Question 1

Interpret what an increase in demand and an increase in supply mean. Discuss the causes of an increase in demand and an increase in supply. How are increases in demand and supply expressed graphically?

Accepted Answer

The answer of Interpret what an increase in demand and...

Question 2

Ceteris paribus, a change in the price of a good always results in a change in:

Accepted Answer

A)  income. 
B)  tastes. 
C)  quantity demanded. 
D)  both income and tastes. 
E)  the price of other goods.

Question 3

Farmers can produce wheat and/or rice. What will happen in the wheat market if there is an increase in the price of rice?

Accepted Answer

A)  Wheat supply will increase. 
B)  Wheat supply will decrease. 
C)  Wheat demand will increase. 
D)  Wheat demand will decrease.

Question 4

Assuming that beef and chicken are substitutes, an increase in the price of beef, other things being equal, will:

Accepted Answer

A)  increase the demand for chicken. 
B)  decrease the demand for chicken. 
C)  not change the demand for chicken. 
D)  decrease the demand for beef.

Question 5

The law of demand states that, ceteris paribus, price and quantity demanded are:

Accepted Answer

A)  directly related. 
B)  inversely related. 
C)  uniformly related. 
D)  horizontally related.

Question 6

Exhibit 3-10  Demand and supply curves  In Exhibit 3-10, what do you expect to happen in this market at point C?

Accepted Answer

A)  Competition among demanders will drive the price down. 
B)  Competition among demanders will drive the price up. 
C)  Competition among suppliers will drive the price up. 
D)  Competition among suppliers will drive the price down. 
E)  The equilibrium price A is not attainable.

Question 7

Assume Qs represents the quantity supplied at a given price and Qd represents quantity demanded at the same given price. Which of the following market conditions produces an upward movement of the price?

Accepted Answer

A)  Qs = 1,000, Qd = 750. 
B)  Qs = 750, Qd = 750. 
C)  Qs = 750, Qd = 1,000. 
D)  Qs = 1,000, Qd = 1,000.

Question 8

Demand for a good will always rise when:

Accepted Answer

A)  the price of a complementary good falls. 
B)  the price of a substitute good falls. 
C)  tastes change. 
D)  incomes decrease. 
E)  the price of the good falls.

Question 9

How will an increase in lumber prices influence the home construction market?

Accepted Answer

A)  The demand for newly constructed homes will increase. 
B)  The demand for newly constructed homes will decrease. 
C)  The supply of newly constructed homes will increase. 
D)  The supply of newly constructed homes will decrease.

Question 10

Other things being equal, an increase in the price of aspirin will decrease the demand for aspirin.

Accepted Answer

A) True 
 B)False

Question 11

If the market price is below the equilibrium price, then:

Accepted Answer

A)  a surplus of product will result. 
B)  the quantity supplied will exceed the quantity demanded. 
C)  the market supply curve will shift to the right. 
D)  the quantity demanded will exceed the quantity supplied. 
E)  the market demand curve will shift to the left.

Question 12

Exhibit 3-15  Supply and demand curves for good X  In Exhibit 3-15, at a price of $.50 the market for good X will experience a:

Accepted Answer

A)  shortage of 100 units. 
B)  surplus of 100 units. 
C)  shortage of 300 units. 
D)  surplus of 200 units.

Question 13

Surpluses cause prices to fall while shortages cause prices to rise.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following states the definition of supply?

Accepted Answer

A)  More of a good is supplied at a lower price. 
B)  There is a positive relationship between the price of a good and the quantity that buyers purchase. 
C)  There is a positive relationship between the price of a good and the quantity offered for sale by suppliers. 
D)  There is a negative relationship between the price of a good and the quantity offered for sale by suppliers.

Question 15

If movies are an inferior good, movie attendance will rise when consumer incomes fall.

Accepted Answer

A) True 
 B)False

Question 16

Assume Qs represents the quantity supplied at a given price and Qd represents the quantity demanded at the same given price. Which of the following market conditions produce a downward movement of the price?

Accepted Answer

A)  Qs = 1,000, Qd = 750. 
B)  Qs = 750, Qd = 750. 
C)  Qs = 750, Qd = 1,000. 
D)  Qs = 1,000, Qd = 1,000.

Question 17

The price system eliminates scarcity.

Accepted Answer

A) True 
 B)False

Question 18

Exhibit 3-7  Demand and supply curves  In Exhibit 3-7, if price happened to currently be $75 in this market, a ____ would result, causing a(n) ____ in price.

