Question 1

Which of the following statements is correct?

Accepted Answer

A)  When demand decreases, both the price and the quantity increase. 
B)  When demand increases, both the price and the quantity decrease. 
C)  When supply increases, the quantity increases and the price falls. 
D)  When supply decreases, both the price and the quantity decrease.

Question 2

In a market, at the equilibrium price,

Accepted Answer

A)  neither buyers nor sellers can do business at a better price. 
B)  buyers are willing to pay a higher price, but sellers do not ask for a higher price. 
C)  buyers are paying the minimum price they are willing to pay for any amount of output and sellers are charging the maximum price they are willing to charge for any amount of production. 
D)  None of the above is true.

Question 3

-Based on the above figure, which of the following is true?

Accepted Answer

A)  At a price of $6, quantity demanded is equal to quantity supplied. 
B)  At a price of $4, quantity demanded is greater than quantity supplied. 
C)  At a price of $8, quantity demanded is less than quantity supplied. 
D)  All of the above answers are correct.

Question 4

-The above figures show the market for gasoline. Which figure shows the effect of motorists increasing the number of times they take the bus to work rather than driving their own cars?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D

Question 5

Good A and good B are substitutes in production. The demand for good A increases so that the price of good A rises. The increase in the price of good A shifts the

Accepted Answer

A)  demand curve for good B leftward. 
B)  demand curve for good B rightward. 
C)  supply curve of good B leftward. 
D)  supply curve of good B rightward.

Question 6

Coffee and sugar are complements. If the supply curve of coffee shifts leftward because of poor weather, then there will be

Accepted Answer

A)  an increase in the price of sugar. 
B)  a decrease in the price of sugar. 
C)  a leftward shift of the demand curve for coffee. 
D)  a leftward shift of the supply curve for sugar.

Question 7

-The above figures show the market for oranges. Which figure shows the effect of a new technology called "the orange picker," which harvests oranges less expensively than ever before?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D

Question 8

-The figure above shows the market for airline tickets. In early 2008 firms negotiated lower wages with their workers. This change is shown in the figure as a shift from

Accepted Answer

A)  D0 to D1. 
B)  D1 to D0. 
C)  S0 to S1. 
D)  S1 to S0.

Question 9

A substitute is a good

Accepted Answer

A)  that can be used in place of another good. 
B)  that is not used in place of another good. 
C)  of lower quality than another good. 
D)  of higher quality than another good.

Question 10

-In the figure, the equilibrium price is initially $3 per bushel of wheat. If suppliers come to expect that the price of a bushel of wheat will rise in the future, but buyers do not, the current equilibrium price will

Accepted Answer

A)  rise. 
B)  not change. 
C)  fall. 
D)  Perhaps rise, fall, or stay the same, depending on whether there are more demanders or suppliers in the market.

Question 11

The observation that the demand curve for grape jelly shifts rightward every time the price of peanut butter falls means that grape jelly and peanut butter are

Accepted Answer

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

Question 12

Flights to Paris are a normal good and people's incomes rise. At the same time, the price of jet fuel rises. The equilibrium price of a flight to Paris ________ and the equilibrium quantity of flights to Paris ________.

Accepted Answer

A)  might rise, fall, or not change; increases 
B)  falls; decreases. 
C)  rises; increases 
D)  rises; might increase, decrease, or not change

Question 13

-Which of the following shifts the supply curve for gasoline rightward?

Accepted Answer

A)  a situation in which the quantity demanded exceeds the quantity supplied 
B)  an increase in the price of gasoline 
C)  a decrease in the price of a resource used to produce gasoline, such as crude oil 
D)  an increase in the demand for gas-guzzling, sport utility vehicles

Question 14

"The recent hurricanes in Florida are bringing financial gain to California citrus growers. Due to extensive damage to the Florida citrus crop, California citrus products are commanding their highest prices ever." Which of the following statements best explains the economics of this quotation?

