Question 1

Which one of the following statements is true?

Accepted Answer

A) If the money price of a good increases, its relative price necessarily increases. 
B) If the money price of a good increases, its relative price necessarily decreases. 
C) The relative price of a good refers to the opportunity cost of purchasing it. 
D) Rational consumers always ignore the monetary price of a good when deciding whether to buy it. 
A) If the money price of a good increases, its relative price necessarily increases. 
B) If the money price of a good increases, its relative price necessarily decreases. 
C) The relative price of a good refers to the opportunity cost of purchasing it. 
D) Rational consumers always ignore the monetary price of a good when deciding whether to buy it.

Question 2

The price of a new textbook is $60 in one year and $75 two years later, while the price of a used copy of the textbook increased from $25 to $37.50. The relative price of a new textbook

Accepted Answer

A) increased by 25 percent. 
B) increased from 2.4 to 3. 
C) decreased from 2.4 to 2.0. 
D) decreased from 1.4 to 1.25 
A) increased by 25 percent. 
B) increased from 2.4 to 3. 
C) decreased from 2.4 to 2.0. 
D) decreased from 1.4 to 1.25

Question 3

When a shortage exists in a market,

Accepted Answer

A) the market clearing price is above equilibrium and market forces will cause the price to fall. 
B) the quantity demanded is less than the quantity supplied at the existing price. 
C) the current price is below the market clearing price and the price will rise. 
D) the quantity supplied is greater than the quantity demanded at the current price. 
A) the market clearing price is above equilibrium and market forces will cause the price to fall. 
B) the quantity demanded is less than the quantity supplied at the existing price. 
C) the current price is below the market clearing price and the price will rise. 
D) the quantity supplied is greater than the quantity demanded at the current price.

Question 4

The fact that when the price of a good goes up, people buy less of it is known as the

Accepted Answer

A) law of supply. 
B) law of demand. 
C) concept of market equilibrium. 
D) need for inferior goods. 
A) law of supply. 
B) law of demand. 
C) concept of market equilibrium. 
D) need for inferior goods.

Question 5

-Refer to the above table. The market quantity supplied when the price is $6 is

Accepted Answer

A) 0 
B) 5 
C) 10 
D) 20 
A) 0 
B) 5 
C) 10 
D) 20

Question 6

Refer to the above figure. The highest price that consumers would be willing to pay for quantity Q2 is

Accepted Answer

A) P2. 
B) P0. 
C) P1. 
D) cannot be determined from the diagram. 
A) P2. 
B) P0. 
C) P1. 
D) cannot be determined from the diagram.

Question 7

The supply curve will shift to the left when

Accepted Answer

A) the supply of the product increases. 
B) the demand for the product decreases. 
C) some producers leave the industry. 
D) the product becomes fashionable. 
A) the supply of the product increases. 
B) the demand for the product decreases. 
C) some producers leave the industry. 
D) the product becomes fashionable.

Question 8

Suppliers will provide more of a good when

Accepted Answer

A) the market price increases. 
B) the good is a normal good. 
C) resource prices increase. 
D) there is a decrease in demand. 
A) the market price increases. 
B) the good is a normal good. 
C) resource prices increase. 
D) there is a decrease in demand.

Question 9

Which of the following is a likely result of the dramatic decrease in the price of microprocessor chips to computer manufacturers in the last two decades?

Accepted Answer

A) An increase in the demand for computers. 
B) A decrease in the supply of diskettes. 
C) An increase in the supply of computers. 
D) An increase in the quantity supplied of computers. 
A) An increase in the demand for computers. 
B) A decrease in the supply of diskettes. 
C) An increase in the supply of computers. 
D) An increase in the quantity supplied of computers.

Question 10

The quantity supplied of a particular good is the amount of the good that

Accepted Answer

A) households are willing to consume at each particular price. 
B) firms will actually end up buying at a particular price during a given time period. 
C) firms are willing to sell at each price during a particular time period. 
D) households want firms to sell at each price during a particular time period. 
A) households are willing to consume at each particular price. 
B) firms will actually end up buying at a particular price during a given time period. 
C) firms are willing to sell at each price during a particular time period. 
D) households want firms to sell at each price during a particular time period.

Question 11

-Refer to the above figure. The arrows show the direction of a shift in the demand curve of Good A. Which of the following would be the most likely reason for the shift in the demand curve if Good A is an inferior good?

Accepted Answer

A) An increase in the price of Good A 
B) A decrease in the price of Good A 
C) A decrease in consumers' income 
D) An increase in consumers' income 
A) An increase in the price of Good A 
B) A decrease in the price of Good A 
C) A decrease in consumers' income 
D) An increase in consumers' income

Question 12

The market supply curve is found by

Accepted Answer

A) surveys of consumer groups. 
B) vertically summing up the equilibrium prices of individual firms. 
C) horizontally summing up the supply curves of individual firms. 
D) estimating what the supply curve would be of one huge firm large enough to serve the entire market. 
A) surveys of consumer groups. 
B) vertically summing up the equilibrium prices of individual firms. 
C) horizontally summing up the supply curves of individual firms. 
D) estimating what the supply curve would be of one huge firm large enough to serve the entire market.

