Question 1

Which of the following will not cause the demand for product K to change?

Accepted Answer

A)  a change in the price of close-substitute product J 
B)  an increase in incomes of buyers of product K 
C)  a change in the price of product K 
D)  a change in consumer tastes for product K

Question 2

The law of demand states that if price increases, other things being equal, the demand for the product will decrease.

Accepted Answer

A) True 
 B)False

Question 3

Two goods are considered to be related goods by many buyers: if the price of one increases, buyers buy more of the other. This indicates that the two goods are complements.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following factors will decrease the current demand for a product?

Accepted Answer

A)  an expected increase in the future price of the product 
B)  a decrease in the current price of a substitute product 
C)  a decrease in the current price of a complementary product 
D)  an increase in the current price of a substitute product

Question 5

Buyers and sellers do not have to deal face-to-face with one another in markets.

Accepted Answer

A) True 
 B)False

Question 6

At the equilibrium price,

Accepted Answer

A)  quantity supplied may exceed quantity demanded or vice versa. 
B)  there are no pressures on price to either rise or fall. 
C)  there are forces that cause price to rise. 
D)  there are forces that cause price to fall.

Question 7

If X is a normal good, a rise in money income will shift the

Accepted Answer

A)  supply curve for X to the left. 
B)  supply curve for X to the right. 
C)  demand curve for X to the left. 
D)  demand curve for X to the right.

Question 8

Suppose an excise tax is imposed on product X. We expect this tax to

Accepted Answer

A)  increase the demand for complementary good Y and decrease the demand for substitute product Z. 
B)  decrease the demand for complementary good Y and increase the demand for substitute product Z. 
C)  increase the demands for both complementary good Y and substitute product Z. 
D)  decrease the demands for both complementary good Y and substitute product Z.

Question 9

An improvement in production technology will

Accepted Answer

A)  increase equilibrium price. 
B)  shift the supply curve to the left. 
C)  shift the supply curve to the right. 
D)  shift the demand curve to the left.

Question 10

By an "increase in demand," economists mean that

Accepted Answer

A)  product price has fallen, so consumers move down to a new point on the demand curve. 
B)  the quantity demanded at each price in a set of prices is greater. 
C)  the quantity demanded at each price in a set of prices is smaller. 
D)  a leftward shift of the demand curve has occurred.

Question 11

(Advanced analysis) The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. If demand changes from P = 100 - 2Q to P = 130 - Q, the new equilibrium quantity is

Accepted Answer

A)  15. 
B)  20. 
C)  24. 
D)  32.

Question 12

If the government subsidizes the car makers in the production of cars, then the supply of steel increases.

Accepted Answer

A) True 
 B)False

Question 13

A headline reads "Perfect Weather Brings Record-High Coffee Harvest." This situation would lead to a(n)

Accepted Answer

A)  increase in the price and in the quantity purchased of coffee. 
B)  decrease in the price and in the quantity purchased of coffee. 
C)  increase in the price and a decrease in the quantity purchased of coffee. 
D)  decrease in the price and an increase in quantity purchased of coffee.

Question 14

An increase in the price of digital cameras will result in a(n)

Accepted Answer

A)  shift of the demand curve for digital cameras to the left. 
B)  decrease in the demand for digital cameras. 
C)  shift of the demand curve for digital cameras to the right. 
D)  movement up and to the left along the demand curve for digital cameras.

Question 15

Attaining "allocative efficiency" means that

Accepted Answer

A)  the law of increasing opportunity costs has reached a maximum. 
B)  the least costly methods are being used to produce a product. 
C)  resources are being devoted to the production of products most desired by society. 
D)  the gap between marginal benefits and marginal costs of the product is biggest.

Question 16

Answer the question based on the following supply and demand schedules in units per week for a product.  If the government introduced a guaranteed price floor of $40 and agreed to purchase surplus output, then the government's total support payments to producers would be

Accepted Answer

A)  $3,000 per week. 
B)  $3,500 per week. 
C)  $4,000 per week. 
D)  $2,500 per week.

Question 17

Assuming conventional supply and demand curves, changes in the determinants of both supply and demand will generally

Accepted Answer

A)  alter both equilibrium price and quantity. 
B)  alter equilibrium quantity but not equilibrium price. 
C)  alter equilibrium price but not equilibrium quantity. 
D)  have no effect on equilibrium price or quantity.

Question 18

Surpluses drive market prices up; shortages drive them down.

Accepted Answer

A) True 
 B)False

Question 19

If there is a shortage of product X, and the price is free to change,

Accepted Answer

A)  fewer resources will be allocated to the production of this good. 
B)  the price of the product will rise. 
C)  the price of the product will decline. 
D)  the supply curve will shift to the left and the demand curve to the right, eliminating the shortage.

Question 20

If an effective ceiling price is placed on hamburgers, then

Accepted Answer

A)  the quantity demanded will exceed the quantity supplied. 
B)  a black market for hamburgers may evolve. 
C)  the price charged will be below the market-clearing price. 
D)  All of these are likely outcomes.

Exam 3: Demand, Supply, and Market Equilibrium

Which of the following will not cause the demand for product K to change?

The law of demand states that if price increases, other things being equal, the demand for the product will decrease.

Two goods are considered to be related goods by many buyers: if the price of one increases, buyers buy more of the other. This indicates that the two goods are complements.

Which of the following factors will decrease the current demand for a product?

Buyers and sellers do not have to deal face-to-face with one another in markets.

At the equilibrium price,

If X is a normal good, a rise in money income will shift the

Suppose an excise tax is imposed on product X. We expect this tax to

An improvement in production technology will

By an "increase in demand," economists mean that

(Advanced analysis) The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. If demand changes from P = 100 - 2Q to P = 130 - Q, the new equilibrium quantity is

If the government subsidizes the car makers in the production of cars, then the supply of steel increases.

A headline reads "Perfect Weather Brings Record-High Coffee Harvest." This situation would lead to a(n)

An increase in the price of digital cameras will result in a(n)

Attaining "allocative efficiency" means that

Answer the question based on the following supply and demand schedules in units per week for a product. If the government introduced a guaranteed price floor of $40 and agreed to purchase surplus output, then the government's total support payments to producers would be

Assuming conventional supply and demand curves, changes in the determinants of both supply and demand will generally

Surpluses drive market prices up; shortages drive them down.

If there is a shortage of product X, and the price is free to change,

If an effective ceiling price is placed on hamburgers, then