Question 1

What is the name of those products whose demand will increase as a result of an increase in income?

Accepted Answer

A) Normal products. 
B) Complementary products. 
C) Substitute products. 
D) Inferior products. 
A) Normal products. 
B) Complementary products. 
C) Substitute products. 
D) Inferior products.

Question 2

All else held constant,a decrease in demand will lead to a

Accepted Answer

A) decrease in price and increase in quantity supplied. 
B) increase in price and increase in quantity supplied. 
C) increase in price and decrease in quantity supplied. 
D) decrease in price and decrease in quantity supplied. 
A) decrease in price and increase in quantity supplied. 
B) increase in price and increase in quantity supplied. 
C) increase in price and decrease in quantity supplied. 
D) decrease in price and decrease in quantity supplied.

Question 3

How will the demand and supply of a product be affected if both producers and consumers expect the future price of a product will be higher than at present?

Accepted Answer

A) It will cause an increase in demand but a decrease in supply. 
B) It will cause an increase in both the demand and supply. 
C) It will cause a decrease in both the demand and supply. 
D) It will cause an increase in supply but will have no effect on demand. 
E) It will cause an increase in supply but a decrease in demand. 
A) It will cause an increase in demand but a decrease in supply. 
B) It will cause an increase in both the demand and supply. 
C) It will cause a decrease in both the demand and supply. 
D) It will cause an increase in supply but will have no effect on demand. 
E) It will cause an increase in supply but a decrease in demand.

Question 4

-Refer to the graph above to answer this question.What would be the new equilibrium price and quantity if supply decreased by 120?

Accepted Answer

A) Supply would be zero. 
B) $1,400 and 80. 
C) $1,000 and 40. 
D) $800 and 80. 
A) Supply would be zero. 
B) $1,400 and 80. 
C) $1,000 and 40. 
D) $800 and 80.

Question 5

Surpluses drive prices up;shortages drive prices down.

Accepted Answer

A) True 
 B)False

Question 6

-Refer to the above graph to answer this question.What is the minimum price the quantity sold at a price of $14 could have been sold for?

Accepted Answer

A) $6. 
B) $8. 
C) $10. 
D) $12. 
E) Cannot be determined. 
A) $6. 
B) $8. 
C) $10. 
D) $12. 
E) Cannot be determined.

Question 7

The product is a normal product.
  
-Refer to the graph above to answer this question.All of the following except one could have caused the shift from D1 to D2.Which is the exception?

Accepted Answer

A) An increase in income. 
B) An increase in the price of a substitute good. 
C) An increase in the price of a complement good. 
D) Growth in the size of the market. 
A) An increase in income. 
B) An increase in the price of a substitute good. 
C) An increase in the price of a complement good. 
D) Growth in the size of the market.

Question 8

The following table shows the initial weekly demand (D1)and the new demand (D2)for packets of pretzels (a bar snack):
  
-Refer to the information above to answer this question.In order to produce the change in demand from D1 to D2,what might have happened to the price of a substitute product like a packet of nuts?

Accepted Answer

A) It has not changed,but people must be buying less. 
B) It has not changed,but people must be buying more. 
C) It has decreased. 
D) It has increased. 
A) It has not changed,but people must be buying less. 
B) It has not changed,but people must be buying more. 
C) It has decreased. 
D) It has increased.

Question 9

In Agfa,at a market price of $3 per kilo,there is a shortage of 60 kilos of basmati rice.For each 50-cent increase in the price,the quantity demanded drops by 8 kilos,while the quantity supplied increases by 12 kilos.
a)What will be the equilibrium price?
b)What will be the surplus/shortage at a price of $5.50?

Accepted Answer

a)$4.50
b)

Question 10

-Refer to the above information to answer this question.What are the equilibrium values of price and quantity?

Accepted Answer

A) $40 and 60. 
B) $40 and 140. 
C) $50 and 100. 
D) $52.50 and 100. 
E) $55 and 120. 
A) $40 and 60. 
B) $40 and 140. 
C) $50 and 100. 
D) $52.50 and 100. 
E) $55 and 120.

Question 11

-Refer to the graph above to answer this question.What does the distance Q1 - Q3 represent?

