer

A)  is P = 70 - Q. 
B)  is P = 35 - 2Q. 
C)  is P = 35 - .5Q. 
D)  cannot be determined from the information given. 
A)  is P = 70 - Q. 
B)  is P = 35 - 2Q. 
C)  is P = 35 - .5Q. 
D)  cannot be determined from the information given.

Question 17

In which of the following instances is the effect on equilibrium price dependent on the magnitude of the shifts in supply and demand?

Accepted Answer

A)  Demand rises and supply rises. 
B)  Supply falls and demand remains constant. 
C)  Demand rises and supply falls. 
D)  Supply rises and demand falls. 
A)  Demand rises and supply rises. 
B)  Supply falls and demand remains constant. 
C)  Demand rises and supply falls. 
D)  Supply rises and demand falls.

Question 18

Over time,the equilibrium price of a gigabyte of computer memory has fallen while the equilibrium quantity purchased has increased.Based on this we can conclude that:

Accepted Answer

A)  decreases in the demand for computer memory have exceeded increases in supply. 
B)  decreases in the supply of computer memory have exceeded increases in demand. 
C)  increases in the demand for computer memory have exceeded increases in supply. 
D)  increases in the supply of computer memory have exceeded increases in demand. 
A)  decreases in the demand for computer memory have exceeded increases in supply. 
B)  decreases in the supply of computer memory have exceeded increases in demand. 
C)  increases in the demand for computer memory have exceeded increases in supply. 
D)  increases in the supply of computer memory have exceeded increases in demand.

Question 19

Which of the following would not shift the demand curve for beef?

Accepted Answer

A)  A widely publicized study that indicates beef consumption increases one's cholesterol. 
B)  A reduction in the price of cattle feed. 
C)  An effective advertising campaign by pork producers. 
D)  A change in the incomes of beef consumers. 
A)  A widely publicized study that indicates beef consumption increases one's cholesterol. 
B)  A reduction in the price of cattle feed. 
C)  An effective advertising campaign by pork producers. 
D)  A change in the incomes of beef consumers.

Question 20

The rationing function of prices refers to the:

Accepted Answer

A)  tendency of supply and demand to shift in opposite directions. 
B)  fact that ration coupons are needed to alleviate wartime shortages of goods. 
C)  capacity of a competitive market to equalize quantity demanded and quantity supplied. 
D)  ability of the market system to generate an equitable distribution of income. 
A)  tendency of supply and demand to shift in opposite directions. 
B)  fact that ration coupons are needed to alleviate wartime shortages of goods. 
C)  capacity of a competitive market to equalize quantity demanded and quantity supplied. 
D)  ability of the market system to generate an equitable distribution of income.

When the price of oil declines significantly,the price of gasoline also declines.The latter occurs because of a(n):

An increase in the excise tax on cigarettes raises the price of cigarettes by shifting the:

Suppose product X is an input in the production of product Y.Product Y in turn is a substitute for product Z.An increase in the price of X can be expected to:

A product market is in equilibrium:

The demand for most products varies directly with changes in consumer incomes.Such products are known as:

Suppose that in the clothing market,production costs have fallen,but the equilibrium price and quantity purchased have both increased.Based on this information we can conclude that:

Which of the following is a consequence of rent controls established to keep housing affordable for the poor?

Which of the following statements is correct?

A firm's supply curve is upsloping because:

A decrease in supply of X increases the equilibrium price of X,which reduces the demand for X and automatically returns the price of X to its initial level.

Other things equal,if the price of a key resource used to produce product X falls,the:

At the equilibrium price:

Because of unseasonably cold weather,the supply of oranges has substantially decreased.This statement indicates the:

Tennis rackets and ballpoint pens are:

(Advanced analysis)The equation for the demand curve in the below diagram:

In which of the following instances is the effect on equilibrium price dependent on the magnitude of the shifts in supply and demand?

Over time,the equilibrium price of a gigabyte of computer memory has fallen while the equilibrium quantity purchased has increased.Based on this we can conclude that:

Which of the following would not shift the demand curve for beef?

The rationing function of prices refers to the:

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 Cost of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition and Oligopoly

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

Filters

Exam 3: Demand, Supply, and Market Equilibrium

When the price of oil declines significantly,the price of gasoline also declines.The latter occurs because of a(n):

An increase in the excise tax on cigarettes raises the price of cigarettes by shifting the:

Suppose product X is an input in the production of product Y.Product Y in turn is a substitute for product Z.An increase in the price of X can be expected to:

A product market is in equilibrium:

The demand for most products varies directly with changes in consumer incomes.Such products are known as:

Suppose that in the clothing market,production costs have fallen,but the equilibrium price and quantity purchased have both increased.Based on this information we can conclude that:

Which of the following is a consequence of rent controls established to keep housing affordable for the poor?

Which of the following statements is correct?

A firm's supply curve is upsloping because:

A decrease in supply of X increases the equilibrium price of X,which reduces the demand for X and automatically returns the price of X to its initial level.

Other things equal,if the price of a key resource used to produce product X falls,the:

At the equilibrium price:

Because of unseasonably cold weather,the supply of oranges has substantially decreased.This statement indicates the:

Tennis rackets and ballpoint pens are:

(Advanced analysis)The equation for the demand curve in the below diagram:

In which of the following instances is the effect on equilibrium price dependent on the magnitude of the shifts in supply and demand?

Over time,the equilibrium price of a gigabyte of computer memory has fallen while the equilibrium quantity purchased has increased.Based on this we can conclude that:

Which of the following would not shift the demand curve for beef?

The rationing function of prices refers to the:

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 Cost of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition and Oligopoly

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

Filters