Question 1

A more efficient process for refining oil into gasoline is developed.As a result, the market price of gasoline:

Accepted Answer

A) and the quantity of gasoline purchased both increase. 
B) increases and the quantity of gasoline purchased falls. 
C) decreases and the quantity of gasoline purchased rises. 
D) decreases and the demand curve for gasoline shifts to the right. 
E) and the quantity of gasoline purchased both decrease. 
A) and the quantity of gasoline purchased both increase. 
B) increases and the quantity of gasoline purchased falls. 
C) decreases and the quantity of gasoline purchased rises. 
D) decreases and the demand curve for gasoline shifts to the right. 
E) and the quantity of gasoline purchased both decrease.

Question 2

The demand schedule for a good:

Accepted Answer

A) indicates the quantity that people will buy at the prevailing price. 
B) indicates the quantities that suppliers will sell at various market prices. 
C) indicates the quantities that will be purchased at alternative market prices. 
D) is determined primarily by the cost of producing the good. 
A) indicates the quantity that people will buy at the prevailing price. 
B) indicates the quantities that suppliers will sell at various market prices. 
C) indicates the quantities that will be purchased at alternative market prices. 
D) is determined primarily by the cost of producing the good.

Question 3

Table 3-E
 $\begin{array}{ccc}
\text { Price per gallon } 
&\text { Quantity Demanded }&\text { Quantity Supplied of }  \
&\text { (thousands of gallons) }&\text { gasoline (thousands of }\
&&\text { gallons) }\
\$ 4.50 & 600 & 2,000 \
\$ 4.25 & 700 & 1,900 \
\$ 4.00 & 800 & 1,800 \
\$ 3.75 & 950 & 1,700 \
\$ 3.50 & 1,200 & 1,600 \
\$ 3.25 & 1,500 & 1,500 \
\$ 3.00 & 1,800 & 1,400 \
\$ 2.75 & 2,100 & 1,300 \
\$ 2.50 & 2,400 & 1,200
\end{array}$

-Refer to Table 3-E.Assuming the market for gasoline is initially in equilibrium, what is likely to happen when there is a significant decrease in the price of sport utility vehicles? (Assume that sport utility vehicles get very low gas mileage.)

Accepted Answer

A) The market price and quantity of gasoline will both decrease. 
B) The market price for gasoline will increase and the quantity demanded will decrease. 
C) The market price of gasoline will decrease and the quantity demanded will increase. 
D) Both the market price and quantity of gasoline demanded will increase. 
E) There will be no change in the price of gasoline. 
A) The market price and quantity of gasoline will both decrease. 
B) The market price for gasoline will increase and the quantity demanded will decrease. 
C) The market price of gasoline will decrease and the quantity demanded will increase. 
D) Both the market price and quantity of gasoline demanded will increase. 
E) There will be no change in the price of gasoline.

Question 4

Assume the following information about the demand and supply curves for good Z: $$\begin{array} { c c c c } 
\text { Price } & \begin{array} { c } 
\text { Demand Quantity } \
\text { Demanded }
\end{array} & \text { Price } & \begin{array} { c } 
\text { Supply Quantity } \
\text { Supplied }
\end{array} \
\$ 10 & 10 & \$ 1 & 10 \
\$ 9 & 20 & \$ 2 & 15 \
\$ 8 & 30 & \$ 3 & 20 \
\$ 7 & 40 & \$ 4 & 25 \
\$ 6 & 50 & \$ 5 & 30 \
\$ 5 & 60 & \$ 6 & 35 \
\$ 4 & 70 & \$ 7 & 40 \
\$ 3 & 80 & \$ 9 & 45 \
\$ 2 & 90 & \$ 10 & 50 \
\$ 1 & 100 & \$ 5 & 55
\end{array}$$ From the information given above,

Accepted Answer

A) If the price was $9, would there be a shortage of 5 units. 
B) If the price was $9, would there be a surplus of 30 units. 
C) If the price was $3, would there be a shortage of 35 units. 
D) If the price was $4, would there be a surplus of 45 units. 
E) None of the above. 
A) If the price was $9, would there be a shortage of 5 units. 
B) If the price was $9, would there be a surplus of 30 units. 
C) If the price was $3, would there be a shortage of 35 units. 
D) If the price was $4, would there be a surplus of 45 units. 
E) None of the above.

