Question 1

A surplus exists

Accepted Answer

A)  in equilibrium. 
B)  when quantity supplied is greater than quantity demanded. 
C)  when quantity supplied is less that quantity demanded. 
D)  at the market clearing price. 
A)  in equilibrium. 
B)  when quantity supplied is greater than quantity demanded. 
C)  when quantity supplied is less that quantity demanded. 
D)  at the market clearing price.

Question 2

How is the market supply curve found? In what ways is the process similar to the way the market demand curve is determined? In what ways are they different?

Accepted Answer

The market supply curve is obtained by h

Question 3

Another name for a shortage 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 4

Total market supply can be derived by

Accepted Answer

A)  horizontally summing individual supply curves at each and every price level. 
B)  vertically summing individual supply curves at the current technology level. 
C)  adding up the largest quantity demanded at various prices. 
D)  looking at the changes in the price of raw materials needed to produce the product. 
A)  horizontally summing individual supply curves at each and every price level. 
B)  vertically summing individual supply curves at the current technology level. 
C)  adding up the largest quantity demanded at various prices. 
D)  looking at the changes in the price of raw materials needed to produce the product.

Question 5

Which of the following will NOT lead to an increase in demand for a normal good?

Accepted Answer

A)  an increase in income 
B)  an increase in the price of an input 
C)  a decrease in the price of a complement good 
D)  an increase in the number of consumers 
A)  an increase in income 
B)  an increase in the price of an input 
C)  a decrease in the price of a complement good 
D)  an increase in the number of consumers

Question 6

Demand is defined as

Accepted Answer

A)  a schedule of how much of an item people will purchase at any particular price of that item during a specified time period, other things being constant. 
B)  a specific quantity of an item that people want at a particular price of that item during a specified time period, other things being constant. 
C)  a schedule of how much of a good or service people will purchase at any particular price of a different item during the specified time period, other things being constant. 
D)  a specific quantity of a good or service that people will purchase at one particular price of another item during a specified time period, other things being constant. 
A)  a schedule of how much of an item people will purchase at any particular price of that item during a specified time period, other things being constant. 
B)  a specific quantity of an item that people want at a particular price of that item during a specified time period, other things being constant. 
C)  a schedule of how much of a good or service people will purchase at any particular price of a different item during the specified time period, other things being constant. 
D)  a specific quantity of a good or service that people will purchase at one particular price of another item during a specified time period, other things being constant.

Question 7

Other things being equal, an increase in wages paid to workers in firms making portable power banks will cause

Accepted Answer

A)  the quantity of portable power banks demanded to increase. 
B)  the quantity of portable power banks supplied to decrease. 
C)  the supply of portable power banks to decrease. 
D)  the demand for portable power banks to decrease. 
A)  the quantity of portable power banks demanded to increase. 
B)  the quantity of portable power banks supplied to decrease. 
C)  the supply of portable power banks to decrease. 
D)  the demand for portable power banks to decrease.

Question 8

Which of the following statements about a supply curve is FALSE?

Accepted Answer

A)  It shows a direct (positive) relationship between price and quantity supplied. 
B)  It shows the quantity supplied at each specific price. 
C)  It typically slopes downward to the right. 
D)  It has a positive slope. 
A)  It shows a direct (positive) relationship between price and quantity supplied. 
B)  It shows the quantity supplied at each specific price. 
C)  It typically slopes downward to the right. 
D)  It has a positive slope.

Question 9

Which of the following causes a decrease in demand for a normal good?

Accepted Answer

A)  increase in price of a substitute 
B)  increase in price of a complement 
C)  increase in price 
D)  increase in income 
A)  increase in price of a substitute 
B)  increase in price of a complement 
C)  increase in price 
D)  increase in income

Question 10

If one day a terrible disease were to wipe out over one-half of the orange trees in the United States, which of the following would likely result?

Accepted Answer

A)  The supply curve of orange juice would shift downward and to the right. 
B)  The supply curve of orange juice would shift upward and to the left. 
C)  The demand curve for orange juice would shift to the right. 
D)  The demand curve for orange juice would shift to the left. 
A)  The supply curve of orange juice would shift downward and to the right. 
B)  The supply curve of orange juice would shift upward and to the left. 
C)  The demand curve for orange juice would shift to the right. 
D)  The demand curve for orange juice would shift to the left.

Question 11

Which of the following is a non-price determinant of demand?

Accepted Answer

A)  income 
B)  tastes and preferences 
C)  prices of related goods and services 
D)  All of the above are correct. 
A)  income 
B)  tastes and preferences 
C)  prices of related goods and services 
D)  All of the above are correct.

Question 12

The price of a new textbook increased from $100 to $120 in one year, while the price of a used textbook increased by 20 percent. What happened to the relative price of a used textbook?

