Question 1

Two goods are substitutes when

Accepted Answer

A)  an increase in the price of one reduces the demand for the other. 
B)  an increase in the price of one raises the demand for the other. 
C)  the two goods are used together. 
D)  the two goods have the same price. 
A)  an increase in the price of one reduces the demand for the other. 
B)  an increase in the price of one raises the demand for the other. 
C)  the two goods are used together. 
D)  the two goods have the same price.

Question 2

What information is provided by a demand curve? What variables are measured along the axes of the graph?

Accepted Answer

The demand curve is a graphical represen

Question 3

Jane has noticed that she used to pay $2.75 for a hamburger and now she pays $3.0. Which of the following statements is TRUE?

Accepted Answer

A)  The relative price of hamburgers has increased compared to hotdogs. 
B)  The money price of hamburgers has increased. 
C)  The law of supply explains why the price of hamburgers has increased. 
D)  Jane will stop consuming hamburgers. 
A)  The relative price of hamburgers has increased compared to hotdogs. 
B)  The money price of hamburgers has increased. 
C)  The law of supply explains why the price of hamburgers has increased. 
D)  Jane will stop consuming hamburgers.

Question 4

Which of the following statements is FALSE about the demand curve?

Accepted Answer

A)  An increase in demand shifts the demand curve to the left, closer to the price axis. 
B)  When only the price of a good changes, there is movement along the demand curve but no change in demand. 
C)  A change in demand is graphically shown by shifting the entire demand curve. 
D)  When demand decreases, there is a drop in the quantity demanded at each price. 
A)  An increase in demand shifts the demand curve to the left, closer to the price axis. 
B)  When only the price of a good changes, there is movement along the demand curve but no change in demand. 
C)  A change in demand is graphically shown by shifting the entire demand curve. 
D)  When demand decreases, there is a drop in the quantity demanded at each price.

Question 5

-Refer to the above figure. Which diagram shows the effect on the market 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 6

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

Accepted Answer

A)  an increase in supply. 
B)  an increase in quantity supplied. 
C)  a decrease in supply. 
D)  a decrease in quantity supplied. 
A)  an increase in supply. 
B)  an increase in quantity supplied. 
C)  a decrease in supply. 
D)  a decrease in quantity supplied.

Question 7

If consumers expect that the price of pretzels will decrease next week, what would happen today?

Accepted Answer

A)  Demand today for pretzels would decrease. 
B)  Demand today for pretzels would increase. 
C)  Demand today for pretzels would be unaffected. 
D)  Supply today of pretzels would decrease. 
A)  Demand today for pretzels would decrease. 
B)  Demand today for pretzels would increase. 
C)  Demand today for pretzels would be unaffected. 
D)  Supply today of pretzels would decrease.

Question 8

Which of the following will NOT affect the position of the market supply curve for a good?

Accepted Answer

A)  The government grants a subsidy to the producers for each unit of a good that they produce. 
B)  The price of the good increases. 
C)  The number of sellers in the market increases. 
D)  There is an increase in the prices of the inputs used in production. 
A)  The government grants a subsidy to the producers for each unit of a good that they produce. 
B)  The price of the good increases. 
C)  The number of sellers in the market increases. 
D)  There is an increase in the prices of the inputs used in production.

Question 9

The effects of a per-unit tax imposed on sales of an industry's product would likely include

Accepted Answer

A)  a lower product price at any amount of the product supplied. 
B)  a leftward shift of the market supply curve for the product. 
C)  a leftward movement along the market supply curve for the product. 
D)  none of the above. 
A)  a lower product price at any amount of the product supplied. 
B)  a leftward shift of the market supply curve for the product. 
C)  a leftward movement along the market supply curve for the product. 
D)  none of the above.

Question 10

-Refer to the above figure. Which diagram shows the effect on the market of cellphones when the demand for cellphones 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 11

The price of a new car is $40,000 while the price of a five-year old car of the same brand is $16,000. The next year the price of the new car increases to $44,000 and the price of a five-year old car of the same brand is $17,600. The relative price of the used car

Accepted Answer

A)  decreased by $2,400. 
B)  decreased by 10 percent. 
C)  increased by 10 percent. 
D)  remained constant at 0.4. 
A)  decreased by $2,400. 
B)  decreased by 10 percent. 
C)  increased by 10 percent. 
D)  remained constant at 0.4.

Question 12

Refer to the above figure. The highest price that consumers would be willing to pay for quantity Q2 is

Accepted Answer

A)  P2. 
B)  P0. 
C)  P1. 
D)  cannot be determined from the diagram. 
A)  P2. 
B)  P0. 
C)  P1. 
D)  cannot be determined from the diagram.

Question 13

Explain why there is a direct relationship between price and quantity supplied.

