Question 1

-What situation gives rise to a surplus?

Accepted Answer

A)  The market clearing price of the good is too high. 
B)  The current price of the good is below its market clearing price. 
C)  The current price of the good is above its market clearing price. 
D)  Supply of the good decreases, but the market price is not permitted to change. 
A)  The market clearing price of the good is too high. 
B)  The current price of the good is below its market clearing price. 
C)  The current price of the good is above its market clearing price. 
D)  Supply of the good decreases, but the market price is not permitted to change.

Question 2

An increase in the number of consumers in a market would cause

Accepted Answer

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

Question 3

A shortage exists

Accepted Answer

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

Question 4

-When the current price of an item is greater than the item's market clearing price

Accepted Answer

A)  supply is greater than demand. 
B)  demand is greater than supply. 
C)  quantity supplied is greater than quantity demanded. 
D)  quantity supplied is less than quantity demanded. 
A)  supply is greater than demand. 
B)  demand is greater than supply. 
C)  quantity supplied is greater than quantity demanded. 
D)  quantity supplied is less than quantity demanded.

Question 5

-The market clearing price of a good is

Accepted Answer

A)  the price at which there is at least some of the good available for everyone. 
B)  the price at which there is no surplus and no shortage. 
C)  the price that consumers prefer. 
D)  the price that producers prefer. 
A)  the price at which there is at least some of the good available for everyone. 
B)  the price at which there is no surplus and no shortage. 
C)  the price that consumers prefer. 
D)  the price that producers prefer.

Question 6

Larry decreases his consumption of grapes after his income goes up. For Larry

Accepted Answer

A)  grapes and income are substitute goods. 
B)  grapes and income are complementary goods. 
C)  grapes are an inferior good. 
D)  grapes are a superior good. 
A)  grapes and income are substitute goods. 
B)  grapes and income are complementary goods. 
C)  grapes are an inferior good. 
D)  grapes are a superior good.

Question 7

-Refer to the above figure. A shortage 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 8

-Refer to the above figure. Suppose that Cheerios and Apple Jacks are substitutes. Which diagram shows the effect on the demand for Cheerios when the price of Apple Jacks cereal has increased?

Accepted Answer

A)  A 
B)  B 
C)  neither graph 
D)  both graphs 
A)  A 
B)  B 
C)  neither graph 
D)  both graphs

Question 9

-In the above figure, what are the equilibrium price and quantity?

Accepted Answer

A)  $40 and 200 units 
B)  $50 and 100 units 
C)  $10 and 200 units 
D)  $30 and 100 units 
A)  $40 and 200 units 
B)  $50 and 100 units 
C)  $10 and 200 units 
D)  $30 and 100 units

Question 10

Briefly discuss the determinants of demand other than price.

Accepted Answer

An increase in income causes demand of a

Question 11

-In the above figure, if the price is equal to $40, there is

Accepted Answer

A)  a surplus of 50 units. 
B)  a shortage of 100 units. 
C)  an excess quantity demanded of 50 units. 
D)  an excess quantity supplied of 100 units. 
A)  a surplus of 50 units. 
B)  a shortage of 100 units. 
C)  an excess quantity demanded of 50 units. 
D)  an excess quantity supplied of 100 units.

Question 12

If there is a decline in the price of milk, an input in the production of ice cream, then there will be a(n)

Accepted Answer

A)  decrease in the supply of ice cream and a leftward shift of the supply curve. 
B)  decrease in the quantity of ice cream supplied and a movement up along the supply curve. 
C)  increase in the supply of ice cream and a rightward shift of the supply curve. 
D)  increase in the quantity of ice cream supplied and a movement down along the supply curve. 
A)  decrease in the supply of ice cream and a leftward shift of the supply curve. 
B)  decrease in the quantity of ice cream supplied and a movement up along the supply curve. 
C)  increase in the supply of ice cream and a rightward shift of the supply curve. 
D)  increase in the quantity of ice cream supplied and a movement down along the supply curve.

Question 13

Which of the following will shift the supply curve for laptop computers to the left?

