Question 1

Fashion trends are a nonprice determinant for demand because

Accepted Answer

A) they cause a movement along the demand curve. 
B) they influence people's tastes and preferences in clothing. 
C) they change the supply of accessories. 
D) they do not affect demand. 
A) they cause a movement along the demand curve. 
B) they influence people's tastes and preferences in clothing. 
C) they change the supply of accessories. 
D) they do not affect demand. B

Question 2

-Refer to the above table. There is an excess quantity supplied of 2,000 units at a price of

Accepted Answer

A) $450. 
B) $500. 
C) $600. 
D) $700. 
A) $450. 
B) $500. 
C) $600. 
D) $700. C

Question 3

A shift in demand occurs when

Accepted Answer

A) the price of that good changes. 
B) the amount demanded of a good changes at each existing price. 
C) there is a change in quantity demanded. 
D) the price changes and the good is a normal good. 
A) the price of that good changes. 
B) the amount demanded of a good changes at each existing price. 
C) there is a change in quantity demanded. 
D) the price changes and the good is a normal good. B

Question 4

-Refer to the above figure. A shortage will exist when

Accepted Answer

A) the price is between $0 and $6. 
B) the price equals $6. 
C) the price equals $10. 
D) quantity demanded equals 3. 
A) the price is between $0 and $6. 
B) the price equals $6. 
C) the price equals $10. 
D) quantity demanded equals 3.

Question 5

If the price of cotton used in making blue jeans increases, which of the following will occur?

Accepted Answer

A) There will be a movement along an unchanged supply curve for jeans. 
B) The supply curve for jeans will shift rightward. 
C) The supply curve for jeans will shift leftward. 
D) There will be a rightward shift in the supply curve for jeans, followed by a movement along the supply curve. 
A) There will be a movement along an unchanged supply curve for jeans. 
B) The supply curve for jeans will shift rightward. 
C) The supply curve for jeans will shift leftward. 
D) There will be a rightward shift in the supply curve for jeans, followed by a movement along the supply curve.

Question 6

The price of a first-class stamp in 1957 was 3 cents, and it is 45 cents in 2012. From this we know that

Accepted Answer

A) both the relative and the absolute price of first-class stamps increased from 1957 to 2012. 
B) the money price of first-class stamps increased from 1957 to 2012 but the absolute price of first-class stamps stayed constant. 
C) the money price of first-class stamps increased from 1957 to 2012 and the relative price of first-class stamps decreased. 
D) the money price of first-class stamps increased from 1957 to 2012, but we can't tell if the relative price of first-class stamps increased or decreased without more information. 
A) both the relative and the absolute price of first-class stamps increased from 1957 to 2012. 
B) the money price of first-class stamps increased from 1957 to 2012 but the absolute price of first-class stamps stayed constant. 
C) the money price of first-class stamps increased from 1957 to 2012 and the relative price of first-class stamps decreased. 
D) the money price of first-class stamps increased from 1957 to 2012, but we can't tell if the relative price of first-class stamps increased or decreased without more information.

Question 7

If the government imposes a per-unit tax on sales of an industry's product, then we would expect

Accepted Answer

A) the supply curve in that industry would shift to the left. 
B) the supply curve in that industry would shift to the right. 
C) the demand curve for that industry would shift to the right. 
D) the demand curve for that industry would shift to the left. 
A) the supply curve in that industry would shift to the left. 
B) the supply curve in that industry would shift to the right. 
C) the demand curve for that industry would shift to the right. 
D) the demand curve for that industry would shift to the left.

Question 8

-Refer to the above figure. Which of the following statements is true?

Accepted Answer

A) Panel A shows a decrease in demand and Panel B shows an increase in demand. 
B) Both Panels A and B show an increase in demand. 
C) Panel A shows a change in demand and Panel B shows a change in quantity demanded. 
D) Panel A shows a change in quantity demanded and Panel B shows a change in demand. 
A) Panel A shows a decrease in demand and Panel B shows an increase in demand. 
B) Both Panels A and B show an increase in demand. 
C) Panel A shows a change in demand and Panel B shows a change in quantity demanded. 
D) Panel A shows a change in quantity demanded and Panel B shows a change in demand.

Question 9

An increase in the relative price of a good cannot be caused by

Accepted Answer

A) an increase in the nominal price of the good that is greater than the increase in the nominal price of the other good. 
B) a decrease in the nominal price of the good that is less than the decrease in the nominal price of the other good. 
C) a decrease in the nominal price of the other good while the price of the good itself remains constant. 
D) an increase in the nominal price of the other good while the price of the good itself remains constant. 
A) an increase in the nominal price of the good that is greater than the increase in the nominal price of the other good. 
B) a decrease in the nominal price of the good that is less than the decrease in the nominal price of the other good. 
C) a decrease in the nominal price of the other good while the price of the good itself remains constant. 
D) an increase in the nominal price of the other good while the price of the good itself remains constant.

Question 10

When the term "price" is used in the law of demand, price refers to

Accepted Answer

A) the dollar price of the good. 
B) the price of the good relative to the price of another good. 
C) the absolute price of the good. 
D) the nominal price of the good relative to its nominal price in the previous year. 
A) the dollar price of the good. 
B) the price of the good relative to the price of another good. 
C) the absolute price of the good. 
D) the nominal price of the good relative to its nominal price in the previous year.

Question 11

How does a change in quantity supplied differ from a change in supply?

