Question 1

The law of demand suggests a _____ relationship between price and _____.

Accepted Answer

A)  positive;quantity demanded 
B)  positive;quantity supplied 
C)  negative;quantity demanded 
D)  negative;,quantity supplied 
A)  positive;quantity demanded 
B)  positive;quantity supplied 
C)  negative;quantity demanded 
D)  negative;,quantity supplied

Question 2

At low prices,only low-cost producers serve the market,but as market prices rise,higher cost-producers begin to serve the market.

Accepted Answer

A) True 
 B)False

Question 3

A change in which factor would shift the supply curve?

Accepted Answer

A)  the price of the good being sold 
B)  the demand for the product 
C)  production technology 
D)  the willingness of consumers to pay 
A)  the price of the good being sold 
B)  the demand for the product 
C)  production technology 
D)  the willingness of consumers to pay

Question 4

If the price of granite countertops rises,we would expect the demand for quartz countertops (a substitute product for granite)to decrease.

Accepted Answer

A) True 
 B)False

Question 5

Bloomberg News reports that OPEC (a group of countries that together form the world's leading supplier of oil)will increase their supply of oil.This is expected to bring future oil prices down.How will this move by OPEC affect the demand for oil today? Explain your reasoning.

Accepted Answer

It will cause today's demand for oil to

Question 6

Use the following to answer questions 
Figure: Supply Shifts  
-(Figure: Supply Shifts)In the figure,the initial supply curve is S1.If producers form expectations that the price will be lower in the near future,S1 will:

Accepted Answer

A)  shift to S2 now. 
B)  shift to S3 now. 
C)  not shift now. 
D)  only shift to S3 in the future. 
A)  shift to S2 now. 
B)  shift to S3 now. 
C)  not shift now. 
D)  only shift to S3 in the future.

Question 7

An increase in supply refers to:

Accepted Answer

A)  a rightward shift of the supply curve. 
B)  a leftward shift of the supply curve. 
C)  an upward movement along the supply curve. 
D)  a downward movement along the supply curve. 
A)  a rightward shift of the supply curve. 
B)  a leftward shift of the supply curve. 
C)  an upward movement along the supply curve. 
D)  a downward movement along the supply curve.

Question 8

Total consumer surplus is measured by the area beneath the demand curve.

Accepted Answer

A) True 
 B)False

Question 9

An increase in demand is a movement along the demand curve to the right.

Accepted Answer

A) True 
 B)False

Question 10

What does the law of demand state?

Accepted Answer

A)  As incomes increase,people consume more of all goods. 
B)  The demand for a good increases with the number of consumers in the market. 
C)  As the price of a good increases,consumers purchase less of that good. 
D)  The supply of a good increases in proportion to the demand for it. 
A)  As incomes increase,people consume more of all goods. 
B)  The demand for a good increases with the number of consumers in the market. 
C)  As the price of a good increases,consumers purchase less of that good. 
D)  The supply of a good increases in proportion to the demand for it.

Question 11

Use the following to answer questions :Figure: Producer Surplus  
-(Figure: Producer Surplus)In the diagram,if the market price of coffee is $6,how much producer surplus do suppliers earn?

Accepted Answer

A)  $25 
B)  $125 
C)  $75.50 
D)  $62.50 
A)  $25 
B)  $125 
C)  $75.50 
D)  $62.50

Question 12

There is no relationship between present prices and future prices.

Accepted Answer

A) True 
 B)False

Question 13

If the price of oil were sufficiently high,it would be used only in:

Accepted Answer

A)  making plastics. 
B)  generating heat. 
C)  powering cars and jets. 
D)  making kerosene. 
A)  making plastics. 
B)  generating heat. 
C)  powering cars and jets. 
D)  making kerosene.

Question 14

Which statement expresses the law of demand?

