Question 1

Which one of the following statements is FALSE?

Accepted Answer

A) There is an inverse (negative)relationship between product price and quantity supplied. 
B) There is some price at which quantity supplied of a product is zero. 
C) As product price increases, producers are willing to put more of the good on the market for sale. 
D) In order to entice producers to offer more of a product on the market for sale, product price must rise. 
A) There is an inverse (negative)relationship between product price and quantity supplied. 
B) There is some price at which quantity supplied of a product is zero. 
C) As product price increases, producers are willing to put more of the good on the market for sale. 
D) In order to entice producers to offer more of a product on the market for sale, product price must rise.

Question 2

According to the law of demand,

Accepted Answer

A) people buy more of a good when the price rises. 
B) people buy more of a good when their income rises. 
C) people buy more of a good when the relative price rises. 
D) people buy more of a good when the price falls. 
A) people buy more of a good when the price rises. 
B) people buy more of a good when their income rises. 
C) people buy more of a good when the relative price rises. 
D) people buy more of a good when the price falls.

Question 3

All of the following will affect the position of the demand curve EXCEPT

Accepted Answer

A) income. 
B) taste and preference. 
C) changes in expectations of future relative prices. 
D) prices of resources used to produce the product. 
A) income. 
B) taste and preference. 
C) changes in expectations of future relative prices. 
D) prices of resources used to produce the product.

Question 4

The relative price of a good is that price

Accepted Answer

A) expressed in today's dollars. 
B) expressed in constant 2012 dollars. 
C) expressed in terms of the price of another good. 
D) that is equal to the equilibrium price. 
A) expressed in today's dollars. 
B) expressed in constant 2012 dollars. 
C) expressed in terms of the price of another good. 
D) that is equal to the equilibrium price.

Question 5

Suppose that goods X and Y are substitutes and the price of good Y falls. We would then expect

Accepted Answer

A) the quantity of good Y demanded to increase and the demand for good X to increase also. 
B) an increase in the demand for good X and a decrease in the quantity of good Y demanded. 
C) an increase in the quantity demanded of good Y and a decrease in the demand for good X. 
D) an increase in the demand for both good X and good Y. 
A) the quantity of good Y demanded to increase and the demand for good X to increase also. 
B) an increase in the demand for good X and a decrease in the quantity of good Y demanded. 
C) an increase in the quantity demanded of good Y and a decrease in the demand for good X. 
D) an increase in the demand for both good X and good Y.

Question 6

The arrangements that individuals have with each other to exchange goods is known as

Accepted Answer

A) demand. 
B) supply. 
C) a market. 
D) complements. 
A) demand. 
B) supply. 
C) a market. 
D) complements.

Question 7

-At a price of P0 in the above figure, which of the following statements is FALSE?

Accepted Answer

A) Quantity demanded equals quantity supplied. 
B) There is an equilibrium in the market. 
C) P0 is the market clearing price. 
D) There is a surplus equal to Q0. 
A) Quantity demanded equals quantity supplied. 
B) There is an equilibrium in the market. 
C) P0 is the market clearing price. 
D) There is a surplus equal to Q0.

Question 8

The Chunnel auto tunnel allows motorists to travel between England and France. As an alternative, there is ferry service across the English Channel. What would happen in the market for ferry service if fees for using the Chunnel were increased?

Accepted Answer

A) The demand for ferry service would increase. 
B) The demand for ferry service would decrease. 
C) There would be an upward movement along the demand curve for transits through the Chunnel. 
D) There would be a downward movement along the demand curve for transits through the Chunnel. 
A) The demand for ferry service would increase. 
B) The demand for ferry service would decrease. 
C) There would be an upward movement along the demand curve for transits through the Chunnel. 
D) There would be a downward movement along the demand curve for transits through the Chunnel.

Question 9

The price of a commodity in terms of another commodity is

Accepted Answer

A) the law of demand. 
B) a substitute. 
C) the money price. 
D) the relative price. 
A) the law of demand. 
B) a substitute. 
C) the money price. 
D) the relative price.

Question 10

The relationship between quantity supplied and the price of output is such that

Accepted Answer

A) an increase in quantity will automatically lead to a reduction in price. 
B) an increase in price will lead to an increase in quantity supplied. 
C) an increase in price will produce an inward shift in the supply curve. 
D) quantity will decrease as the number of firms increases. 
A) an increase in quantity will automatically lead to a reduction in price. 
B) an increase in price will lead to an increase in quantity supplied. 
C) an increase in price will produce an inward shift in the supply curve. 
D) quantity will decrease as the number of firms increases.

Question 11

Assume that coffee and tea are substitutes. Given a downward sloping demand curve for tea, an increase in the price of tea will cause

Accepted Answer

A) an increase in the demand for coffee. 
B) a decrease in the demand for coffee. 
C) a leftward shift of the demand curve for tea. 
D) a leftward shift in the demand for coffee. 
A) an increase in the demand for coffee. 
B) a decrease in the demand for coffee. 
C) a leftward shift of the demand curve for tea. 
D) a leftward shift in the demand for coffee.

