Question 1

What is the substitution effect?

Accepted Answer

A) The effect that a change in income has on the demand for a substitute product. 
B) The sacrifice which has to be made when an additional quantity of one product is purchased. 
C) The substitution of one product for another as a result of a change in their relative prices. 
D) The substitution of a normal product for an inferior product as the result of an increase in income. 
A) The effect that a change in income has on the demand for a substitute product. 
B) The sacrifice which has to be made when an additional quantity of one product is purchased. 
C) The substitution of one product for another as a result of a change in their relative prices. 
D) The substitution of a normal product for an inferior product as the result of an increase in income.

Question 2

If the price of a product is below equilibrium,which of the following statements is true?

Accepted Answer

A) The quantity demanded will exceed the quantity supplied. 
B) The quantity supplied will exceed the quantity demanded. 
C) A surplus of the product exists. 
D) None of the choices are correct. 
A) The quantity demanded will exceed the quantity supplied. 
B) The quantity supplied will exceed the quantity demanded. 
C) A surplus of the product exists. 
D) None of the choices are correct.

Question 3

Why is the demand curve downward sloping? Explain.

Accepted Answer

The demand curve is downward sloping bec

Question 4

What is the term for the quantities which producers are willing and able to sell per period of time at various prices?

Accepted Answer

A) Quantity supplied. 
B) Quantity demanded. 
C) Surplus. 
D) Supply. 
E) Product availability. 
A) Quantity supplied. 
B) Quantity demanded. 
C) Surplus. 
D) Supply. 
E) Product availability.

Question 5

Table 2.11 depicts the market for mushrooms (in thousands of kilograms per month).
  
-What is the effect of an increase in demand for a product?

Accepted Answer

A) Its price will rise and quantity traded will decrease. 
B) Its price will rise and quantity traded will increase. 
C) Its price will fall and quantity traded will decrease. 
D) Its price will fall and quantity traded will increase. 
A) Its price will rise and quantity traded will decrease. 
B) Its price will rise and quantity traded will increase. 
C) Its price will fall and quantity traded will decrease. 
D) Its price will fall and quantity traded will increase.

Question 6

-Refer to Figure 2.15 to answer this question.What will be the effect if the price is now $1,200?

Accepted Answer

A) There would be a surplus of 30. 
B) There would be a shortage of 30. 
C) 160 would be purchased. 
D) There would be a surplus of 60. 
E) The price will increase. 
A) There would be a surplus of 30. 
B) There would be a shortage of 30. 
C) 160 would be purchased. 
D) There would be a surplus of 60. 
E) The price will increase.

Question 7

An increase in the price of a product causes a decrease in the real income of consumers.

Accepted Answer

A) True 
 B)False

Question 8

-Refer to the above information to answer this question.What is true if price is $45?

Accepted Answer

A) Price will soon fall. 
B) There is a surplus of 40. 
C) The quantity supplied is 200. 
D) The quantity demanded is 80. 
E) There is a shortage of 40. 
A) Price will soon fall. 
B) There is a surplus of 40. 
C) The quantity supplied is 200. 
D) The quantity demanded is 80. 
E) There is a shortage of 40.

Question 9

What is the term for those products which tend to be purchased jointly and whose demands therefore are related?

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 10

Assume the market for coffee is initially in equilibrium.
a)Draw a demand and supply diagram to illustrate the initial equilibrium.
b)Explain the impact on the coffee market if there is an increase in the price of coffee beans.
c)Graphically illustrate the impact on the diagram you prepared for part (a).

Accepted Answer

a) @#IMG-DLM& 
b)An increase in the pric

Question 11

What is a normal product?

Accepted Answer

A) It is a product which consumers buy regularly. 
B) It is a product which consumers buy more of as their incomes increase. 
C) It is a product which consumers buy less of as their incomes increase. 
D) It is a product which consumers buy more of as their incomes decrease. 
A) It is a product which consumers buy regularly. 
B) It is a product which consumers buy more of as their incomes increase. 
C) It is a product which consumers buy less of as their incomes increase. 
D) It is a product which consumers buy more of as their incomes decrease.

Question 12

-What is the slope of the demand curve?

Accepted Answer

A) It is downward-sloping because when the price of a product falls,consumers are willing and able to buy more. 
B) It is upward-sloping because when the price of a product falls,consumers are willing and able to buy more. 
C) It is upward-sloping because when the price of a product increases,consumers are willing and able to buy more. 
D) It is downward-sloping because higher prices are associated with larger quantities. 
A) It is downward-sloping because when the price of a product falls,consumers are willing and able to buy more. 
B) It is upward-sloping because when the price of a product falls,consumers are willing and able to buy more. 
C) It is upward-sloping because when the price of a product increases,consumers are willing and able to buy more. 
D) It is downward-sloping because higher prices are associated with larger quantities.

Question 13

-Refer to the above graph to answer this question.What could cause the movement from point C to point D?

Accepted Answer

A) A decrease in the supply. 
B) A decrease in the price. 
C) A decrease in prices of productive resources. 
D) An increase in the price of a substitute product. 
E) An increase in the price of a complementary product. 
A) A decrease in the supply. 
B) A decrease in the price. 
C) A decrease in prices of productive resources. 
D) An increase in the price of a substitute product. 
E) An increase in the price of a complementary product.

Question 14

What is the term for those products whose demand will decrease as a result of an increase in income and will increase as a result of a decrease in income?

Accepted Answer

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

Question 15

What is true of substitute products?

