Question 1

Which of the following statements about markets is false?

Accepted Answer

A)  markets are used to allocate resources in market systems
B)  markets can vary in geographical size
C)  prices are used to allocate goods in markets
D)  markets are used to allocate resources in centrally-planned socialist economic systems
E)  supply and demand explains how prices are set in competitive markets D

Question 2

-Which of the following statements about the market represented by Figure 3-9 is correct?

Accepted Answer

A)  At a price of $50.00,there is an excess supply of 11 million units.
B)  At a price of $50.00,there is an excess demand of 11 million units.
C)  At a price of $50.00,there is an excess supply of 15 million units.
D)  At a price of $50.00,there is an excess demand of 15 million units.
E)  At a price of $50.00,there is an excess demand of 25 million units. C

Question 3

Which of the following would increase the amount of an inferior good that buyers would like to purchase?

Accepted Answer

A)  an increase in buyers' incomes
B)  an increase in the price of a complement
C)  a decrease in the price of a substitute
D)  a decrease in buyers' incomes
E)  a decrease in its expected future price D

Question 4

-In the supply and demand for socks schedules in Figure 3-10,a price of $4 per pair results in

Accepted Answer

A)  equilibrium
B)  excess supply of 10 pairs
C)  excess demand of 5 pairs
D)  excess demand of 13 pairs
E)  excess demand of 10 pairs

Question 5

Which of the following would shift the demand curve for the normal good regular vanilla ice cream to the left?

Accepted Answer

A)  reports of health risks as a result of eating vanilla ice cream
B)  an increase in the price of frozen yogurt
C)  a decrease in the price of hot fudge sauce
D)  an increase in the price of regular vanilla ice cream
E)  an increase in buyers' incomes

Question 6

-Suppose that initially the market for DVDs is at point A on demand curve D₂ in Figure 3-3.If the price of cassette tapes decreased,

Accepted Answer

A)  the demand curve will shift to D₃
B)  equilibrium will move to point B on demand curve D₁
C)  equilibrium will move to point C on demand curve D₁
D)  there will be no change from point A
E)  the demand curve will shift to D₂

Question 7

When the price of gasoline is such that the quantity of gasoline demanded just equals the quantity of gasoline supplied,we say that the market is

Accepted Answer

A)  in equilibrium
B)  in distress
C)  in disequilibrium
D)  in need of change
E)  in dire straits

Question 8

A decrease in the price of a commodity results in a(n)

Accepted Answer

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

Question 9

If two goods are substitutes,then a(n)

Accepted Answer

A)  increase in the demand for one of them will cause its price to fall
B)  increase the supply of one of them will cause its price to rise
C)  increase in the price of one of them will cause the demand for the other to increase
D)  increase in the price of one of them will cause the supply of the other to increase
E)  decrease in the price of one of them will cause the demand for the other to increase

Question 10

The amount of a commodity that buyers in the market would like to purchase at a particular price is

Accepted Answer

A)  equilibrium
B)  quantity supplied
C)  quantity produced
D)  infinite
E)  quantity demanded

Question 11

An increase in supply results in a(n)

Accepted Answer

A)  increase in demand
B)  decrease in equilibrium quantity and an increase in equilibrium price
C)  decrease in equilibrium quantity and a decrease in equilibrium price
D)  decrease in equilibrium price and an increase in equilibrium quantity
E)  unfavorable shift in tastes and preferences

Question 12

When demand increases,

Accepted Answer

A)  consumers are willing and able to purchase more of the good at every price
B)  consumers are willing and able to purchase less of the good at every price
C)  there is a movement to the right along the demand curve
D)  this is referred to as a change in quantity demanded
E)  the price will tend to fall

Question 13

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 14

When a market is in equilibrium,

Accepted Answer

A)  quantity demanded equals quantity supplied
B)  quantity demanded exceeds quantity supplied
C)  the demand curve is identical to the supply curve
D)  the economy must be at a point along the production possibilities frontier
E)  the law of demand is equivalent to the law of supply

Question 15

-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 16

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 17

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 18

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 19

When households and businesses interact in product markets money

Accepted Answer

A)  is not exchanged
B)  is flowing toward businesses
C)  is flowing toward households
D)  is not used at all
E)  is flowing to both businesses and households

Question 20

An increase in the price of gasoline will lead to a(n)

Accepted Answer

A)  increase in the supply of gasoline
B)  decrease in the supply of gasoline
C)  no change in the supply of gasoline
D)  decrease in the quantity of gasoline supplied
E)  increase in the quantity of gasoline supplied

Exam 3: Supply and Demand