Question 1

If tablet computers are considered substitutes for e-readers, the decline in the price of tablet computers would, all else equal,

Accepted Answer

A)  increase the demand for e-readers. 
B)  decrease the demand for e-readers. 
C)  increase the quantity demanded for e-readers. 
D)  decrease the quantity demanded for e-readers.

Question 2

In February, market analysts predict that the price of titanium will rise in March. What happens in the titanium market in February, holding everything else constant?

Accepted Answer

A)  The supply curve shifts to the right. 
B)  The supply curve shifts to the left. 
C)  The quantity demanded and the quantity supplied of titanium increase. 
D)  The demand curve shifts to the left.

Question 3

In most countries in South America, the legal driving age is 18. If the legal driving age in the United States was raised from 16 to 18, how would this affect the market for new and used automobiles? What would happen to the equilibrium price and quantity of new and used automobiles?

Accepted Answer

The answer of In most countries in South America, the...

Question 4

Figure 3-2 
-Refer to Figure 3-2. An increase in the expected future price of the product would be represented by a movement from

Accepted Answer

A)  A to B. 
B)  B to A. 
C)  S1 to S2. 
D)  S2 to S1.

Question 5

Suppose that when the price of strawberries decreases, Simone increases her purchase of whipped cream. To Simone,

Accepted Answer

A)  strawberries and whipped cream are complements. 
B)  strawberries and whipped cream and substitutes. 
C)  strawberries and whipped cream are normal goods. 
D)  strawberries are a normal good and whipped cream is an inferior good.

Question 6

Figure 3-7 
-Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for women's clothing. Which panel best describes what happens in this market when the wages of seamstresses rise?

Accepted Answer

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

Question 7

A supply curve

Accepted Answer

A)  is a table that shows the relationship between the price of a product and the quantity of the product supplied. 
B)  is a curve that shows the relationship between the price of a product and the quantity of the product supplied. 
C)  is the relationship between the supply of a good and the cost of producing the good. 
D)  is a curve that shows the relationship between the price of a product and the quantity of the product that producers and consumers are willing to exchange.

Question 8

Figure 3-1 
-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 9

A(n) ________ is represented by a leftward shift of the demand curve while a(n) ________ is represented by a movement along a given demand curve.

Accepted Answer

A)  decrease in demand; increase in demand 
B)  decrease in demand; increase in quantity demanded 
C)  increase in demand; decrease in quantity demanded 
D)  decrease in quantity demanded; decrease in demand

Question 10

Figure 3-1 
-Refer to Figure 3-1. An increase in the price of a complement 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 11

A decrease in the demand for soft drinks due to changes in consumer tastes, accompanied by an increase in the supply of soft drinks as a result of reductions in input prices, will result in

Accepted Answer

A)  a decrease in the equilibrium quantity of soft drinks and no change in the equilibrium price. 
B)  a decrease in the equilibrium price of soft drinks and no change in the equilibrium quantity. 
C)  a decrease in the equilibrium price of soft drinks; the equilibrium quantity may increase or decrease. 
D)  an increase in the equilibrium quantity of soft drinks; the equilibrium price may increase or decrease.

Question 12

Table 3-5
 
-Refer to Table 3-5. 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 Table 3-5
 
-Refer to Table 3-5. The...

Question 13

Technological advancements have led to lower prices and an increase in the sale of color laser printers. How does this affect the market for traditional inkjet printers?

Accepted Answer

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

Question 14

The market for smart phones has grown rapidly over the past few years, due in part to the overwhelming success of the Apple iPhone. Following the successful launch of the iPhone in 2007, companies such as Samsung, HTC, and LG have all introduced products to compete with the iPhone. The smart phones introduced to compete with the iPhone would be considered

Accepted Answer

A)  complements to the iPhone. 
B)  substitutes for the iPhone. 
C)  inferior goods compared to the iPhone. 
D)  normal goods compared to the iPhone.

Question 15

Figure 3-8 
-What would happen in the market for laser eye surgery if insurance companies started to cover a portion of the price of voluntary procedures?

Accepted Answer

A)  Demand will increase, but this will not shift the supply curve. 
B)  Supply will increase, but this will not shift the demand curve. 
C)  Demand and supply will both increase. 
D)  Demand will increase and supply will decrease.

Question 16

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 17

In response to a surplus the market price of a good will fall; as the price falls, the quantity demanded will increase and quantity supplies will decrease until equilibrium is reached.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following would cause the equilibrium price of ketchup to increase and the equilibrium quantity of ketchup to decrease?

Accepted Answer

A)  a decrease in the price of tomatoes 
B)  an increase in the price of tomatoes 
C)  an increase in the price of mustard, a substitute for ketchup 
D)  an increase in the price of french fries, a complement for ketchup

Question 19

Figure 3-1 
-In January, buyers of gold expect that the price of gold will rise in February. What happens in the gold market in January, holding all else constant?

Accepted Answer

A)  The supply curve shifts to the right. 
B)  The demand curve shifts to the left. 
C)  The demand curve shifts to the right. 
D)  The quantity demanded increases.

Question 20

The phrase "demand has increased" means that

Accepted Answer

A)  a demand curve has shifted to the left. 
B)  there has been an upward movement along a demand curve. 
C)  there has been a downward movement along a demand curve. 
D)  a demand curve has shifted to the right.

Exam 3: Where Prices Come From: the Interaction of Demand and Supply

If tablet computers are considered substitutes for e-readers, the decline in the price of tablet computers would, all else equal,

In February, market analysts predict that the price of titanium will rise in March. What happens in the titanium market in February, holding everything else constant?

In most countries in South America, the legal driving age is 18. If the legal driving age in the United States was raised from 16 to 18, how would this affect the market for new and used automobiles? What would happen to the equilibrium price and quantity of new and used automobiles?

Figure 3-2 -Refer to Figure 3-2. An increase in the expected future price of the product would be represented by a movement from

Suppose that when the price of strawberries decreases, Simone increases her purchase of whipped cream. To Simone,

Figure 3-7 -Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for women's clothing. Which panel best describes what happens in this market when the wages of seamstresses rise?

A supply curve

Figure 3-1 -If the price of music downloads was to decrease, then

A(n) is represented by a leftward shift of the demand curve while a(n) is represented by a movement along a given demand curve.

Figure 3-1 -Refer to Figure 3-1. An increase in the price of a complement would be represented by a movement from