Question 1

What type of relationship does the law of demand demonstrate?

Accepted Answer

A)  direct 
B)  equilibrium 
C)  inverse 
D)  dynamic 
A)  direct 
B)  equilibrium 
C)  inverse 
D)  dynamic

Question 2

-Refer to the above table about a free market of earbuds. When the quantity demanded is 3000 earbuds and the quantity supplied is 1500 earbuds, the market price of earbuds will likely

Accepted Answer

A)  decrease to $8. 
B)  decrease to $6. 
C)  increase to $12. 
D)  stay unchanged at $10. 
A)  decrease to $8. 
B)  decrease to $6. 
C)  increase to $12. 
D)  stay unchanged at $10.

Question 3

An increase in quantity demanded of a good is caused by

Accepted Answer

A)  a decrease in income. 
B)  a decrease in the price of a substitute. 
C)  a decrease in the price of the good. 
D)  a change of tastes. 
A)  a decrease in income. 
B)  a decrease in the price of a substitute. 
C)  a decrease in the price of the good. 
D)  a change of tastes.

Question 4

State the law of supply and explain it.

Accepted Answer

The law of supply indicates the direct o

Question 5

The relationship between quantity supplied and the price of output is such that

Accepted Answer

A)  an increase in quantity will automatically lead to a reduction in price. 
B)  an increase in price will lead to an increase in quantity supplied. 
C)  an increase in price will produce an inward shift in the supply curve. 
D)  quantity will decrease as the number of firms increases. 
A)  an increase in quantity will automatically lead to a reduction in price. 
B)  an increase in price will lead to an increase in quantity supplied. 
C)  an increase in price will produce an inward shift in the supply curve. 
D)  quantity will decrease as the number of firms increases.

Question 6

-Using the above table, at a price of $5 there will be a

Accepted Answer

A)  shortage of 20 units. 
B)  shortage of 10 units. 
C)  surplus of 20 units. 
D)  surplus of 10 units. 
A)  shortage of 20 units. 
B)  shortage of 10 units. 
C)  surplus of 20 units. 
D)  surplus of 10 units.

Question 7

Which of the following will cause a movement along the demand curve for shoes?

Accepted Answer

A)  an increase in the price of socks 
B)  an increase in income 
C)  an increase in the price of shoes 
D)  all of the above 
A)  an increase in the price of socks 
B)  an increase in income 
C)  an increase in the price of shoes 
D)  all of the above

Question 8

-Refer to the above figure. Which panel demonstrates the law of demand?

Accepted Answer

A)  Panel A 
B)  Panel B 
C)  Panel C 
D)  Panel D 
A)  Panel A 
B)  Panel B 
C)  Panel C 
D)  Panel D

Question 9

The law of demand is based on the observation that

Accepted Answer

A)  people buy less of a product when the product becomes less fashionable. 
B)  people buy more of a product when its price falls. 
C)  people are indifferent to price changes. 
D)  people always want more than they need. 
A)  people buy less of a product when the product becomes less fashionable. 
B)  people buy more of a product when its price falls. 
C)  people are indifferent to price changes. 
D)  people always want more than they need.

Question 10

What would happen in the market for prescription drugs if people begin to view over-the-counter remedies as a good substitute for prescription medications?

Accepted Answer

A)  Prescription medications will become an inferior good. 
B)  There is an upward movement along the demand curve for prescription medications. 
C)  There is a downward movement along the demand curve for prescription medications. 
D)  The demand for prescription medications will decrease. 
A)  Prescription medications will become an inferior good. 
B)  There is an upward movement along the demand curve for prescription medications. 
C)  There is a downward movement along the demand curve for prescription medications. 
D)  The demand for prescription medications will decrease.

Question 11

In economic terminology, a normal good is a good

Accepted Answer

A)  on which a monetary value cannot be placed. 
B)  that is liked only by normal people. 
C)  for which demand increases when price increases. 
D)  for which demand increases when income increases. 
A)  on which a monetary value cannot be placed. 
B)  that is liked only by normal people. 
C)  for which demand increases when price increases. 
D)  for which demand increases when income increases.

Question 12

-Refer to the above table. What is the market quantity demanded at a price of $8?

Accepted Answer

A)  5 
B)  15 
C)  35 
D)  44 
A)  5 
B)  15 
C)  35 
D)  44

Question 13

Which of the following is NOT a non-price determinant of demand?

