Question 1

The law of demand states that

Accepted Answer

A)  people demand less at lower prices. 
B)  the quantity demanded is directly related to price. 
C)  the quantity demanded is inversely related to price. 
D)  changes in price and changes in quantity demanded move in the same direction. 
A)  people demand less at lower prices. 
B)  the quantity demanded is directly related to price. 
C)  the quantity demanded is inversely related to price. 
D)  changes in price and changes in quantity demanded move in the same direction.

Question 2

Market clearing price

Accepted Answer

A)  refers to a movement along the demand curve. 
B)  refers to a supply curve. 
C)  exists at a the point at which quantity demanded equals quantity supplied. 
D)  refers to a surplus. 
A)  refers to a movement along the demand curve. 
B)  refers to a supply curve. 
C)  exists at a the point at which quantity demanded equals quantity supplied. 
D)  refers to a surplus.

Question 3

According to the above figure for a gasoline market, an increase in the price from $2 to $4 will result in

Accepted Answer

A)  a shortage of 30 million gallons. 
B)  an increase in quantity demanded of 10 million gallons. 
C)  an increase in quantity supplied of 20 million gallons. 
D)  an increase in demand of 20 million gallons. 
A)  a shortage of 30 million gallons. 
B)  an increase in quantity demanded of 10 million gallons. 
C)  an increase in quantity supplied of 20 million gallons. 
D)  an increase in demand of 20 million gallons.

Question 4

-Refer to the above table. At a price of $450, there is an

Accepted Answer

A)  equilibrium. 
B)  excess quantity supplied of 4,000 tablets. 
C)  excess quantity demanded of 6,000 tablets. 
D)  excess quantity demanded of 9,000 tablets. 
A)  equilibrium. 
B)  excess quantity supplied of 4,000 tablets. 
C)  excess quantity demanded of 6,000 tablets. 
D)  excess quantity demanded of 9,000 tablets.

Question 5

If more buyers came into the market for a good, we would expect to see the market demand curve

Accepted Answer

A)  shift inward and to the left. 
B)  remain unchanged since none of the determinants of individual demand changed. 
C)  shift outward and to the right. 
D)  reflect a positive relationship between price and quantity demanded. 
A)  shift inward and to the left. 
B)  remain unchanged since none of the determinants of individual demand changed. 
C)  shift outward and to the right. 
D)  reflect a positive relationship between price and quantity demanded.

Question 6

At a market clearing price

Accepted Answer

A)  the quantity demanded will just equal the quantity supplied. 
B)  there will be an excess quantity demanded. 
C)  there will be a tendency for price to rise over time. 
D)  the demand function will shift outward. 
A)  the quantity demanded will just equal the quantity supplied. 
B)  there will be an excess quantity demanded. 
C)  there will be a tendency for price to rise over time. 
D)  the demand function will shift outward.

Question 7

The law of demand states that there is

Accepted Answer

A)  an inverse relationship between income and quantity demanded, ceteris paribus. 
B)  a direct relationship between income and quantity demanded, ceteris paribus. 
C)  no relationship between taste and quantity demanded, ceteris paribus. 
D)  an inverse relationship between price and quantity demanded, ceteris paribus. 
A)  an inverse relationship between income and quantity demanded, ceteris paribus. 
B)  a direct relationship between income and quantity demanded, ceteris paribus. 
C)  no relationship between taste and quantity demanded, ceteris paribus. 
D)  an inverse relationship between price and quantity demanded, ceteris paribus.

Question 8

-Refer to the above table. The equilibrium price of tablets is

Accepted Answer

A)  $500. 
B)  $550. 
C)  $650. 
D)  $700. 
A)  $500. 
B)  $550. 
C)  $650. 
D)  $700.

Question 9

Which of the following does NOT cause a shift in demand?

Accepted Answer

A)  change in income 
B)  change in tastes 
C)  change in the price of the good 
D)  change in the price of a related good 
A)  change in income 
B)  change in tastes 
C)  change in the price of the good 
D)  change in the price of a related good

Question 10

State the law of demand and illustrate it. Explain what is meant by the term "price" in the law of demand.

Accepted Answer

The law of demand states that when the p

Question 11

The price of a new textbook increases from $75 to $90 while the price of used copies of the textbook increases from $50 to $65. Other things equal, we would expect to observe

Accepted Answer

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

Question 12

-Refer to the above figure. A movement from Point A to Point B is caused by

Accepted Answer

A)  an increase in income. 
B)  an expectation of a decrease in the price of the good in that figure. 
C)  a decrease in the price of the good in that figure. 
D)  all of the above. 
A)  an increase in income. 
B)  an expectation of a decrease in the price of the good in that figure. 
C)  a decrease in the price of the good in that figure. 
D)  all of the above.

