Question 1

-Using the above figure, at which price is there neither excess quantity demanded nor excess quantity supplied?

Accepted Answer

A)  P1 
B)  P2 
C)  P3 
D)  none of these 
A)  P1 
B)  P2 
C)  P3 
D)  none of these

Question 2

Suppose a concert by Rihanna and a basketball game played by the Houston Rockets are substitutes, then which of the following is TRUE?

Accepted Answer

A)  If the price of a ticket to a Rockets game increases, then the demand for Rihanna tickets will fall. 
B)  If the price of a ticket to a Rockets game decreases, then the demand for Rihanna tickets will fall. 
C)  If the price of a ticket to a Rockets game increases, then the demand for Rihanna tickets will remain unchanged. 
D)  The price of a ticket to a Rockets game will always equal the price of a ticket to a Rihanna concert. 
A)  If the price of a ticket to a Rockets game increases, then the demand for Rihanna tickets will fall. 
B)  If the price of a ticket to a Rockets game decreases, then the demand for Rihanna tickets will fall. 
C)  If the price of a ticket to a Rockets game increases, then the demand for Rihanna tickets will remain unchanged. 
D)  The price of a ticket to a Rockets game will always equal the price of a ticket to a Rihanna concert.

Question 3

After the price of smartphone apps falls, Justin buys fewer flash drives but he buys a new smartphone. For Justin

Accepted Answer

A)  smartphone apps and flash drives are complements, and smartphone apps and smartphones are substitutes. 
B)  smartphone apps, flash drives, and smartphones are all complements. 
C)  smartphone apps and flash drives are substitutes, and smartphone apps and smartphones are complements. 
D)  smartphone apps, flash drives, and smartphones are not all complements. 
A)  smartphone apps and flash drives are complements, and smartphone apps and smartphones are substitutes. 
B)  smartphone apps, flash drives, and smartphones are all complements. 
C)  smartphone apps and flash drives are substitutes, and smartphone apps and smartphones are complements. 
D)  smartphone apps, flash drives, and smartphones are not all complements.

Question 4

Which of the following will NOT cause a rightward shift in the supply curve?

Accepted Answer

A)  an improvement in technology 
B)  a reduction in resource costs 
C)  a reduction in the expected future price 
D)  none of the above 
A)  an improvement in technology 
B)  a reduction in resource costs 
C)  a reduction in the expected future price 
D)  none of the above

Question 5

There will be an increase in supply when

Accepted Answer

A)  a consumer's income increases. 
B)  there is an improvement in technology. 
C)  the demand curve shifts. 
D)  the market price rises from $3 to $4. 
A)  a consumer's income increases. 
B)  there is an improvement in technology. 
C)  the demand curve shifts. 
D)  the market price rises from $3 to $4.

Question 6

Which of the following statements is FALSE?

Accepted Answer

A)  An increase in income causes an increase in the demand for a normal good. 
B)  An increase in income causes a decrease in the demand for an inferior good. 
C)  A decrease in income causes the demand curve for a normal good to shift to the left. 
D)  An increase in income causes the demand curve for an inferior good to shift to the right. 
A)  An increase in income causes an increase in the demand for a normal good. 
B)  An increase in income causes a decrease in the demand for an inferior good. 
C)  A decrease in income causes the demand curve for a normal good to shift to the left. 
D)  An increase in income causes the demand curve for an inferior good to shift to the right.

Question 7

Suppose that the price of cornflakes is $6.75 per box and the price of oatmeal is $4.50 per box. Both boxes contain the same number of ounces of cereal. The relative price of cornflakes in terms of oatmeal is

Accepted Answer

A)  0.67. 
B)  1.0. 
C)  0.75. 
D)  1.50. 
A)  0.67. 
B)  1.0. 
C)  0.75. 
D)  1.50.

Question 8

-Refer to the above figure. Plastic is an input for producing cellphones. Which diagram shows the effect on the supply of cellphones when the price of plastic has increased?

Accepted Answer

A)  graph C 
B)  graph D 
C)  neither graph 
D)  both graphs 
A)  graph C 
B)  graph D 
C)  neither graph 
D)  both graphs

Question 9

For typical goods, supply curves are

Accepted Answer

A)  downward sloping. 
B)  upward sloping. 
C)  horizontal. 
D)  vertical. 
A)  downward sloping. 
B)  upward sloping. 
C)  horizontal. 
D)  vertical.

Question 10

Any improvement in overall production technology that permits more output to be produced with the same level of inputs causes

Accepted Answer

A)  a movement up the supply curve resulting in both a higher equilibrium price and quantity. 
B)  a rightward shift of the supply curve so that more is offered at each price. 
C)  no movement of the supply curve, but a fall in price and a decrease in quantity supplied. 
D)  a leftward shift of the supply curve so that less is offered for sale at each price. 
A)  a movement up the supply curve resulting in both a higher equilibrium price and quantity. 
B)  a rightward shift of the supply curve so that more is offered at each price. 
C)  no movement of the supply curve, but a fall in price and a decrease in quantity supplied. 
D)  a leftward shift of the supply curve so that less is offered for sale at each price.

