Question 1

Both the supply and demand curves can shift due to changes in income.

Accepted Answer

A) True 
 B)False

Question 2

If both the demand and supply curves for computers shift to the right,the price of computers may rise,fall,or remain unchanged.

Accepted Answer

A) True 
 B)False

Question 3

If the same dairy can produce either whole milk or skim milk,an increase in the profitability of whole milk results in a(n)

Accepted Answer

A)  decrease in the quantity supplied of whole milk 
B)  increase in the supply of whole milk 
C)  decrease in the supply of skim milk 
D)  increase in the supply of skim milk 
E)  decrease in the quantity supplied of skim milk

Question 4

Bread and butter are complements.A decrease in the price of bread results in a(n)

Accepted Answer

A)  decrease in the supply of break 
B)  increase in the demand for butter 
C)  increase in the demand for bread 
D)  increase in resource prices 
E)  violation of the law of demand

Question 5

-In Figure 3-8,using the supply and demand curves denoted S₁ and D₂,respectively,the equilibrium price and quantity are

Accepted Answer

A)  $100 and 50,000 
B)  $100 and 100,000 
C)  $150 and 50,000 
D)  $150 and 75,000 
E)  $150 and 100,000

Question 6

If an improvement in production technology causes a decrease in production costs,the result is a(n)

Accepted Answer

A)  decrease in quantity supplied 
B)  increase in demand 
C)  increase in supply 
D)  improvement is working conditions 
E)  increase in quantity supplied

Question 7

Suppose that today the market for lima beans is in equilibrium.Tomorrow both the supply and demand curves for lima beans will shift to the left.As a result,the equilibrium price __________ and the equilibrium quantity will __________.

Accepted Answer

A)  will fall;fall 
B)  will fall;rise 
C)  will rise;fall 
D)  cannot be determined;fall 
E)  cannot be determined;rise

Question 8

When individuals come together to buy and sell goods and services,they form a(n)

Accepted Answer

A)  economy 
B)  market 
C)  production possibilities frontier 
D)  supply curve 
E)  demand curve

Question 9

An increase in both equilibrium price and quantity could be produced by a(n)

Accepted Answer

A)  decrease in supply,with demand constant 
B)  increase in supply,with demand constant 
C)  decrease in demand,with supply constant 
D)  increase in demand,with supply constant 
E)  rise in resource prices

Question 10

A decrease in supply results in a(n)

Accepted Answer

A)  decrease in demand 
B)  increase in equilibrium quantity and a decrease in equilibrium price 
C)  decrease in equilibrium quantity and a decrease in equilibrium price 
D)  increase in demand 
E)  increase in equilibrium price and a decrease in equilibrium quantity

Question 11

An increase in supply could be caused by a(n)

Accepted Answer

A)  increase in price 
B)  government-imposed price ceiling 
C)  decrease in resource prices 
D)  decrease in consumer incomes 
E)  unfavorable shift in tastes and preferences

Question 12

A decrease in demand,with supply constant,results in a(n)

Accepted Answer

A)  increase in equilibrium price and a decrease in equilibrium quantity 
B)  decrease in equilibrium price and a decrease in equilibrium quantity 
C)  increase in equilibrium price and an increase in equilibrium quantity 
D)  increase in equilibrium price and an ambiguous effect on equilibrium quantity 
E)  decrease in supply

Question 13

Which of the following are the best examples of substitute goods?

Accepted Answer

A)  personal computers and computer software programs 
B)  milk and cookies 
C)  Packard Bell and IBM personal computers 
D)  hot dogs and mustard 
E)  contact lenses and lens cleaning solutions

Question 14

A decrease in demand and an increase in supply results in a(n)

Accepted Answer

A)  decrease in equilibrium price and an ambiguous effect on equilibrium quantity 
B)  increase in equilibrium price and an ambiguous effect on equilibrium quantity 
C)  ambiguous effect on equilibrium price and an increase in equilibrium quantity 
D)  ambiguous effect on equilibrium price and an decrease in equilibrium quantity 
E)  increase in equilibrium price and a decrease in equilibrium quantity

Question 15

Assume the typical shapes of the demand and supply curves.If both demand and supply increase in a competitive market,the equilibrium price will

Accepted Answer

A)  always rise 
B)  always fall 
C)  rise if demand increases more than supply increases 
D)  fall if demand increases more than supply increases 
E)  remain unchanged

Question 16

-Consider the market for ground beef represented by Figure 3-12,which is initially in equilibrium at point J.Which of the following is correct if equilibrium shifts to point K?

Accepted Answer

A)  There is an excess supply of 50,000 pounds at the price of $1.00. 
B)  The demand decreased due to a lower price substitute. 
C)  There is an excess demand of 25,000 pounds at the price of $1.00. 
D)  The shift in supply will cause a temporary shortage,which will disappear when the price rises to $1.50. 
E)  Both demand and the quantity demanded have dropped.

Question 17

If the demand for baseball cards rises and the supply curve does not shift,then the price

Accepted Answer

A)  will rise and quantity will fall 
B)  and quantity will rise 
C)  will fall and quantity will rise 
D)  and quantity will fall 
E)  will rise,but quantity may rise or fall

Question 18

Procter & Gamble Co.is a major soap producer.All of the following,except one,would shift its supply curve of liquid soap to left.Which is the exception?

Accepted Answer

A)  an increase in the price of bar soap 
B)  an increase in the price of a key ingredient of liquid soap 
C)  environmental regulations force Procter & Gamble to use a more costly technology to produce liquid soap 
D)  a decrease in the price of liquid soap 
E)  an increase in the wage rate for factory workers who produce liquid soap

Question 19

Which of the following could lead to a rightward shift of the demand curve for a good?

Accepted Answer

A)  a decrease in the price of a substitute good 
B)  an increase in the price of a complementary good 
C)  a decrease in the price of the good,assuming it is a normal good 
D)  an increase in the price of the good,assuming it is an inferior good 
E)  expectations that the price of the good will rise in the future

Question 20

An increase in the price of a good results in a(n)

Accepted Answer

A)  decrease in demand 
B)  increase in demand 
C)  increase in quantity demanded 
D)  decrease in quantity demanded 
E)  increase in supply

Exam 3: Supply and Demand