Question 1

An inferior good is one for which

Accepted Answer

A)  demand increases as income increases. 
B)  demand decreases as income increases. 
C)  the demand curve is vertical. 
D)  the demand curve slopes up. 
A)  demand increases as income increases. 
B)  demand decreases as income increases. 
C)  the demand curve is vertical. 
D)  the demand curve slopes up.

Question 2

Which of the following will cause the demand curve for cable TV services to shift to the left?

Accepted Answer

A)  a rise in the price of cable TV services 
B)  a decrease in average incomes of cable TV subscribers 
C)  an increase in population 
D)  the creation of several hit TV series 
A)  a rise in the price of cable TV services 
B)  a decrease in average incomes of cable TV subscribers 
C)  an increase in population 
D)  the creation of several hit TV series

Question 3

An increase in the price of steel to car manufacturers will cause

Accepted Answer

A)  the quantity demanded for cars to increase. 
B)  the demand for cars to decrease. 
C)  the quantity supplied of cars to increase. 
D)  the supply curve for cars to shift left. 
A)  the quantity demanded for cars to increase. 
B)  the demand for cars to decrease. 
C)  the quantity supplied of cars to increase. 
D)  the supply curve for cars to shift left.

Question 4

The relationship between a change in the price of a complementary good and demand for another complementary good is

Accepted Answer

A)  positive. 
B)  negative. 
C)  inconclusive. 
D)  zero. 
A)  positive. 
B)  negative. 
C)  inconclusive. 
D)  zero.

Question 5

All of the following will cause the supply curve of good A to shift rightward EXCEPT

Accepted Answer

A)  a reduction in the prices of inputs used to produce good A. 
B)  an increase in the number of firms in the industry producing good A. 
C)  a decrease in the per-unit tax on good A which producers must pay. 
D)  an increase in the market price of good A. 
A)  a reduction in the prices of inputs used to produce good A. 
B)  an increase in the number of firms in the industry producing good A. 
C)  a decrease in the per-unit tax on good A which producers must pay. 
D)  an increase in the market price of good A.

Question 6

John argues that when the price of a good decreases, people will purchase less of the good. This statement is

Accepted Answer

A)  consistent with the law of demand. 
B)  inconsistent with the law of demand. 
C)  referring to money prices. 
D)  consistent with the law of supply. 
A)  consistent with the law of demand. 
B)  inconsistent with the law of demand. 
C)  referring to money prices. 
D)  consistent with the law of supply.

Question 7

Fashion trends are a nonprice determinant for demand because

Accepted Answer

A)  they cause a movement along the demand curve. 
B)  they influence people's tastes and preferences in clothing. 
C)  they change the supply of accessories. 
D)  they do not affect demand. 
A)  they cause a movement along the demand curve. 
B)  they influence people's tastes and preferences in clothing. 
C)  they change the supply of accessories. 
D)  they do not affect demand.

Question 8

-Refer to the above figure. The arrows show the direction of a shift in the demand curve of Good A. Which of the following would be the most likely reason for the shift in the demand curve if Good A is an inferior good?

Accepted Answer

A)  an increase in the price of Good A 
B)  a decrease in the price of Good A 
C)  a decrease in consumers' income 
D)  an increase in consumers' income 
A)  an increase in the price of Good A 
B)  a decrease in the price of Good A 
C)  a decrease in consumers' income 
D)  an increase in consumers' income

Question 9

-Refer to the above figure. Excess quantity demanded will exist when

Accepted Answer

A)  the price is between $0 and $6. 
B)  the price equals $6. 
C)  the price equals $10. 
D)  quantity demanded equals 3. 
A)  the price is between $0 and $6. 
B)  the price equals $6. 
C)  the price equals $10. 
D)  quantity demanded equals 3.

Question 10

A market demand curve is found by

Accepted Answer

A)  adding the prices each consumer would pay for each quantity. 
B)  adding the prices and the quantities demanded by a consumer. 
C)  adding the quantities demanded for each individual consumer at each price. 
D)  taking the demand curve of the "representative" consumer. 
A)  adding the prices each consumer would pay for each quantity. 
B)  adding the prices and the quantities demanded by a consumer. 
C)  adding the quantities demanded for each individual consumer at each price. 
D)  taking the demand curve of the "representative" consumer.

Question 11

-Refer to the above figure. The rightward shift of the curve indicates

Accepted Answer

A)  an increase in demand. 
B)  an increase in supply. 
C)  a change in quantity demanded. 
D)  a change in quantity supplied. 
A)  an increase in demand. 
B)  an increase in supply. 
C)  a change in quantity demanded. 
D)  a change in quantity supplied.