Question 5

Table 3-B
 $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { PRICE per laree pepperani } \
\text { pizza }
\end{array} & \begin{array} { c } 
\text { QUANTITY DEMANDED } \
\text { of large pepperoni pizzas }
\end{array} & \begin{array} { c } 
\text { QUANTITY sUPPLIED } \
\text { large pepperoni pizzas }
\end{array} \
\hline \$ 10 & 1,000 \text { urits } & 5,500 \text { urits } \
\hline 9 & 2,000 \text { urits } & 5,000 \text { urits } \
\hline 8 & 3,000 \text { urits } & 4,500 \text { urits } \
\hline 7 & 4,000 \text { urits } & 4,000 \text { urits } \
\hline 6 & 5,000 \text { urits } & 3,500 \text { urits } \
\hline 5 & \text { 6,000 urits } & 3,000 \text { urits } \
\hline 4 & 7,000 \text { urits } & 2,500 \text { urits } \
\hline 3 & \text { 8,000 urits } & 2,000 \text { urits } \
\hline 2 & 9,000 \text { urits } & 1,500 \text { urits } \
\hline 1 & 10,000 \text { urits } & 1,000 \text { urits } \
\hline
\end{array}$$
-Refer to Table 3-B.At a price of $4, there is a ____ of ____ pizzas.

Accepted Answer

A) shortage; 4,500 
B) surplus; 4,500 
C) shortage; 6,500 
D) surplus; 6,500 
E) shortage; 9,500 
A) shortage; 4,500 
B) surplus; 4,500 
C) shortage; 6,500 
D) surplus; 6,500 
E) shortage; 9,500

Question 6

The law of demand refers to the:

Accepted Answer

A) decrease in price that results as more units of a product are demanded. 
B) increase in price that results from an increase in demand for a good of limited supply. 
C) inverse relationship between the price of a good and the quantity demanded. 
D) increase in the quantity of a good made available when its price increases. 
A) decrease in price that results as more units of a product are demanded. 
B) increase in price that results from an increase in demand for a good of limited supply. 
C) inverse relationship between the price of a good and the quantity demanded. 
D) increase in the quantity of a good made available when its price increases.

Question 7

Table 3-C
 $$\begin{array} { | c | c | c | } 
\hline \text { PRICE music downloads } & \begin{array} { c } 
\text { QUANTITY DEMANDED } \
\text { music downloads }
\end{array} & \begin{array} { c } 
\text { QUANTITY SUPPLIED } \
\text { music downloads }
\end{array} \
\hline \text { \$2.00 } & 1,000,000 \text { urits } & 5,500,000 \text { urits } \
\hline 1.80 & 2,000,000 \text { units } & 5,00,000 \text { units } \
\hline 1.60 & 3,000,000 \text { units } & 4,50,000 \text { units } \
\hline 1.40 & 4,000,000 \text { units } & 4,000,000 \text { units } \
\hline 1.20 & 5,000,000 \text { units } & 3,500,000 \text { units } \
\hline 1.00 & 6,000,000 \text { units } & 3,000,000 \text { units } \
\hline 0.80 & 7,000,000 \text { units } & 2,500,000 \text { units } \
\hline 0.65 & 8,000,000 \text { units } & 2,000,000 \text { units } \
\hline 0.40 & 9,000,000 \text { units } & 1,500,000 \text { units } \
\hline 0.20 & 10,000,000 \text { units } & 1,000,000 \text { units } \
\hline
\end{array}$$
-Refer to Table 3-C.At $0.40 there is a ____ of ____ downloads.

Accepted Answer

A) surplus; 10,500,000 
B) surplus; 7,500,000 
C) shortage; 7,500,000 
D) shortage; 10,500,000 
E) None of the above are correct. 
A) surplus; 10,500,000 
B) surplus; 7,500,000 
C) shortage; 7,500,000 
D) shortage; 10,500,000 
E) None of the above are correct.

Question 8

The difference between a change in quantity supplied and a change in supply is that a change in:

Accepted Answer

A) quantity supplied is caused by a change in a good's own, current price, while a change in supply is caused by a change in some other variable, such as input prices, prices of related goods, expectations, or taxes. 
B) supply is caused by a change in a good's own, current price, while a change in the quantity supplied is caused by a change in some other variable, such as input prices, prices of related goods, expectations, or taxes. 
C) quantity supplied is a change in the amount people want to sell, while a change in supply is a change in the amount they actually sell. 
D) supply and a change in the quantity supplied are the same thing. 
A) quantity supplied is caused by a change in a good's own, current price, while a change in supply is caused by a change in some other variable, such as input prices, prices of related goods, expectations, or taxes. 
B) supply is caused by a change in a good's own, current price, while a change in the quantity supplied is caused by a change in some other variable, such as input prices, prices of related goods, expectations, or taxes. 
C) quantity supplied is a change in the amount people want to sell, while a change in supply is a change in the amount they actually sell. 
D) supply and a change in the quantity supplied are the same thing.

