Question 1

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

Accepted Answer

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

Question 2

You are just about to finish college and are about to start a high paying job. Because of this new job, what is the most likely outcome in the market for cars?

Accepted Answer

A)  Your demand for cars will decrease.
B)  The market supply of cars will increase.
C)  Your demand for cars will increase.
D)  The market supply of cars will decrease.
E)  The demand and the supply for cars will decrease. C

Question 3

A decrease in the price of a complement in production leads to

Accepted Answer

A)  a decrease in the supply of the good in question.
B)  an increase in the supply of the good in question.
C)  no change in the supply of the good in question.
D)  a decrease in the quantity supplied of the good in question.
E)  an increase in the supply of the good in question and a decrease in the quantity supplied of the good in question. A

Question 4

-The figure above shows the market for iPods. Which of the following creates a movement from point A to point B?

Accepted Answer

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

Question 5

The number of people looking to buy ceiling fan buyers increases, so there is an increase in the

Accepted Answer

A)  quantity of ceiling fans demanded and a surplus of ceiling fans.
B)  demand for ceiling fans and a rise in the price of a ceiling fan.
C)  demand for ceiling fans and a surplus of ceiling fans.
D)  supply of ceiling fans and no change in the price of a ceiling fan.
E)  demand for ceiling fans and in the supply of ceiling fans.

Question 6

-In the above figure, the movement from point a to point b reflects

Accepted Answer

A)  a decrease in the price of pizza.
B)  an increase in the demand for pizza.
C)  an increase in the number of people who eat pizza.
D)  an increase in the price of the tomato sauce used to produce pizza.
E)  a decrease in the number of firms producing pizza.

Question 7

What are substitutes in production?

Accepted Answer

The answer of What are substitutes in production?...

Question 8

What is the effect on the price and quantity of a product if both the demand and supply simultaneously increase?

Accepted Answer

The answer of What is the effect on the price...

Question 9

Soft drinks are a normal good. Draw a graph showing the effect of an increase in income on the demand for soft drinks.

Accepted Answer

The answer of Soft drinks are a normal good. Draw...

Question 10

-The figure above shows the market for iPods. Which of the following shifts the demand curve from D₀ to D₁?

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)  an increase in people's incomes

Question 11

Suppose that the number of companies selling computer software decreases. How does this change affect the supply of computer software and the supply curve of computer software?

Accepted Answer

The answer of Suppose that the number of companies selling...

Question 12

Which of the following is correct?
I. A surplus puts downward pressure on the price of a good.
Ii. A shortage puts upward pressure on the price of a good.
Iii. There is no surplus or shortage at equilibrium.

Accepted Answer

A)  i and ii
B)  i and iii
C)  ii and iii
D)  i, ii, and iii
E)  only iii

Question 13

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 14

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 15

Because of the high cost of fuel, railroads such as Union Pacific Corp and CSX Corp have increased the price they charge to haul freight. This change means that the

Accepted Answer

A)  demand curve for hauling freight has shifted leftward.
B)  supply curve for hauling freight has shifted leftward.
C)  demand curve for hauling freight has shifted rightward.
D)  supply curve for hauling freight has shifted rightward.
E)  neither the supply curve nor the demand curve for hauling freight has shifted; the only change is that the price is higher.

Question 16

-The graph illustrates the demand for peanuts. Peanuts are a normal good because the

Accepted Answer

A)  demand curve for peanuts slopes downward.
B)  demand for peanuts increases when income increases.
C)  demand for peanuts increases when the price of one of its substitutes rises.
D)  peanuts have both substitutes and complements.
E)  demand curve shows that if the price of peanuts rises, there is a movement along the demand curve to a lower quantity demanded.

Question 17

If the price of carrots is below the equilibrium price, the

Accepted Answer

A)  quantity demanded of carrots exceeds the quantity supplied and a surplus exists.
B)  quantity supplied of carrots exceeds the quantity demanded and a surplus exists.
C)  quantity demanded of carrots exceeds the quantity supplied and a shortage exists.
D)  quantity supplied of carrots exceeds the quantity demanded and a shortage exists.
E)  quantity supplied of carrots equals the quantity demanded.

Question 18

Which of the following increases the supply of a good and shifts its supply curve rightward?

Accepted Answer

A)  a smaller number of producers
B)  a higher wage paid to workers in the industry
C)  a technological advance in how the good is produced
D)  an increase in the cost of the resources used to produce the good
E)  an increase in the price of the good

Question 19

Consider the market for bread. If the price of wheat rises, then the

Accepted Answer

A)  demand curve for bread shifts leftward.
B)  supply curve of bread shifts leftward.
C)  price of bread falls.
D)  equilibrium quantity of bread increases.
E)  demand curve for bread shifts rightward.

Question 20

A competitive market is in equilibrium. Then there is a decrease in demand and a decrease in supply. The equilibrium price ________, and the equilibrium quantity ________.

Accepted Answer

A)  rises; decreases
B)  perhaps changes but we can't say if it rises, falls, or stays the same; decreases
C)  falls; increases
D)  perhaps changes but we can't say if it rises, falls, or stays the same; increases
E)  rises; increases

Exam 4: Demand and Supply