Accepted Answer

For firms to produce more of a good per

Question 14

A given supply curve illustrates

Accepted Answer

A)  the relationship between price and quantity supplied. 
B)  the effect of a change in resource costs on quantity supplied. 
C)  the effect of a change in technology on quantity supplied. 
D)  the relationship between expected future prices and quantity supplied. 
A)  the relationship between price and quantity supplied. 
B)  the effect of a change in resource costs on quantity supplied. 
C)  the effect of a change in technology on quantity supplied. 
D)  the relationship between expected future prices and quantity supplied.

Question 15

-Refer to the above figure. Which panel shows the effect of an increase in the price of a good on the demand curve of that good?

Accepted Answer

A)  Panel A 
B)  Panel B 
C)  both panels 
D)  neither panel 
A)  Panel A 
B)  Panel B 
C)  both panels 
D)  neither panel

Question 16

John increases his consumption of Good X and Good Y when his income increases. For John

Accepted Answer

A)  Good X and Good Y are substitute goods. 
B)  Good X and Good Y are complement goods. 
C)  Good X is an inferior good. 
D)  Good X and Y are normal goods 
A)  Good X and Good Y are substitute goods. 
B)  Good X and Good Y are complement goods. 
C)  Good X is an inferior good. 
D)  Good X and Y are normal goods

Question 17

In a free market, the market price and quantity in the above figure will adjust to equilibrium values of

Accepted Answer

A)  $1 per gallon and 50 million gallons. 
B)  $4 per gallon and 10 million gallons. 
C)  $2 per gallon and 60 million gallons. 
D)  $2 per gallon and 30 million gallons. 
A)  $1 per gallon and 50 million gallons. 
B)  $4 per gallon and 10 million gallons. 
C)  $2 per gallon and 60 million gallons. 
D)  $2 per gallon and 30 million gallons.

Question 18

In economics, "demand" refers to

Accepted Answer

A)  what people need instead of want without paying for it. 
B)  the minimum amount of a good people need to survive. 
C)  the satisfaction a good will provide a person. 
D)  how much of a good people will buy at any price during a given time period. 
A)  what people need instead of want without paying for it. 
B)  the minimum amount of a good people need to survive. 
C)  the satisfaction a good will provide a person. 
D)  how much of a good people will buy at any price during a given time period.

Question 19

-Refer to the above figure. Which panel best demonstrates the demand curve?

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 20

When economists talk about a demand schedule for a product, they mean

Accepted Answer

A)  the amount of a good that consumers intend to purchase at each price in a set of possible prices in a given time period. 
B)  the amount of a good that consumers are able to purchase (though they might not be willing to) at different prices in a given period of time. 
C)  the amount of a good that consumers intend to purchase at only one particular price in a given period of time. 
D)  the amount of a good that producers are willing to make available for sale at a particular price in a given time period. 
A)  the amount of a good that consumers intend to purchase at each price in a set of possible prices in a given time period. 
B)  the amount of a good that consumers are able to purchase (though they might not be willing to) at different prices in a given period of time. 
C)  the amount of a good that consumers intend to purchase at only one particular price in a given period of time. 
D)  the amount of a good that producers are willing to make available for sale at a particular price in a given time period.

Exam 3: Demand and Supply

Two goods are substitutes when

What information is provided by a demand curve? What variables are measured along the axes of the graph?

Jane has noticed that she used to pay $2.75 for a hamburger and now she pays $3.0. Which of the following statements is TRUE?

Which of the following statements is FALSE about the demand curve?

-Refer to the above figure. Which diagram shows the effect on the market of cellphones when the price of plastic has increased?

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

If consumers expect that the price of pretzels will decrease next week, what would happen today?

Which of the following will NOT affect the position of the market supply curve for a good?

The effects of a per-unit tax imposed on sales of an industry's product would likely include

-Refer to the above figure. Which diagram shows the effect on the market of cellphones when the demand for cellphones has increased?

The price of a new car is $40,000 while the price of a five-year old car of the same brand is $16,000. The next year the price of the new car increases to $44,000 and the price of a five-year old car of the same brand is $17,600. The relative price of the used car

Refer to the above figure. The highest price that consumers would be willing to pay for quantity Q2 is

Explain why there is a direct relationship between price and quantity supplied.

A given supply curve illustrates

-Refer to the above figure. Which panel shows the effect of an increase in the price of a good on the demand curve of that good?

John increases his consumption of Good X and Good Y when his income increases. For John

In a free market, the market price and quantity in the above figure will adjust to equilibrium values of

In economics, "demand" refers to

-Refer to the above figure. Which panel best demonstrates the demand curve?

When economists talk about a demand schedule for a product, they mean

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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