Question 1

Wheat is used to produce cereal. When the price of wheat falls, the

Accepted Answer

A)  supply of wheat decreases. 
B)  demand for wheat increases. 
C)  demand for cereal increases. 
D)  demand for cereal decreases. 
E)  supply of cereal increases. 
A)  supply of wheat decreases. 
B)  demand for wheat increases. 
C)  demand for cereal increases. 
D)  demand for cereal decreases. 
E)  supply of cereal increases.

Question 2

An increase in the number of pineapple growers results in

Accepted Answer

A)  no change in the supply of pineapples and a movement along the supply curve of pineapples. 
B)  an increase in the supply of pineapples and a leftward shift in the supply curve of pineapples. 
C)  an increase in the supply of pineapples and a rightward shift in the supply curve of pineapples. 
D)  an increase in the quantity of pineapples supplied and no shift in the supply curve of pineapples. 
E)  None of the above answers is correct. 
A)  no change in the supply of pineapples and a movement along the supply curve of pineapples. 
B)  an increase in the supply of pineapples and a leftward shift in the supply curve of pineapples. 
C)  an increase in the supply of pineapples and a rightward shift in the supply curve of pineapples. 
D)  an increase in the quantity of pineapples supplied and no shift in the supply curve of pineapples. 
E)  None of the above answers is correct.

Question 3

In the above figure, the shift in the demand curve from D to D1 can be the result of

Accepted Answer

A)  an increase in the price of soft drinks, a complement to pizza. 
B)  an increase in the price of pizza. 
C)  a change in quantity demanded. 
D)  an increase in the price of a sub sandwich, a substitute for pizza. 
E)  a decrease in income if pizza is a normal good. 
A)  an increase in the price of soft drinks, a complement to pizza. 
B)  an increase in the price of pizza. 
C)  a change in quantity demanded. 
D)  an increase in the price of a sub sandwich, a substitute for pizza. 
E)  a decrease in income if pizza is a normal good.

Question 4

A technological improvement lowers the cost of producing corn. As a result, the price of a kilogram of corn ________ and the quantity of corn ________.

Accepted Answer

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

Question 5

Which of the following shifts the demand curve for movies leftward?

Accepted Answer

A)  An increase in incomes, assuming movies are a normal good. 
B)  A decrease in the price of Netflix, a substitute for movies. 
C)  An increase in the price of movie tickets. 
D)  A decrease in the price of movie tickets. 
E)  An increase in movie star salaries. 
A)  An increase in incomes, assuming movies are a normal good. 
B)  A decrease in the price of Netflix, a substitute for movies. 
C)  An increase in the price of movie tickets. 
D)  A decrease in the price of movie tickets. 
E)  An increase in movie star salaries.

Question 6

A scooter uses much less petrol than a car. Suppose the price of petrol rises substantially. Which of the figures above best illustrates how this change affects the demand curve for scooters?

Accepted Answer

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

Question 7

A normal good is DEFINED as a good

Accepted Answer

A)  for which demand increases when the price of a complement falls. 
B)  for which demand increases when income increases. 
C)  with a downward-sloping demand curve. 
D)  for which demand increases when the number of demanders increases. 
E)  for which demand increases when the price of a substitute rises. 
A)  for which demand increases when the price of a complement falls. 
B)  for which demand increases when income increases. 
C)  with a downward-sloping demand curve. 
D)  for which demand increases when the number of demanders increases. 
E)  for which demand increases when the price of a substitute rises.

Question 8

A surplus of cardboard boxes means that

Accepted Answer

A)  at the current price of a cardboard box, the quantity demanded equals the quantity supplied and the price will fall to restore the equilibrium. 
B)  the current price of a cardboard box is less than the equilibrium price. 
C)  at the current price of a cardboard box, the quantity demanded exceeds the quantity supplied. 
D)  at the current price of a cardboard box, the quantity demanded is less than the quantity supplied. 
E)  More information is needed to determine if the price of cardboard boxes is higher than, lower than or equal to the equilibrium price. 
A)  at the current price of a cardboard box, the quantity demanded equals the quantity supplied and the price will fall to restore the equilibrium. 
B)  the current price of a cardboard box is less than the equilibrium price. 
C)  at the current price of a cardboard box, the quantity demanded exceeds the quantity supplied. 
D)  at the current price of a cardboard box, the quantity demanded is less than the quantity supplied. 
E)  More information is needed to determine if the price of cardboard boxes is higher than, lower than or equal to the equilibrium price.

