Question 1

An excess quantity supplied can be corrected by

Accepted Answer

A) a fall in price. 
B) legally fixing the price at its present level. 
C) a decrease in demand. 
D) an increase in supply. 
A) a fall in price. 
B) legally fixing the price at its present level. 
C) a decrease in demand. 
D) an increase in supply.

Question 2

A surplus exists

Accepted Answer

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

Question 3

According to the law of demand, the quantity demanded of a good is related to

Accepted Answer

A) the average price of all goods. 
B) income. 
C) any factor that affects the decision of an individual consumer but not the market. 
D) the relative price of that good. 
A) the average price of all goods. 
B) income. 
C) any factor that affects the decision of an individual consumer but not the market. 
D) the relative price of that good.

Question 4

A demand curve is a graphical representation of

Accepted Answer

A) consumer tastes. 
B) national income. 
C) the demand schedule. 
D) relative prices. 
A) consumer tastes. 
B) national income. 
C) the demand schedule. 
D) relative prices.

Question 5

Regarding the law of supply, which of the following statements is correct?

Accepted Answer

A) As the price of a good or service rises, the quantity supplied will increase. 
B) As the price of a good or service rises, the quantity supplied will decrease. 
C) The ceteris paribus assumption does not apply. 
D) As demand falls, supply rises. 
A) As the price of a good or service rises, the quantity supplied will increase. 
B) As the price of a good or service rises, the quantity supplied will decrease. 
C) The ceteris paribus assumption does not apply. 
D) As demand falls, supply rises.

Question 6

Of the following, which is the least likely to be an example of substitute goods?

Accepted Answer

A) Beer and pretzels 
B) Margarine and butter 
C) Beef and chicken 
D) Tea and coffee 
A) Beer and pretzels 
B) Margarine and butter 
C) Beef and chicken 
D) Tea and coffee

Question 7

-Refer to the above figure. At a price of two cents, the quantity of bubble gum demanded will be

Accepted Answer

A) 3. 
B) 2. 
C) 4. 
D) 5. 
A) 3. 
B) 2. 
C) 4. 
D) 5.

Question 8

After the price of music downloads falls, Phil buys fewer CDs and buys a new MP3 player. For Phil,

Accepted Answer

A) music downloads and CDs are complements, and MP3 players and CDs are substitutes 
B) music downloads, MP3 players, and CDs are all complements. 
C) music downloads and CDs are substitutes, and music downloads and MP3 players are complements. 
D) music downloads, MP3 players, and CDs are all substitutes. 
A) music downloads and CDs are complements, and MP3 players and CDs are substitutes 
B) music downloads, MP3 players, and CDs are all complements. 
C) music downloads and CDs are substitutes, and music downloads and MP3 players are complements. 
D) music downloads, MP3 players, and CDs are all substitutes.

Question 9

If the price of airline travel in Europe falls and the demand for train travel in Europe also 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 10

We are given the individual demand curves for all of the people that consume Good Y. Which statement is true about the market demand curve for Good Y?

Accepted Answer

A) The market demand curve is obtained by horizontally summing the individual demand curves. 
B) The market demand curve is obtained by vertically summing the individual demand curves. 
C) The market demand curve cannot be obtained because information on prices is missing. 
D) The market demand curve cannot be obtained from individual demand curves. 
A) The market demand curve is obtained by horizontally summing the individual demand curves. 
B) The market demand curve is obtained by vertically summing the individual demand curves. 
C) The market demand curve cannot be obtained because information on prices is missing. 
D) The market demand curve cannot be obtained from individual demand curves.

Question 11

If a good is a normal good, an increase in income will

Accepted Answer

A) decrease the quantity demanded of the good. 
B) increase the demand for the good. 
C) cause the demand curve for the good to shift to the left. 
D) cause a movement down along the demand curve. 
A) decrease the quantity demanded of the good. 
B) increase the demand for the good. 
C) cause the demand curve for the good to shift to the left. 
D) cause a movement down along the demand curve.

Question 12

A supply curve

Accepted Answer

A) has an indirect or negative relationship between price and quantity supplied. 
B) has a direct or positive relationship between price and quantity supplied. 
C) shows the relationship between quantity supplied and income. 
D) shows the relationship between complements. 
A) has an indirect or negative relationship between price and quantity supplied. 
B) has a direct or positive relationship between price and quantity supplied. 
C) shows the relationship between quantity supplied and income. 
D) shows the relationship between complements.

