Question 1

(Figure: Predicting Demand Shifts) Which factor would change demand from D0 to D1?

Accepted Answer

A)  an increase in consumer income if this is the demand for an inferior good 
B)  a change in consumer tastes so that consumers want less of the good 
C)  an increase in the price of a substitute good 
D)  an increase in the price of a complement 
A)  an increase in consumer income if this is the demand for an inferior good 
B)  a change in consumer tastes so that consumers want less of the good 
C)  an increase in the price of a substitute good 
D)  an increase in the price of a complement C

Question 2

The law of supply states that as the price of a good increases, quantity supplied decreases, ceteris paribus.

Accepted Answer

A) True 
 B)False  False

Question 3

When a consumer's income level is low, it is MORE likely the consumer will purchase ______ goods.

Accepted Answer

A)  complementary 
B)  substitute 
C)  normal 
D)  inferior 
A)  complementary 
B)  substitute 
C)  normal 
D)  inferior D

Question 4

Graphically, a change in demand is represented by a shift of the demand curve.

Accepted Answer

A) True 
 B)False

Question 5

The law of demand states that:

Accepted Answer

A)  the lower a product's price, the less of that product consumers will purchase during a given period. 
B)  the lower a product's price, the more of that product consumers will purchase during a given period. 
C)  higher prices will lead producers to offer less of their products for sale during a given period. 
D)  higher prices will lead producers to offer more of their products for sale during a given period. 
A)  the lower a product's price, the less of that product consumers will purchase during a given period. 
B)  the lower a product's price, the more of that product consumers will purchase during a given period. 
C)  higher prices will lead producers to offer less of their products for sale during a given period. 
D)  higher prices will lead producers to offer more of their products for sale during a given period.

Question 6

Supply is the maximum amount of a product that consumers are willing to purchase at various prices.

Accepted Answer

A) True 
 B)False

Question 7

In general, economic markets only contain legal activity conducted by incorporated businesses.

Accepted Answer

A) True 
 B)False

Question 8

Consider the demand for olive oil. What would happen to the demand for olive oil if a study confirming its beneficial health effects is published at the same time that an investigative report finds that much of the olive oil imported into the country is actually sunflower oil that has been dyed?

Accepted Answer

A)  We would expect demand to shift to the right. 
B)  We would expect demand to shift to the left. 
C)  We would expect demand not to change. 
D)  We would expect demand to shift in each direction, but the final position will depend on which event has the bigger impact on demand. 
A)  We would expect demand to shift to the right. 
B)  We would expect demand to shift to the left. 
C)  We would expect demand not to change. 
D)  We would expect demand to shift in each direction, but the final position will depend on which event has the bigger impact on demand.

Question 9

In a market when the price of a good changes:

Accepted Answer

A)  both quantity demanded and quantity supplied change for the good. 
B)  demand for the good changes. 
C)  both demand for and supply of the good change. 
D)  both the demand curve and the supply curve for the good shift. 
A)  both quantity demanded and quantity supplied change for the good. 
B)  demand for the good changes. 
C)  both demand for and supply of the good change. 
D)  both the demand curve and the supply curve for the good shift.

Question 10

(Figure: Interpreting Demand Curves) In the demand curve shown, an increase in price from $1 to $2 will:

Accepted Answer

A)  cause quantity demanded to rise from 20 units to 30 units. 
B)  cause quantity demanded to fall from 30 units to 20 units. 
C)  have no impact on sales. 
D)  make buyers angry. 
A)  cause quantity demanded to rise from 20 units to 30 units. 
B)  cause quantity demanded to fall from 30 units to 20 units. 
C)  have no impact on sales. 
D)  make buyers angry.

Question 11

If supply increases and at the same time demand decreases, equilibrium price:

Accepted Answer

A)  decreases and equilibrium quantity is indeterminate. 
B)  increases and equilibrium quantity decreases. 
C)  is indeterminate and equilibrium quantity increases. 
D)  is indeterminate and equilibrium quantity decreases. 
A)  decreases and equilibrium quantity is indeterminate. 
B)  increases and equilibrium quantity decreases. 
C)  is indeterminate and equilibrium quantity increases. 
D)  is indeterminate and equilibrium quantity decreases.

