Question 1

If the price of a product is expected to increase in the future,the supply today will increase.

Accepted Answer

A) True 
 B)False

Question 2

When Toyota introduced its 2010 Prius,it announced that the average retail price of the 2010 model would be lower than the average retail price was for the equivalent 2009 model.Which of the following would explain the price differential?

Accepted Answer

A) The demand for the Prius had increased,and the supply of the Prius remained unchanged. 
B) The supply of the Prius had decreased,and the demand for the Prius remained unchanged. 
C) The demand for the Prius had decreased,and the supply of the Prius had increased. 
D) The demand for the Prius had increased,and the supply of the Prius had decreased.

Question 3

Figure 3-4 
-Refer to Figure 3-4.At a price of $25,how many units will be supplied?

Accepted Answer

A) 400 
B) 500 
C) 600 
D) 800

Question 4

Suppose a positive technological change in the production of disease-resistant corn caused the price of corn to fall.Holding everything else constant,how would this affect the market for wheat (a substitute for corn)?

Accepted Answer

A) The supply of wheat would increase and the equilibrium price of wheat would decrease. 
B) The demand for wheat would decrease and the equilibrium price of wheat would decrease. 
C) The demand for wheat would increase because consumers could afford to buy more wheat and corn. 
D) The demand for wheat would decrease and the equilibrium price of wheat would increase.

Question 5

In recent years the cost of producing wines in the U.S.has increased largely due to rising rents for vineyards.At the same time,more and more Americans prefer wine over beer.Which of the following best explains the effect of these events in the wine market?

Accepted Answer

A) The supply curve has shifted to the left and the demand curve has shifted to the right.As a result there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price. 
B) Both the supply and demand curves have shifted to the right.As a result,there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity. 
C) Both the supply and demand curves have shifted to the right.As a result,there has been an increase in both the equilibrium price and the equilibrium quantity. 
D) The supply curve has shifted to the left and the demand curve has shifted to the right.As a result,there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity.

Question 6

Figure 3-3 
-Refer to Figure 3-3.The figure above shows the supply and demand curves for two markets: the market for original Michelangelo sculptures and the market for Ray Ban sunglasses.Which graph most likely represents which market?

Accepted Answer

A) Graph B represents the market for original Michelangelo sculptures and Graph A represents the market for Ray Ban sunglasses. 
B) Graph A represents the market for original Michelangelo sculptures and Graph B represents the market for Ray Ban sunglasses. 
C) Graph A represents both the market for original Michelangelo sculptures and Ray Ban sunglasses. 
D) Graph B represents both the market for original Michelangelo sculptures and Ray Ban sunglasses.

Question 7

If in the market for apples the supply has decreased,then

Accepted Answer

A) the supply curve for apples has shifted to the right. 
B) there has been a movement upwards along the supply curve for apples. 
C) the supply curve for apples has shifted to the left. 
D) there has been a movement downwards along the supply curve for apples.

Question 8

What are the five most important variables that shift the market supply curve?

Accepted Answer

The answer of What are the five most important variables...

Question 9

Table 3-1
 
-Refer to Table 3-1.The table above shows the demand schedules for Kona coffee of two individuals (Luke and Ravi)and the rest of the market.At a price of $6,the quantity demanded in the market would be

Accepted Answer

A) 36 lbs. 
B) 68 lbs. 
C) 89 lbs. 
D) 123 lbs.

Question 10

The popularity of digital cameras has enticed large discount stores like Wal-Mart and Costco to offer digital photo printing services.How does this affect the digital photo printing market?

Accepted Answer

A) The demand curve for digital photo printing services shifts to the right. 
B) The demand curve for digital photo printing services shifts to the left. 
C) The supply curve for digital photo printing services shifts to the right. 
D) The supply curve for digital photo printing services shifts to the left.

Question 11

Figure 3-1 
-Refer to Figure 3-1.If the product represented is an inferior good,a decrease 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 12

Figure 3-4 
-Refer to Figure 3-4.If the current market price is $25,the market will achieve equilibrium by

Accepted Answer

A) a price increase,increasing the supply and decreasing the demand. 
B) a price decrease,decreasing the supply and increasing the demand. 
C) a price decrease,decreasing the quantity supplied and increasing the quantity demanded. 
D) a price increase,increasing the quantity supplied and decreasing the quantity demanded.

Question 13

A decrease in the price of pork will result in

Accepted Answer

A) a smaller quantity of pork supplied. 
B) a larger quantity of pork supplied. 
C) a decrease in the demand for pork. 
D) an increase in the supply of pork.

Question 14

An inferior good is a good for which the quantity demanded increases as the price decreases,holding everything else constant.

Accepted Answer

A) True 
 B)False

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

If the price of a product is expected to increase in the future,the supply today will increase.

When Toyota introduced its 2010 Prius,it announced that the average retail price of the 2010 model would be lower than the average retail price was for the equivalent 2009 model.Which of the following would explain the price differential?

Figure 3-4 -Refer to Figure 3-4.At a price of $25,how many units will be supplied?

Suppose a positive technological change in the production of disease-resistant corn caused the price of corn to fall.Holding everything else constant,how would this affect the market for wheat (a substitute for corn) ?

In recent years the cost of producing wines in the U.S.has increased largely due to rising rents for vineyards.At the same time,more and more Americans prefer wine over beer.Which of the following best explains the effect of these events in the wine market?

Figure 3-3 -Refer to Figure 3-3.The figure above shows the supply and demand curves for two markets: the market for original Michelangelo sculptures and the market for Ray Ban sunglasses.Which graph most likely represents which market?

If in the market for apples the supply has decreased,then

What are the five most important variables that shift the market supply curve?

Table 3-1 -Refer to Table 3-1.The table above shows the demand schedules for Kona coffee of two individuals (Luke and Ravi) and the rest of the market.At a price of $6,the quantity demanded in the market would be

The popularity of digital cameras has enticed large discount stores like Wal-Mart and Costco to offer digital photo printing services.How does this affect the digital photo printing market?

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

Figure 3-4 -Refer to Figure 3-4.If the current market price is $25,the market will achieve equilibrium by

A decrease in the price of pork will result in

An inferior good is a good for which the quantity demanded increases as the price decreases,holding everything else constant.