Accepted Answer

A) A change in quantity supplied shifts the supply curve; a change in supply is a movement along the curve. 
B) A change in one of the ceteris paribus conditions affects quantity supplied, not supply. 
C) A change in the price affects quantity supplied, not supply. 
D) There is no difference. 
A) A change in quantity supplied shifts the supply curve; a change in supply is a movement along the curve. 
B) A change in one of the ceteris paribus conditions affects quantity supplied, not supply. 
C) A change in the price affects quantity supplied, not supply. 
D) There is no difference.

Question 12

Which of the following is a non-price determinant of supply?

Accepted Answer

A) the price of related goods consumers may buy 
B) technological advances in production 
C) consumers' incomes 
D) the number of consumers 
A) the price of related goods consumers may buy 
B) technological advances in production 
C) consumers' incomes 
D) the number of consumers

Question 13

What is the difference between a normal good and an inferior good? How does this relate to the demand curve?

Accepted Answer

A normal good is one for which demand in

Question 14

If the price of gasoline rises sharply and the demand for sports utility vehicles falls, then the two goods are

Accepted Answer

A) complements. 
B) normal goods. 
C) substitutes. 
D) inferior goods. 
A) complements. 
B) normal goods. 
C) substitutes. 
D) inferior goods.

Question 15

Suppose all prices increase by 10 percent in the year while the total sales of HDTVs remain constant. This is

Accepted Answer

A) a violation of the law of demand since fewer HDTVs should be purchased at a higher price. 
B) a violation of the law of demand since more HDTVs should have been purchased with higher incomes. 
C) not a violation of the law of demand since the relative price of HDTVs did not change. 
D) not a violation of the law of demand since the law of demand does not apply to expensive goods like HDTVs. 
A) a violation of the law of demand since fewer HDTVs should be purchased at a higher price. 
B) a violation of the law of demand since more HDTVs should have been purchased with higher incomes. 
C) not a violation of the law of demand since the relative price of HDTVs did not change. 
D) not a violation of the law of demand since the law of demand does not apply to expensive goods like HDTVs.

Question 16

If a bottled soft drink and bottled juice are substitutes, when the price of the bottled soft drink rises,

Accepted Answer

A) demand for bottled juice rises. 
B) demand for bottled juice falls. 
C) quantity of bottled juice demanded falls. 
D) quantity of bottled juice demanded rises. 
A) demand for bottled juice rises. 
B) demand for bottled juice falls. 
C) quantity of bottled juice demanded falls. 
D) quantity of bottled juice demanded rises.

Question 17

The supply curve has a

Accepted Answer

A) negative slope. 
B) positive slope. 
C) slope equal to -1. 
D) undefined slope. 
A) negative slope. 
B) positive slope. 
C) slope equal to -1. 
D) undefined slope.

Question 18

Which of the following will occur as the price of a good decreases?

Accepted Answer

A) The demand curve for that good will shift to the left. 
B) The demand curve for that good will shift to the right. 
C) The quantity demanded for that good will increase. 
D) Demand for that good will increase. 
A) The demand curve for that good will shift to the left. 
B) The demand curve for that good will shift to the right. 
C) The quantity demanded for that good will increase. 
D) Demand for that good will increase.

Question 19

Which of the following occurs when a market is in equilibrium?

Accepted Answer

A) quantity supplied is equal to quantity demanded 
B) supply is equal to demand. 
C) the price of the good will tend to rise, all else held constant. 
D) the price of the good will tend to fall, all else held constant. 
A) quantity supplied is equal to quantity demanded 
B) supply is equal to demand. 
C) the price of the good will tend to rise, all else held constant. 
D) the price of the good will tend to fall, all else held constant.

Question 20

Suppose a change takes place and the new equilibrium is at point A in the above figure. This change could have been caused by

Accepted Answer

A) an increase in the per-unit tax on CDs. 
B) a decrease in the income of consumers. 
C) a reduction in the wages paid to workers in the CD industry. 
D) a reduction in the price of CD players. 
A) an increase in the per-unit tax on CDs. 
B) a decrease in the income of consumers. 
C) a reduction in the wages paid to workers in the CD industry. 
D) a reduction in the price of CD players.

Exam 3: Demand and Supply

Fashion trends are a nonprice determinant for demand because

-Refer to the above table. There is an excess quantity supplied of 2,000 units at a price of

A shift in demand occurs when

-Refer to the above figure. A shortage will exist when

If the price of cotton used in making blue jeans increases, which of the following will occur?

The price of a first-class stamp in 1957 was 3 cents, and it is 45 cents in 2012. From this we know that

If the government imposes a per-unit tax on sales of an industry's product, then we would expect

-Refer to the above figure. Which of the following statements is true?

An increase in the relative price of a good cannot be caused by

When the term "price" is used in the law of demand, price refers to

How does a change in quantity supplied differ from a change in supply?

Which of the following is a non-price determinant of supply?

What is the difference between a normal good and an inferior good? How does this relate to the demand curve?

If the price of gasoline rises sharply and the demand for sports utility vehicles falls, then the two goods are

Suppose all prices increase by 10 percent in the year while the total sales of HDTVs remain constant. This is

If a bottled soft drink and bottled juice are substitutes, when the price of the bottled soft drink rises,

The supply curve has a

Which of the following will occur as the price of a good decreases?

Which of the following occurs when a market is in equilibrium?

Suppose a change takes place and the new equilibrium is at point A in the above figure. This change could have been caused by

The Nature of Economics

Scarcity and the World of Trade-Offs

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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