Question 1

Suppose we observe that the demand for eggs increases when people buy more potatoes. We can conclude that eggs and potatoes are

Accepted Answer

A)  inferior goods. 
B)  normal goods. 
C)  complements. 
D)  substitutes. 
A)  inferior goods. 
B)  normal goods. 
C)  complements. 
D)  substitutes.

Question 2

A significant increase in the price of basketballs will most likely lead to

Accepted Answer

A)  an increase in the demand for basketball shoes. 
B)  an inward shift in the demand for basketballs. 
C)  a movement along the demand curve for basketball shoes. 
D)  an inward shift in the demand for basketball shoes. 
A)  an increase in the demand for basketball shoes. 
B)  an inward shift in the demand for basketballs. 
C)  a movement along the demand curve for basketball shoes. 
D)  an inward shift in the demand for basketball shoes.

Question 3

If the price of cotton used in making blue jeans increases, which of the following will occur?

Accepted Answer

A)  There will be a movement along an unchanged supply curve for jeans. 
B)  The supply curve for jeans will shift rightward. 
C)  The supply curve for jeans will shift leftward. 
D)  There will be a rightward shift in the supply curve for jeans, followed by a movement along the supply curve. 
A)  There will be a movement along an unchanged supply curve for jeans. 
B)  The supply curve for jeans will shift rightward. 
C)  The supply curve for jeans will shift leftward. 
D)  There will be a rightward shift in the supply curve for jeans, followed by a movement along the supply curve.

Question 4

Suppose that today, consumers expect the price of bottled water to double in the future. Then today the bottled water's

Accepted Answer

A)  demand curve will shift to the right. 
B)  demand curve will shift to the left. 
C)  supply curve will shift to the right. 
D)  supply curve will shift to the left. 
A)  demand curve will shift to the right. 
B)  demand curve will shift to the left. 
C)  supply curve will shift to the right. 
D)  supply curve will shift to the left.

Question 5

Which of the following occurs when a market is in equilibrium?

Accepted Answer

A)  Quantity supplied is equal to quantity demanded. 
B)  Supply is equal to demand. 
C)  The price of the good will tend to rise, all else held constant. 
D)  The price of the good will tend to fall, all else held constant. 
A)  Quantity supplied is equal to quantity demanded. 
B)  Supply is equal to demand. 
C)  The price of the good will tend to rise, all else held constant. 
D)  The price of the good will tend to fall, all else held constant.

Question 6

Equilibrium in a market occurs when

Accepted Answer

A)  demand and supply indicate a small surplus of a good. 
B)  price is at its minimum. 
C)  quantity supplied and quantity demanded are equal at the market clearing price. 
D)  the market price leads to a decrease in quantity demanded. 
A)  demand and supply indicate a small surplus of a good. 
B)  price is at its minimum. 
C)  quantity supplied and quantity demanded are equal at the market clearing price. 
D)  the market price leads to a decrease in quantity demanded.

Question 7

The law of supply states that other things being equal

Accepted Answer

A)  supply creates its own demand. 
B)  supply will increase if productivity increases. 
C)  as price increases, quantity supplied increases. 
D)  supply will increase to meet demand if demand increases. 
A)  supply creates its own demand. 
B)  supply will increase if productivity increases. 
C)  as price increases, quantity supplied increases. 
D)  supply will increase to meet demand if demand increases.

Question 8

-Refer to the above figure. A movement from point A to point B indicates

Accepted Answer

A)  an increase in demand. 
B)  a decrease in demand. 
C)  an increase in quantity demanded. 
D)  a decrease in quantity demanded. 
A)  an increase in demand. 
B)  a decrease in demand. 
C)  an increase in quantity demanded. 
D)  a decrease in quantity demanded.

Question 9

-Refer to the above figure. Which of the following statements is TRUE?

Accepted Answer

A)  Panel A shows a decrease in demand and Panel B shows an increase in demand. 
B)  Both Panels A and B show an increase in demand. 
C)  Panel A shows a change in demand and Panel B shows a change in quantity demanded. 
D)  Panel A shows a change in quantity demanded and Panel B shows a change in demand. 
A)  Panel A shows a decrease in demand and Panel B shows an increase in demand. 
B)  Both Panels A and B show an increase in demand. 
C)  Panel A shows a change in demand and Panel B shows a change in quantity demanded. 
D)  Panel A shows a change in quantity demanded and Panel B shows a change in demand.

Question 10

According to the law of demand, a decrease in the price of a good causes

Accepted Answer

A)  a rightward shift of the demand curve for that good. 
B)  a leftward shift of the demand curve for that good. 
C)  an upward movement along the demand curve for that good. 
D)  a downward movement along the demand curve for that good. 
A)  a rightward shift of the demand curve for that good. 
B)  a leftward shift of the demand curve for that good. 
C)  an upward movement along the demand curve for that good. 
D)  a downward movement along the demand curve for that good.

Question 11

Last year there were 6 pizza shops in town. This year there are only 4. Other things being equal, the decrease in the number of suppliers will

Accepted Answer

A)  cause the market supply curve to shift to the right. 
B)  increase the market demand for pizza. 
C)  cause a decrease in the quantity supplied at each price. 
D)  have no impact on market supply as long as the demand for pizza remains strong. 
A)  cause the market supply curve to shift to the right. 
B)  increase the market demand for pizza. 
C)  cause a decrease in the quantity supplied at each price. 
D)  have no impact on market supply as long as the demand for pizza remains strong.