Question 13

Another name for a surplus is

Accepted Answer

A) excess quantity supplied. 
B) excess quantity demanded. 
C) equilibrium. 
D) market clearing. 
A) excess quantity supplied. 
B) excess quantity demanded. 
C) equilibrium. 
D) market clearing.

Question 14

Which of the following will cause a movement along the demand curve for shoes?

Accepted Answer

A) An increase in the price of socks 
B) An increase in income 
C) An increase in the price of shoes 
D) All of the above 
A) An increase in the price of socks 
B) An increase in income 
C) An increase in the price of shoes 
D) All of the above

Question 15

Which of the following would likely cause an increase in the supply of espresso coffee makers?

Accepted Answer

A) an increase in the number of business firms demanding espresso makers 
B) an increase in the price of espresso makers 
C) an increase in the cost of manufacturing espresso makers 
D) a widespread expectation that the price of espresso makers will fall in the future 
A) an increase in the number of business firms demanding espresso makers 
B) an increase in the price of espresso makers 
C) an increase in the cost of manufacturing espresso makers 
D) a widespread expectation that the price of espresso makers will fall in the future

Question 16

-Refer to the above figure. Which panel shows the effect of an increase in the price of a good on the demand curve of that good?

Accepted Answer

A) Panel A. 
B) Panel B. 
C) Both panels. 
D) Neither panel. 
A) Panel A. 
B) Panel B. 
C) Both panels. 
D) Neither panel.

Question 17

The equilibrium or market clearing price occurs at the point at which

Accepted Answer

A) quantity demanded equals quantity supplied. 
B) the supply curve intersects the horizontal axis. 
C) the demand curve intersects the vertical axis. 
D) there is a shortage of the desired good. 
A) quantity demanded equals quantity supplied. 
B) the supply curve intersects the horizontal axis. 
C) the demand curve intersects the vertical axis. 
D) there is a shortage of the desired good.

Question 18

Which of the following would cause an increase in the market supply of mountain bikes?

Accepted Answer

A) a decrease in the demand for mountain bikes 
B) an increase in taxes levied on mountain bike manufacturers 
C) an increase in the cost of components used to assemble mountain bikes 
D) an increase in the number of firms making mountain bikes 
A) a decrease in the demand for mountain bikes 
B) an increase in taxes levied on mountain bike manufacturers 
C) an increase in the cost of components used to assemble mountain bikes 
D) an increase in the number of firms making mountain bikes

Question 19

A shortage exists

Accepted Answer

A) in equilibrium. 
B) when quantity supplied is greater than quantity demanded. 
C) when quantity supplied is less than quantity demanded. 
D) at the market clearing price. 
A) in equilibrium. 
B) when quantity supplied is greater than quantity demanded. 
C) when quantity supplied is less than quantity demanded. 
D) at the market clearing price.

Question 20

-Using the above table, the market clearing price is ________ and equilibrium quantity is ________.

Accepted Answer

A) $55; 80 
B) $60; 150 
C) $70; 150 
D) $150; 150 
A) $55; 80 
B) $60; 150 
C) $70; 150 
D) $150; 150

Exam 3: Demand and Supply

Which one of the following statements is true?

The price of a new textbook is $60 in one year and $75 two years later, while the price of a used copy of the textbook increased from $25 to $37.50. The relative price of a new textbook

When a shortage exists in a market,

The fact that when the price of a good goes up, people buy less of it is known as the

-Refer to the above table. The market quantity supplied when the price is $6 is

Refer to the above figure. The highest price that consumers would be willing to pay for quantity Q2 is

The supply curve will shift to the left when

Suppliers will provide more of a good when

Which of the following is a likely result of the dramatic decrease in the price of microprocessor chips to computer manufacturers in the last two decades?

The quantity supplied of a particular good is the amount of the good that

-Refer to the above figure. The arrows show the direction of a shift in the demand curve of Good A. Which of the following would be the most likely reason for the shift in the demand curve if Good A is an inferior good?

The market supply curve is found by

Another name for a surplus is

Which of the following will cause a movement along the demand curve for shoes?

Which of the following would likely cause an increase in the supply of espresso coffee makers?

-Refer to the above figure. Which panel shows the effect of an increase in the price of a good on the demand curve of that good?

The equilibrium or market clearing price occurs at the point at which

Which of the following would cause an increase in the market supply of mountain bikes?

A shortage exists

-Using the above table, the market clearing price is ________ and equilibrium quantity is ________.

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

Filters

-Using the above table, the market clearing price is and equilibrium quantity is .