Accepted Answer

A)  development of a cheaper microchip used in laptop computer production 
B)  a subsidy to the laptop computer industry 
C)  expectations of a future decline in laptop computer prices 
D)  a reduction of the number of firms that make laptop computers 
A)  development of a cheaper microchip used in laptop computer production 
B)  a subsidy to the laptop computer industry 
C)  expectations of a future decline in laptop computer prices 
D)  a reduction of the number of firms that make laptop computers

Question 14

A shift in demand occurs when

Accepted Answer

A)  the price of that good changes. 
B)  the amount demanded of a good changes at each existing price. 
C)  there is a change in quantity demanded. 
D)  the price changes and the good is a normal good. 
A)  the price of that good changes. 
B)  the amount demanded of a good changes at each existing price. 
C)  there is a change in quantity demanded. 
D)  the price changes and the good is a normal good.

Question 15

Which of the following factors will lead to a shift in the demand curve?

Accepted Answer

A)  changes in the costs of inputs 
B)  changes in technology 
C)  changes in the price of the good 
D)  changes in consumers' tastes and preferences 
A)  changes in the costs of inputs 
B)  changes in technology 
C)  changes in the price of the good 
D)  changes in consumers' tastes and preferences

Question 16

According to the law of demand

Accepted Answer

A)  people buy more of a good when the price rises. 
B)  people buy more of a good when their income rises. 
C)  people buy more of a good when the relative price rises. 
D)  people buy more of a good when the price falls. 
A)  people buy more of a good when the price rises. 
B)  people buy more of a good when their income rises. 
C)  people buy more of a good when the relative price rises. 
D)  people buy more of a good when the price falls.

Question 17

When a surplus exists

Accepted Answer

A)  the price is below the market clearing price. 
B)  quantity demanded exceeds quantity supplied. 
C)  an excess quantity demanded exists. 
D)  none of the above. 
A)  the price is below the market clearing price. 
B)  quantity demanded exceeds quantity supplied. 
C)  an excess quantity demanded exists. 
D)  none of the above.

Question 18

Which of the following is NOT true about the equilibrium price?

Accepted Answer

A)  the price where a change in quantity supplied occurs 
B)  the price where the demand curve intersects the supply curve 
C)  the price where quantity demanded equals quantity supplied 
D)  the price where there is neither excess quantity demanded or excess quantity supplied 
A)  the price where a change in quantity supplied occurs 
B)  the price where the demand curve intersects the supply curve 
C)  the price where quantity demanded equals quantity supplied 
D)  the price where there is neither excess quantity demanded or excess quantity supplied

Question 19

When the amount supplied is greater at each price, there is a(n)

Accepted Answer

A)  rightward shift in the supply curve. 
B)  leftward shift in the supply curve. 
C)  upward movement along the supply curve. 
D)  downward movement along the supply curve. 
A)  rightward shift in the supply curve. 
B)  leftward shift in the supply curve. 
C)  upward movement along the supply curve. 
D)  downward movement along the supply curve.

Question 20

An increase in the price of input used to produce a product will lead to

Accepted Answer

A)  a decrease in the demand for that product. 
B)  a decrease in quantity supplied of that product 
C)  a decrease in the supply of that product. 
D)  an increase in the supply of that product. 
A)  a decrease in the demand for that product. 
B)  a decrease in quantity supplied of that product 
C)  a decrease in the supply of that product. 
D)  an increase in the supply of that product.

Exam 3: Demand and Supply

-What situation gives rise to a surplus?

An increase in the number of consumers in a market would cause

A shortage exists

-When the current price of an item is greater than the item's market clearing price

-The market clearing price of a good is

Larry decreases his consumption of grapes after his income goes up. For Larry

-Refer to the above figure. A shortage will exist when

-Refer to the above figure. Suppose that Cheerios and Apple Jacks are substitutes. Which diagram shows the effect on the demand for Cheerios when the price of Apple Jacks cereal has increased?

-In the above figure, what are the equilibrium price and quantity?

Briefly discuss the determinants of demand other than price.

-In the above figure, if the price is equal to $40, there is

If there is a decline in the price of milk, an input in the production of ice cream, then there will be a(n)

Which of the following will shift the supply curve for laptop computers to the left?

A shift in demand occurs when

Which of the following factors will lead to a shift in the demand curve?

According to the law of demand

When a surplus exists

Which of the following is NOT true about the equilibrium price?

When the amount supplied is greater at each price, there is a(n)

An increase in the price of input used to produce a product will lead to

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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