Question 1

Some sales managers are talking shop. Which of the following quotations refers to a movement along the demand curve?

Accepted Answer

A)  ʺIt has been an unusually mild winter; our sales of wool scarves are down from last year.ʺ 
B)  ʺSince our competitors raised their prices our sales have doubled.ʺ 
C)  ʺWe decided to cut our prices, and the increase in our sales has been remarkable.ʺ 
D)  none of the above

Question 2

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; demand 
D)  leftward; supply

Question 3

-The figure above shows the demand for fruit snacks. Which movement reflects how consumers would react to an increase in the price of a non-fruit snack?

Accepted Answer

A)  from point a to point d 
B)  from point a to point c 
C)  from point a to point b 
D)  from point a to point e

Question 4

-The figure above shows the demand for fruit snacks. Which movement reflects a decrease in demand?

Accepted Answer

A)  from point a to point c 
B)  from point a to point d 
C)  from point a to point e 
D)  from point a to point b

Question 5

Which of the following shifts the demand curve for movie downloads rightward?

Accepted Answer

A)  A decrease in the price of downloading a movie. 
B)  A 10 percent increase in peopleʹs income if movie downloads are a normal good. 
C)  An increase in the quantity and quality of programming included in the basic cable television service package. 
D)  A decrease in the price of cable television service.

Question 6

Which of the following shifts the supply curve for oranges?

Accepted Answer

A)  disastrous weather that destroys about half of this yearʹs orange crop 
B)  an increase in the price of bananas, a substitute in consumption for oranges 
C)  an increase in income for all orange consumers 
D)  a newly discovered increase in the nutritional value of oranges

Question 7

We observe that the equilibrium price of digital cameras has fallen and the equilibrium quantity of digital cameras has increased. Which of the following events could be responsible for this?

Accepted Answer

A)  The price of film cameras rose. 
B)  Consumersʹ preferences changed in favor of digital cameras. 
C)  Workers who make digital cameras received a pay raise. 
D)  Technological advances in digital camera production.

Question 8

$$\begin{array} { | l | l | l | l | } 
\hline \begin{array} { l } 
\text { Price } \
\text { (dollars per } \
\text { disc) }
\end{array} & \begin{array} { l } 
\text { Quantity } \
\text { demanded }
\end{array} & \begin{array} { l } 
\text { Price } \
\text { (dollars per } \
\text { disc) }
\end{array} & \begin{array} { l } 
\text { Quantity } \
\text { supplied }
\end{array} \
\hline 4 & 36,000 & 4 & 4,000 \
\hline 8 & 32,000 & 8 & 8,000 \
\hline 12 & 28,000 & 12 & 12,000 \
\hline 16 & 24,000 & 16 & 16,000 \
\hline 20 & 20,000 & 20 & 20,000 \
\hline 24 & 16,000 & 24 & 24,000 \
\hline 28 & 12,000 & 28 & 28,000 \
\hline 32 & 8,000 & 32 & 32,000 \
\hline 36 & 4,000 & 36 & 36,000 \
\hline
\end{array}$$
-The above table gives the demand and supply schedules for Blu-ray discs. Based on the table, the equilibrium quantity and price of a Blu-ray discs is

Accepted Answer

A)  28,000 and $12. 
B)  16,000 and $24. 
C)  16,000 and $16. 
D)  20,000 and $20.

Question 9

The quantity supplied of a good or service is the quantity that a producer___________ at a particular price during a given time period.

Accepted Answer

A)  is willing to sell 
B)  needs to sell 
C)  actually sells 
D)  should sell

Question 10

-The above figure shows the market for pizza. Which figure shows the effect of a new report by the
u.S. Surgeon General that eating pizza lowers cholesterol levels, an outcome many people want?

Accepted Answer

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

Question 11

The price of a gallon of milk falls. Which of the following is a possible cause?

Accepted Answer

A)  A decrease in the price of oatmeal, a complement to milk. 
B)  Milk is a normal good and peopleʹs incomes rise. 
C)  A drought that reduces supplies of feed grains fed to cows that produce milk. 
D)  A discovery that milk cause diabetes.

Question 12

If the price of product X falls and this change increases the demand for product Y, then

Accepted Answer

A)  X and Y are complements. 
B)  Y is an inferior good. 
C)  X is an inferior good. 
D)  X and Y are substitutes.

Question 13

There are 72,922 seats in Lambeau Field where the Green Bay Packers play football. The Packers have sold out their season tickets since 1960. There are about 80,000 people on the waiting list to buy season tickets in 2010. Packers tickets are a normal good. As a result of the economic recession in 2010 during which peopleʹs incomes decreased, the

Accepted Answer

A)  substitution effect changed the quantity demanded. 
B)  demand curve for Packers tickets shifted rightward. 
C)  quantity demanded of Packers tickets decreased. 
D)  demand for Packers tickets decreased.

Question 14

Homer changes jobs and his new job pays him a higher income. Before he changed jobs, Homer purchased 3 pounds of tuna and 2 pounds of chicken. After he changed jobs, Homer now purchases 2 pounds of tuna and 3 pounds of chicken. For Homer,

Accepted Answer

A)  both tuna and chicken are inferior goods. 
B)  tuna is a normal good and chicken is an inferior good. 
C)  both tuna and chicken are normal goods. 
D)  tuna is an inferior good and chicken is a normal good.

Question 15

Crude oil can be refined into home heating oil or gasoline. If very cold weather caused the price of home heating oil to increase then, the

Accepted Answer

A)  demand for gasoline would increase. 
B)  supply of gasoline would increase. 
C)  equilibrium price of gasoline would rise. 
D)  Both answers A and C are correct.

Question 16

ʺIf the price of crude oil falls, the demand for gasoline will increase, so people will by more gas and the price of gas will go up.ʺ Is this statement true or false? Explain.

Accepted Answer

The answer of ʺIf the price of crude oil falls,...

Question 17

-Using the above figure, suppose that roses are a normal good. If there is an increase in income,

Accepted Answer

A)  the equilibrium price will rise above $25 per dozen roses. 
B)  we cannot predict what will happen to the equilibrium price. 
C)  we cannot predict what will happen to the equilibrium quantity. 
D)  the equilibrium quantity will decrease below 10 dozen roses.

Question 18

Explain the difference between a change in demand and a change in quantity demanded. What leads to each of these changes?

Accepted Answer

The answer of Explain the difference between a change in...

Question 19

If good A is a normal good and income increases, the equilibrium price of A __________and the equilibrium quantity of A__________.

Accepted Answer

A)  falls; decreases 
B)  rises; increases 
C)  rises; decreases 
D)  falls; increases

Question 20

A complement is a good

Accepted Answer

A)  of higher quality than another good. 
B)  of lower quality than another good. 
C)  used in conjunction with another good. 
D)  used instead of another good.

Exam 3: Demand and Supply