Question 12

If the price of gasoline increases from $4 to $4.50, ceteris paribus:

Accepted Answer

A)  people will buy more gasoline. 
B)  people will buy less gasoline. 
C)  the demand curve for gasoline will shift to the left. 
D)  the demand curve for gasoline will shift to the right. 
A)  people will buy more gasoline. 
B)  people will buy less gasoline. 
C)  the demand curve for gasoline will shift to the left. 
D)  the demand curve for gasoline will shift to the right.

Question 13

Butter is a substitute for margarine. If the price of margarine drops, we would expect to see:

Accepted Answer

A)  the price of butter rise and the quantity of butter fall. 
B)  the price of butter fall and the quantity of butter rise. 
C)  both the price of butter and the quantity of butter rise. 
D)  both the price of butter and quantity of butter fall. 
A)  the price of butter rise and the quantity of butter fall. 
B)  the price of butter fall and the quantity of butter rise. 
C)  both the price of butter and the quantity of butter rise. 
D)  both the price of butter and quantity of butter fall.

Question 14

Which statement is NOT correct about markets?

Accepted Answer

A)  They enable buyers and sellers to conduct transactions with one another. 
B)  They require a physical location for transactions to take place. 
C)  They use prices to communicate between buyers and sellers. 
D)  They can exist for single goods as well as for multiple products. 
A)  They enable buyers and sellers to conduct transactions with one another. 
B)  They require a physical location for transactions to take place. 
C)  They use prices to communicate between buyers and sellers. 
D)  They can exist for single goods as well as for multiple products.

Question 15

(Table) Using the data for the market for lattes in the table, at a price of $10: $$\begin{array} { l c c c c c c } 
\mathbf { P } & \mathbf { \$ 1 0 } & \mathbf { \$ 8 } & \mathbf { \$ 6 } & \mathbf { \$ 4 } & \mathbf { \$ 2 } & \mathbf { \$ 0 }  \
\mathbf { Q } _ { d } & 3 & 7 & 10 & 14 & 20 & 30 \
\boldsymbol { Q } _ { s } & 20 & 15 & 10 & 7 & 3 & 0
\end{array}$$

Accepted Answer

A)  there is a surplus of lattes. 
B)  there is a shortage of lattes. 
C)  the price of lattes will rise. 
D)  the price of lattes will stay the same. 
A)  there is a surplus of lattes. 
B)  there is a shortage of lattes. 
C)  the price of lattes will rise. 
D)  the price of lattes will stay the same.

Question 16

If sellers expect the price of their product to rise in the future, they are likely to increase their supply in the near future.

Accepted Answer

A) True 
 B)False

Question 17

The market economy is often called the price system because:

Accepted Answer

A)  prices are often not known until after the transaction is completed. 
B)  prices provide information for both buyers and sellers. 
C)  all prices must be publicized, by law. 
D)  prices become less important over time. 
A)  prices are often not known until after the transaction is completed. 
B)  prices provide information for both buyers and sellers. 
C)  all prices must be publicized, by law. 
D)  prices become less important over time.

Question 18

Amit is willing to pay $330 for a new game console. The game console sells for $200 and Amit purchases it for $330. The $330 is his willingness-to-pay.

Accepted Answer

A) True 
 B)False

Question 19

When the supply curve shifts out (to the right) and the demand curve shifts in (to the left), the equilibrium quantity will:

Accepted Answer

A)  increase. 
B)  decrease. 
C)  be indeterminate. 
D)  remain unchanged. 
A)  increase. 
B)  decrease. 
C)  be indeterminate. 
D)  remain unchanged.

Question 20

In the graph, an increase in quantity demanded would be represented by a change from point a to point _____, while a decrease in demand would be represented by a change from point d to point _____.