Question 12

-According to the above table, at a price of $1 per unit, which of the following would exist?

Accepted Answer

A)  a shortage of 800 units 
B)  a surplus of 800 units 
C)  a surplus of 200 units 
D)  a shortage of 200 units 
A)  a shortage of 800 units 
B)  a surplus of 800 units 
C)  a surplus of 200 units 
D)  a shortage of 200 units

Question 13

There is an increase in the demand for cookies when the price of coffee falls. Other things constant, we can conclude that cookies and coffee are

Accepted Answer

A)  substitute goods. 
B)  inferior goods. 
C)  independent goods. 
D)  complementary goods. 
A)  substitute goods. 
B)  inferior goods. 
C)  independent goods. 
D)  complementary goods.

Question 14

The law of demand states that

Accepted Answer

A)  consumers will exhaust their incomes as they purchase goods and services at given absolute prices. 
B)  the quantity demanded of a good is higher at a lower relative price than at a higher relative price. 
C)  there is a direct positive relationship between relative price and quantity demanded. 
D)  if the price of a good increases both relatively and absolutely, there will be no change in quantity demanded. 
A)  consumers will exhaust their incomes as they purchase goods and services at given absolute prices. 
B)  the quantity demanded of a good is higher at a lower relative price than at a higher relative price. 
C)  there is a direct positive relationship between relative price and quantity demanded. 
D)  if the price of a good increases both relatively and absolutely, there will be no change in quantity demanded.

Question 15

An indirect or inverse relationship between price and quantity demanded is

Accepted Answer

A)  the market clearing price. 
B)  a change in demand. 
C)  a supply curve. 
D)  a demand curve. 
A)  the market clearing price. 
B)  a change in demand. 
C)  a supply curve. 
D)  a demand curve.

Question 16

The money price of a good is also known as its

Accepted Answer

A)  relative price. 
B)  comparative price. 
C)  absolute price. 
D)  subjective price. 
A)  relative price. 
B)  comparative price. 
C)  absolute price. 
D)  subjective price.

Question 17

All of the following cause a shift in the demand curve EXCEPT a change in the

Accepted Answer

A)  price of related goods. 
B)  price of the good or service. 
C)  consumer income. 
D)  number of consumers. 
A)  price of related goods. 
B)  price of the good or service. 
C)  consumer income. 
D)  number of consumers.

Question 18

If the price of airline travel in Europe falls and the demand for train travel in Europe also falls, then the two goods are

Accepted Answer

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

Question 19

The supply curve will shift to the left when

Accepted Answer

A)  the supply of the product increases. 
B)  the demand for the product decreases. 
C)  some producers leave the industry. 
D)  the product becomes fashionable. 
A)  the supply of the product increases. 
B)  the demand for the product decreases. 
C)  some producers leave the industry. 
D)  the product becomes fashionable.

Question 20

The price of a new textbook increased by 35 percent and the price of a used textbook increased by 30 percent. What happened to the relative price of the new textbook?

Accepted Answer

A)  It increased by 5 percent. 
B)  It increased, but we can't tell by how much without more information. 
C)  It decreased by 5 percent. 
D)  It decreased, but we can't tell by how much without more information. 
A)  It increased by 5 percent. 
B)  It increased, but we can't tell by how much without more information. 
C)  It decreased by 5 percent. 
D)  It decreased, but we can't tell by how much without more information.

Exam 3: Demand and Supply

An inferior good is one for which

Which of the following will cause the demand curve for cable TV services to shift to the left?

An increase in the price of steel to car manufacturers will cause

The relationship between a change in the price of a complementary good and demand for another complementary good is

All of the following will cause the supply curve of good A to shift rightward EXCEPT

John argues that when the price of a good decreases, people will purchase less of the good. This statement is

Fashion trends are a nonprice determinant for demand because

-Refer to the above figure. The arrows show the direction of a shift in the demand curve of Good A. Which of the following would be the most likely reason for the shift in the demand curve if Good A is an inferior good?

-Refer to the above figure. Excess quantity demanded will exist when

A market demand curve is found by

-Refer to the above figure. The rightward shift of the curve indicates

-According to the above table, at a price of $1 per unit, which of the following would exist?

There is an increase in the demand for cookies when the price of coffee falls. Other things constant, we can conclude that cookies and coffee are

The law of demand states that

An indirect or inverse relationship between price and quantity demanded is

The money price of a good is also known as its

All of the following cause a shift in the demand curve EXCEPT a change in the

If the price of airline travel in Europe falls and the demand for train travel in Europe also falls, then the two goods are

The supply curve will shift to the left when

The price of a new textbook increased by 35 percent and the price of a used textbook increased by 30 percent. What happened to the relative price of the new textbook?

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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