Question 1

If the price of gasoline (a normal good)decreases,other things constant,

Accepted Answer

A) the demand for gasoline increases 
B) the demand for gasoline decreases 
C) the quantity demanded of gasoline increases 
D) the quantity demanded of gasoline decreases 
E) neither the demand for gasoline nor the quantity demanded of gasoline changes because everything is assumed constant along a demand curve 
A) the demand for gasoline increases 
B) the demand for gasoline decreases 
C) the quantity demanded of gasoline increases 
D) the quantity demanded of gasoline decreases 
E) neither the demand for gasoline nor the quantity demanded of gasoline changes because everything is assumed constant along a demand curve

Question 2

Suppose demand decreases and supply decreases.Which of the following will happen?

Accepted Answer

A) equilibrium price will increase 
B) equilibrium price will decrease 
C) equilibrium quantity will increase 
D) equilibrium quantity will decrease 
E) neither the equilibrium price nor the quantity will change 
A) equilibrium price will increase 
B) equilibrium price will decrease 
C) equilibrium quantity will increase 
D) equilibrium quantity will decrease 
E) neither the equilibrium price nor the quantity will change

Question 3

Which of the following is the best example of substitutes?

Accepted Answer

A) coffee and cream 
B) videotapes and VCRs 
C) money and biscuits 
D) tortillas and salsa 
E) hiking boots and athletic shoes 
A) coffee and cream 
B) videotapes and VCRs 
C) money and biscuits 
D) tortillas and salsa 
E) hiking boots and athletic shoes

Question 4

A decrease in the supply of chocolate chips would usually result in a

Accepted Answer

A) higher equilibrium price and a lower equilibrium quantity 
B) lower equilibrium price and a lower equilibrium quantity 
C) lower equilibrium price and a higher equilibrium quantity 
D) higher equilibrium price and a higher equilibrium quantity 
E) decrease in the demand for chocolate chips 
A) higher equilibrium price and a lower equilibrium quantity 
B) lower equilibrium price and a lower equilibrium quantity 
C) lower equilibrium price and a higher equilibrium quantity 
D) higher equilibrium price and a higher equilibrium quantity 
E) decrease in the demand for chocolate chips

Question 5

If demand for personal computers increases as a result of an increase in income,

Accepted Answer

A) personal computers must be a normal good 
B) personal computers must be an inferior good 
C) personal computers must be a complement 
D) the substitutes for personal computers must be inferior goods 
E) the substitution effect is larger than the income effect 
A) personal computers must be a normal good 
B) personal computers must be an inferior good 
C) personal computers must be a complement 
D) the substitutes for personal computers must be inferior goods 
E) the substitution effect is larger than the income effect

Question 6

A rightward shift of a demand curve represents a decrease in demand.

Accepted Answer

A) True 
 B)False

Question 7

A change in the composition of the population will generally

Accepted Answer

A) change demand only if there is a change in the size of the population 
B) change demand only if there is no change in the size of the population 
C) change demand even if there is no change in the size of the population 
D) have absolutely no effect on demand 
E) result in a movement along the demand curve 
A) change demand only if there is a change in the size of the population 
B) change demand only if there is no change in the size of the population 
C) change demand even if there is no change in the size of the population 
D) have absolutely no effect on demand 
E) result in a movement along the demand curve

Question 8

If a decrease in the price of a good causes a rightward shift of the demand curve for that good,then it is an inferior good.

Accepted Answer

A) True 
 B)False

Question 9

If people believe that prices are going to be higher in the future then they are today,they will

Accepted Answer

A) wait until the future to purchase the things they wand 
B) decrease their demand now 
C) increase their demand now 
D) increase their supply now 
E) save more today so they have the income to buy more in the future 
A) wait until the future to purchase the things they wand 
B) decrease their demand now 
C) increase their demand now 
D) increase their supply now 
E) save more today so they have the income to buy more in the future

Question 10

Exhibit 4-2  
-Consider Exhibit 4-2.Which of the following represents an increase in supply?

Accepted Answer

A) a movement from C to D 
B) a movement from D to B 
C) a movement from D to E 
D) a movement from F to E 
E) none of the above represents an increase in the quantity supplied 
A) a movement from C to D 
B) a movement from D to B 
C) a movement from D to E 
D) a movement from F to E 
E) none of the above represents an increase in the quantity supplied

Question 11

Exhibit 4-1  
-Consider Exhibit 4-1 which shows 3 demand curves for corn flakes.Which of the following would be most likely to shift the demand curve from D2 to D1?

Accepted Answer

A) a report that eating corn flakes decrreases the risk of cancer 
B) an increase in consumer incomes if corn flakes is a normal good 
C) an increase in the price of oatmeal which many consumers consider to be a substitute for corn flakes 
D) an increase in the price milk which many consumers consider to be complement for corn flakes 
E) a widely anticipated recession 
A) a report that eating corn flakes decrreases the risk of cancer 
B) an increase in consumer incomes if corn flakes is a normal good 
C) an increase in the price of oatmeal which many consumers consider to be a substitute for corn flakes 
D) an increase in the price milk which many consumers consider to be complement for corn flakes 
E) a widely anticipated recession

Question 12

The law of demand assumes that as the price of a good increases,

Accepted Answer

A) people recognize that its price may be even higher in the future,so they buy now rather than later 
B) consumers tend to shift their purchases to relatively cheaper substitutes 
C) people will buy less of it in the hope that the good will be cheaper in the future 
D) the consumer's money income increases,and he or she is less able to buy all goods,including the good whose price has increased 
E) the consumer's money income decreases,and if the product is a normal good,more will be purchased 
A) people recognize that its price may be even higher in the future,so they buy now rather than later 
B) consumers tend to shift their purchases to relatively cheaper substitutes 
C) people will buy less of it in the hope that the good will be cheaper in the future 
D) the consumer's money income increases,and he or she is less able to buy all goods,including the good whose price has increased 
E) the consumer's money income decreases,and if the product is a normal good,more will be purchased

Question 13

For which of the following would the income effect of a price change be greatest?

