Question 1

The product is a normal product.
  
-Refer to the graph above to answer this question.Which of the following statements is correct?

Accepted Answer

A) Both ab and ac represent an increase in the quantity demanded. 
B) Both ab and ac represent an increase in demand. 
C) While ab represents an increase in demand,ac represents an increase in supply. 
D) While ac represents an increase in demand,ab represents an increase in the quantity supplied. 
E) Both ab and cb represent an increase in demand. 
A) Both ab and ac represent an increase in the quantity demanded. 
B) Both ab and ac represent an increase in demand. 
C) While ab represents an increase in demand,ac represents an increase in supply. 
D) While ac represents an increase in demand,ab represents an increase in the quantity supplied. 
E) Both ab and cb represent an increase in demand.

Question 2

What is meant by the term change in the quantity demanded?

Accepted Answer

A) The change in the quantity which results from a price change and implies a movement along the demand curve. 
B) The change in the quantity which results from a change in any factor other than the price and implies a movement along the demand curve. 
C) The change in the quantity which results from a price change and implies a shift in the demand curve. 
D) The change in the quantity which results from a change in any factor other than the price and implies a shift in the demand curve. 
A) The change in the quantity which results from a price change and implies a movement along the demand curve. 
B) The change in the quantity which results from a change in any factor other than the price and implies a movement along the demand curve. 
C) The change in the quantity which results from a price change and implies a shift in the demand curve. 
D) The change in the quantity which results from a change in any factor other than the price and implies a shift in the demand curve.

Question 3

-Refer to the above graph to answer this question.If the price of the product is $8,how many units would be sold?

Accepted Answer

A) 400 units. 
B) 500 units. 
C) 600 units. 
D) 800 units. 
E) Cannot be determined. 
A) 400 units. 
B) 500 units. 
C) 600 units. 
D) 800 units. 
E) Cannot be determined.

Question 4

How will a change in income affect the demand for an inferior product?

Accepted Answer

A) The demand will increase if the income of consumers increases. 
B) The demand will increase if the income of consumers decreases. 
C) The demand for an inferior product is not affected by consumer incomes. 
D) The demand will remain the same but the quantity demanded will increase if income decreases. 
A) The demand will increase if the income of consumers increases. 
B) The demand will increase if the income of consumers decreases. 
C) The demand for an inferior product is not affected by consumer incomes. 
D) The demand will remain the same but the quantity demanded will increase if income decreases.

Question 5

What is the term for the effect which a price change has on real income and therefore on the quantity demanded of a product?

Accepted Answer

A) Income effect. 
B) Substitution effect. 
C) Market demand. 
D) Change in the quantity demanded. 
E) Opportunity cost. 
A) Income effect. 
B) Substitution effect. 
C) Market demand. 
D) Change in the quantity demanded. 
E) Opportunity cost.

Question 6

The following table shows the quantity demanded and quantity supplied of grapefruits (in millions of kilos):
  
-Refer to the table above to answer this question.If buyers think that the price of grapefruits is going to rise,causing the demand to change by 6 million kilos,what will be the new equilibrium price and quantity?

Accepted Answer

A) $2.50 and 28 million kilos 
B) $2.75 and 26 million kilos 
C) $2.50 and 26 million kilos 
D) $3.00 and 36 million kilos 
A) $2.50 and 28 million kilos 
B) $2.75 and 26 million kilos 
C) $2.50 and 26 million kilos 
D) $3.00 and 36 million kilos

Question 7

-What will a surplus of a product lead to?

Accepted Answer

A) A reduction in supply. 
B) A reduction in price. 
C) An increase in price. 
D) An increase in supply. 
A) A reduction in supply. 
B) A reduction in price. 
C) An increase in price. 
D) An increase in supply.

Question 8

The product is a normal product.
  
-All of the following except one will cause the supply of a product to increase.Which is the exception?

Accepted Answer

A) A decrease in the price of a substitute in production. 
B) An increase in business taxes. 
C) The expectation of suppliers that the future price of the product will be lower. 
D) A decrease in the price of resources. 
E) An improvement in technology. 
A) A decrease in the price of a substitute in production. 
B) An increase in business taxes. 
C) The expectation of suppliers that the future price of the product will be lower. 
D) A decrease in the price of resources. 
E) An improvement in technology.

Question 9

Which of the following best describes a normal product?

Accepted Answer

A) A product that people both need and like. 
B) A product whose demand increases if income increases. 
C) A product whose demand increases if income decreases. 
D) A staple product that everyone needs. 
A) A product that people both need and like. 
B) A product whose demand increases if income increases. 
C) A product whose demand increases if income decreases. 
D) A staple product that everyone needs.

Question 10

Which of the following pairs of goods are complementary?

Accepted Answer

A) Coffee and tea. 
B) Skis and ski boots. 
C) Bread and crackers. 
D) Popcorn and pretzels. 
A) Coffee and tea. 
B) Skis and ski boots. 
C) Bread and crackers. 
D) Popcorn and pretzels.

Question 11

-Refer to the above information to answer this question.What is true if price is $52.50?

Accepted Answer

A) Price will soon rise. 
B) There is a surplus of 110. 
C) The quantity supplied is 90. 
D) The quantity demanded is 90. 
E) There is a shortage of 40. 
A) Price will soon rise. 
B) There is a surplus of 110. 
C) The quantity supplied is 90. 
D) The quantity demanded is 90. 
E) There is a shortage of 40.

Question 12

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

Accepted Answer

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

Question 13

What is the effect on product A of an increase in the price of substitute product B?

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.

Question 14

What is the equilibrium price?