Accepted Answer

A)  shortage; increase 
B)  shortage; decrease 
C)  surplus; increase 
D)  surplus; decrease 
E)  market clearing; change

Question 19

If the price of coffee decreases, the demand curve for tea (a substitute good) will:

Accepted Answer

A)  remain unchanged. 
B)  shift to the right. 
C)  shift to the left. 
D)  do none of the above

Question 20

Exhibit 3-13  Supply and demand curves  Which of the graphs in Exhibit 3-13 illustrates a shortage exists at the indicated market price?

Accepted Answer

A)  Diagram A. 
B)  Diagram B. 
C)  Diagram C. 
D)  Diagrams A and B.

Exam 3: Market Demand and Supply

Interpret what an increase in demand and an increase in supply mean. Discuss the causes of an increase in demand and an increase in supply. How are increases in demand and supply expressed graphically?

Ceteris paribus, a change in the price of a good always results in a change in:

Farmers can produce wheat and/or rice. What will happen in the wheat market if there is an increase in the price of rice?

Assuming that beef and chicken are substitutes, an increase in the price of beef, other things being equal, will:

The law of demand states that, ceteris paribus, price and quantity demanded are:

Exhibit 3-10 Demand and supply curves In Exhibit 3-10, what do you expect to happen in this market at point C?

Assume Q_s represents the quantity supplied at a given price and Q_d represents quantity demanded at the same given price. Which of the following market conditions produces an upward movement of the price?

Demand for a good will always rise when:

How will an increase in lumber prices influence the home construction market?

Other things being equal, an increase in the price of aspirin will decrease the demand for aspirin.

If the market price is below the equilibrium price, then:

Exhibit 3-15 Supply and demand curves for good X In Exhibit 3-15, at a price of $.50 the market for good X will experience a:

Surpluses cause prices to fall while shortages cause prices to rise.

Which of the following states the definition of supply?

If movies are an inferior good, movie attendance will rise when consumer incomes fall.

Assume Q_s represents the quantity supplied at a given price and Q_d represents the quantity demanded at the same given price. Which of the following market conditions produce a downward movement of the price?

The price system eliminates scarcity.

Exhibit 3-7 Demand and supply curves In Exhibit 3-7, if price happened to currently be $75 in this market, a would result, causing a(n) in price.

If the price of coffee decreases, the demand curve for tea (a substitute good) will:

Exhibit 3-13 Supply and demand curves Which of the graphs in Exhibit 3-13 illustrates a shortage exists at the indicated market price?

Exam 3: Market Demand and Supply

Interpret what an increase in demand and an increase in supply mean. Discuss the causes of an increase in demand and an increase in supply. How are increases in demand and supply expressed graphically?

Ceteris paribus, a change in the price of a good always results in a change in:

Farmers can produce wheat and/or rice. What will happen in the wheat market if there is an increase in the price of rice?

Assuming that beef and chicken are substitutes, an increase in the price of beef, other things being equal, will:

The law of demand states that, ceteris paribus, price and quantity demanded are:

Exhibit 3-10 Demand and supply curves In Exhibit 3-10, what do you expect to happen in this market at point C?

Assume Qs represents the quantity supplied at a given price and Qd represents quantity demanded at the same given price. Which of the following market conditions produces an upward movement of the price?

Demand for a good will always rise when:

How will an increase in lumber prices influence the home construction market?

Other things being equal, an increase in the price of aspirin will decrease the demand for aspirin.

If the market price is below the equilibrium price, then:

Exhibit 3-15 Supply and demand curves for good X In Exhibit 3-15, at a price of $.50 the market for good X will experience a:

Surpluses cause prices to fall while shortages cause prices to rise.

Which of the following states the definition of supply?

If movies are an inferior good, movie attendance will rise when consumer incomes fall.

Assume Qs represents the quantity supplied at a given price and Qd represents the quantity demanded at the same given price. Which of the following market conditions produce a downward movement of the price?

The price system eliminates scarcity.

Exhibit 3-7 Demand and supply curves In Exhibit 3-7, if price happened to currently be $75 in this market, a ____ would result, causing a(n) ____ in price.

If the price of coffee decreases, the demand curve for tea (a substitute good) will:

Exhibit 3-13 Supply and demand curves Which of the graphs in Exhibit 3-13 illustrates a shortage exists at the indicated market price?

Assume Q_s represents the quantity supplied at a given price and Q_d represents quantity demanded at the same given price. Which of the following market conditions produces an upward movement of the price?

Assume Q_s represents the quantity supplied at a given price and Q_d represents the quantity demanded at the same given price. Which of the following market conditions produce a downward movement of the price?

Exhibit 3-7 Demand and supply curves In Exhibit 3-7, if price happened to currently be $75 in this market, a would result, causing a(n) in price.