Question 9

A huge 50 per cent off sale on golf clubs is advertised for next week. What happens this week in the market for golf clubs?

Accepted Answer

A)  The supply of golf clubs increases. 
B)  The demand for golf clubs decreases. 
C)  The supply of golf clubs decreases. 
D)  The demand for golf clubs increases. 
E)  The demand for and the supply of golf clubs decreases. 
A)  The supply of golf clubs increases. 
B)  The demand for golf clubs decreases. 
C)  The supply of golf clubs decreases. 
D)  The demand for golf clubs increases. 
E)  The demand for and the supply of golf clubs decreases.

Question 10

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

Question 11

Petrol prices increase by 50 per cent and other things remain the same. As a result, there is

Accepted Answer

A)  an increase in the demand for petrol. 
B)  a decrease in the quantity of petrol demanded. 
C)  a decrease in the demand for petrol. 
D)  no change in the quantity of petrol demanded. 
E)  More information is needed to determine if the demand for petrol increases or decreases. 
A)  an increase in the demand for petrol. 
B)  a decrease in the quantity of petrol demanded. 
C)  a decrease in the demand for petrol. 
D)  no change in the quantity of petrol demanded. 
E)  More information is needed to determine if the demand for petrol increases or decreases.

Question 12

Which of the following increases the quantity supplied of compact discs, but does NOT increase the supply of compact discs?

Accepted Answer

A)  A decrease in the number of suppliers of compact discs. 
B)  An increase in the price of the resources used to produce compact discs. 
C)  New technology that lowers the cost of producing compact discs. 
D)  A decrease in the price of a compact disc. 
E)  An increase in the price of a compact disc. 
A)  A decrease in the number of suppliers of compact discs. 
B)  An increase in the price of the resources used to produce compact discs. 
C)  New technology that lowers the cost of producing compact discs. 
D)  A decrease in the price of a compact disc. 
E)  An increase in the price of a compact disc.

Question 13

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

Accepted Answer

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

Question 14

The above figure shows the market for pizza. The market is in equilibrium. Pizza and tacos are substitutes for consumers. The price of tacos falls. 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

The law of demand refers to how

Accepted Answer

A)  the price of the good changes when people's demand for the good changes. 
B)  demand changes when people's incomes change. 
C)  the quantity demanded changes when the demand for the good changes. 
D)  the quantity demanded changes when the price of the good changes. 
E)  demand changes when the prices of substitutes and complements change. 
A)  the price of the good changes when people's demand for the good changes. 
B)  demand changes when people's incomes change. 
C)  the quantity demanded changes when the demand for the good changes. 
D)  the quantity demanded changes when the price of the good changes. 
E)  demand changes when the prices of substitutes and complements change.

Question 16

Car insurance and cars are complements. If the price of car insurance increases, the

Accepted Answer

A)  demand for cars increases. 
B)  demand for cars decreases. 
C)  quantity of cars demanded increases. 
D)  quantity of cars demanded decreases. 
E)  More information is needed to determine if the demand for cars increases or decreases. 
A)  demand for cars increases. 
B)  demand for cars decreases. 
C)  quantity of cars demanded increases. 
D)  quantity of cars demanded decreases. 
E)  More information is needed to determine if the demand for cars increases or decreases.

Question 17

If a higher price for wheat decreases the quantity of corn being produced, which of the following describes what has occurred?

Accepted Answer

A)  The quantity of wheat supplied increased and quantity of corn supplied decreased. 
B)  The supply of wheat increased and the quantity of corn supplied decreased 
C)  The supply of wheat increased and the supply of corn decreased. 
D)  The supply of wheat decreased and the supply of corn decreased. 
E)  The quantity of wheat supplied increased and the supply of corn decreased. 
A)  The quantity of wheat supplied increased and quantity of corn supplied decreased. 
B)  The supply of wheat increased and the quantity of corn supplied decreased 
C)  The supply of wheat increased and the supply of corn decreased. 
D)  The supply of wheat decreased and the supply of corn decreased. 
E)  The quantity of wheat supplied increased and the supply of corn decreased.

