Question 1

-The above figures show the market for HD televisions.Blu-ray players can be used to play HD movies.If the price of blu-ray players falls,then which figure shows the effect of this change in the market for HD televisions?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
E)  None of the figures represent this change.

Question 2

-In the above figure,the shift in the supply curve from S to S₂ reflects

Accepted Answer

A)  an increase in the quantity of pizza supplied. 
B)  a decrease in the quantity of pizza supplied. 
C)  an increase in the supply of pizza. 
D)  a decrease in the supply of pizza. 
E)  a decrease in the supply of pizza and a simultaneous decrease in the quantity of pizza supplied.

Question 3

Which of the following increases the quantity supplied of compact discs but does  NOT  increase the supply of compact discs?

Accepted Answer

A)  a decrease in the price of a compact disc 
B)  an increase in the price of a compact disc 
C)  a decrease in the number of suppliers of compact discs 
D)  an increase in the price of the resources used to produce compact discs 
E)  new technology that lowers the cost of producing compact discs

Question 4

-The above figure shows the market for pizza.The market is in equilibrium when new pizza firms enter the market.What point represents the most likely new price and quantity?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
E)  E

Question 5

Suppose the price of leather used to produce shoes increases.The higher price of leather ________ the supply of shoes and the supply curve of shoes ________.

Accepted Answer

A)  increases; shifts rightward 
B)  increases; shifts leftward 
C)  decreases; shifts rightward 
D)  decreases; shifts leftward 
E)  does not change; does not shift

Question 6

-The graph illustrates the market for computers.If the number of buyers of computers increases and technology advances,you predict that the

Accepted Answer

A)  equilibrium quantity of computers will increase. 
B)  equilibrium quantity of computers will decrease. 
C)  equilibrium price of a computer will rise. 
D)  equilibrium price of a computer will fall. 
E)  equilibrium quantity of computers might increase, decrease, or not change.

Question 7

A technological improvement lowers the cost of producing corn.As a result,the price of a pound of corn ________ and the quantity of corn ________.

Accepted Answer

A)  rises; increases 
B)  rises; decreases 
C)  falls; increases 
D)  falls; decreases 
E)  falls; does not change

Question 8

Suppose that over the next few years the demand for dancing to country and western music decreases.Hence,at country and western dance clubs the equilibrium price of admission ________ and the equilibrium quantity of dancing ________.

Accepted Answer

A)  rises; increases 
B)  rises; decreases 
C)  falls; increases 
D)  falls; decreases 
E)  does not change; decreases

Question 9

-The above figure shows the market for pizza.The market is in equilibrium when people learn that eating pizza helps prevent heart disease.What point represents the most likely new price and quantity?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
E)  E

Question 10

If the demand curve for desktop computers shifts rightward and at the same time the supply curve shifts leftward,then

Accepted Answer

A)  the equilibrium price definitely rises. 
B)  the equilibrium price definitely falls. 
C)  the equilibrium price definitely remains the same. 
D)  More information is needed to determine the effect on the equilibrium price. 
E)  the equilibrium quantity definitely increases.

Question 11

The price of cotton clothing falls.As a result,

Accepted Answer

A)  the quantity demanded of cotton clothing increases. 
B)  the demand for cotton clothing increases. 
C)  the quantity demanded of cotton clothing decreases. 
D)  the demand for cotton clothing decreases. 
E)  both the demand for cotton clothing increases and the quantity demand of cotton clothing increases.

Question 12

People consume more soup as temperatures falls.So,as cold weather approaches,

Accepted Answer

A)  the quantity of soup demanded increases. 
B)  the demand for soup increases. 
C)  people move closer to their demand curve for soup. 
D)  people move farther beyond their demand curves. 
E)  both the demand and the quantity demanded of soup increase.

Question 13

Which of the following is true?

Accepted Answer

A)  For an inferior good, when income increases, the demand curve shifts leftward. 
B)  If the price of a substitute rises, the demand curve shifts leftward. 
C)  If people expect the price of a good will rise in the future, the demand curve shifts leftward. 
D)  An increase in population shifts the demand curve leftward. 
E)  An increase in the cost of producing a good shifts the demand curve leftward.

Question 14

-The figure above shows the market for iPods.Which of the following shifts the demand curve from D₀ to D₂?

Accepted Answer

A)  a decrease in the price of Zunes, a substitute for iPods 
B)  an increase in the price of iPods 
C)  a requirement that all students at universities have an iPod 
D)  a decrease in the price of iPods 
E)  a decrease in people's incomes if iPods are a normal good

Question 15

The law of supply reflects the fact that

Accepted Answer

A)  people buy more of a good when its price falls. 
B)  suppliers have an incentive to use their resources in the way that brings the biggest return. 
C)  higher prices are more attractive to consumers because they signal a higher quality product. 
D)  businesses can sell more goods at lower prices. 
E)  the demand curve is downward sloping.

Question 16

-Which figure above shows the effect if research is published claiming that eating pizza is healthy?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
E)  Both Figure A and Figure D

Question 17

Assume a competitive market is in equilibrium.There is an increase in demand,but no change in supply.As a result the equilibrium price ________,and the equilibrium quantity ________.

Accepted Answer

A)  rises; increases 
B)  rises; does not change 
C)  falls; does not change 
D)  falls; decreases 
E)  falls; increases

Question 18

Other things remaining the same,the quantity of a good or service demanded will increase if the price of the good or service

Accepted Answer

A)  rises. 
B)  falls. 
C)  does not change. 
D)  rises or does not change. 
E)  rises or falls.

Question 19

Changes in which of the following factors do  NOT  shift the demand curve?

Accepted Answer

A)  the price of the good 
B)  buyers' incomes 
C)  the price of a substitute good 
D)  the number of buyers 
E)  the price expected in the future

Question 20

Which of the following increases the supply of gasoline?

Accepted Answer

A)  a situation where the quantity of gasoline demanded exceeds the quantity supplied 
B)  an increase in the price of gasoline 
C)  a decrease in the price of a resource used to produce gasoline, such as crude oil 
D)  a decrease in the demand for gas-guzzling, sport utility vehicles 
E)  an increase in income if gas-guzzling, sport utility vehicles are a normal good

Exam 4: Demand and Supply