Question 1

Consider the market for peanut butter.If there is a decrease in the price of deli turkey slices (a substitute in consumption for peanut butter)along with a decrease in the price of peanut brittle (a substitute in production for peanut butter),the

Accepted Answer

A) equilibrium price of peanut butter definitely falls. 
B) equilibrium quantity of peanut definitely decreases. 
C) equilibrium price of peanut butter might rise or fall. 
D) equilibrium quantity of peanut butter definitely increases. 
E) equilibrium price of peanut butter definitely rises.

Question 2

"Other things remaining the same,if the price of a good rises,the quantity supplied of that good increases." This sentence describes a

Accepted Answer

A) shift of a supply curve. 
B) shift of the price curve. 
C) movement along a supply curve. 
D) movement along the price curve. 
E) movement along the quantity curve.

Question 3

A change in the price of a good ________ its supply curve and ________ a movement along its supply curve.

Accepted Answer

A) shifts;causes 
B) shifts;does not cause 
C) does not shift;causes 
D) does not shift;does not cause 
E) None of the above because the change in the price might cause either a shift in the supply curve or a movement along the supply curve depending on the size of the change.

Question 4

List the factors that change supply and shift the supply curve.Tell what happens to supply and the supply curve when there is an increase in the factor.

Accepted Answer

The answer of List the factors that change supply and...

Question 5

-In the above figure,an increase in cost of the cheese used to produce pizza

Accepted Answer

A) shifts the supply curve from S to S1. 
B) shifts the supply curve from S to S2. 
C) results in a movement from point a to point b. 
D) results in a movement from point b to point a. 
E) has no effect.

Question 6

When personal computers were first produced,the price was very high.As time passed,the price of personal computers fell because

Accepted Answer

A) the demand for personal computers decreased. 
B) the initial price was too high and nobody bought personal computers. 
C) there were technological advances in the production of personal computers. 
D) people's incomes increased and personal computers are an inferior good. 
E) None of the above answers is correct.

Question 7

-According to the figure above,which of the following events will increase the quantity demanded of bottled water?

Accepted Answer

A) a fall in the price of soda 
B) a rise in the price of a fitness club membership 
C) an increase in the number of buyers of bottled water 
D) a fall in the price of bottled water 
E) a rise in the price of bottled water

Question 8

Candy makers accurately anticipate the increase in demand for candy for Halloween so that the supply of candy and demand for candy increase the same amount.As a result,the price of candy ________ and the quantity of candy ________.

Accepted Answer

A) rises;does not change 
B) falls;increases 
C) does not change;increases 
D) does not change;does not change 
E) rises;increases

Question 9

Suppose the equilibrium quantity of movie tickets is 1000.If the demand curve shifts ________,the equilibrium quantity of movie tickets will ________.

Accepted Answer

A) rightward;increase 
B) rightward;decrease 
C) leftward;increase 
D) rightward;not change 
E) leftward;not change

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

What leads to a decrease in the quantity demanded of a good or service?

Accepted Answer

The answer of What leads to a decrease in the...

Question 12

-The above figure shows the market for pizza.The market is in equilibrium when the wages paid pizza workers increases.What point represents the most likely new price and quantity?

Accepted Answer

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

Question 13

-The above figure illustrates the market for corn.If point "a" represents the original equilibrium and point "b" the new equilibrium,which of the following could have caused the change?

Accepted Answer

A) a decrease in the number of corn growers 
B) a decrease the price of wheat,a substitute in production for corn 
C) an increase in the cost of the seed used to grow the corn 
D) a decrease in buyers' incomes if corn is an inferior good 
E) an increased belief among buyers that corn is healthy

Question 14

The law of supply reflects the fact that

Accepted Answer

A) people buy more of a good when its price falls. 
B) suppliers have an incentive to use their resources in the way that brings the biggest return. 
C) higher prices are more attractive to consumers because they signal a higher quality product. 
D) businesses can sell more goods at lower prices. 
E) the demand curve is downward sloping.

Question 15

If the number of companies producing memory chips increases,then the

Accepted Answer

A) supply of memory chips does not change. 
B) supply of memory chips increases. 
C) supply of memory chips decreases. 
D) quantity of memory chips supplied increases. 
E) demand for memory chips increases.

Question 16

Consumers eat salsa with taco chips.The price of salsa rises.How does the increase in the price of salsa affect the demand for taco chips?

Accepted Answer

A) It decreases the demand for taco chips. 
B) It increases the demand for taco chips. 
C) It has no effect on the demand for taco chips. 
D) It will decrease the demand for taco chips only if taco chips are a normal good. 
E) It could increase,decrease,or have no effect on the demand for taco chips,but more information is needed to determine the impact.

Question 17

Suppose that tattoos gained immense popularity with retired people as well as college students.This gain in popularity best reflects which of the following influences on buying plans?

Accepted Answer

A) the price of a substitute good 
B) income 
C) expectations 
D) preferences 
E) the price of a complement good

Question 18

Two brands of water,Natural Water and Mountain Water,are close substitutes.If the price of Mountain Water decreases,the fall in price

Accepted Answer

A) shifts the demand curve for Natural Water rightward. 
B) shifts the demand curve for Natural Water leftward. 
C) increases the price of Natural Water. 
D) increases the demand for Mountain Water. 
E) More information is needed to determine if the demand curve for Natural Water shifts rightward or leftward.

Question 19

Which of the following results in a movement upward along the demand curve for movies?

Accepted Answer

A) an increase in the price of movie tickets 
B) a decrease in the price of movie tickets 
C) an increase in income,assuming that movies are a normal good 
D) a decrease in income,assuming that movies are a normal good 
E) a decrease in the price of NetFlix,a substitute for movies

Question 20

-The graph illustrates the market for British pounds,the currency of the United Kingdom.As the number of buyers of pounds increases and the number of sellers of pounds increases,the equilibrium price of a pound

Accepted Answer

A) will rise. 
B) will fall 
C) will remain the same. 
D) might rise,fall,or remain the same depending on whether the effect on buyers is larger than,less than,or the same as the effect on sellers. 
E) None of the above answers is correct.

Exam 4: Demand and Supply

Consider the market for peanut butter.If there is a decrease in the price of deli turkey slices (a substitute in consumption for peanut butter) along with a decrease in the price of peanut brittle (a substitute in production for peanut butter) ,the