Question 1

An increase in population results in an increase in demand.

Accepted Answer

A) True 
 B)False

Question 2

If the demand for a product increases and the supply of the product does not change, equilibrium price and equilibrium quantity will both increase.

Accepted Answer

A) True 
 B)False

Question 3

Suppose that when the price of pickles decreases, Teddy increases his purchase of ketchup. To Teddy,

Accepted Answer

A)  pickles and ketchup are complements. 
B)  pickles and ketchup and substitutes. 
C)  pickles and ketchup are normal goods. 
D)  pickles are a normal good and ketchup is an inferior good. 
A)  pickles and ketchup are complements. 
B)  pickles and ketchup and substitutes. 
C)  pickles and ketchup are normal goods. 
D)  pickles are a normal good and ketchup is an inferior good.

Question 4

Which of the following would shift the supply curve for smartphones to the right?

Accepted Answer

A)  an increase in the price of a substitute in production 
B)  an increase in consumer income (assuming that all smartphones are normal goods) 
C)  a decrease in the number of firms that produce smartphones 
D)  a decrease in the price of an input used to produce smartphones 
A)  an increase in the price of a substitute in production 
B)  an increase in consumer income (assuming that all smartphones are normal goods) 
C)  a decrease in the number of firms that produce smartphones 
D)  a decrease in the price of an input used to produce smartphones

Question 5

Hurricane Katrina damaged a large portion of refining and pipeline capacity when it swept through the Gulf coast states in August 2005. As a result of this, many gasoline distributors were not able to maintain normal deliveries. At the pre-hurricane equilibrium price (i.e., at the initial equilibrium price), we would expect to see

Accepted Answer

A)  a surplus of gasoline. 
B)  the quantity demanded equal to the quantity supplied. 
C)  a shortage of gasoline. 
D)  an increase in the demand for gasoline. 
A)  a surplus of gasoline. 
B)  the quantity demanded equal to the quantity supplied. 
C)  a shortage of gasoline. 
D)  an increase in the demand for gasoline.

Question 6

Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall. Holding everything else constant, how would this affect the market for Blu-ray players (a complement to LCD televisions)?

Accepted Answer

A)  The supply of Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease. 
B)  The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would increase. 
C)  The demand for Blu-ray players would decrease because consumers could afford to buy fewer LCD televisions and Blu-ray players. 
D)  The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease. 
A)  The supply of Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease. 
B)  The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would increase. 
C)  The demand for Blu-ray players would decrease because consumers could afford to buy fewer LCD televisions and Blu-ray players. 
D)  The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease.

Question 7

Figure 3-7  
-Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for potatoes and that steak and potatoes are complements. What panel describes what happens in this market when the price of steak rises?

Accepted Answer

A)  Panel (a) 
B)  Panel (b) 
C)  Panel (c) 
D)  Panel (d) 
A)  Panel (a) 
B)  Panel (b) 
C)  Panel (c) 
D)  Panel (d)

Question 8

If the price of gasoline decreases, what will be the impact in the market for public transportation?

Accepted Answer

A)  The demand curve for public transportation shifts to the right. 
B)  The quantity of public transportation demanded increases. 
C)  The demand curve for public transportation shifts to the left. 
D)  The quantity of public transportation demanded decreases. 
A)  The demand curve for public transportation shifts to the right. 
B)  The quantity of public transportation demanded increases. 
C)  The demand curve for public transportation shifts to the left. 
D)  The quantity of public transportation demanded decreases.

Question 9

Which of the following statements is true?

Accepted Answer

A)  An increase in demand causes an increase in the equilibrium price; the increase in price causes supply to increase. 
B)  A decrease in supply causes the equilibrium price to rise; the increase in price then results in a decrease in quantity demanded. 
C)  If both demand and supply decrease, there must be a decrease in the equilibrium price; equilibrium quantity may either increase or decrease. 
D)  If demand increases and supply decreases one cannot determine if the equilibrium price will increase or decrease without knowing which change is greater. 
A)  An increase in demand causes an increase in the equilibrium price; the increase in price causes supply to increase. 
B)  A decrease in supply causes the equilibrium price to rise; the increase in price then results in a decrease in quantity demanded. 
C)  If both demand and supply decrease, there must be a decrease in the equilibrium price; equilibrium quantity may either increase or decrease. 
D)  If demand increases and supply decreases one cannot determine if the equilibrium price will increase or decrease without knowing which change is greater.

Question 10

Table 3-4
  
-Refer to Table 3-4. The table above shows the demand schedules for cashews of two individuals (Jordy and Amy) and the rest of the market. At a price of $6, the quantity demanded in the market would be

Accepted Answer

A)  87 lbs. 
B)  95 lbs. 
C)  103 lbs. 
D)  215 lbs. 
A)  87 lbs. 
B)  95 lbs. 
C)  103 lbs. 
D)  215 lbs.

Question 11

If the price of pork rinds falls, then the substitution effect due to the price change will cause

Accepted Answer

A)  an increase in the demand for pork rinds. 
B)  an increase in the demand for corn chips, a substitute for pork rinds. 
C)  an increase in the quantity of pork rinds demanded. 
D)  a decrease in the quantity of pork rinds demanded. 
A)  an increase in the demand for pork rinds. 
B)  an increase in the demand for corn chips, a substitute for pork rinds. 
C)  an increase in the quantity of pork rinds demanded. 
D)  a decrease in the quantity of pork rinds demanded.

Question 12

If consumers believe the price of tablet computers will increase in the future, this will cause the demand for tablet computers to decrease now.

Accepted Answer

A) True 
 B)False

Question 13

An increase in the demand for lobster due to changes in consumer tastes, accompanied by a decrease in the supply of lobster as a result bad weather reducing the number of fishermen trapping lobster, will result in

Accepted Answer

A)  a decrease in the equilibrium quantity of lobster and no change in the equilibrium price. 
B)  an increase in the equilibrium price of lobster and no change in the equilibrium quantity. 
C)  an increase in the equilibrium price of lobster; the equilibrium quantity may increase or decrease. 
D)  a decrease in the equilibrium quantity of lobster; the equilibrium price may increase or decrease. 
A)  a decrease in the equilibrium quantity of lobster and no change in the equilibrium price. 
B)  an increase in the equilibrium price of lobster and no change in the equilibrium quantity. 
C)  an increase in the equilibrium price of lobster; the equilibrium quantity may increase or decrease. 
D)  a decrease in the equilibrium quantity of lobster; the equilibrium price may increase or decrease.

Question 14

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

Accepted Answer

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

Question 15

Chips and salsa are complements. If the price of salsa decreases, the demand for chips will increase.

Accepted Answer

A) True 
 B)False

Question 16

If, in response to a decrease in the price of grapes, the quantity of grapes demanded increases, then economists would describe this as

Accepted Answer

A)  an increase in demand. 
B)  an increase in quantity demanded. 
C)  a change in consumer income. 
D)  an increase in consumers' taste for grapes. 
A)  an increase in demand. 
B)  an increase in quantity demanded. 
C)  a change in consumer income. 
D)  an increase in consumers' taste for grapes.

Question 17

Table 3-1
  
-Refer to Table 3-1. The table above shows the demand schedules for loose-leaf tea of two individuals (Sunil and Mia) and the rest of the market. If the price of loose-leaf tea rises from $3 to $4, the market quantity demanded would

Accepted Answer

A)  decrease by 32 lbs. 
B)  increase by 64 lbs. 
C)  increase by 32 lbs. 
D)  decrease by 64 lbs. 
A)  decrease by 32 lbs. 
B)  increase by 64 lbs. 
C)  increase by 32 lbs. 
D)  decrease by 64 lbs.

Question 18

Which of the following statements is true?

Accepted Answer

A)  An increase in supply causes a change in equilibrium price; the change in price does not cause a further change in demand or supply. 
B)  A decrease in supply causes equilibrium price to rise; the increase in price then results in a decrease in demand. 
C)  If both demand and supply increase there must be an increase in equilibrium price; equilibrium quantity may either increase or decrease. 
D)  If demand decreases and supply increases one cannot determine if equilibrium price will increase or decrease without knowing which change is greater. 
A)  An increase in supply causes a change in equilibrium price; the change in price does not cause a further change in demand or supply. 
B)  A decrease in supply causes equilibrium price to rise; the increase in price then results in a decrease in demand. 
C)  If both demand and supply increase there must be an increase in equilibrium price; equilibrium quantity may either increase or decrease. 
D)  If demand decreases and supply increases one cannot determine if equilibrium price will increase or decrease without knowing which change is greater.

Question 19

Which of the following would cause a decrease in the supply of peanut butter?

Accepted Answer

A)  a decrease in the price of jelly (assuming that peanut butter and jelly are complements) 
B)  a decrease in the price of peanut butter 
C)  an increase the price of peanuts 
D)  an increase in the technology used to produce peanut butter 
A)  a decrease in the price of jelly (assuming that peanut butter and jelly are complements) 
B)  a decrease in the price of peanut butter 
C)  an increase the price of peanuts 
D)  an increase in the technology used to produce peanut butter

Question 20

If the demand for a product increases and the supply of the same product increases, the equilibrium price will increase.

Accepted Answer

A) True 
 B)False

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

An increase in population results in an increase in demand.

If the demand for a product increases and the supply of the product does not change, equilibrium price and equilibrium quantity will both increase.

Suppose that when the price of pickles decreases, Teddy increases his purchase of ketchup. To Teddy,

Which of the following would shift the supply curve for smartphones to the right?

Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall. Holding everything else constant, how would this affect the market for Blu-ray players (a complement to LCD televisions)?

Figure 3-7 -Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for potatoes and that steak and potatoes are complements. What panel describes what happens in this market when the price of steak rises?

If the price of gasoline decreases, what will be the impact in the market for public transportation?

Which of the following statements is true?

Table 3-4 -Refer to Table 3-4. The table above shows the demand schedules for cashews of two individuals (Jordy and Amy) and the rest of the market. At a price of $6, the quantity demanded in the market would be

If the price of pork rinds falls, then the substitution effect due to the price change will cause

If consumers believe the price of tablet computers will increase in the future, this will cause the demand for tablet computers to decrease now.

An increase in the demand for lobster due to changes in consumer tastes, accompanied by a decrease in the supply of lobster as a result bad weather reducing the number of fishermen trapping lobster, will result in

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

Chips and salsa are complements. If the price of salsa decreases, the demand for chips will increase.

If, in response to a decrease in the price of grapes, the quantity of grapes demanded increases, then economists would describe this as

Table 3-1 -Refer to Table 3-1. The table above shows the demand schedules for loose-leaf tea of two individuals (Sunil and Mia) and the rest of the market. If the price of loose-leaf tea rises from $3 to $4, the market quantity demanded would

Which of the following statements is true?

Which of the following would cause a decrease in the supply of peanut butter?

If the demand for a product increases and the supply of the same product increases, the equilibrium price will increase.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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