Question 1

The supply curve for watches

Accepted Answer

A)  shows the supply of watches consumers are willing and able to buy at any given price. 
B)  is downward sloping. 
C)  shows the relationship between the quantity of watches firms are willing and able to supply and the quantity of watches consumers are willing and able to purchase. 
D)  shows the relationship between the price of watches and the quantity of watches supplied.

Question 2

Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity. What happens in the market for walnuts if the Centers for Disease Control and Prevention announces that consuming a half cup of walnuts each week helps to lower bad levels of cholesterol?

Accepted Answer

A)  D increases, S no change, P and Q increase 
B)  S increases, D no change, P decreases, Q increases 
C)  D and S increase, P and Q decrease 
D)  D no change, S increases, P decreases, Q decreases

Question 3

How does the decreasing use of traditional cameras affect the market for traditional camera film?

Accepted Answer

A)  The demand curve for traditional camera film shifts to the right. 
B)  The quantity of traditional camera film demanded decreases. 
C)  The quantity of traditional camera film demanded increases. 
D)  The demand curve for traditional camera film shifts to the left.

Question 4

Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for almonds. Which panel best describes what happens in this market when there is an increase in the productivity of almond harvesters?

Accepted Answer

A)  Panel (a) 
B)  Panel (b) 
C)  Panel (c) 
D)  Panel (d)

Question 5

Which of the following would cause a decrease in the supply of milk?

Accepted Answer

A)  an increase in the price of cookies (assuming that milk and cookies are complements) 
B)  a decrease in the price of milk 
C)  an increase the price of a product that producers sell instead of milk 
D)  an increase in the number of firms that produce milk

Question 6

Refer to Table 3-1. The table contains information about the corn market. Use the table to answer the following questions.
a. What are the equilibrium price and quantity of corn?
b. Suppose the prevailing price is $9 per bushel. Is there a shortage or a surplus in the market?
c. What is the quantity of the shortage or surplus?
d. How many bushels will be sold if the market price is $9 per bushel?
e. If the market price is $9 per bushel, what must happen to restore equilibrium in the market?
f. At what price will suppliers be able to sell 22 000 bushels of corn?
g. Suppose the market price is $21 per bushel. Is there a shortage or a surplus in the market?
h. What is the quantity of the shortage or surplus?
i. How many bushels will be sold if the market price is $21 per bushel?
j. If the market price is $21 per bushel, what must happen to restore equilibrium in the market?

Accepted Answer

The answer of Refer to Table 3-1. The table contains...

Question 7

-Refer to Figure 3-1. If the product represented is an inferior good, an increase in income would be represented by a movement from

Accepted Answer

A)  A to B. 
B)  B to A. 
C)  D1 to D2. 
D)  D2 to D1.

Question 8

A normal good is a good for which the demand increases as income decreases, holding everything else constant.

Accepted Answer

A) True 
 B)False

Question 9

-Refer to Figure 3-5. At a price of $5, the quantity sold

Accepted Answer

A)  is 2 units. 
B)  is 4 units. 
C)  is 6 units. 
D)  cannot be determined.

Question 10

Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left, but the supply curve shifts more than the demand curve. As a result,

Accepted Answer

A)  both the equilibrium price and quantity of MP3 players will decrease. 
B)  the equilibrium price of MP3 players will decrease; the equilibrium quantity will increase. 
C)  the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will decrease. 
D)  the equilibrium price of MP3 players will increase; the equilibrium quantity will decrease.

Question 11

How does the increasing use of MP3 players affect the market for compact discs?

Accepted Answer

A)  The demand curve for compact discs shifts to the right. 
B)  The supply curve for compact discs shifts to the left. 
C)  The supply curve for compact discs shifts to the right. 
D)  The demand curve for compact discs shifts to the left.

Question 12

If the price of grapefruit rises, the substitution effect due to the price change will cause

Accepted Answer

A)  a decrease in the demand for grapefruit. 
B)  a decrease in the demand for oranges, a substitute for grapefruit. 
C)  a decrease in the quantity demanded of grapefruit. 
D)  a decrease in the quantity supplied of grapefruit.

Question 13

Which of the following is the correct way to describe equilibrium in a market?

Accepted Answer

A)  At equilibrium, demand equals supply. 
B)  At equilibrium, quantity demanded equals quantity supplied. 
C)  At equilibrium, market forces no longer apply. 
D)  At equilibrium, scarcity is eliminated.

Question 14

-Refer to Figure 3-5. At a price of $10, the quantity sold

Accepted Answer

A)  is 2 units. 
B)  is 4 units. 
C)  is 6 units. 
D)  is 8 units.

Question 15

If the price of music downloads was to decrease, then

Accepted Answer

A)  the demand for MP3 players would decrease. 
B)  the demand for MP3 players would increase. 
C)  the supply of MP3 players would increase. 
D)  the quantity demanded of MP3 players would decrease.

Question 16

-Refer to Figure 3-1. A decrease in the price of a substitute good would be represented by a movement from

Accepted Answer

A)  A to B. 
B)  B to A. 
C)  D1 to D2. 
D)  D2 to D1.

Question 17

If the number of firms producing mouthwash increases and consumer preference for mouthwash increases, the equilibrium price of mouthwash will definitely increase.

Accepted Answer

A) True 
 B)False

Question 18

If consumers believe the price of iPads will decrease in the future, this will cause the demand for iPads to decrease now.

Accepted Answer

A) True 
 B)False

Question 19

-Refer to Figure 3-1. A decrease in the price of a complementary good would be represented by a movement from

Accepted Answer

A)  A to B. 
B)  B to A. 
C)  D1 to D2. 
D)  D2 to D1.

Question 20

-Refer to Figure 3-4. If the price is $10,

Accepted Answer

A)  there would be a surplus of 600 units. 
B)  there would be a shortage of 600 units. 
C)  there would be a surplus of 200 units. 
D)  there would be a shortage of 200 units.

Exam 3: Where Prices Come Frome : The Interaction of Demand and Supply

The supply curve for watches

Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity. What happens in the market for walnuts if the Centers for Disease Control and Prevention announces that consuming a half cup of walnuts each week helps to lower bad levels of cholesterol?

How does the decreasing use of traditional cameras affect the market for traditional camera film?

Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for almonds. Which panel best describes what happens in this market when there is an increase in the productivity of almond harvesters?

Which of the following would cause a decrease in the supply of milk?

-Refer to Figure 3-1. If the product represented is an inferior good, an increase in income would be represented by a movement from

A normal good is a good for which the demand increases as income decreases, holding everything else constant.

-Refer to Figure 3-5. At a price of $5, the quantity sold

Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left, but the supply curve shifts more than the demand curve. As a result,

How does the increasing use of MP3 players affect the market for compact discs?

If the price of grapefruit rises, the substitution effect due to the price change will cause

Which of the following is the correct way to describe equilibrium in a market?

-Refer to Figure 3-5. At a price of $10, the quantity sold

If the price of music downloads was to decrease, then

-Refer to Figure 3-1. A decrease in the price of a substitute good would be represented by a movement from

If the number of firms producing mouthwash increases and consumer preference for mouthwash increases, the equilibrium price of mouthwash will definitely increase.

If consumers believe the price of iPads will decrease in the future, this will cause the demand for iPads to decrease now.

-Refer to Figure 3-1. A decrease in the price of a complementary good would be represented by a movement from

-Refer to Figure 3-4. If the price is $10,