Question 1

It is certain that the equilibrium price will fall when:

Accepted Answer

A)  the supply curve and the demand curve both shift to the right. 
B)  the supply curve shifts to the right and the demand curve shifts to the left. 
C)  supply and demand both increase. 
D)  supply decreases and demand stays the same.

Question 2

Markets that are characterized by many buyers and many sellers are:

Accepted Answer

A)  inefficient. 
B)  competitive. 
C)  foreign. 
D)  monopolies.

Question 3

It is certain that the equilibrium price will rise when the supply curve shifts to the _____ and the demand curve shifts to the _____.

Accepted Answer

A)  right; right 
B)  right; left 
C)  left; left 
D)  left; right

Question 4

The market price of airline flights increased recently. Some economists suggest that the price increased because of an increase in the number of business travelers. They believe that in the market for flights:

Accepted Answer

A)  supply increased. 
B)  supply decreased. 
C)  demand increased. 
D)  demand decreased.

Question 5

Use the following to answer questions:
Figure: Demand for DVDs 
-(Figure: Demand for DVDs) Look at the figure Demand for DVDs. A decrease in the price of DVD players (a complement) would result in a change illustrated by the move from:

Accepted Answer

A)  f to g in panel A. 
B)  h to i in panel B. 
C)  j to k in panel C. 
D)  l to m in panel D.

Question 6

Apple and Samsung are large corporations that produce smart phones, the iPhone and the Galaxy, respectively. They are constantly trying through expensive advertising and product innovations to persuade customers to buy their brand. Is the smart phone market a competitive in the economic sense defined in Chapter 3? Why or why not?

Accepted Answer

The answer of Apple and Samsung are large corporations that...

Question 7

Suppose the equilibrium price of good X is $25 and the equilibrium quantity is 124 units. If the price of good X is $2:

Accepted Answer

A)  there will be excess demand for good X. 
B)  there will be an excess supply of good X. 
C)  the market will clear. 
D)  the quantity demanded of good X will be less than 124 units.

Question 8

Use the following to answer questions:
Figure: Shifts in Demand and Supply IV 
-(Figure: Shifts in Demand and Supply IV) Look at the figure Shifts in Demand and Supply IV. The figure shows how supply and demand might shift in response to specific events. Suppose consumer incomes increase. Which panel BEST describes how this will affect the market for big-screen televisions, a normal good?

Accepted Answer

A)  panel A 
B)  panel B 
C)  panel C 
D)  panel D

Question 9

According to the law of demand, if the price of steak increases in Rhode Island, the demand for steak will decrease in Rhode Island.

Accepted Answer

A) True 
 B)False

Question 10

Milk is an important ingredient in the production of ice cream. If the price of milk increases, then one would expect, holding all other things constant:

Accepted Answer

A)  the supply curve for ice cream to shift left. 
B)  the supply curve for ice cream to shift right. 
C)  no change in the supply curve for ice cream. 
D)  a movement along the supply curve for ice cream curve, resulting in more ice cream supplied.

Question 11

If tortilla chips are a normal good, when there is an increase in income, equilibrium price _____ and equilibrium quantity _____.

Accepted Answer

A)  decreases; increases. 
B)  decreases; decreases. 
C)  increases; increases. 
D)  increases; decreases.

Question 12

You read that college tuition is rising every year, and yet more students attend college every year. Isn't this a violation of the law of demand?

Accepted Answer

The answer of You read that college tuition is rising...

Question 13

The _____ tomatoes will decrease if fertilizer prices rise.

Accepted Answer

A)  demand for 
B)  quantity demanded of 
C)  supply of 
D)  equilibrium price of

Question 14

Use the following to answer questions:
Figure: Shifts in Demand and Supply III 
-(Figure: Shifts in Demand and Supply III) Look at the figure Shifts in Demand and Supply III. The figure shows how supply and demand might shift in response to specific events. Suppose scientists discover that eating asparagus slows the aging process. Which panel BEST describes how this will affect the market for asparagus?

Accepted Answer

A)  panel A 
B)  panel B 
C)  panel C 
D)  panel D

Question 15

Rice and potatoes are substitutes in consumption. If the price of rice rises and there is a bumper crop of potatoes, in the market for potatoes one would expect the equilibrium price to _____ and the equilibrium quantity to _____.

Accepted Answer

A)  rise, fall, or stay the same; rise 
B)  rise; fall 
C)  fall; fall 
D)  rise; fall, rise, or stay the same

Question 16

An increase in demand, all other things unchanged, will result in _____ in equilibrium price and _____ in equilibrium quantity.

Accepted Answer

A)  an increase; an increase 
B)  a decrease; a decrease 
C)  a decrease; an increase 
D)  an increase; a decrease

Question 17

Use the following to answer questions:
Figure: Supply of Coconuts 
-(Figure: Supply of Coconuts) Look at the figure Supply of Coconuts. If the prices of inputs (e.g., labor, fertilizer, and fuel) used to produce and transport coconuts increased, it would be represented in the figure as a movement from:

Accepted Answer

A)  A to B. 
B)  B to A. 
C)  C to A. 
D)  E to B.

Question 18

The demand curve for running shoes has shifted to the right. What could have caused it?

Accepted Answer

A)  a fall in the price of running shoes 
B)  an increase in the price of running shoes 
C)  an increase in the supply of running shoes 
D)  an increase in the income of buyers of running shoes

Question 19

When the price of armchairs increases, the:

Accepted Answer

A)  quantity supplied increases. 
B)  supply increases. 
C)  quantity supplied decreases. 
D)  supply decreases.

Question 20

If the demand for tires goes down when the price of gas goes up, then tires and gas are:

Accepted Answer

A)  substitutes. 
B)  complements. 
C)  both expensive. 
D)  both inexpensive.

Exam 3: Supply and Demand

It is certain that the equilibrium price will fall when:

Markets that are characterized by many buyers and many sellers are:

It is certain that the equilibrium price will rise when the supply curve shifts to the _ and the demand curve shifts to the _.

The market price of airline flights increased recently. Some economists suggest that the price increased because of an increase in the number of business travelers. They believe that in the market for flights:

Use the following to answer questions: Figure: Demand for DVDs -(Figure: Demand for DVDs) Look at the figure Demand for DVDs. A decrease in the price of DVD players (a complement) would result in a change illustrated by the move from: