Question 1

Suppose the current price of a kilogram of steak is $6 per kilogram and the equilibrium price is $9 per kilogram. What takes place?

Accepted Answer

A)  There is a shortage, so the price rises and quantity demanded increases. 
B)  There is a shortage, so the price rises and quantity demanded decreases. 
C)  There is a surplus, so the price falls and quantity demanded increases. 
D)  There is a shortage, so the price falls and quantity demanded increases. 
E)  There is a shortage, so the price falls and quantity demanded decreases. 
A)  There is a shortage, so the price rises and quantity demanded increases. 
B)  There is a shortage, so the price rises and quantity demanded decreases. 
C)  There is a surplus, so the price falls and quantity demanded increases. 
D)  There is a shortage, so the price falls and quantity demanded increases. 
E)  There is a shortage, so the price falls and quantity demanded decreases.

Question 2

Suppose the price of bread rises. This rise could be the result of

Accepted Answer

A)  an increase in the supply of bread. 
B)  a decrease in the demand for bread. 
C)  a decrease in the supply of bread. 
D)  Both answers A and C are correct. 
E)  Both answers B and C are correct. 
A)  an increase in the supply of bread. 
B)  a decrease in the demand for bread. 
C)  a decrease in the supply of bread. 
D)  Both answers A and C are correct. 
E)  Both answers B and C are correct.

Question 3

Which figure above shows the effect of a decrease in the number of pizza sellers?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
E)  Both Figure B and Figure C 
A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
E)  Both Figure B and Figure C

Question 4

In the above figure, the shift in the supply curve from S to S1 reflects

Accepted Answer

A)  an increase in the quantity of pizza supplied. 
B)  a decrease in the supply of pizza. 
C)  an increase in the supply of pizza. 
D)  a decrease in the quantity of pizza supplied. 
E)  None of the above answers is correct. 
A)  an increase in the quantity of pizza supplied. 
B)  a decrease in the supply of pizza. 
C)  an increase in the supply of pizza. 
D)  a decrease in the quantity of pizza supplied. 
E)  None of the above answers is correct.

Question 5

Scooters are a normal good and buyers' incomes decrease. Which of the figures above best illustrates how this change affects the demand curve for scooters?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
E)  None of the above answers is correct because the decrease in income will affect the supply curve NOT the demand curve. 
A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
E)  None of the above answers is correct because the decrease in income will affect the supply curve NOT the demand curve.

Question 6

The graph illustrates the demand for peanuts. Peanuts are a normal good because

Accepted Answer

A)  the demand curve shows that, if the price of peanuts rises, there is a movement along the demand curve to a lower quantity demanded. 
B)  peanuts have both substitutes and complements. 
C)  the demand for peanuts increases when the price of one of its substitutes rises. 
D)  the demand curve for peanuts slopes downward. 
E)  the demand for peanuts increases when income increases. 
A)  the demand curve shows that, if the price of peanuts rises, there is a movement along the demand curve to a lower quantity demanded. 
B)  peanuts have both substitutes and complements. 
C)  the demand for peanuts increases when the price of one of its substitutes rises. 
D)  the demand curve for peanuts slopes downward. 
E)  the demand for peanuts increases when income increases.

Question 7

In a recession, consumers have less income to spend. As a result, if dining out is a normal good, then which of the following would happen to the demand curve for dining out?

Accepted Answer

A)  The demand curve would shift rightward. 
B)  The demand curve would not shift but the price of dining out would fall. 
C)  The effect on the demand curve is unknown. 
D)  The demand curve would not shift but the price of dining out would rise. 
E)  The demand curve would shift leftward. 
A)  The demand curve would shift rightward. 
B)  The demand curve would not shift but the price of dining out would fall. 
C)  The effect on the demand curve is unknown. 
D)  The demand curve would not shift but the price of dining out would rise. 
E)  The demand curve would shift leftward.

Question 8

The demand for cat food decreases while the supply increases. The equilibrium price of cat food ________, and the equilibrium quantity ________.

Accepted Answer

A)  falls; perhaps changes but we can't say if it increases, decreases or stays the same 
B)  rises; perhaps changes but we can't say if it increases, decreases or stays the same 
C)  rises; decreases 
D)  does not change; increases 
E)  falls; increases 
A)  falls; perhaps changes but we can't say if it increases, decreases or stays the same 
B)  rises; perhaps changes but we can't say if it increases, decreases or stays the same 
C)  rises; decreases 
D)  does not change; increases 
E)  falls; increases

Question 9

Consider the market for smart phones. Which of the following shifts the demand curve leftward?

Accepted Answer

A)  An increase in the price of smart phones. 
B)  Studies showing that using smart phones can cause brain cancer. 
C)  A decrease in the quantity demanded of smart phones. 
D)  An increase in the services provided by smart phones, such as text messaging. 
E)  A decrease in the price of smart phones. 
A)  An increase in the price of smart phones. 
B)  Studies showing that using smart phones can cause brain cancer. 
C)  A decrease in the quantity demanded of smart phones. 
D)  An increase in the services provided by smart phones, such as text messaging. 
E)  A decrease in the price of smart phones.