Accepted Answer

A)  It decreased by 25 percent. 
B)  It increased by 20 percent. 
C)  It remained constant. 
D)  It can't be determined without knowing the nominal price of the used textbook in at least one of the years. 
A)  It decreased by 25 percent. 
B)  It increased by 20 percent. 
C)  It remained constant. 
D)  It can't be determined without knowing the nominal price of the used textbook in at least one of the years.

Question 13

If a demand curve shifts, we know that

Accepted Answer

A)  the price of the good itself is not a factor. 
B)  the price of the good itself is a factor. 
C)  the price of the good and supply are the major factors. 
D)  the price of the good and demand are major factors. 
A)  the price of the good itself is not a factor. 
B)  the price of the good itself is a factor. 
C)  the price of the good and supply are the major factors. 
D)  the price of the good and demand are major factors.

Question 14

If the price of butter increases, the demand for margarine

Accepted Answer

A)  will be unchanged. 
B)  will shift outward. 
C)  will shift inward. 
D)  will kink into an S-curve. 
A)  will be unchanged. 
B)  will shift outward. 
C)  will shift inward. 
D)  will kink into an S-curve.

Question 15

The law of demand

Accepted Answer

A)  is only an assumption that cannot be tested. 
B)  only applies to necessities, not luxuries. 
C)  is consistent with human behavior in the world. 
D)  does not apply to scarce goods. 
A)  is only an assumption that cannot be tested. 
B)  only applies to necessities, not luxuries. 
C)  is consistent with human behavior in the world. 
D)  does not apply to scarce goods.

Question 16

If the demand of a good is inversely related to income, it must be

Accepted Answer

A)  a bad good. 
B)  an inferior good. 
C)  a normal good. 
D)  an everyday product. 
A)  a bad good. 
B)  an inferior good. 
C)  a normal good. 
D)  an everyday product.

Question 17

-Refer to the above table. The market quantity supplied when the price is $7 is

Accepted Answer

A)  0. 
B)  20. 
C)  29. 
D)  38. 
A)  0. 
B)  20. 
C)  29. 
D)  38.

Question 18

Other things being equal, an increase in the prices of portable power banks leads to a decrease in the amount portable power banks that people purchase. This is known as

Accepted Answer

A)  the law of demand. 
B)  the law of supply. 
C)  ceteris paribus. 
D)  equilibrium. 
A)  the law of demand. 
B)  the law of supply. 
C)  ceteris paribus. 
D)  equilibrium.

Question 19

Refer to the above figure. Other things being equal, if price is at P2, then we would expect

Accepted Answer

A)  price to decline until an equilibrium is achieved at P0. 
B)  consumers to reduce their offering price for the good. 
C)  an excess quantity demanded to occur. 
D)  consumers to bid against each other for goods and force the price still higher. 
A)  price to decline until an equilibrium is achieved at P0. 
B)  consumers to reduce their offering price for the good. 
C)  an excess quantity demanded to occur. 
D)  consumers to bid against each other for goods and force the price still higher.

Question 20

If we are comparing the price of regular gasoline with the price of super gasoline, then an increase in the relative price of regular gasoline implies that

Accepted Answer

A)  the nominal price of regular gasoline increased. 
B)  the nominal price of super gasoline decreased. 
C)  the relative price of super gasoline decreased. 
D)  the relative price of regular gasoline increased. 
A)  the nominal price of regular gasoline increased. 
B)  the nominal price of super gasoline decreased. 
C)  the relative price of super gasoline decreased. 
D)  the relative price of regular gasoline increased.

Exam 3: Demand and Supply

A surplus exists

How is the market supply curve found? In what ways is the process similar to the way the market demand curve is determined? In what ways are they different?

Another name for a shortage is

Total market supply can be derived by

Which of the following will NOT lead to an increase in demand for a normal good?

Demand is defined as

Other things being equal, an increase in wages paid to workers in firms making portable power banks will cause

Which of the following statements about a supply curve is FALSE?

Which of the following causes a decrease in demand for a normal good?

If one day a terrible disease were to wipe out over one-half of the orange trees in the United States, which of the following would likely result?

Which of the following is a non-price determinant of demand?

The price of a new textbook increased from $100 to $120 in one year, while the price of a used textbook increased by 20 percent. What happened to the relative price of a used textbook?

If a demand curve shifts, we know that

If the price of butter increases, the demand for margarine

The law of demand

If the demand of a good is inversely related to income, it must be

-Refer to the above table. The market quantity supplied when the price is $7 is

Other things being equal, an increase in the prices of portable power banks leads to a decrease in the amount portable power banks that people purchase. This is known as

Refer to the above figure. Other things being equal, if price is at P2, then we would expect

If we are comparing the price of regular gasoline with the price of super gasoline, then an increase in the relative price of regular gasoline implies that

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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