Question 9

If input prices rose and production technology improved at the same time, as a result:

Accepted Answer

A) prices would rise. 
B) prices would fall. 
C) larger quantities to be exchanged. 
D) smaller quantities to be exchanged. 
E) we would not know which direction either prices or quantities exchanged would be altered without more information. 
A) prices would rise. 
B) prices would fall. 
C) larger quantities to be exchanged. 
D) smaller quantities to be exchanged. 
E) we would not know which direction either prices or quantities exchanged would be altered without more information.

Question 10

If new manufacturers enter the computer industry, then (ceteris paribus):

Accepted Answer

A) some established manufacturers must exit the industry. 
B) the equilibrium price of computers must rise. 
C) the supply curve shifts to the right. 
D) the supply curve shifts to the left. 
A) some established manufacturers must exit the industry. 
B) the equilibrium price of computers must rise. 
C) the supply curve shifts to the right. 
D) the supply curve shifts to the left.

Question 11

Which of the following scenarios would prompt producers to supply less now than they otherwise would have?

Accepted Answer

A) Producers expecting a higher price in the future 
B) Producers expecting prices to remain unchanged 
C) Producers expecting a lower price in the future 
D) Producers expecting prices to be volatile 
A) Producers expecting a higher price in the future 
B) Producers expecting prices to remain unchanged 
C) Producers expecting a lower price in the future 
D) Producers expecting prices to be volatile

Question 12

A technological improvement that lowers production costs for Good A will shift:

Accepted Answer

A) the supply curve for A to the left. 
B) the demand curve for A to the left. 
C) the demand curve for A to the right. 
D) the supply curve for A to the right. 
E) both the demand and supply curves for A to the right. 
A) the supply curve for A to the left. 
B) the demand curve for A to the left. 
C) the demand curve for A to the right. 
D) the supply curve for A to the right. 
E) both the demand and supply curves for A to the right.

Question 13

Figure 3-G
The diagram below represents the market for butter.  
-Refer to Figure 3-G.If the current price of butter equals $2, you would expect to find:

Accepted Answer

A) the market in equilibrium at 3,000 pounds per year. 
B) the market in equilibrium at 8,000 pounds per year. 
C) that the market is not in equilibrium, and that the quantity supplied is greater than the quantity demanded. 
D) that the market is not in equilibrium, and that the quantity demanded is greater than the quantity supplied. 
A) the market in equilibrium at 3,000 pounds per year. 
B) the market in equilibrium at 8,000 pounds per year. 
C) that the market is not in equilibrium, and that the quantity supplied is greater than the quantity demanded. 
D) that the market is not in equilibrium, and that the quantity demanded is greater than the quantity supplied.

Question 14

When there is an excess quantity demanded of a product at the current price, then:

Accepted Answer

A) the price will tend to fall. 
B) the price will tend to rise. 
C) the price must be above the equilibrium price. 
D) producers will reduce output and sales will fall. 
A) the price will tend to fall. 
B) the price will tend to rise. 
C) the price must be above the equilibrium price. 
D) producers will reduce output and sales will fall.

Question 15

As a result of the decline in the real estate markets, many sellers and builders were very eager to sell their homes.As a result of this greater willingness to sell, we would expect to see:

Accepted Answer

A) an increase in equilibrium price and an increase in equilibrium quantity. 
B) an increase in equilibrium price and a decrease in equilibrium quantity. 
C) a decrease in equilibrium price and an increase in equilibrium quantity. 
D) a decrease in equilibrium price and a decrease in equilibrium quantity. 
E) no change in equilibrium price and an increase in equilibrium quantity. 
A) an increase in equilibrium price and an increase in equilibrium quantity. 
B) an increase in equilibrium price and a decrease in equilibrium quantity. 
C) a decrease in equilibrium price and an increase in equilibrium quantity. 
D) a decrease in equilibrium price and a decrease in equilibrium quantity. 
E) no change in equilibrium price and an increase in equilibrium quantity.

Question 16

Which of the following would not cause a change in the demand for cheese?

Accepted Answer

A) an increase in the price of crackers, which are consumed with cheese 
B) an increase in the income of cheese consumers 
C) an increase in the population of cheese lovers 
D) an increase in the price of cheese 
E) a decrease in the price of crackers, which are consumed with cheese 
A) an increase in the price of crackers, which are consumed with cheese 
B) an increase in the income of cheese consumers 
C) an increase in the population of cheese lovers 
D) an increase in the price of cheese 
E) a decrease in the price of crackers, which are consumed with cheese

Question 17

Which of the following is most likely to be an inferior good?