Accepted Answer

A) ballpoint pens 
B) air travel to Australia 
C) chewing gum 
D) haircuts 
E) college textbooks 
A) ballpoint pens 
B) air travel to Australia 
C) chewing gum 
D) haircuts 
E) college textbooks

Question 14

Tax preparation services and IRS tax publications can be considered substitutes.

Accepted Answer

A) True 
 B)False

Question 15

Exhibit 4-4  
-In Exhibit 4-4,which of the following could not cause the shift from D to D'?

Accepted Answer

A) a decrease in the price of a complement 
B) an increase in the price of a substitute 
C) a decrease in the price of the good in question 
D) an increase in the number of consumers 
E) a decrease in income if the good in question is an inferior good 
A) a decrease in the price of a complement 
B) an increase in the price of a substitute 
C) a decrease in the price of the good in question 
D) an increase in the number of consumers 
E) a decrease in income if the good in question is an inferior good

Question 16

An increase in the price of a good normally increases the

Accepted Answer

A) demand for its substitutes 
B) supply of complements for the good 
C) purchasing power of consumers' dollar incomes 
D) money income of the consumer 
E) quantity demanded of all goods that are unrelated to the good in question 
A) demand for its substitutes 
B) supply of complements for the good 
C) purchasing power of consumers' dollar incomes 
D) money income of the consumer 
E) quantity demanded of all goods that are unrelated to the good in question

Question 17

If both demand and supply increase,price will

Accepted Answer

A) always increase 
B) always decrease 
C) increase only if supply increases more than demand does 
D) increase only if demand increases more than supply does 
E) decrease only if supply increases less than demand does 
A) always increase 
B) always decrease 
C) increase only if supply increases more than demand does 
D) increase only if demand increases more than supply does 
E) decrease only if supply increases less than demand does

Question 18

A surplus of wheat

Accepted Answer

A) is impossible if people are hungry 
B) is impossible if the price of wheat is below equilibrium 
C) will result in an increase the price of wheat 
D) is unlikely to result in any change in the price of wheat 
E) indicates that the problem of scarcity of wheat has been solved 
A) is impossible if people are hungry 
B) is impossible if the price of wheat is below equilibrium 
C) will result in an increase the price of wheat 
D) is unlikely to result in any change in the price of wheat 
E) indicates that the problem of scarcity of wheat has been solved

Question 19

Suppose a market is in equilibrium and then a price floor is established below the equilibrium price.Which of the following will happen?

Accepted Answer

A) quantity demanded will increase 
B) a surplus will develop 
C) a shortage will develop 
D) the quantity sold will rise 
E) the market will remain in equilibrium 
A) quantity demanded will increase 
B) a surplus will develop 
C) a shortage will develop 
D) the quantity sold will rise 
E) the market will remain in equilibrium

Question 20

Velcro is becoming more and more popular for a variety of uses,including as fasteners for shoes.What should happen to the equilibrium price and quantity for shoelaces as a result?

Accepted Answer

A) Both price and quantity should increase. 
B) Both price and quantity should decrease. 
C) Price should increase and quantity decrease. 
D) Price should decrease and quantity increase. 
E) Nothing. 
A) Both price and quantity should increase. 
B) Both price and quantity should decrease. 
C) Price should increase and quantity decrease. 
D) Price should decrease and quantity increase. 
E) Nothing.

Exam 4: Demand, supply, and Markets

If the price of gasoline (a normal good)decreases,other things constant,

Suppose demand decreases and supply decreases.Which of the following will happen?

Which of the following is the best example of substitutes?

A decrease in the supply of chocolate chips would usually result in a

If demand for personal computers increases as a result of an increase in income,

A rightward shift of a demand curve represents a decrease in demand.

A change in the composition of the population will generally

If a decrease in the price of a good causes a rightward shift of the demand curve for that good,then it is an inferior good.

If people believe that prices are going to be higher in the future then they are today,they will

Exhibit 4-2 -Consider Exhibit 4-2.Which of the following represents an increase in supply?

Exhibit 4-1 -Consider Exhibit 4-1 which shows 3 demand curves for corn flakes.Which of the following would be most likely to shift the demand curve from D2 to D1?

The law of demand assumes that as the price of a good increases,

For which of the following would the income effect of a price change be greatest?

Tax preparation services and IRS tax publications can be considered substitutes.

Exhibit 4-4 -In Exhibit 4-4,which of the following could not cause the shift from D to D'?

An increase in the price of a good normally increases the

If both demand and supply increase,price will

A surplus of wheat

Suppose a market is in equilibrium and then a price floor is established below the equilibrium price.Which of the following will happen?

Velcro is becoming more and more popular for a variety of uses,including as fasteners for shoes.What should happen to the equilibrium price and quantity for shoelaces as a result?

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Aggregate Demand

Baggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

Externalities and the Environment

International Finance

Economic Development

understanding Graphs

National Income Accounts

The Algebra of Demand-Side Equilibrium

Filters

Exhibit 4-1 -Consider Exhibit 4-1 which shows 3 demand curves for corn flakes.Which of the following would be most likely to shift the demand curve from D₂ to D₁?