Question 1

Gasoline prices increase by 50 percent and other things remain the same.As a result,there is

Accepted Answer

A)  an increase in the demand for gasoline. 
B)  a decrease in the demand for gasoline. 
C)  no change in the quantity of gasoline demanded. 
D)  a decrease in the quantity of gasoline demanded. 
E)  More information is needed to determine if the demand for gasoline increases or decreases.

Question 2

-The above figure shows the market for laptops.Which of the following causes a movement from B to A?

Accepted Answer

A)  an increase in the cost of hard drives 
B)  an increase in the productivity of the workers manufacturing laptops 
C)  a decrease in the price of laptops 
D)  an increase in the price of laptops 
E)  an increase in the number of laptop manufactures and sellers

Question 3

If the demand for a good increases when people's incomes increase,

Accepted Answer

A)  the good is an inferior good. 
B)  the law of demand is violated. 
C)  the good's demand curve must be slope upward. 
D)  the good is a normal good. 
E)  the good is a substitute good for an inferior good.

Question 4

Suppose that the price of bread rises.This rise could be the result of

Accepted Answer

A)  a decrease in the supply of bread. 
B)  an increase in the supply of bread. 
C)  a decrease in the demand for bread. 
D)  Both answers A and C are correct. 
E)  Both answers B and C are correct.

Question 5

-The above figure shows the market for game day t-shirts.If the price of t-shirts is $8,then

Accepted Answer

A)  there is a shortage and the price of t-shirts will rise. 
B)  there is a surplus and the price of t-shirts will rise. 
C)  the market is in equilibrium. 
D)  there is a shortage and the price of t-shirts will fall. 
E)  there is a surplus and the price of t-shirts will fall.

Question 6

-The graph illustrates the market for bottled water.When the price exceeds the equilibrium price,the quantity demanded is ________ the quantity supplied and the price of the good will ________.

Accepted Answer

A)  less then; fall 
B)  greater than; rise 
C)  greater than; fall 
D)  less than; rise 
E)  equal to; fall

Question 7

The law of supply states that other things remaining the same,a decrease in the price of a kayak leads to

Accepted Answer

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

Question 8

-Pizza is a normal good.Which figure above shows the effect of a decrease in consumers' incomes?

Accepted Answer

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

Question 9

Kiwis and strawberries are substitutes for consumers.An increase in the price of a kiwi coupled with an increase in the number of strawberry growers ________ the equilibrium price of a pound of strawberries and ________ the equilibrium quantity of strawberries.

Accepted Answer

A)  raises; increases 
B)  probably changes, but more information is needed to determine if it rises or falls; increases 
C)  raises; probably changes, but more information is needed to determine if it increases or decreases 
D)  lowers; probably changes, but more information is needed to determine if it increases or decreases 
E)  lowers; increases

Question 10

The American Dairy Association starts a highly successful advertising campaign that makes most people want to drink more milk.As a result,

Accepted Answer

A)  the demand for milk increases. 
B)  the quantity demanded of milk increases. 
C)  the price of milk falls to encourage people to drink more milk. 
D)  the demand for milk is not affected. 
E)  the demand for milk decreases because the price of milk rises.

Question 11

The "quantity demanded" of any good or service is ________ during a specified time period and at a specified price.

Accepted Answer

A)  the amount people are willing to buy 
B)  the amount people are able to buy 
C)  the amount people are willing and able to offer 
D)  the amount people are willing and able to buy 
E)  the amount people are willing to buy because it is the amount sellers are willing to sell

Question 12

There are five hundred buyers in the market for cheese.If we know each individual's demand curves,to find the market demand,we must

Accepted Answer

A)  add the prices that each buyer will pay at every quantity. 
B)  add the quantities that each buyer will purchase at every price. 
C)  multiply the price times quantity for each buyer and then add the resulting products together. 
D)  average the price each buyer is willing to pay for each given quantity. 
E)  give up because there is no way to find the market demand.

Question 13

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 14

If both producers and consumers believe that a product's price will rise in the future,then at the present,the equilibrium price

Accepted Answer

A)  does not change. 
B)  rises. 
C)  falls. 
D)  might rise, fall, or not change, but the change can never be predicted. 
E)  might rise, fall, or not change depending on whether the effect from the producers is greater than or less than the effect from the consumers.

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

-Suppose Katie,Mark,and Bobby are the only consumers in the market for ice cream.Using the demand schedules in the table above,what is the market demand curve for ice cream?

Accepted Answer

The answer of 
-Suppose Katie,Mark,and Bobby are the only consumers...

Question 17

The quantity supplied of a good,service,or resource is ________ during a specified period and at a specified price.

Accepted Answer

A)  the amount that people are able to sell 
B)  the amount that people are willing to sell 
C)  the amount that people are able and willing to sell 
D)  the amount that people are willing and able to buy 
E)  the amount sold

Question 18

-The above figures show the market for HD televisions.If the technology used to produce these televisions advances so that productivity increases,which figure shows the effect of this change?

Accepted Answer

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

Question 19

Smart phones are becoming less expensive as new technology reduces the cost of production.In a supply and demand model,explain the effects of the technological innovations and their effect on the quantity of smart phones.

Accepted Answer

The answer of Smart phones are becoming less expensive as...

Question 20

When the demand for a good decreases,its equilibrium price ________ and equilibrium quantity ________.

Accepted Answer

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

Exam 4: Demand and Supply