Accepted Answer

A) The decrease in equilibrium quantity traded resulting from a decrease in demand. 
B) The decrease in equilibrium quantity traded resulting from a decrease in supply. 
C) The decrease in equilibrium quantity traded resulting from a decrease in the quantity supplied. 
D) The decrease in equilibrium quantity traded resulting from an increase in the quantity supplied. 
A) The decrease in equilibrium quantity traded resulting from a decrease in demand. 
B) The decrease in equilibrium quantity traded resulting from a decrease in supply. 
C) The decrease in equilibrium quantity traded resulting from a decrease in the quantity supplied. 
D) The decrease in equilibrium quantity traded resulting from an increase in the quantity supplied.

Question 12

-Refer to the graph above to answer this question.What would be the new equilibrium price and quantity if demand decreased by 60?

Accepted Answer

A) $1,000 and 80. 
B) $800 and 80. 
C) $1,400 and 80. 
D) $1,400 and 60. 
A) $1,000 and 80. 
B) $800 and 80. 
C) $1,400 and 80. 
D) $1,400 and 60.

Question 13

The above information contains supply and demand data for luxurious apartments in a downtown waterfront area.
-Refer to the above information to answer this question.If two potential buyers decide to leave this market,what are the new equilibrium values of price and quantity?

Accepted Answer

A) $2.0 million and 10. 
B) $1.8 million and 12. 
C) $1.6 million and 14. 
D) $1.4 million and 16. 
E) $1.2 million and 18. 
A) $2.0 million and 10. 
B) $1.8 million and 12. 
C) $1.6 million and 14. 
D) $1.4 million and 16. 
E) $1.2 million and 18.

Question 14

The following figure shows the market for grapefruit (in kilos):
  
-Refer to the diagram above to answer this question.If factor prices were to rise,causing the supply to change by 12 kilos,what will be the new equilibrium price and quantity?

Accepted Answer

A) $2.25 and 36 kilos 
B) $2.75 and 20 kilos 
C) $2.75 and 44 kilos 
D) $3.25 and 28 kilos 
A) $2.25 and 36 kilos 
B) $2.75 and 20 kilos 
C) $2.75 and 44 kilos 
D) $3.25 and 28 kilos

Question 15

Which of the following is explained by the combination of the substitution effect and the income effect?

Accepted Answer

A) Ceteris paribus. 
B) Downward sloping demand curves. 
C) Market demand. 
D) Equilibrium price. 
A) Ceteris paribus. 
B) Downward sloping demand curves. 
C) Market demand. 
D) Equilibrium price.

Question 16

Consider the demand and supply schedules above for a limited number of hotels in the downtown business district area of a particular city.
-Refer to the above information to answer this question.If two of the hotels have been purchased,what are the new equilibrium values of price and quantity?

Accepted Answer

A) $60 million and 4. 
B) $60 million and 6. 
C) $70 million and 6. 
D) $70 million and 4. 
E) $80 million and 6. 
A) $60 million and 4. 
B) $60 million and 6. 
C) $70 million and 6. 
D) $70 million and 4. 
E) $80 million and 6.

Question 17

What is the term for the substitution of one product for another as a result of a change in their relative prices?

Accepted Answer

A) Income effect. 
B) Substitution effect. 
C) Market effect. 
D) Law of demand. 
A) Income effect. 
B) Substitution effect. 
C) Market effect. 
D) Law of demand.

Question 18

Which of the following factors will change the supply of apple juice?
a)An increase in the price of apples.
b)An increase in the price of apple juice.
c)An increase in the price of orange juice.
d)An increase in consumer income.
e)An increase in the number of apple juice suppliers.

Accepted Answer

(a)An increase in the price of

Question 19

What is the effect of consumers' expecting that the future price of a product will increase?

Accepted Answer

A) It will cause an increase in the quantity demanded. 
B) It will cause an increase in demand. 
C) It will cause a decrease in demand. 
D) It will cause a decrease in the quantity demanded. 
E) It will cause a decrease in supply. 
A) It will cause an increase in the quantity demanded. 
B) It will cause an increase in demand. 
C) It will cause a decrease in demand. 
D) It will cause a decrease in the quantity demanded. 
E) It will cause a decrease in supply.

Question 20

What is the effect on a normal product if income increases?

Accepted Answer

A) It will cause an increase in the quantity demanded. 
B) It will cause an increase in demand. 
C) It will cause a decrease in demand. 
D) It will cause an increase in supply. 
E) It will cause a decrease in supply. 
A) It will cause an increase in the quantity demanded. 
B) It will cause an increase in demand. 
C) It will cause a decrease in demand. 
D) It will cause an increase in supply. 
E) It will cause a decrease in supply.

What is the name of those products whose demand will increase as a result of an increase in income?