Question 12

If two goods, J and K, are complements, then which of the following statements is FALSE?

Accepted Answer

A)  They are consumed together. 
B)  An increase in the price of J causes the demand for K to rise. 
C)  When the quantity demanded of J increases, the demand for K increases. 
D)  A decrease in the price of K causes an increase in the demand for J. 
A)  They are consumed together. 
B)  An increase in the price of J causes the demand for K to rise. 
C)  When the quantity demanded of J increases, the demand for K increases. 
D)  A decrease in the price of K causes an increase in the demand for J.

Question 13

The law of supply states that there is

Accepted Answer

A)  an inverse relationship between price and technology, ceteris paribus. 
B)  a direct relationship between profit and quantity supplied, ceteris paribus. 
C)  no relationship between price of resources and number of suppliers, ceteris paribus. 
D)  a direct relationship between price and quantity supplied, ceteris paribus. 
A)  an inverse relationship between price and technology, ceteris paribus. 
B)  a direct relationship between profit and quantity supplied, ceteris paribus. 
C)  no relationship between price of resources and number of suppliers, ceteris paribus. 
D)  a direct relationship between price and quantity supplied, ceteris paribus.

Question 14

If a bottle of soda and bottled juice are substitutes, when the price of soda rises

Accepted Answer

A)  demand for bottled juice rises. 
B)  demand for bottled juice falls. 
C)  quantity of bottled juice demanded falls. 
D)  quantity of bottled juice demanded rises. 
A)  demand for bottled juice rises. 
B)  demand for bottled juice falls. 
C)  quantity of bottled juice demanded falls. 
D)  quantity of bottled juice demanded rises.

Question 15

-Refer to the above figure. The rightward shift of the curve could have been caused by

Accepted Answer

A)  a technological improvement. 
B)  a technological setback. 
C)  an increase in income. 
D)  a decrease in income. 
A)  a technological improvement. 
B)  a technological setback. 
C)  an increase in income. 
D)  a decrease in income.

Question 16

An increase 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 17

Which of the following illustrates the law of demand?

Accepted Answer

A)  More people watch college basketball in March than in November. 
B)  The number of long distance calls in the United States is greater on Christmas than on Valentine's Day. 
C)  College enrollment decreases when tuition increases. 
D)  The prevailing wage rate in an industry determines how many people choose to work in the industry. 
A)  More people watch college basketball in March than in November. 
B)  The number of long distance calls in the United States is greater on Christmas than on Valentine's Day. 
C)  College enrollment decreases when tuition increases. 
D)  The prevailing wage rate in an industry determines how many people choose to work in the industry.

Question 18

For a demand schedule, which of the following is held constant?

Accepted Answer

A)  relative prices 
B)  quantity demanded 
C)  quality of the good 
D)  nominal prices 
A)  relative prices 
B)  quantity demanded 
C)  quality of the good 
D)  nominal prices

Question 19

Another name for a surplus is

Accepted Answer

A)  excess quantity supplied. 
B)  excess quantity demanded. 
C)  equilibrium. 
D)  market clearing. 
A)  excess quantity supplied. 
B)  excess quantity demanded. 
C)  equilibrium. 
D)  market clearing.

Question 20

The price of a new textbook increases from $200 to $270, while the price of used copies of the textbook increased from $100 to $125. Other things being equal, we would expect

Accepted Answer

A)  the quantity demanded of the used textbook to increase and the quantity demanded of the new textbook to decrease. 
B)  the quantity demanded of both to fall. 
C)  the demand for the new textbook to increase and the demand for the used textbook to decrease. 
D)  the quantity demanded of the used textbook to decrease and the quantity demanded of the new textbook to increase. 
A)  the quantity demanded of the used textbook to increase and the quantity demanded of the new textbook to decrease. 
B)  the quantity demanded of both to fall. 
C)  the demand for the new textbook to increase and the demand for the used textbook to decrease. 
D)  the quantity demanded of the used textbook to decrease and the quantity demanded of the new textbook to increase.

Exam 3: Demand and Supply

Suppose we observe that the demand for eggs increases when people buy more potatoes. We can conclude that eggs and potatoes are

A significant increase in the price of basketballs will most likely lead to

If the price of cotton used in making blue jeans increases, which of the following will occur?

Suppose that today, consumers expect the price of bottled water to double in the future. Then today the bottled water's

Which of the following occurs when a market is in equilibrium?

Equilibrium in a market occurs when

The law of supply states that other things being equal

-Refer to the above figure. A movement from point A to point B indicates

-Refer to the above figure. Which of the following statements is TRUE?

According to the law of demand, a decrease in the price of a good causes

Last year there were 6 pizza shops in town. This year there are only 4. Other things being equal, the decrease in the number of suppliers will

If two goods, J and K, are complements, then which of the following statements is FALSE?

The law of supply states that there is

If a bottle of soda and bottled juice are substitutes, when the price of soda rises

-Refer to the above figure. The rightward shift of the curve could have been caused by

An increase in supply will occur when

Which of the following illustrates the law of demand?

For a demand schedule, which of the following is held constant?

Another name for a surplus is

The price of a new textbook increases from $200 to $270, while the price of used copies of the textbook increased from $100 to $125. Other things being equal, we would expect

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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