Accepted Answer

A) The price at which there is no surplus,but there may be a shortage. 
B) The price at which there is no shortage,but there may be a surplus. 
C) The price at which everyone is able to buy the quantities they desire. 
D) The price at which the quantity demanded equals the quantity supplied. 
E) The price that both buyers and sellers agree is fair. 
A) The price at which there is no surplus,but there may be a shortage. 
B) The price at which there is no shortage,but there may be a surplus. 
C) The price at which everyone is able to buy the quantities they desire. 
D) The price at which the quantity demanded equals the quantity supplied. 
E) The price that both buyers and sellers agree is fair.

Question 15

-Refer to Figure 2.15 to answer this question.Assume that there is a shortage of 60 units.What does this mean?

Accepted Answer

A) The price must be $800. 
B) The price must be above equilibrium. 
C) The price must be $1,200. 
D) The price must be $600. 
A) The price must be $800. 
B) The price must be above equilibrium. 
C) The price must be $1,200. 
D) The price must be $600.

Question 16

Which of the following pairs of products are complements?

Accepted Answer

A) Automobiles and steel. 
B) Steel and oil. 
C) Bread and flour. 
D) Cameras and films. 
E) Flour and wheat. 
A) Automobiles and steel. 
B) Steel and oil. 
C) Bread and flour. 
D) Cameras and films. 
E) Flour and wheat.

Question 17

What is the term for the mechanism which brings buyers and sellers together to assist them in negotiation the exchange of products?

Accepted Answer

A) Production possibilities. 
B) Laissez-faire. 
C) Opportunity cost. 
D) The market. 
E) Supply and demand. 
A) Production possibilities. 
B) Laissez-faire. 
C) Opportunity cost. 
D) The market. 
E) Supply and demand.

Question 18

The product is a normal product.
  
-Refer to the graph above to answer this question.What does the distance Q1 to Q2 represent?

Accepted Answer

A) An increase in the quantity demanded. 
B) A surplus at price P1. 
C) A shortage at price P1. 
D) The result of a decrease in income. 
A) An increase in the quantity demanded. 
B) A surplus at price P1. 
C) A shortage at price P1. 
D) The result of a decrease in income.

Question 19

What is the term for income measured by the amount of goods and services which it will buy?

Accepted Answer

A) Income effect. 
B) Net income. 
C) Real income. 
D) Nominal income. 
E) Actual income. 
A) Income effect. 
B) Net income. 
C) Real income. 
D) Nominal income. 
E) Actual income.

Question 20

-Refer to the above graph to answer this question.How could you describe the movement from point C to point D?

Accepted Answer

A) A decrease in demand which leads to a decrease in the equilibrium price and a decrease in supply. 
B) A decrease in supply which leads to an increase in the equilibrium price and a decrease in demand. 
C) A decrease in demand which leads to a decrease in the equilibrium price and a decrease in the quantity supplied. 
D) A decrease in supply which leads to a decrease in the equilibrium price and a decrease in the quantity demanded. 
E) A decrease in demand which leads to an increase in the equilibrium price and a decrease in supply. 
A) A decrease in demand which leads to a decrease in the equilibrium price and a decrease in supply. 
B) A decrease in supply which leads to an increase in the equilibrium price and a decrease in demand. 
C) A decrease in demand which leads to a decrease in the equilibrium price and a decrease in the quantity supplied. 
D) A decrease in supply which leads to a decrease in the equilibrium price and a decrease in the quantity demanded. 
E) A decrease in demand which leads to an increase in the equilibrium price and a decrease in supply.

The product is a normal product. -Refer to the graph above to answer this question.Which of the following statements is correct?

What is meant by the term change in the quantity demanded?

-Refer to the above graph to answer this question.If the price of the product is $8,how many units would be sold?

How will a change in income affect the demand for an inferior product?

What is the term for the effect which a price change has on real income and therefore on the quantity demanded of a product?

-What will a surplus of a product lead to?

The product is a normal product. -All of the following except one will cause the supply of a product to increase.Which is the exception?

Which of the following best describes a normal product?

Which of the following pairs of goods are complementary?

-Refer to the above information to answer this question.What is true if price is $52.50?

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

What is the effect on product A of an increase in the price of substitute product B?

What is the equilibrium price?

-Refer to Figure 2.15 to answer this question.Assume that there is a shortage of 60 units.What does this mean?

Which of the following pairs of products are complements?

What is the term for the mechanism which brings buyers and sellers together to assist them in negotiation the exchange of products?

The product is a normal product. -Refer to the graph above to answer this question.What does the distance Q1 to Q2 represent?

What is the term for income measured by the amount of goods and services which it will buy?

-Refer to the above graph to answer this question.How could you describe the movement from point C to point D?

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

The product is a normal product. -Refer to the graph above to answer this question.Which of the following statements is correct?

What is meant by the term change in the quantity demanded?

-Refer to the above graph to answer this question.If the price of the product is $8,how many units would be sold?

How will a change in income affect the demand for an inferior product?

What is the term for the effect which a price change has on real income and therefore on the quantity demanded of a product?

-What will a surplus of a product lead to?

The product is a normal product. -All of the following except one will cause the supply of a product to increase.Which is the exception?

Which of the following best describes a normal product?

Which of the following pairs of goods are complementary?

-Refer to the above information to answer this question.What is true if price is $52.50?

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

What is the effect on product A of an increase in the price of substitute product B?

What is the equilibrium price?

-Refer to Figure 2.15 to answer this question.Assume that there is a shortage of 60 units.What does this mean?

Which of the following pairs of products are complements?

What is the term for the mechanism which brings buyers and sellers together to assist them in negotiation the exchange of products?

The product is a normal product. -Refer to the graph above to answer this question.What does the distance Q1 to Q2 represent?

What is the term for income measured by the amount of goods and services which it will buy?

-Refer to the above graph to answer this question.How could you describe the movement from point C to point D?

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