Accepted Answer

A) When the price of one increases,the quantity purchased of the other decreases. 
B) When the price of one increases,the quantity purchased of the other increases. 
C) When the price of one decreases,the quantity purchased of the other increases. 
D) They are products which are always purchased together. 
A) When the price of one increases,the quantity purchased of the other decreases. 
B) When the price of one increases,the quantity purchased of the other increases. 
C) When the price of one decreases,the quantity purchased of the other increases. 
D) They are products which are always purchased together.

Question 16

All of the following except one will cause the demand for a normal product to decrease.Which is the exception?

Accepted Answer

A) The expectation by consumers that the future price will be higher. 
B) The fear of consumers of a future recession. 
C) An increase in the price of a complementary product. 
D) A decrease in the price of a substitute product. 
E) A decrease in consumer incomes. 
A) The expectation by consumers that the future price will be higher. 
B) The fear of consumers of a future recession. 
C) An increase in the price of a complementary product. 
D) A decrease in the price of a substitute product. 
E) A decrease in consumer incomes.

Question 17

Consider the effects of each event outlined in the following table on the market for orange juice in Canada. Place a (   ), (   ) or (-) under the appropriate heading to indicate whether there will be an increase, decrease, or no change in demand (D), supply (S), equilibrium price (P) and quantity traded (Q). Assume orange juice is a normal good.

Accepted Answer

The answer of Consider the effects of each event outlined...

Question 18

The product is a normal product.
  
-What is the effect of a decrease in the supply of a product?

Accepted Answer

A) It will cause an increase in both the price and in the quantity traded. 
B) It will cause an increase in the price but a decrease in the quantity traded. 
C) It will cause a decrease in both the price and in the quantity traded. 
D) It will cause a decrease in the price but an increase in the quantity traded. 
A) It will cause an increase in both the price and in the quantity traded. 
B) It will cause an increase in the price but a decrease in the quantity traded. 
C) It will cause a decrease in both the price and in the quantity traded. 
D) It will cause a decrease in the price but an increase in the quantity traded.

Question 19

Table 2.11 depicts the market for mushrooms (in thousands of kilograms per month).
  
-What is the effect of a shortage?

Accepted Answer

A) It will cause a decrease in the price,leading to an increase in the quantity supplied and a decrease in the quantity demanded. 
B) It will cause a decrease in the price,leading to a decrease in the quantity supplied and an increase in the quantity demanded. 
C) It will cause an increase in the price,leading to an increase in the quantity supplied and a decrease in the quantity demanded. 
D) It will cause an increase in the price,leading to a decrease in the quantity supplied and an increase in the quantity demanded. 
A) It will cause a decrease in the price,leading to an increase in the quantity supplied and a decrease in the quantity demanded. 
B) It will cause a decrease in the price,leading to a decrease in the quantity supplied and an increase in the quantity demanded. 
C) It will cause an increase in the price,leading to an increase in the quantity supplied and a decrease in the quantity demanded. 
D) It will cause an increase in the price,leading to a decrease in the quantity supplied and an increase in the quantity demanded.

Question 20

An increase in business taxes causes the supply curve to shift left.

Accepted Answer

A) True 
 B)False

What is the substitution effect?

If the price of a product is below equilibrium,which of the following statements is true?

Why is the demand curve downward sloping? Explain.

What is the term for the quantities which producers are willing and able to sell per period of time at various prices?

Table 2.11 depicts the market for mushrooms (in thousands of kilograms per month). -What is the effect of an increase in demand for a product?

-Refer to Figure 2.15 to answer this question.What will be the effect if the price is now $1,200?

An increase in the price of a product causes a decrease in the real income of consumers.

-Refer to the above information to answer this question.What is true if price is $45?

What is the term for those products which tend to be purchased jointly and whose demands therefore are related?

What is a normal product?

-What is the slope of the demand curve?

-Refer to the above graph to answer this question.What could cause the movement from point C to point D?

What is the term for those products whose demand will decrease as a result of an increase in income and will increase as a result of a decrease in income?

What is true of substitute products?

All of the following except one will cause the demand for a normal product to decrease.Which is the exception?

The product is a normal product. -What is the effect of a decrease in the supply of a product?

Table 2.11 depicts the market for mushrooms (in thousands of kilograms per month). -What is the effect of a shortage?

An increase in business taxes causes the supply curve to shift left.

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 substitution effect?

If the price of a product is below equilibrium,which of the following statements is true?

Why is the demand curve downward sloping? Explain.

What is the term for the quantities which producers are willing and able to sell per period of time at various prices?

Table 2.11 depicts the market for mushrooms (in thousands of kilograms per month). -What is the effect of an increase in demand for a product?

-Refer to Figure 2.15 to answer this question.What will be the effect if the price is now $1,200?

An increase in the price of a product causes a decrease in the real income of consumers.

-Refer to the above information to answer this question.What is true if price is $45?

What is the term for those products which tend to be purchased jointly and whose demands therefore are related?

What is a normal product?

-What is the slope of the demand curve?

-Refer to the above graph to answer this question.What could cause the movement from point C to point D?

What is the term for those products whose demand will decrease as a result of an increase in income and will increase as a result of a decrease in income?

What is true of substitute products?

All of the following except one will cause the demand for a normal product to decrease.Which is the exception?

The product is a normal product. -What is the effect of a decrease in the supply of a product?

Table 2.11 depicts the market for mushrooms (in thousands of kilograms per month). -What is the effect of a shortage?

An increase in business taxes causes the supply curve to shift left.

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