Question 13

The "real" price of a good is known as

Accepted Answer

A)  the absolute price of the good. 
B)  the dollar price of the good since we use dollars in the United States. 
C)  relative price of the good. 
D)  the price actually paid for a good instead of the sticker price. 
A)  the absolute price of the good. 
B)  the dollar price of the good since we use dollars in the United States. 
C)  relative price of the good. 
D)  the price actually paid for a good instead of the sticker price.

Question 14

As John's income has increased, he has purchased less instant noodles. Instant noodles are

Accepted Answer

A)  a normal good for John. 
B)  an inferior good for John. 
C)  not following the law of demand. 
D)  not scarce for John. 
A)  a normal good for John. 
B)  an inferior good for John. 
C)  not following the law of demand. 
D)  not scarce for John.

Question 15

-Using the above table, at a price of $70, there is

Accepted Answer

A)  a surplus of 150 units. 
B)  a shortage of 120 units. 
C)  a surplus of 270 units. 
D)  a shortage of 150 units. 
A)  a surplus of 150 units. 
B)  a shortage of 120 units. 
C)  a surplus of 270 units. 
D)  a shortage of 150 units.

Question 16

More cattle are found to have mad cow disease. As a result, consumer confidence in the safety of beef is shaken. What would an economist predict will happen in the beef market?

Accepted Answer

A)  As consumer preferences move away from beef, there is an upward movement along the beef demand curve. 
B)  The demand curve will shift to the left. 
C)  The demand curve does not shift but consumers move to a point lower down the curve. 
D)  absolutely no change in either the quantity demand or the demand for beef 
A)  As consumer preferences move away from beef, there is an upward movement along the beef demand curve. 
B)  The demand curve will shift to the left. 
C)  The demand curve does not shift but consumers move to a point lower down the curve. 
D)  absolutely no change in either the quantity demand or the demand for beef

Question 17

A demand schedule provides

Accepted Answer

A)  the quantities of a good people are willing to sell every year. 
B)  the amount of a good a person wants to sell during a given time period. 
C)  the alternative quantities demanded for a given time period at different possible prices. 
D)  the amount of a good a person wants at different times of the day. 
A)  the quantities of a good people are willing to sell every year. 
B)  the amount of a good a person wants to sell during a given time period. 
C)  the alternative quantities demanded for a given time period at different possible prices. 
D)  the amount of a good a person wants at different times of the day.

Question 18

According to the market data for good X in the above table, a stable equilibrium price is established at

Accepted Answer

A)  $2. 
B)  $4. 
C)  $6. 
D)  $8. 
A)  $2. 
B)  $4. 
C)  $6. 
D)  $8.

Question 19

-Refer to the above table. Suppose Buyer 2 leaves the market. What is the new market quantity of DVDs demanded at a price of $10?

Accepted Answer

A)  33 
B)  25 
C)  22 
D)  8 
A)  33 
B)  25 
C)  22 
D)  8

Question 20

When there is a shortage I. there is a tendency for price to increase.
II) there is an excess quantity demanded.

Accepted Answer

A)  I only 
B)  II only 
C)  both I and II 
D)  neither I nor II 
A)  I only 
B)  II only 
C)  both I and II 
D)  neither I nor II

Exam 3: Demand and Supply

The law of demand states that

Market clearing price

According to the above figure for a gasoline market, an increase in the price from $2 to $4 will result in

-Refer to the above table. At a price of $450, there is an

If more buyers came into the market for a good, we would expect to see the market demand curve

At a market clearing price

The law of demand states that there is

-Refer to the above table. The equilibrium price of tablets is

Which of the following does NOT cause a shift in demand?

State the law of demand and illustrate it. Explain what is meant by the term "price" in the law of demand.

The price of a new textbook increases from $75 to $90 while the price of used copies of the textbook increases from $50 to $65. Other things equal, we would expect to observe

-Refer to the above figure. A movement from Point A to Point B is caused by

The "real" price of a good is known as

As John's income has increased, he has purchased less instant noodles. Instant noodles are

-Using the above table, at a price of $70, there is

More cattle are found to have mad cow disease. As a result, consumer confidence in the safety of beef is shaken. What would an economist predict will happen in the beef market?

A demand schedule provides

According to the market data for good X in the above table, a stable equilibrium price is established at

-Refer to the above table. Suppose Buyer 2 leaves the market. What is the new market quantity of DVDs demanded at a price of $10?

When there is a shortage I. there is a tendency for price to increase. II) there is an excess quantity demanded.

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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