Accepted Answer

A)  the price of the good or service 
B)  tastes and preferences 
C)  expectations of future prices 
D)  prices of related goods and services 
A)  the price of the good or service 
B)  tastes and preferences 
C)  expectations of future prices 
D)  prices of related goods and services

Question 14

A decrease in supply will occur when

Accepted Answer

A)  the supply curve shifts downward to the right. 
B)  the supply curve shifts upward to the left. 
C)  the demand curve shifts downward to the left. 
D)  the demand curve shifts upward to the right. 
A)  the supply curve shifts downward to the right. 
B)  the supply curve shifts upward to the left. 
C)  the demand curve shifts downward to the left. 
D)  the demand curve shifts upward to the right.

Question 15

All of the following will affect the position of the demand curve EXCEPT

Accepted Answer

A)  income. 
B)  taste and preference. 
C)  changes in expectations of future relative prices. 
D)  prices of resources used to produce the product. 
A)  income. 
B)  taste and preference. 
C)  changes in expectations of future relative prices. 
D)  prices of resources used to produce the product.

Question 16

An increase in demand occurs when

Accepted Answer

A)  we measure price in money price rather than real price. 
B)  we move up the demand curve. 
C)  the demand curve shifts to the right. 
D)  the demand curve shifts to the left. 
A)  we measure price in money price rather than real price. 
B)  we move up the demand curve. 
C)  the demand curve shifts to the right. 
D)  the demand curve shifts to the left.

Question 17

Pam graduates from law school and gets a position in a law firm. At the same time the price of hamburger falls while other food prices have stayed the same. She notices that she buys less hamburger than she did before. Is she violating the law of demand?

Accepted Answer

A)  Yes, since she is buying less hamburger at a lower price. 
B)  Yes, since she is buying less hamburger in a relatively short period of time and we wouldn't expect her tastes to have changed. 
C)  No, since the law of demand refers to relative price changes and the price of hamburger falling is an absolute price change. 
D)  No, since other things are not held constant, such as her income. 
A)  Yes, since she is buying less hamburger at a lower price. 
B)  Yes, since she is buying less hamburger in a relatively short period of time and we wouldn't expect her tastes to have changed. 
C)  No, since the law of demand refers to relative price changes and the price of hamburger falling is an absolute price change. 
D)  No, since other things are not held constant, such as her income.

Question 18

-Refer to the above figure. At a price of $2, excess quantity demanded equals

Accepted Answer

A)  0. 
B)  3. 
C)  12. 
D)  15. 
A)  0. 
B)  3. 
C)  12. 
D)  15.

Question 19

When there is an excess quantity of a product supplied, there will be

Accepted Answer

A)  a tendency for price of the product to increase. 
B)  a tendency for price of the product to fall. 
C)  incentives for consumers to leave the market. 
D)  upward pressure on the price of labor. 
A)  a tendency for price of the product to increase. 
B)  a tendency for price of the product to fall. 
C)  incentives for consumers to leave the market. 
D)  upward pressure on the price of labor.

Question 20

Which of the following will occur as the price of a good decreases?

Accepted Answer

A)  The demand curve for that good will shift to the left. 
B)  The demand curve for that good will shift to the right. 
C)  The quantity demanded for that good will increase. 
D)  Demand for that good will increase. 
A)  The demand curve for that good will shift to the left. 
B)  The demand curve for that good will shift to the right. 
C)  The quantity demanded for that good will increase. 
D)  Demand for that good will increase.

Exam 3: Demand and Supply

What type of relationship does the law of demand demonstrate?

-Refer to the above table about a free market of earbuds. When the quantity demanded is 3000 earbuds and the quantity supplied is 1500 earbuds, the market price of earbuds will likely

An increase in quantity demanded of a good is caused by

State the law of supply and explain it.

The relationship between quantity supplied and the price of output is such that

-Using the above table, at a price of $5 there will be a

Which of the following will cause a movement along the demand curve for shoes?

-Refer to the above figure. Which panel demonstrates the law of demand?

The law of demand is based on the observation that

What would happen in the market for prescription drugs if people begin to view over-the-counter remedies as a good substitute for prescription medications?

In economic terminology, a normal good is a good

-Refer to the above table. What is the market quantity demanded at a price of $8?

Which of the following is NOT a non-price determinant of demand?

A decrease in supply will occur when

All of the following will affect the position of the demand curve EXCEPT

An increase in demand occurs when

Pam graduates from law school and gets a position in a law firm. At the same time the price of hamburger falls while other food prices have stayed the same. She notices that she buys less hamburger than she did before. Is she violating the law of demand?

-Refer to the above figure. At a price of $2, excess quantity demanded equals

When there is an excess quantity of a product supplied, there will be

Which of the following will occur as the price of a good decreases?

The Nature of Economics

Scarcity and the World of Trade-Offs

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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