Question 1

You observe that the price of a good rises and the quantity decreases. These observations can be the result of the

Accepted Answer

A)  demand curve shifting rightward. 
B)  demand curve shifting leftward. 
C)  supply curve shifting rightward. 
D)  supply curve shifting leftward.

Question 2

You observe that an increase in the price of salsa decreases the demand for tortilla chips and increases the demand for potato chips. You can conclude that

Accepted Answer

A)  salsa and tortilla chips are substitutes. 
B)  salsa and potato chips are complements. 
C)  tortilla chips and potato chips are complements. 
D)  salsa and tortilla chips are complements.

Question 3

The equilibrium price is the price at which the quantity

Accepted Answer

A)  sold equals the quantity bought. 
B)  demanded equals the quantity sold. 
C)  demanded equals the quantity supplied. 
D)  supplied equals the quantity bought.

Question 4

Which of the following is the best way to describe equilibrium in a market? At equilibrium, the

Accepted Answer

A)  price is the lowest possible. 
B)  price is usually affordable to most people. 
C)  supply and demand curves can never shift again. 
D)  quantity supplied equals the quantity demanded.

Question 5

Doctors find that one aspirin per day reduces the risk of heart attacks. Demand for aspirin will

Accepted Answer

A)  increase, so that equilibrium price and equilibrium quantity will increase. 
B)  decrease, so that equilibrium price and equilibrium quantity will increase. 
C)  increase, so that equilibrium price will decrease and equilibrium quantity will increase. 
D)  increase, but the new equilibrium price and quantity are indeterminate.

Question 6

-The figure above shows the market for airline tickets. If airline tickets are a normal good, then the recession in 2008 that caused people's incomes to decrease lead to a shift from

Accepted Answer

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

Question 7

-Consider the demand curves for soft drinks shown in the figure above. Moving from point a to point c means that

Accepted Answer

A)  the marginal benefit of each additional soft drink falls. 
B)  the opportunity cost of another soft drink increases. 
C)  people's incomes have decreased. 
D)  the price of a soft drink has increased.

Question 8

The "law of demand" refers to the fact that, all other things remaining the same, when the price of a good rises

Accepted Answer

A)  the demand curve shifts rightward. 
B)  the demand curve shifts leftward. 
C)  there is a movement down along the demand curve to a larger quantity demanded. 
D)  there is a movement up along the demand curve to a smaller quantity demanded.

Question 9

If the equilibrium price for a two-liter bottle of Coca-Cola is $1.50 today, just like it was ten years ago, can we safely say that all supply and demand conditions in the market for Coke have remained very stable all these years?

Accepted Answer

The answer of If the equilibrium price for a two-liter...

Question 10

A change in which of the following alters buying plans for cars but does NOT shift the demand curve for cars?

Accepted Answer

A)  a 5 percent increase in people's income 
B)  a 10 percent decrease in the price of car insurance 
C)  a 20 percent increase in the price of a car 
D)  an increased preference for walking rather than driving

Question 11

Inferior goods are those for which demand increases as

Accepted Answer

A)  the price of a substitute falls. 
B)  the price of a substitute rises. 
C)  income decreases. 
D)  income increases.

Question 12

In the market for chocolate chip cookies, if the demand decreases while the supply increases, the price definitely falls but the quantity might increase, decrease, or remain the same.

Accepted Answer

A) True 
 B)False

Question 13

A decrease in the price of bowling shifts the

Accepted Answer

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

Question 14

An economist says: "The demand curve has two interpretations." What does the economist mean?

Accepted Answer

The answer of An economist says: "The demand curve has...

Question 15

The law of demand implies that, other things remaining the same

Accepted Answer

A)  as the price of a cheeseburger rises, the quantity of cheeseburgers demanded will increase. 
B)  as the price of a cheeseburger rises, the quantity of cheeseburgers demanded will decrease. 
C)  as income increases, the quantity of cheeseburgers demanded will increase. 
D)  as the demand for cheeseburgers increases, the price of a cheeseburger will fall.

Question 16

During the last decade, the price of shoes rose substantially yet people bought more pairs of new shoes each year. This experience suggests that the

Accepted Answer

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

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

-The diagram above illustrates the market for apartments in Victoria, British Columbia.
a) If the current rent is $300 per month, is there a shortage or surplus in the apartment market and how much is the shortage or surplus?
b) What is the equilibrium rent and quantity of apartments?

Accepted Answer

The answer of 
-The diagram above illustrates the market for...

Question 19

As a result of an increase in the supply of a good, the equilibrium quantity ________ and the equilibrium price ________.

Accepted Answer

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

Question 20

-Using the data in the above table, the equilibrium quantity and equilibrium price for a cellular telephone is

Accepted Answer

A)  50 thousand and $100. 
B)  80 thousand and $80. 
C)  60 thousand and $50. 
D)  40 thousand and $20.

Exam 3: Demand and Supply