Accepted Answer

A)  The supply of Florida oranges decreased, causing their price to increase, which then increased the demand for substitute California oranges. 
B)  The supply of Florida oranges decreased, causing the supply of California oranges to increase and the price of California oranges to rise. 
C)  The demand for Florida oranges decreased because of the hurricanes, causing a greater demand for California oranges and an increase in the price of California oranges. 
D)  The demand for Florida oranges decreased, causing their prices to rise, therefore increasing the demand for California oranges.

Question 15

Which of the following explains why supply curves slope upward?

Accepted Answer

A)  prices and income 
B)  increasing marginal cost 
C)  resources and technology 
D)  substitutes in production and complements in production

Question 16

If the demand curve for bottled water shifts rightward and the supply curve of bottled water shifts leftward, the equilibrium

Accepted Answer

A)  price of bottled water definitely increases. 
B)  price of bottled water definitely decreases. 
C)  quantity of bottled water definitely increases. 
D)  quantity of bottled water definitely decreases.

Question 17

Suppose the equilibrium price of bottled water has risen from $1.00 per bottle to $2.00 per bottle and the equilibrium quantity has increased. These changes are a result of a ________ shift of the ________ curve for bottled water.

Accepted Answer

A)  rightward; demand 
B)  rightward; supply 
C)  leftward; supply 
D)  leftward; demand

Question 18

-In the above figure, if D2 is the original demand curve and the price of a substitute in consumption rises, which price and quantity might result?

Accepted Answer

A)  point a, with price P2 and quantity Q2 
B)  point b, with price P1 and quantity Q1 
C)  point c, with price P3 and quantity Q3 
D)  point d, with price P1 and quantity Q3

Question 19

-The figure above shows supply curves for soft drinks. Suppose the economy is at point a. A movement to point d would be the result of

Accepted Answer

A)  an increase in technology. 
B)  a decrease in the relative price of a soft drink. 
C)  an increase in the relative price of a soft drink. 
D)  an increase in the number of soft drink suppliers.

Question 20

-The above figures show the market for hamburger meat. Which figure shows the effect when more farmers decide to raise cows that are processed into hamburger meat?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D

Exam 3: Demand and Supply

Which of the following statements is correct?

In a market, at the equilibrium price,

-Based on the above figure, which of the following is true?

-The above figures show the market for gasoline. Which figure shows the effect of motorists increasing the number of times they take the bus to work rather than driving their own cars?

Good A and good B are substitutes in production. The demand for good A increases so that the price of good A rises. The increase in the price of good A shifts the

Coffee and sugar are complements. If the supply curve of coffee shifts leftward because of poor weather, then there will be

-The above figures show the market for oranges. Which figure shows the effect of a new technology called "the orange picker," which harvests oranges less expensively than ever before?

-The figure above shows the market for airline tickets. In early 2008 firms negotiated lower wages with their workers. This change is shown in the figure as a shift from

A substitute is a good

-In the figure, the equilibrium price is initially $3 per bushel of wheat. If suppliers come to expect that the price of a bushel of wheat will rise in the future, but buyers do not, the current equilibrium price will

The observation that the demand curve for grape jelly shifts rightward every time the price of peanut butter falls means that grape jelly and peanut butter are

Flights to Paris are a normal good and people's incomes rise. At the same time, the price of jet fuel rises. The equilibrium price of a flight to Paris and the equilibrium quantity of flights to Paris .

-Which of the following shifts the supply curve for gasoline rightward?

"The recent hurricanes in Florida are bringing financial gain to California citrus growers. Due to extensive damage to the Florida citrus crop, California citrus products are commanding their highest prices ever." Which of the following statements best explains the economics of this quotation?

Which of the following explains why supply curves slope upward?

If the demand curve for bottled water shifts rightward and the supply curve of bottled water shifts leftward, the equilibrium

Suppose the equilibrium price of bottled water has risen from $1.00 per bottle to $2.00 per bottle and the equilibrium quantity has increased. These changes are a result of a shift of the curve for bottled water.

-In the above figure, if D₂ is the original demand curve and the price of a substitute in consumption rises, which price and quantity might result?

-The figure above shows supply curves for soft drinks. Suppose the economy is at point a. A movement to point d would be the result of

-The above figures show the market for hamburger meat. Which figure shows the effect when more farmers decide to raise cows that are processed into hamburger meat?