Question 1

The demand curve is downward sloping because

Accepted Answer

A)  the price must rise to induce firms to increase quantity supplied. 
B)  a reduction in the price of a good causes individuals to increase their purchase of that good. 
C)  an increase in the price will cause a leftward shift in the demand curve. 
D)  all of the above. 
A)  the price must rise to induce firms to increase quantity supplied. 
B)  a reduction in the price of a good causes individuals to increase their purchase of that good. 
C)  an increase in the price will cause a leftward shift in the demand curve. 
D)  all of the above.

Question 2

A change in the price of a good causes

Accepted Answer

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

Question 3

Sarah gets a salary increase. Before her raise, she purchased 5 pounds of fish and 1 pound of beef stew a month. After her raise, she consumes 2 pounds of fish and 3 pounds of beef stew a month. If everything else is held constant, we know that

Accepted Answer

A)  fish is an inferior good and beef stew is a normal good for Sarah. 
B)  fish is a normal good and beef stew is an inferior good for Sarah. 
C)  both fish and beef stew are normal goods for Sarah. 
D)  both fish and beef stew are inferior goods for Sarah. 
A)  fish is an inferior good and beef stew is a normal good for Sarah. 
B)  fish is a normal good and beef stew is an inferior good for Sarah. 
C)  both fish and beef stew are normal goods for Sarah. 
D)  both fish and beef stew are inferior goods for Sarah.

Question 4

The relationship between quantity supplied and price is usually

Accepted Answer

A)  an inverse relationship. 
B)  a direct relationship. 
C)  a negative relationship. 
D)  impossible to determine. 
A)  an inverse relationship. 
B)  a direct relationship. 
C)  a negative relationship. 
D)  impossible to determine.

Question 5

The price of a new textbook is $60 in one year and $75 two years later, while the price of a used copy of the textbook increased from $25 to $37.50. The relative price of a new textbook

Accepted Answer

A)  increased by 25 percent. 
B)  increased from 2.4 to 3. 
C)  decreased from 2.4 to 2.0. 
D)  decreased from 1.4 to 1.25. 
A)  increased by 25 percent. 
B)  increased from 2.4 to 3. 
C)  decreased from 2.4 to 2.0. 
D)  decreased from 1.4 to 1.25.

Question 6

-Suppose that, at a rental rate of $1000 per month, 650 residents wish to rent apartments and that landlords offer 800 apartments available for rent. Which one of the following statements is then TRUE?

Accepted Answer

A)  There is a shortage of 150 apartments. 
B)  There is an excess demand for apartments. 
C)  The market clearing rental price of apartments is too low. 
D)  The market clearing rental price of apartments is less than $1000 per month. 
A)  There is a shortage of 150 apartments. 
B)  There is an excess demand for apartments. 
C)  The market clearing rental price of apartments is too low. 
D)  The market clearing rental price of apartments is less than $1000 per month.

Question 7

-Refer to the above figure. At a price of four cents, a(n) ________ of bubble gum will exist in the market.

Accepted Answer

A)  surplus 
B)  shortage 
C)  excess quantity demanded 
D)  equilibrium quantity 
A)  surplus 
B)  shortage 
C)  excess quantity demanded 
D)  equilibrium quantity

Question 8

According to the law of demand, other things being equal

Accepted Answer

A)  when the price a good goes up, then people buy more of that good. 
B)  when the price a good goes down, then people buy more of that good. 
C)  when people's income goes down, then they buy less of a good. 
D)  when people's income goes up, then they buy less of a good. 
A)  when the price a good goes up, then people buy more of that good. 
B)  when the price a good goes down, then people buy more of that good. 
C)  when people's income goes down, then they buy less of a good. 
D)  when people's income goes up, then they buy less of a good.

Question 9

-According to the above table, a surplus exists when

Accepted Answer

A)  the price is $1 per unit. 
B)  the price is $2 per unit. 
C)  the price is $3 per unit. 
D)  the price is greater than $3 per unit. 
A)  the price is $1 per unit. 
B)  the price is $2 per unit. 
C)  the price is $3 per unit. 
D)  the price is greater than $3 per unit.

Question 10

A supply schedule

Accepted Answer

A)  can be used to generate a supply curve. 
B)  is a table reflecting the inverse relationship between price and quantity supplied. 
C)  shows what happens to quantity supplied when price is held constant. 
D)  all of the above. 
A)  can be used to generate a supply curve. 
B)  is a table reflecting the inverse relationship between price and quantity supplied. 
C)  shows what happens to quantity supplied when price is held constant. 
D)  all of the above.

