Question 1

An increase in quantity demanded is caused by

Accepted Answer

A) an increase in income. 
B) a decrease in the price of the good. 
C) a decrease in the price of a complement. 
D) a change in expectations about price in the future. 
A) an increase in income. 
B) a decrease in the price of the good. 
C) a decrease in the price of a complement. 
D) a change in expectations about price in the future.

Question 2

There will be an increase in supply when

Accepted Answer

A) a consumer's income increases. 
B) there is an improvement in technology. 
C) the demand curve shifts. 
D) the market price rises from $3 to $4. 
A) a consumer's income increases. 
B) there is an improvement in technology. 
C) the demand curve shifts. 
D) the market price rises from $3 to $4.

Question 3

According to the law of demand, other things being equal,

Accepted Answer

A) when the price a good goes up, then people buy more of that good. 
B) when the price a good goes up, then people buy less of that good. 
C) when people's income goes up, then they buy more of a good. 
D) when people's income goes up, then they buy less of a good. 
A) when the price a good goes up, then people buy more of that good. 
B) when the price a good goes up, then people buy less of that good. 
C) when people's income goes up, then they buy more of a good. 
D) when people's income goes up, then they buy less of a good.

Question 4

All of the following will cause the supply curve of good A to shift rightward EXCEPT

Accepted Answer

A) a reduction in the prices of inputs used to produce good A. 
B) an increase in the number of firms in the industry producing good A. 
C) a decrease in the per-unit tax on good A which producers must pay. 
D) an increase in the market price of good A. 
A) a reduction in the prices of inputs used to produce good A. 
B) an increase in the number of firms in the industry producing good A. 
C) a decrease in the per-unit tax on good A which producers must pay. 
D) an increase in the market price of good A.

Question 5

-According to the above figure, equilibrium is at point

Accepted Answer

A) E. 
B) B. 
C) C. 
D) D. 
A) E. 
B) B. 
C) C. 
D) D.

Question 6

Suppose that the price of cornflakes is $3 per box and the price of oatmeal is $4.50 per box. Both boxes contain the same number of ounces of cereal. The relative price of cornflakes in terms of oatmeal is

Accepted Answer

A) 0.67. 
B) 1.0. 
C) 0.75. 
D) 1.50. 
A) 0.67. 
B) 1.0. 
C) 0.75. 
D) 1.50.

Question 7

If one day a terrible disease were to wipe out over one-half of the world's lime trees, which of the following would likely result?

Accepted Answer

A) The supply curve of lime juice would shift downward and to the right. 
B) The supply curve of lime juice would shift upward and to the left. 
C) The demand curve for lime juice would shift to the right. 
D) The demand curve for lime juice would shift to the left. 
A) The supply curve of lime juice would shift downward and to the right. 
B) The supply curve of lime juice would shift upward and to the left. 
C) The demand curve for lime juice would shift to the right. 
D) The demand curve for lime juice would shift to the left.

Question 8

Total market demand can be calculated by

Accepted Answer

A) horizontally summing individual demand curves at each and every price level. 
B) vertically summing individual demand curves at each and every income level. 
C) adding up the largest quantity demanded by each individual. 
D) looking at the changes in the products' popularity. 
A) horizontally summing individual demand curves at each and every price level. 
B) vertically summing individual demand curves at each and every income level. 
C) adding up the largest quantity demanded by each individual. 
D) looking at the changes in the products' popularity.

Question 9

-Refer to the above figure. Which diagram shows the effect on the market of Corn Flakes when the price of Corn Flakes has increased?

Accepted Answer

A) graph C 
B) graph D 
C) neither graph 
D) both graphs 
A) graph C 
B) graph D 
C) neither graph 
D) both graphs

Question 10

Which of the following illustrates the law of demand?

Accepted Answer

A) More people watch college basketball in March than in November. 
B) The number of long distance calls in the United States is greater on Christmas than on Valentine's Day. 
C) College enrollment increases when federal tuition grants are readily available to students. 
D) The prevailing wage rate in an industry determines how many people choose to work in the industry. 
A) More people watch college basketball in March than in November. 
B) The number of long distance calls in the United States is greater on Christmas than on Valentine's Day. 
C) College enrollment increases when federal tuition grants are readily available to students. 
D) The prevailing wage rate in an industry determines how many people choose to work in the industry.

Question 11

An increase in the price of input used to produce a product will lead to

Accepted Answer

A) a decrease in the demand for that product. 
B) a decrease in quantity supplied of that product 
C) a decrease in the supply of that product. 
D) an increase in the supply of that product. 
A) a decrease in the demand for that product. 
B) a decrease in quantity supplied of that product 
C) a decrease in the supply of that product. 
D) an increase in the supply of that product.

Question 12

An indirect or inverse relationship between price and quantity demanded is

Accepted Answer

A) the market clearing price. 
B) a change in demand. 
C) a supply curve. 
D) a demand curve. 
A) the market clearing price. 
B) a change in demand. 
C) a supply curve. 
D) a demand curve.

Question 13

Which of the following does NOT cause a rightward shift in the supply curve?

Accepted Answer

A) a reduction in resource costs 
B) an increase in technology 
C) a reduction in the price of the good 
D) a reduction in the expected future price of the good 
A) a reduction in resource costs 
B) an increase in technology 
C) a reduction in the price of the good 
D) a reduction in the expected future price of the good

Question 14

A fundamental principle in demand analysis is that a change in price leads to

Accepted Answer

A) a movement along the demand curve. 
B) a rightward shift of the demand curve. 
C) a leftward shift of the demand curve. 
D) a complementary movement on the supply curve. 
A) a movement along the demand curve. 
B) a rightward shift of the demand curve. 
C) a leftward shift of the demand curve. 
D) a complementary movement on the supply curve.

Question 15

The market supply curve can be derived by

Accepted Answer

A) vertically adding the individual supplies at each quantity level. 
B) multiplying the price and quantity supplied at each price level. 
C) horizontally adding the individual supplies at each price level. 
D) looking at the capacity utilization in the largest firms in the industry. 
A) vertically adding the individual supplies at each quantity level. 
B) multiplying the price and quantity supplied at each price level. 
C) horizontally adding the individual supplies at each price level. 
D) looking at the capacity utilization in the largest firms in the industry.

Question 16

Which of the following is NOT a non-price determinant of demand?

Accepted Answer

A) the price of the good or service 
B) tastes and preferences 
C) expectations of future prices 
D) prices of related goods and services 
A) the price of the good or service 
B) tastes and preferences 
C) expectations of future prices 
D) prices of related goods and services

Question 17

According to the above figure for a gasoline market, an increase in the price from $2 to $4 will result in

Accepted Answer

A) a shortage of 30 million gallons. 
B) an increase in quantity demanded of 10 million gallons. 
C) an increase in quantity supplied of 20 million gallons. 
D) an increase in demand of 20 million gallons. 
A) a shortage of 30 million gallons. 
B) an increase in quantity demanded of 10 million gallons. 
C) an increase in quantity supplied of 20 million gallons. 
D) an increase in demand of 20 million gallons.

Question 18

Which of the following is an example of the law of supply?

Accepted Answer

A) The price of gum has increased so producers are making more gum. 
B) The price of labor has increased and producers decrease supply. 
C) The amount of a good purchased increases when the price decreases. 
D) Producers provide less of a good when the price increases. 
A) The price of gum has increased so producers are making more gum. 
B) The price of labor has increased and producers decrease supply. 
C) The amount of a good purchased increases when the price decreases. 
D) Producers provide less of a good when the price increases.

Question 19

The law of demand includes the statement "other things being equal." These other things include all of the following EXCEPT

Accepted Answer

A) the price of the good itself. 
B) the price of related goods. 
C) incomes. 
D) tastes. 
A) the price of the good itself. 
B) the price of related goods. 
C) incomes. 
D) tastes.

Question 20

In a free market, the market price and quantity in the above figure will adjust to equilibrium values of

Accepted Answer

A) $1 per gallon and 50 million gallons. 
B) $4 per gallon and 10 million gallons. 
C) $2 per gallon and 60 million gallons. 
D) $2 per gallon and 30 million gallons. 
A) $1 per gallon and 50 million gallons. 
B) $4 per gallon and 10 million gallons. 
C) $2 per gallon and 60 million gallons. 
D) $2 per gallon and 30 million gallons.

Exam 3: Demand and Supply

An increase in quantity demanded is caused by

There will be an increase in supply when

According to the law of demand, other things being equal,

All of the following will cause the supply curve of good A to shift rightward EXCEPT

-According to the above figure, equilibrium is at point

Suppose that the price of cornflakes is $3 per box and the price of oatmeal is $4.50 per box. Both boxes contain the same number of ounces of cereal. The relative price of cornflakes in terms of oatmeal is

If one day a terrible disease were to wipe out over one-half of the world's lime trees, which of the following would likely result?

Total market demand can be calculated by

-Refer to the above figure. Which diagram shows the effect on the market of Corn Flakes when the price of Corn Flakes has increased?

Which of the following illustrates the law of demand?

An increase in the price of input used to produce a product will lead to

An indirect or inverse relationship between price and quantity demanded is

Which of the following does NOT cause a rightward shift in the supply curve?

A fundamental principle in demand analysis is that a change in price leads to

The market supply curve can be derived by

Which of the following is NOT a non-price determinant of demand?

According to the above figure for a gasoline market, an increase in the price from $2 to $4 will result in

Which of the following is an example of the law of supply?

The law of demand includes the statement "other things being equal." These other things include all of the following EXCEPT

In a free market, the market price and quantity in the above figure will adjust to equilibrium values of

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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