Question 10

Suppose the equilibrium price of oranges is $2.00 per kilogram. If the actual price is above the equilibrium price, a

Accepted Answer

A)  surplus exists but nothing happens until either the demand or the supply changes. 
B)  surplus exists and the price rises to restore equilibrium. 
C)  shortage exists and the price rises to restore equilibrium. 
D)  surplus exists and the price falls to restore equilibrium. 
E)  shortage exists and the price falls to restore equilibrium. 
A)  surplus exists but nothing happens until either the demand or the supply changes. 
B)  surplus exists and the price rises to restore equilibrium. 
C)  shortage exists and the price rises to restore equilibrium. 
D)  surplus exists and the price falls to restore equilibrium. 
E)  shortage exists and the price falls to restore equilibrium.

Question 11

Market equilibrium i. can never occur because there are always people who want a good but cannot afford it.
Ii) occurs at the intersection of the supply and demand curves.
Iii) is the point where the price equals the quantity.

Accepted Answer

A)  i and ii 
B)  ii and iii 
C)  ii only 
D)  iii only 
E)  i only 
A)  i and ii 
B)  ii and iii 
C)  ii only 
D)  iii only 
E)  i only

Question 12

The graph illustrates the supply of sweaters. As the technology used to produce sweaters improves, the

Accepted Answer

A)  quantity of sweaters supplied decreases. 
B)  quantity of sweaters supplied increases. 
C)  supply of sweaters decreases and the demand for sweaters does not change. 
D)  supply of sweaters increases AND the demand for sweaters increases. 
E)  supply of sweaters increases and the demand for sweaters does not change. 
A)  quantity of sweaters supplied decreases. 
B)  quantity of sweaters supplied increases. 
C)  supply of sweaters decreases and the demand for sweaters does not change. 
D)  supply of sweaters increases AND the demand for sweaters increases. 
E)  supply of sweaters increases and the demand for sweaters does not change.

Question 13

The law of supply reflects the fact that

Accepted Answer

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

Question 14

The above figure shows the market for pizza. The market is in equilibrium when the cheese used to produce pizza falls in price. What point represents the most likely new price and quantity?

Accepted Answer

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

Question 15

If both the supply and demand curves shift simultaneously, we can ALWAYS predict what will happen to

Accepted Answer

A)  both the price and the quantity. 
B)  either the price or the quantity, but not both. 
C)  only the quantity. 
D)  only the price. 
E)  neither the price nor the quantity. 
A)  both the price and the quantity. 
B)  either the price or the quantity, but not both. 
C)  only the quantity. 
D)  only the price. 
E)  neither the price nor the quantity.

Question 16

The price of cotton clothing falls. As a result,

Accepted Answer

A)  the quantity demanded of cotton clothing decreases. 
B)  the demand for cotton clothing increases. 
C)  the demand for cotton clothing decreases. 
D)  the quantity demanded of cotton clothing increases. 
E)  both the demand for cotton clothing increases AND the quantity demanded of cotton clothing increases. 
A)  the quantity demanded of cotton clothing decreases. 
B)  the demand for cotton clothing increases. 
C)  the demand for cotton clothing decreases. 
D)  the quantity demanded of cotton clothing increases. 
E)  both the demand for cotton clothing increases AND the quantity demanded of cotton clothing increases.

Question 17

If the demand for digital cameras increases when consumers' incomes rise, then digital cameras are

Accepted Answer

A)  an inferior good. 
B)  a normal good. 
C)  made using advanced technology. 
D)  a substitute for camcorders. 
E)  a complement to camcorders. 
A)  an inferior good. 
B)  a normal good. 
C)  made using advanced technology. 
D)  a substitute for camcorders. 
E)  a complement to camcorders.

Question 18

Assume a market is in equilibrium. There is an increase in supply, but no change in demand As a result the equilibrium price ________, and the equilibrium quantity ________.

Accepted Answer

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

Question 19

Suppose the demand curve for desktop computers shifts rightward and at the same time the supply curve shifts leftward. Which of the following could have caused these shifts?

Accepted Answer

A)  Consumers purchased more computers because of the Christmas season, and the labour costs of producing desktop computers decreased. 
B)  Desktop computers are a normal good and incomes increased, while the labour costs of producing personal computers increased. 
C)  The price of a laptop computer, a substitute for desktop computers, fell and the cost of producing desktop computers decreased. 
D)  Desktop computers are a normal good and incomes decreased, while the labour costs of producing personal computers increased. 
E)  Desktop computers are a normal good and incomes increased, while more firms entered the market. 
A)  Consumers purchased more computers because of the Christmas season, and the labour costs of producing desktop computers decreased. 
B)  Desktop computers are a normal good and incomes increased, while the labour costs of producing personal computers increased. 
C)  The price of a laptop computer, a substitute for desktop computers, fell and the cost of producing desktop computers decreased. 
D)  Desktop computers are a normal good and incomes decreased, while the labour costs of producing personal computers increased. 
E)  Desktop computers are a normal good and incomes increased, while more firms entered the market.