Accepted Answer

A)  b; b 
B)  b; c 
C)  c; b 
D)  c; c 
A)  b; b 
B)  b; c 
C)  c; b 
D)  c; c

(Figure: Predicting Demand Shifts) Which factor would change demand from D₀ to D₁?

The law of supply states that as the price of a good increases, quantity supplied decreases, ceteris paribus.

When a consumer's income level is low, it is MORE likely the consumer will purchase ______ goods.

Graphically, a change in demand is represented by a shift of the demand curve.

The law of demand states that:

Supply is the maximum amount of a product that consumers are willing to purchase at various prices.

In general, economic markets only contain legal activity conducted by incorporated businesses.

Consider the demand for olive oil. What would happen to the demand for olive oil if a study confirming its beneficial health effects is published at the same time that an investigative report finds that much of the olive oil imported into the country is actually sunflower oil that has been dyed?

In a market when the price of a good changes:

(Figure: Interpreting Demand Curves) In the demand curve shown, an increase in price from $1 to $2 will:

If supply increases and at the same time demand decreases, equilibrium price:

If the price of gasoline increases from $4 to $4.50, ceteris paribus:

Butter is a substitute for margarine. If the price of margarine drops, we would expect to see:

Which statement is NOT correct about markets?

(Table) Using the data for the market for lattes in the table, at a price of $10: 3 7 10 14 20 30 20 15 10 7 3 0

If sellers expect the price of their product to rise in the future, they are likely to increase their supply in the near future.

The market economy is often called the price system because:

Amit is willing to pay $330 for a new game console. The game console sells for $200 and Amit purchases it for $330. The $330 is his willingness-to-pay.

When the supply curve shifts out (to the right) and the demand curve shifts in (to the left), the equilibrium quantity will:

In the graph, an increase in quantity demanded would be represented by a change from point a to point _, while a decrease in demand would be represented by a change from point d to point _.

Exploring Economics

Production, Economic Growth, and Trade

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Aggregate Demand and Supply

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

Filters

Exam 3: Supply and Demand

(Figure: Predicting Demand Shifts) Which factor would change demand from D0 to D1?

The law of supply states that as the price of a good increases, quantity supplied decreases, ceteris paribus.

When a consumer's income level is low, it is MORE likely the consumer will purchase ______ goods.

Graphically, a change in demand is represented by a shift of the demand curve.

The law of demand states that:

Supply is the maximum amount of a product that consumers are willing to purchase at various prices.

In general, economic markets only contain legal activity conducted by incorporated businesses.

Consider the demand for olive oil. What would happen to the demand for olive oil if a study confirming its beneficial health effects is published at the same time that an investigative report finds that much of the olive oil imported into the country is actually sunflower oil that has been dyed?

In a market when the price of a good changes:

(Figure: Interpreting Demand Curves) In the demand curve shown, an increase in price from $1 to $2 will:

If supply increases and at the same time demand decreases, equilibrium price:

If the price of gasoline increases from $4 to $4.50, ceteris paribus:

Butter is a substitute for margarine. If the price of margarine drops, we would expect to see:

Which statement is NOT correct about markets?

(Table) Using the data for the market for lattes in the table, at a price of $10: 3 7 10 14 20 30 20 15 10 7 3 0

If sellers expect the price of their product to rise in the future, they are likely to increase their supply in the near future.

The market economy is often called the price system because:

Amit is willing to pay $330 for a new game console. The game console sells for $200 and Amit purchases it for $330. The $330 is his willingness-to-pay.

When the supply curve shifts out (to the right) and the demand curve shifts in (to the left), the equilibrium quantity will:

In the graph, an increase in quantity demanded would be represented by a change from point a to point _____, while a decrease in demand would be represented by a change from point d to point _____.

Exploring Economics

Production, Economic Growth, and Trade

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Aggregate Demand and Supply

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

Filters

(Figure: Predicting Demand Shifts) Which factor would change demand from D₀ to D₁?

In the graph, an increase in quantity demanded would be represented by a change from point a to point _, while a decrease in demand would be represented by a change from point d to point _.