Accepted Answer

A) Porsches. 
B) Lobster. 
C) Used clothing. 
D) An Ivy League education. 
A) Porsches. 
B) Lobster. 
C) Used clothing. 
D) An Ivy League education.

Question 18

Figure 3-A  
-Refer to Figure 3-I.Starting with initial demand curves D0 and S0, a movement from ____ is consistent with a decrease in both demand and supply.

Accepted Answer

A) Point A to Point I 
B) Point A to Point C 
C) Point A to Point F 
D) Point A to Point E 
E) Point A to Point G 
A) Point A to Point I 
B) Point A to Point C 
C) Point A to Point F 
D) Point A to Point E 
E) Point A to Point G

Question 19

Which of the following will cause a change in the supply of a product?

Accepted Answer

A) a change in the price of suppliers' inputs 
B) a change in the price of alternative goods that could be produced with the same resources 
C) a natural disaster 
D) a change in the expected future price of the product 
E) all of the above 
A) a change in the price of suppliers' inputs 
B) a change in the price of alternative goods that could be produced with the same resources 
C) a natural disaster 
D) a change in the expected future price of the product 
E) all of the above

Question 20

Ceteris paribus, if the market demand for a product decreases, then equilibrium quantity will (be) ____ and equilibrium price will (be) ____.

Accepted Answer

A) increase; increase 
B) indeterminate; decrease 
C) indeterminate; increase 
D) decrease; decrease 
A) increase; increase 
B) indeterminate; decrease 
C) indeterminate; increase 
D) decrease; decrease

A more efficient process for refining oil into gasoline is developed.As a result, the market price of gasoline:

The demand schedule for a good:

The law of demand refers to the:

The difference between a change in quantity supplied and a change in supply is that a change in:

If input prices rose and production technology improved at the same time, as a result:

If new manufacturers enter the computer industry, then (ceteris paribus):

Which of the following scenarios would prompt producers to supply less now than they otherwise would have?

A technological improvement that lowers production costs for Good A will shift:

Figure 3-G The diagram below represents the market for butter. -Refer to Figure 3-G.If the current price of butter equals $2, you would expect to find:

When there is an excess quantity demanded of a product at the current price, then:

As a result of the decline in the real estate markets, many sellers and builders were very eager to sell their homes.As a result of this greater willingness to sell, we would expect to see:

Which of the following would not cause a change in the demand for cheese?

Which of the following is most likely to be an inferior good?

Figure 3-A -Refer to Figure 3-I.Starting with initial demand curves D₀ and S₀, a movement from ____ is consistent with a decrease in both demand and supply.

Which of the following will cause a change in the supply of a product?

Ceteris paribus, if the market demand for a product decreases, then equilibrium quantity will (be) and equilibrium price will (be) .

The Role and Method of Economics

The Economic Way of Thinking

Using Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

Filters

Exam 3: Supply and Demand

A more efficient process for refining oil into gasoline is developed.As a result, the market price of gasoline:

The demand schedule for a good:

The law of demand refers to the:

The difference between a change in quantity supplied and a change in supply is that a change in:

If input prices rose and production technology improved at the same time, as a result:

If new manufacturers enter the computer industry, then (ceteris paribus):

Which of the following scenarios would prompt producers to supply less now than they otherwise would have?

A technological improvement that lowers production costs for Good A will shift:

Figure 3-G The diagram below represents the market for butter. -Refer to Figure 3-G.If the current price of butter equals $2, you would expect to find:

When there is an excess quantity demanded of a product at the current price, then:

As a result of the decline in the real estate markets, many sellers and builders were very eager to sell their homes.As a result of this greater willingness to sell, we would expect to see:

Which of the following would not cause a change in the demand for cheese?

Which of the following is most likely to be an inferior good?

Figure 3-A -Refer to Figure 3-I.Starting with initial demand curves D0 and S0, a movement from ____ is consistent with a decrease in both demand and supply.

Which of the following will cause a change in the supply of a product?

Ceteris paribus, if the market demand for a product decreases, then equilibrium quantity will (be) ____ and equilibrium price will (be) ____.

The Role and Method of Economics

The Economic Way of Thinking

Using Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

Filters

Figure 3-A -Refer to Figure 3-I.Starting with initial demand curves D₀ and S₀, a movement from ____ is consistent with a decrease in both demand and supply.

Ceteris paribus, if the market demand for a product decreases, then equilibrium quantity will (be) and equilibrium price will (be) .