Question 20

The Motor Vehicle Builders' Union bargained for higher wages and more benefits for its members. As a result of the higher wages and increased benefits, i. the quantity of new cars supplied decreases.
Ii) the supply of new cars decreases.
Iii) the supply of new cars increases.

Accepted Answer

A)  only i 
B)  only ii 
C)  only iii 
D)  both i and ii 
E)  Neither i, ii nor iii is correct. 
A)  only i 
B)  only ii 
C)  only iii 
D)  both i and ii 
E)  Neither i, ii nor iii is correct.

Suppose the current price of a kilogram of steak is $6 per kilogram and the equilibrium price is $9 per kilogram. What takes place?

Suppose the price of bread rises. This rise could be the result of

Which figure above shows the effect of a decrease in the number of pizza sellers?

In the above figure, the shift in the supply curve from S to S1 reflects

Scooters are a normal good and buyers' incomes decrease. Which of the figures above best illustrates how this change affects the demand curve for scooters?

The graph illustrates the demand for peanuts. Peanuts are a normal good because

In a recession, consumers have less income to spend. As a result, if dining out is a normal good, then which of the following would happen to the demand curve for dining out?

The demand for cat food decreases while the supply increases. The equilibrium price of cat food , and the equilibrium quantity .

Consider the market for smart phones. Which of the following shifts the demand curve leftward?

Suppose the equilibrium price of oranges is $2.00 per kilogram. If the actual price is above the equilibrium price, a

Market equilibrium i. can never occur because there are always people who want a good but cannot afford it. Ii) occurs at the intersection of the supply and demand curves. Iii) is the point where the price equals the quantity.

The graph illustrates the supply of sweaters. As the technology used to produce sweaters improves, the

The law of supply reflects the fact that

The above figure shows the market for pizza. The market is in equilibrium when the cheese used to produce pizza falls in price. What point represents the most likely new price and quantity?

If both the supply and demand curves shift simultaneously, we can ALWAYS predict what will happen to

The price of cotton clothing falls. As a result,

If the demand for digital cameras increases when consumers' incomes rise, then digital cameras are

Assume a market is in equilibrium. There is an increase in supply, but no change in demand As a result the equilibrium price , and the equilibrium quantity .

Suppose the demand curve for desktop computers shifts rightward and at the same time the supply curve shifts leftward. Which of the following could have caused these shifts?

The Motor Vehicle Builders' Union bargained for higher wages and more benefits for its members. As a result of the higher wages and increased benefits, i. the quantity of new cars supplied decreases. Ii) the supply of new cars decreases. Iii) the supply of new cars increases.

Getting Started

The Australian and Global Economies

The Economic Problem

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 4: Demand and Supply

Suppose the current price of a kilogram of steak is $6 per kilogram and the equilibrium price is $9 per kilogram. What takes place?

Suppose the price of bread rises. This rise could be the result of

Which figure above shows the effect of a decrease in the number of pizza sellers?

In the above figure, the shift in the supply curve from S to S1 reflects

Scooters are a normal good and buyers' incomes decrease. Which of the figures above best illustrates how this change affects the demand curve for scooters?

The graph illustrates the demand for peanuts. Peanuts are a normal good because

In a recession, consumers have less income to spend. As a result, if dining out is a normal good, then which of the following would happen to the demand curve for dining out?

The demand for cat food decreases while the supply increases. The equilibrium price of cat food ________, and the equilibrium quantity ________.

Consider the market for smart phones. Which of the following shifts the demand curve leftward?

Suppose the equilibrium price of oranges is $2.00 per kilogram. If the actual price is above the equilibrium price, a

Market equilibrium i. can never occur because there are always people who want a good but cannot afford it. Ii) occurs at the intersection of the supply and demand curves. Iii) is the point where the price equals the quantity.

The graph illustrates the supply of sweaters. As the technology used to produce sweaters improves, the

The law of supply reflects the fact that

The above figure shows the market for pizza. The market is in equilibrium when the cheese used to produce pizza falls in price. What point represents the most likely new price and quantity?

If both the supply and demand curves shift simultaneously, we can ALWAYS predict what will happen to

The price of cotton clothing falls. As a result,

If the demand for digital cameras increases when consumers' incomes rise, then digital cameras are

Assume a market is in equilibrium. There is an increase in supply, but no change in demand As a result the equilibrium price ________, and the equilibrium quantity ________.

Suppose the demand curve for desktop computers shifts rightward and at the same time the supply curve shifts leftward. Which of the following could have caused these shifts?

The Motor Vehicle Builders' Union bargained for higher wages and more benefits for its members. As a result of the higher wages and increased benefits, i. the quantity of new cars supplied decreases. Ii) the supply of new cars decreases. Iii) the supply of new cars increases.

Getting Started

The Australian and Global Economies

The Economic Problem

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

The demand for cat food decreases while the supply increases. The equilibrium price of cat food , and the equilibrium quantity .

Assume a market is in equilibrium. There is an increase in supply, but no change in demand As a result the equilibrium price , and the equilibrium quantity .