Question 13

-Refer to the above figure for the market of Cheerios. Which diagram depicts the effect of an increase in the price of Cheerios?

Accepted Answer

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

Question 14

-According to the above figure for a gasoline market, at a price of $1 per gallon of gasoline, there would be

Accepted Answer

A) a shortage of 30 million gallons. 
B) a surplus of 30 million gallons. 
C) a shortage of 20 million gallons. 
D) a surplus of 50 million gallons. 
A) a shortage of 30 million gallons. 
B) a surplus of 30 million gallons. 
C) a shortage of 20 million gallons. 
D) a surplus of 50 million gallons.

Question 15

Graphically, the market supply curve is obtained by

Accepted Answer

A) changing the ceteris paribus conditions. 
B) a change in quantity supplied. 
C) horizontally summing quantity supplied at various prices for individual producers. 
D) vertically summing quantity supplied at various prices for individual producers. 
A) changing the ceteris paribus conditions. 
B) a change in quantity supplied. 
C) horizontally summing quantity supplied at various prices for individual producers. 
D) vertically summing quantity supplied at various prices for individual producers.

Question 16

A schedule of how much of a good people will purchase for a range of possible prices during a specified time period, other things constant, is the definition of

Accepted Answer

A) supply. 
B) demand. 
C) a purchasing contract. 
D) an economic market. 
A) supply. 
B) demand. 
C) a purchasing contract. 
D) an economic market.

Question 17

Which of the following is a determinant of consumer demand?

Accepted Answer

A) Expectation of the future relative price of a product 
B) Taxes imposed on firms that sell the product 
C) Cost of inputs used to produce the product 
D) Number of firms that produce the product 
A) Expectation of the future relative price of a product 
B) Taxes imposed on firms that sell the product 
C) Cost of inputs used to produce the product 
D) Number of firms that produce the product

Question 18

If the price of butter increases, the demand for margarine

Accepted Answer

A) will be unchanged. 
B) will shift outward. 
C) will shift inward. 
D) will kink into an S-curve. 
A) will be unchanged. 
B) will shift outward. 
C) will shift inward. 
D) will kink into an S-curve.

Question 19

The price of an MP3 music player increased from $50 to $70 while the price of a music download increased from $1 to $2. The relative price of an MP3 music player in terms of music downloads

Accepted Answer

A) increased from 0.04 to 0.05. 
B) decreased from 50 to 35. 
C) increased, but we need more information to know by how much. 
D) decreased, but we need more information to know by how much. 
A) increased from 0.04 to 0.05. 
B) decreased from 50 to 35. 
C) increased, but we need more information to know by how much. 
D) decreased, but we need more information to know by how much.

Question 20

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 that good in the law of demand. 
B) consumers' income. 
C) consumers' tastes and preferences. 
D) the number of potential buyers. 
A) the price of that good in the law of demand. 
B) consumers' income. 
C) consumers' tastes and preferences. 
D) the number of potential buyers.

Exam 3: Demand and Supply

An excess quantity supplied can be corrected by

A surplus exists

According to the law of demand, the quantity demanded of a good is related to

A demand curve is a graphical representation of

Regarding the law of supply, which of the following statements is correct?

Of the following, which is the least likely to be an example of substitute goods?

-Refer to the above figure. At a price of two cents, the quantity of bubble gum demanded will be

After the price of music downloads falls, Phil buys fewer CDs and buys a new MP3 player. For Phil,

If the price of airline travel in Europe falls and the demand for train travel in Europe also falls, then the two goods are

We are given the individual demand curves for all of the people that consume Good Y. Which statement is true about the market demand curve for Good Y?

If a good is a normal good, an increase in income will

A supply curve

-Refer to the above figure for the market of Cheerios. Which diagram depicts the effect of an increase in the price of Cheerios?

-According to the above figure for a gasoline market, at a price of $1 per gallon of gasoline, there would be

Graphically, the market supply curve is obtained by

A schedule of how much of a good people will purchase for a range of possible prices during a specified time period, other things constant, is the definition of

Which of the following is a determinant of consumer demand?

If the price of butter increases, the demand for margarine

The price of an MP3 music player increased from $50 to $70 while the price of a music download increased from $1 to $2. The relative price of an MP3 music player in terms of music downloads

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

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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