Question 18

Which of the following increases the demand for a good?

Accepted Answer

A)  A rise in the price of a complement. 
B)  A decrease in the number of buyers. 
C)  The expectation that future income will be higher. 
D)  A fall in the price of a substitute. 
E)  An increase in income, assuming the good is an inferior good. 
A)  A rise in the price of a complement. 
B)  A decrease in the number of buyers. 
C)  The expectation that future income will be higher. 
D)  A fall in the price of a substitute. 
E)  An increase in income, assuming the good is an inferior good.

Question 19

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

Accepted Answer

A)  will remain the same. 
B)  will fall. 
C)  will rise. 
D)  might rise, fall or remain the same but more information is needed. 
E)  will rise if the magnitude of the effect on the buyers is larger than the magnitude of the effect on the sellers. 
A)  will remain the same. 
B)  will fall. 
C)  will rise. 
D)  might rise, fall or remain the same but more information is needed. 
E)  will rise if the magnitude of the effect on the buyers is larger than the magnitude of the effect on the sellers.

Question 20

Suppose that the price of flour used to produce bagels increases. Hence the equilibrium price of a bagel ________, and the equilibrium quantity ________.

Accepted Answer

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

Wheat is used to produce cereal. When the price of wheat falls, the

An increase in the number of pineapple growers results in

In the above figure, the shift in the demand curve from D to D1 can be the result of

A technological improvement lowers the cost of producing corn. As a result, the price of a kilogram of corn and the quantity of corn .

Which of the following shifts the demand curve for movies leftward?

A scooter uses much less petrol than a car. Suppose the price of petrol rises substantially. Which of the figures above best illustrates how this change affects the demand curve for scooters?

A normal good is DEFINED as a good

A surplus of cardboard boxes means that

A huge 50 per cent off sale on golf clubs is advertised for next week. What happens this week in the market for golf clubs?

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?

Petrol prices increase by 50 per cent and other things remain the same. As a result, there is

Which of the following increases the quantity supplied of compact discs, but does NOT increase the supply of compact discs?

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

The above figure shows the market for pizza. The market is in equilibrium. Pizza and tacos are substitutes for consumers. The price of tacos falls. What point represents the most likely new price and quantity?

The law of demand refers to how

Car insurance and cars are complements. If the price of car insurance increases, the

If a higher price for wheat decreases the quantity of corn being produced, which of the following describes what has occurred?

Which of the following increases the demand for a good?

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

Suppose that the price of flour used to produce bagels increases. Hence the equilibrium price of a bagel , and the equilibrium quantity .

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

Wheat is used to produce cereal. When the price of wheat falls, the

An increase in the number of pineapple growers results in

In the above figure, the shift in the demand curve from D to D1 can be the result of

A technological improvement lowers the cost of producing corn. As a result, the price of a kilogram of corn ________ and the quantity of corn ________.

Which of the following shifts the demand curve for movies leftward?

A scooter uses much less petrol than a car. Suppose the price of petrol rises substantially. Which of the figures above best illustrates how this change affects the demand curve for scooters?

A normal good is DEFINED as a good

A surplus of cardboard boxes means that

A huge 50 per cent off sale on golf clubs is advertised for next week. What happens this week in the market for golf clubs?

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?

Petrol prices increase by 50 per cent and other things remain the same. As a result, there is

Which of the following increases the quantity supplied of compact discs, but does NOT increase the supply of compact discs?

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

The above figure shows the market for pizza. The market is in equilibrium. Pizza and tacos are substitutes for consumers. The price of tacos falls. What point represents the most likely new price and quantity?

The law of demand refers to how

Car insurance and cars are complements. If the price of car insurance increases, the

If a higher price for wheat decreases the quantity of corn being produced, which of the following describes what has occurred?

Which of the following increases the demand for a good?

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

Suppose that the price of flour used to produce bagels increases. Hence the equilibrium price of a bagel ________, and the equilibrium quantity ________.

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

A technological improvement lowers the cost of producing corn. As a result, the price of a kilogram of corn and the quantity of corn .

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

Suppose that the price of flour used to produce bagels increases. Hence the equilibrium price of a bagel , and the equilibrium quantity .