Accepted Answer

A)  There is a positive relationship between price and consumer surplus. 
B)  There is a positive relationship between price and quantity that buyers are willing and able to purchase. 
C)  There is an inverse relationship between the willingness to pay and the ability to pay. 
D)  There is a negative relationship between price and quantity demanded. 
A)  There is a positive relationship between price and consumer surplus. 
B)  There is a positive relationship between price and quantity that buyers are willing and able to purchase. 
C)  There is an inverse relationship between the willingness to pay and the ability to pay. 
D)  There is a negative relationship between price and quantity demanded.

Question 15

Consumer surplus is a gain from exchange,but producer surplus is a loss from exchange.

Accepted Answer

A) True 
 B)False

Question 16

When the price of oil used for generating electricity increases,the demand for nuclear power will increase.

Accepted Answer

A) True 
 B)False

Question 17

If producers form expectations that copper prices will be higher in the future,then this will shift the:

Accepted Answer

A)  demand curve for copper to the left. 
B)  supply curve of copper to the right. 
C)  demand curve for copper to the right. 
D)  supply curve of copper to the left. 
A)  demand curve for copper to the left. 
B)  supply curve of copper to the right. 
C)  demand curve for copper to the right. 
D)  supply curve of copper to the left.

Question 18

In the oil market,an increase in the wage of oil workers will shift the:

Accepted Answer

A)  supply curve of oil to the right. 
B)  supply curve of oil to the left. 
C)  demand curve for oil to the left. 
D)  demand curve for oil to the right. 
A)  supply curve of oil to the right. 
B)  supply curve of oil to the left. 
C)  demand curve for oil to the left. 
D)  demand curve for oil to the right.

Question 19

An increase in the future expected price of a storable good ________ supply.

Accepted Answer

A)  increases 
B)  decreases 
C)  does not change 
D)  changes in an indeterminate direction 
A)  increases 
B)  decreases 
C)  does not change 
D)  changes in an indeterminate direction

Question 20

Advertising,fads,and fashion are examples of influences on demand that are generally referred to as altering expectations about products.

Accepted Answer

A) True 
 B)False

Exam 3: Supply and Demand

The law of demand suggests a _____ relationship between price and _____.

At low prices,only low-cost producers serve the market,but as market prices rise,higher cost-producers begin to serve the market.

A change in which factor would shift the supply curve?

If the price of granite countertops rises,we would expect the demand for quartz countertops (a substitute product for granite)to decrease.

Bloomberg News reports that OPEC (a group of countries that together form the world's leading supplier of oil)will increase their supply of oil.This is expected to bring future oil prices down.How will this move by OPEC affect the demand for oil today? Explain your reasoning.

Use the following to answer questions Figure: Supply Shifts -(Figure: Supply Shifts)In the figure,the initial supply curve is S1.If producers form expectations that the price will be lower in the near future,S1 will:

An increase in supply refers to:

Total consumer surplus is measured by the area beneath the demand curve.

An increase in demand is a movement along the demand curve to the right.

What does the law of demand state?

Use the following to answer questions :Figure: Producer Surplus -(Figure: Producer Surplus)In the diagram,if the market price of coffee is $6,how much producer surplus do suppliers earn?

There is no relationship between present prices and future prices.

If the price of oil were sufficiently high,it would be used only in:

Which statement expresses the law of demand?

Consumer surplus is a gain from exchange,but producer surplus is a loss from exchange.

When the price of oil used for generating electricity increases,the demand for nuclear power will increase.

If producers form expectations that copper prices will be higher in the future,then this will shift the:

In the oil market,an increase in the wage of oil workers will shift the:

An increase in the future expected price of a storable good ________ supply.

Advertising,fads,and fashion are examples of influences on demand that are generally referred to as altering expectations about products.

The Big Ideas

The Power of Trade

Equilibrium- How Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Saving,investment,and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

Transmission and Amplification Mechanisms

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters

The law of demand suggests a _ relationship between price and _.

Use the following to answer questions Figure: Supply Shifts -(Figure: Supply Shifts)In the figure,the initial supply curve is S₁.If producers form expectations that the price will be lower in the near future,S₁will: