Question 1

All else equal, as the price of a product falls, the quantity supplied increases.

Accepted Answer

A) True 
 B)False

Question 2

If an increase in income leads to a decrease in the demand for salami, then salami is

Accepted Answer

A)  an inferior good. 
B)  a neutral good. 
C)  a necessity. 
D)  a normal good. 
A)  an inferior good. 
B)  a neutral good. 
C)  a necessity. 
D)  a normal good.

Question 3

The phrase "demand has decreased" means that

Accepted Answer

A)  a demand curve has shifted to the left. 
B)  there has been an upward movement along a demand curve. 
C)  there has been a downward movement along a demand curve. 
D)  a demand curve has shifted to the right. 
A)  a demand curve has shifted to the left. 
B)  there has been an upward movement along a demand curve. 
C)  there has been a downward movement along a demand curve. 
D)  a demand curve has shifted to the right.

Question 4

The law of demand implies, holding everything else constant, that as the price of yogurt

Accepted Answer

A)  increases, the demand for yogurt will increase. 
B)  increases, the quantity of yogurt demanded will decrease. 
C)  decreases, the quantity of yogurt demanded will decrease. 
D)  decreases, the demand for yogurt will increase. 
A)  increases, the demand for yogurt will increase. 
B)  increases, the quantity of yogurt demanded will decrease. 
C)  decreases, the quantity of yogurt demanded will decrease. 
D)  decreases, the demand for yogurt will increase.

Question 5

In 2004, hurricanes damaged a large portion of Florida's orange crop. As a result of this, many orange growers were not able to supply fruit to the market. If, following the hurricane, the price remained at its pre-hurricane level, we would expect to see

Accepted Answer

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

Question 6

If the price of refillable butane lighters was to decrease, then

Accepted Answer

A)  the demand for butane would decrease. 
B)  the demand for butane would increase. 
C)  the quantity of butane demanded would increase. 
D)  the quantity of butane demanded would decrease. 
A)  the demand for butane would decrease. 
B)  the demand for butane would increase. 
C)  the quantity of butane demanded would increase. 
D)  the quantity of butane demanded would decrease.

Question 7

Figure 3-6  
-Refer to Figure 3-6. The figure above represents the market for coffee grinders. Assume that the price of coffee grinders is $50. At this price

Accepted Answer

A)  the quantity supplied exceeds the quantity supplied by 100. The price will eventually fall to $25 where quantity demanded will equal quantity supplied. 
B)  the supply exceeds the demand by 90. Some producers will have an incentive to offer to sell coffee grinders at a lower price. 
C)  there is a surplus equal to 90 coffee grinders that will be eliminated when the price falls to $25. 
D)  there is a surplus equal to 90 coffee grinders and the price of coffee grinders will fall until demand is equal to supply. 
A)  the quantity supplied exceeds the quantity supplied by 100. The price will eventually fall to $25 where quantity demanded will equal quantity supplied. 
B)  the supply exceeds the demand by 90. Some producers will have an incentive to offer to sell coffee grinders at a lower price. 
C)  there is a surplus equal to 90 coffee grinders that will be eliminated when the price falls to $25. 
D)  there is a surplus equal to 90 coffee grinders and the price of coffee grinders will fall until demand is equal to supply.

Question 8

Use the following demand schedule for apples to draw a graph of the demand curve. Be sure to label the demand curve and each axis, and show each point on the demand curve.

Accepted Answer

The answer of Use the following demand schedule for apples...

Question 9

Which of the following statements is true?

Accepted Answer

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

Question 10

Figure 3-2  
-Refer to Figure 3-2. A decrease in the price of the product would be represented by a movement from

Accepted Answer

A)  A to B. 
B)  B to A. 
C)  S1 to S2. 
D)  S2 to S1. 
A)  A to B. 
B)  B to A. 
C)  S1 to S2. 
D)  S2 to S1.

Question 11

Suppose that when the price of hamburgers increases, the Ruiz family increases their purchases of hot dogs. To the Ruiz family

Accepted Answer

A)  hamburgers and hot dogs are complements. 
B)  hamburgers and hot dogs are inferior goods. 
C)  hamburgers and hot dogs are normal goods. 
D)  hamburgers and hot dogs are substitutes. 
A)  hamburgers and hot dogs are complements. 
B)  hamburgers and hot dogs are inferior goods. 
C)  hamburgers and hot dogs are normal goods. 
D)  hamburgers and hot dogs are substitutes.

Question 12

What is the law of supply? What does this law imply about the shape of the supply curve?

Accepted Answer

The law of supply states that, holding e

Question 13

A competitive market equilibrium is a market equilibrium with many buyers and sellers.

Accepted Answer

A) True 
 B)False

Question 14

A positive technological change will cause the quantity of a good supplied to increase.

Accepted Answer

A) True 
 B)False

Question 15

If the price of smartphones was to increase, then

Accepted Answer

A)  the demand for smartphone apps would decrease. 
B)  the demand for smartphone apps would increase. 
C)  the quantity of smartphone apps demanded would increase. 
D)  the quantity of smartphone apps demanded would decrease. 
A)  the demand for smartphone apps would decrease. 
B)  the demand for smartphone apps would increase. 
C)  the quantity of smartphone apps demanded would increase. 
D)  the quantity of smartphone apps demanded would decrease.

Question 16

In most countries in South America, the legal driving age is 18. If the legal driving age in the United States was raised from 16 to 18, how would this affect the market for new and used automobiles? What would happen to the equilibrium price and quantity of new and used automobiles?

Accepted Answer

The demand for new and used au

Question 17

Studies have shown that drinking one glass of red wine per day may help prevent heart disease. Assume this is true, and favorable weather has increased the grape harvest of California vineyards. In the market for red wine, these two developments would

Accepted Answer

A)  increase demand and decrease supply, resulting in an increase in the equilibrium quantity and a decrease in the equilibrium price of red wine. 
B)  increase demand and increase supply, resulting in an increase in the equilibrium quantity and an uncertain effect on the equilibrium price of red wine. 
C)  increase demand and increase supply, resulting in an increase in the equilibrium price and an uncertain effect on the equilibrium quantity of red wine. 
D)  increase demand and increase supply, resulting in an increase in both the equilibrium price and the equilibrium quantity of red wine. 
A)  increase demand and decrease supply, resulting in an increase in the equilibrium quantity and a decrease in the equilibrium price of red wine. 
B)  increase demand and increase supply, resulting in an increase in the equilibrium quantity and an uncertain effect on the equilibrium price of red wine. 
C)  increase demand and increase supply, resulting in an increase in the equilibrium price and an uncertain effect on the equilibrium quantity of red wine. 
D)  increase demand and increase supply, resulting in an increase in both the equilibrium price and the equilibrium quantity of red wine.

Question 18

A normal good is a good for which the demand increases as income decreases, holding everything else constant.

Accepted Answer

A) True 
 B)False

Question 19

If in the market for peaches the supply curve has shifted to the left

Accepted Answer

A)  the supply of peaches has increased. 
B)  the supply of peaches has decreased. 
C)  the quantity of peaches supplied has increased. 
D)  the quantity of peaches supplied has decreased. 
A)  the supply of peaches has increased. 
B)  the supply of peaches has decreased. 
C)  the quantity of peaches supplied has increased. 
D)  the quantity of peaches supplied has decreased.

Question 20

A shortage occurs when the market price is lower than the equilibrium price.

Accepted Answer

A) True 
 B)False

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

All else equal, as the price of a product falls, the quantity supplied increases.

If an increase in income leads to a decrease in the demand for salami, then salami is

The phrase "demand has decreased" means that

The law of demand implies, holding everything else constant, that as the price of yogurt

In 2004, hurricanes damaged a large portion of Florida's orange crop. As a result of this, many orange growers were not able to supply fruit to the market. If, following the hurricane, the price remained at its pre-hurricane level, we would expect to see

If the price of refillable butane lighters was to decrease, then

Figure 3-6 -Refer to Figure 3-6. The figure above represents the market for coffee grinders. Assume that the price of coffee grinders is $50. At this price

Use the following demand schedule for apples to draw a graph of the demand curve. Be sure to label the demand curve and each axis, and show each point on the demand curve.

Which of the following statements is true?

Figure 3-2 -Refer to Figure 3-2. A decrease in the price of the product would be represented by a movement from

Suppose that when the price of hamburgers increases, the Ruiz family increases their purchases of hot dogs. To the Ruiz family

What is the law of supply? What does this law imply about the shape of the supply curve?

A competitive market equilibrium is a market equilibrium with many buyers and sellers.

A positive technological change will cause the quantity of a good supplied to increase.

If the price of smartphones was to increase, then

In most countries in South America, the legal driving age is 18. If the legal driving age in the United States was raised from 16 to 18, how would this affect the market for new and used automobiles? What would happen to the equilibrium price and quantity of new and used automobiles?

Studies have shown that drinking one glass of red wine per day may help prevent heart disease. Assume this is true, and favorable weather has increased the grape harvest of California vineyards. In the market for red wine, these two developments would

A normal good is a good for which the demand increases as income decreases, holding everything else constant.

If in the market for peaches the supply curve has shifted to the left

A shortage occurs when the market price is lower than the equilibrium price.

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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