All else held constant,a decrease in demand will lead to a

How will the demand and supply of a product be affected if both producers and consumers expect the future price of a product will be higher than at present?

-Refer to the graph above to answer this question.What would be the new equilibrium price and quantity if supply decreased by 120?

Surpluses drive prices up;shortages drive prices down.

-Refer to the above graph to answer this question.What is the minimum price the quantity sold at a price of $14 could have been sold for?

The product is a normal product. -Refer to the graph above to answer this question.All of the following except one could have caused the shift from D1 to D2.Which is the exception?

-Refer to the above information to answer this question.What are the equilibrium values of price and quantity?

-Refer to the graph above to answer this question.What does the distance Q1 - Q3 represent?

-Refer to the graph above to answer this question.What would be the new equilibrium price and quantity if demand decreased by 60?

The above information contains supply and demand data for luxurious apartments in a downtown waterfront area. -Refer to the above information to answer this question.If two potential buyers decide to leave this market,what are the new equilibrium values of price and quantity?

The following figure shows the market for grapefruit (in kilos): -Refer to the diagram above to answer this question.If factor prices were to rise,causing the supply to change by 12 kilos,what will be the new equilibrium price and quantity?

Which of the following is explained by the combination of the substitution effect and the income effect?

Consider the demand and supply schedules above for a limited number of hotels in the downtown business district area of a particular city. -Refer to the above information to answer this question.If two of the hotels have been purchased,what are the new equilibrium values of price and quantity?

What is the term for the substitution of one product for another as a result of a change in their relative prices?

Which of the following factors will change the supply of apple juice? a)An increase in the price of apples. b)An increase in the price of apple juice. c)An increase in the price of orange juice. d)An increase in consumer income. e)An increase in the number of apple juice suppliers.

What is the effect of consumers' expecting that the future price of a product will increase?

What is the effect on a normal product if income increases?

The Economic Problem

Demand and Supply: An Elaboration

Elasticity

Consumer Choice

A Firms Production Decisions and Costs in the Short Run

Costs in the Long Run

Perfect Competition

An Evaluation of Competitive Markets

Monopoly

Imperfect Competition

The Factors of Production

International Trade

Filters

Exam 2: Demand and Supply: An Introduction

What is the name of those products whose demand will increase as a result of an increase in income?

All else held constant,a decrease in demand will lead to a

How will the demand and supply of a product be affected if both producers and consumers expect the future price of a product will be higher than at present?

-Refer to the graph above to answer this question.What would be the new equilibrium price and quantity if supply decreased by 120?

Surpluses drive prices up;shortages drive prices down.

-Refer to the above graph to answer this question.What is the minimum price the quantity sold at a price of $14 could have been sold for?

The product is a normal product. -Refer to the graph above to answer this question.All of the following except one could have caused the shift from D1 to D2.Which is the exception?

-Refer to the above information to answer this question.What are the equilibrium values of price and quantity?

-Refer to the graph above to answer this question.What does the distance Q1 - Q3 represent?

-Refer to the graph above to answer this question.What would be the new equilibrium price and quantity if demand decreased by 60?

The above information contains supply and demand data for luxurious apartments in a downtown waterfront area. -Refer to the above information to answer this question.If two potential buyers decide to leave this market,what are the new equilibrium values of price and quantity?

The following figure shows the market for grapefruit (in kilos): -Refer to the diagram above to answer this question.If factor prices were to rise,causing the supply to change by 12 kilos,what will be the new equilibrium price and quantity?

Which of the following is explained by the combination of the substitution effect and the income effect?

Consider the demand and supply schedules above for a limited number of hotels in the downtown business district area of a particular city. -Refer to the above information to answer this question.If two of the hotels have been purchased,what are the new equilibrium values of price and quantity?

What is the term for the substitution of one product for another as a result of a change in their relative prices?

Which of the following factors will change the supply of apple juice? a)An increase in the price of apples. b)An increase in the price of apple juice. c)An increase in the price of orange juice. d)An increase in consumer income. e)An increase in the number of apple juice suppliers.

What is the effect of consumers' expecting that the future price of a product will increase?

What is the effect on a normal product if income increases?

The Economic Problem

Demand and Supply: An Elaboration

Elasticity

Consumer Choice

A Firms Production Decisions and Costs in the Short Run

Costs in the Long Run

Perfect Competition

An Evaluation of Competitive Markets

Monopoly

Imperfect Competition

The Factors of Production

International Trade

Filters