Question 11

When producers anticipate that the price of their product will increase in the future

Accepted Answer

A)  the supply curve will shift to the right. 
B)  the supply curve will shift to the left. 
C)  the current production will move along on the supply curve. 
D)  they will immediately lobby Congress to adjust prices now. 
A)  the supply curve will shift to the right. 
B)  the supply curve will shift to the left. 
C)  the current production will move along on the supply curve. 
D)  they will immediately lobby Congress to adjust prices now.

Question 12

When the price of tablet devices decreased in the 2010s, there was an increase in the demand for computing apps because tablet devices and computing apps are

Accepted Answer

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

Question 13

An increase in the price of wheat will lead to

Accepted Answer

A)  an upward movement along the demand curve for wheat. 
B)  a leftward shift in the demand curve for wheat. 
C)  a rightward shift in the supply curve for wheat. 
D)  an increase in the quantity of wheat consumed. 
A)  an upward movement along the demand curve for wheat. 
B)  a leftward shift in the demand curve for wheat. 
C)  a rightward shift in the supply curve for wheat. 
D)  an increase in the quantity of wheat consumed.

Question 14

-According to the above table, the market clearing (equilibrium) price would adjust to

Accepted Answer

A)  $1. 
B)  $3. 
C)  $4. 
D)  $5. 
A)  $1. 
B)  $3. 
C)  $4. 
D)  $5.

Question 15

According to the law of demand, the quantity demanded of a good is related to

Accepted Answer

A)  the average price of all goods. 
B)  income. 
C)  any factor that affects the decision of an individual consumer but not the market. 
D)  the relative price of that good. 
A)  the average price of all goods. 
B)  income. 
C)  any factor that affects the decision of an individual consumer but not the market. 
D)  the relative price of that good.

Question 16

-Using the above table, the market clearing price for this product is

Accepted Answer

A)  $5. 
B)  $4. 
C)  $3. 
D)  $2. 
A)  $5. 
B)  $4. 
C)  $3. 
D)  $2.

Question 17

Which of the following are substitute goods?

Accepted Answer

A)  margarine and butter 
B)  peanut butter and jelly 
C)  pizza and soda 
D)  trucks and gasoline 
A)  margarine and butter 
B)  peanut butter and jelly 
C)  pizza and soda 
D)  trucks and gasoline

Question 18

-Refer to the above figure. At a price of $10, excess quantity supplied equals

Accepted Answer

A)  0. 
B)  12. 
C)  15. 
D)  infinity. 
A)  0. 
B)  12. 
C)  15. 
D)  infinity.

Question 19

When a rise in the price of one item results in a decrease in the demand for another good, then the two goods are

Accepted Answer

A)  substitute goods. 
B)  complementary goods. 
C)  inferior goods. 
D)  satisfying the law of supply. 
A)  substitute goods. 
B)  complementary goods. 
C)  inferior goods. 
D)  satisfying the law of supply.

Question 20

Which one of the following would cause an increase in the supply of planes?

Accepted Answer

A)  a decrease in the demand for planes 
B)  an increase in the price of planes 
C)  an increase in taxes applied to plane producers 
D)  an improvement in the technology used to produce planes 
A)  a decrease in the demand for planes 
B)  an increase in the price of planes 
C)  an increase in taxes applied to plane producers 
D)  an improvement in the technology used to produce planes

Exam 3: Demand and Supply

The demand curve is downward sloping because

A change in the price of a good causes

Sarah gets a salary increase. Before her raise, she purchased 5 pounds of fish and 1 pound of beef stew a month. After her raise, she consumes 2 pounds of fish and 3 pounds of beef stew a month. If everything else is held constant, we know that

The relationship between quantity supplied and price is usually

The price of a new textbook is $60 in one year and $75 two years later, while the price of a used copy of the textbook increased from $25 to $37.50. The relative price of a new textbook

-Suppose that, at a rental rate of $1000 per month, 650 residents wish to rent apartments and that landlords offer 800 apartments available for rent. Which one of the following statements is then TRUE?

-Refer to the above figure. At a price of four cents, a(n) ________ of bubble gum will exist in the market.

According to the law of demand, other things being equal

-According to the above table, a surplus exists when

A supply schedule

When producers anticipate that the price of their product will increase in the future

When the price of tablet devices decreased in the 2010s, there was an increase in the demand for computing apps because tablet devices and computing apps are

An increase in the price of wheat will lead to

-According to the above table, the market clearing (equilibrium) price would adjust to

According to the law of demand, the quantity demanded of a good is related to

-Using the above table, the market clearing price for this product is

Which of the following are substitute goods?

-Refer to the above figure. At a price of $10, excess quantity supplied equals

When a rise in the price of one item results in a decrease in the demand for another good, then the two goods are

Which one of the following would cause an increase in the supply of planes?

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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