Question 11

According to the law of supply

Accepted Answer

A)  people buy more of a good when the price increases. 
B)  people buy less of a good when the price decreases. 
C)  producers provide more of a good when the price decreases. 
D)  producers provide less of a good when the price decreases. 
A)  people buy more of a good when the price increases. 
B)  people buy less of a good when the price decreases. 
C)  producers provide more of a good when the price decreases. 
D)  producers provide less of a good when the price decreases.

Question 12

Which of the following would cause a change in the quantity demanded of a product?

Accepted Answer

A)  a higher price 
B)  a higher income 
C)  expectations of future price increases 
D)  All of the above are correct. 
A)  a higher price 
B)  a higher income 
C)  expectations of future price increases 
D)  All of the above are correct.

Question 13

"A shortage is the same thing as scarcity." Do you agree or disagree with this statement? Why? What can cause a shortage to disappear in a market? What can cause scarcity to disappear?

Accepted Answer

Disagree with the statement. Scarcity is

Question 14

An increase in quantity demanded is caused by

Accepted Answer

A)  an increase in income. 
B)  a decrease in the price of the good. 
C)  a decrease in the price of a complement. 
D)  a change in expectations about price in the future. 
A)  an increase in income. 
B)  a decrease in the price of the good. 
C)  a decrease in the price of a complement. 
D)  a change in expectations about price in the future.

Question 15

Suppose that a new study finds that eating more fish will improve a person's health. As a result

Accepted Answer

A)  the demand for fish will fall. 
B)  the demand for fish will rise. 
C)  the price of fish will fall. 
D)  a smaller amount of fish will be purchased. 
A)  the demand for fish will fall. 
B)  the demand for fish will rise. 
C)  the price of fish will fall. 
D)  a smaller amount of fish will be purchased.

Question 16

-Refer to the above figure. At a price of $6, excess quantity supplied equals

Accepted Answer

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

Question 17

Consider the following:   The relative price of movies this year has

Accepted Answer

A)  increased. 
B)  decreased. 
C)  stayed the same. 
D)  Not enough information has been given to calculate an answer. 
A)  increased. 
B)  decreased. 
C)  stayed the same. 
D)  Not enough information has been given to calculate an answer.

Question 18

A market is in equilibrium when

Accepted Answer

A)  the quantity demanded equals the quantity supplied at the market clearing price. 
B)  the horizontal axis crosses the vertical axis. 
C)  buyers do not desire for the price to be any lower. 
D)  the equilibrium price is below the market price. 
A)  the quantity demanded equals the quantity supplied at the market clearing price. 
B)  the horizontal axis crosses the vertical axis. 
C)  buyers do not desire for the price to be any lower. 
D)  the equilibrium price is below the market price.

Question 19

A normal good is one for which

Accepted Answer

A)  demand increases as income increases. 
B)  demand increases as income decreases. 
C)  the demand curve is horizontal. 
D)  demand increases as the price of a substitute increases. 
A)  demand increases as income increases. 
B)  demand increases as income decreases. 
C)  the demand curve is horizontal. 
D)  demand increases as the price of a substitute increases.

Question 20

The relative price of a smartphone is

Accepted Answer

A)  the money price of the smartphone divided by the money price of some other good. 
B)  the price of the smartphone compared with what students think it should cost. 
C)  the amount it cost to make the smartphone. 
D)  what the company earned for selling the smartphone. 
A)  the money price of the smartphone divided by the money price of some other good. 
B)  the price of the smartphone compared with what students think it should cost. 
C)  the amount it cost to make the smartphone. 
D)  what the company earned for selling the smartphone.

Exam 3: Demand and Supply

-Using the above figure, at which price is there neither excess quantity demanded nor excess quantity supplied?

Suppose a concert by Rihanna and a basketball game played by the Houston Rockets are substitutes, then which of the following is TRUE?

After the price of smartphone apps falls, Justin buys fewer flash drives but he buys a new smartphone. For Justin

Which of the following will NOT cause a rightward shift in the supply curve?

There will be an increase in supply when

Which of the following statements is FALSE?

Suppose that the price of cornflakes is $6.75 per box and the price of oatmeal is $4.50 per box. Both boxes contain the same number of ounces of cereal. The relative price of cornflakes in terms of oatmeal is

-Refer to the above figure. Plastic is an input for producing cellphones. Which diagram shows the effect on the supply of cellphones when the price of plastic has increased?

For typical goods, supply curves are

Any improvement in overall production technology that permits more output to be produced with the same level of inputs causes

According to the law of supply

Which of the following would cause a change in the quantity demanded of a product?

"A shortage is the same thing as scarcity." Do you agree or disagree with this statement? Why? What can cause a shortage to disappear in a market? What can cause scarcity to disappear?

An increase in quantity demanded is caused by

Suppose that a new study finds that eating more fish will improve a person's health. As a result

-Refer to the above figure. At a price of $6, excess quantity supplied equals

Consider the following: The relative price of movies this year has

A market is in equilibrium when

A normal good is one for which

The relative price of a smartphone is

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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