Question 12

Distinguish between a change in demand and a change in quantity demanded.

Accepted Answer

A change in quantity demanded is caused

Question 13

If Apple's iTunes Music Store increases its "fee" for its music downloads, the law of demand predicts that

Accepted Answer

A) the number of iTunes music downloads would increase. 
B) there would be no change in the demand for iTunes music downloads. 
C) the number of iTunes music downloads would decrease. 
D) iTunes music supply would change but demand would not. 
A) the number of iTunes music downloads would increase. 
B) there would be no change in the demand for iTunes music downloads. 
C) the number of iTunes music downloads would decrease. 
D) iTunes music supply would change but demand would not.

Question 14

A significant increase in the price of tennis balls will most likely lead to

Accepted Answer

A) an increase in the demand for tennis racquets. 
B) an inward shift in the demand for tennis balls. 
C) a movement along the demand curve for tennis racquets. 
D) an inward shift in the demand for tennis racquets. 
A) an increase in the demand for tennis racquets. 
B) an inward shift in the demand for tennis balls. 
C) a movement along the demand curve for tennis racquets. 
D) an inward shift in the demand for tennis racquets.

Question 15

-Refer to the above figure. Which panel demonstrates the law of demand?

Accepted Answer

A) Panel A. 
B) Panel B. 
C) Panel C. 
D) Panel D. 
A) Panel A. 
B) Panel B. 
C) Panel C. 
D) Panel D.

Question 16

Which one of the following would cause a rightward shift in the demand curve of digital cameras?

Accepted Answer

A) Digital cameras become easier to use. 
B) The price of digital cameras decreases. 
C) Production methods are modified to make production of digital cameras more efficient. 
D) Government regulations are imposed to limit the number of digital cameras imported. 
A) Digital cameras become easier to use. 
B) The price of digital cameras decreases. 
C) Production methods are modified to make production of digital cameras more efficient. 
D) Government regulations are imposed to limit the number of digital cameras imported.

Question 17

When there is a shortage, I. there is a tendency for price to increase.
II. there is an excess quantity demanded.

Accepted Answer

A) I only 
B) II only 
C) Both I and II 
D) Neither I nor II 
A) I only 
B) II only 
C) Both I and II 
D) Neither I nor II

Question 18

The money price of a good is also known as its

Accepted Answer

A) relative price. 
B) case price. 
C) absolute price. 
D) subjective price. 
A) relative price. 
B) case price. 
C) absolute price. 
D) subjective price.

Question 19

The price of a new textbook increased by 25 percent and the price of a used textbook increased by 30 percent. What happened to the relative price of the new textbook?

Accepted Answer

A) It increased by 5 percent. 
B) It increased, but we can't tell by how much without more information. 
C) It decreased by 5 percent. 
D) It decreased, but we can't tell by how much without more information. 
A) It increased by 5 percent. 
B) It increased, but we can't tell by how much without more information. 
C) It decreased by 5 percent. 
D) It decreased, but we can't tell by how much without more information.

Question 20

-According to the above table, at a price of $16 per DVD, there is

Accepted Answer

A) an equilibrium. 
B) a surplus of 3000 DVDs. 
C) a shortage of 3000 DVDs. 
D) a shortage of 1500 DVDs. 
A) an equilibrium. 
B) a surplus of 3000 DVDs. 
C) a shortage of 3000 DVDs. 
D) a shortage of 1500 DVDs.

Exam 3: Demand and Supply

Which one of the following statements is FALSE?

According to the law of demand,

All of the following will affect the position of the demand curve EXCEPT

The relative price of a good is that price

Suppose that goods X and Y are substitutes and the price of good Y falls. We would then expect

The arrangements that individuals have with each other to exchange goods is known as

-At a price of P0 in the above figure, which of the following statements is FALSE?

The Chunnel auto tunnel allows motorists to travel between England and France. As an alternative, there is ferry service across the English Channel. What would happen in the market for ferry service if fees for using the Chunnel were increased?

The price of a commodity in terms of another commodity is

The relationship between quantity supplied and the price of output is such that

Assume that coffee and tea are substitutes. Given a downward sloping demand curve for tea, an increase in the price of tea will cause

Distinguish between a change in demand and a change in quantity demanded.

If Apple's iTunes Music Store increases its "fee" for its music downloads, the law of demand predicts that

A significant increase in the price of tennis balls will most likely lead to

-Refer to the above figure. Which panel demonstrates the law of demand?

Which one of the following would cause a rightward shift in the demand curve of digital cameras?

When there is a shortage, I. there is a tendency for price to increase. II. there is an excess quantity demanded.

The money price of a good is also known as its

The price of a new textbook increased by 25 percent and the price of a used textbook increased by 30 percent. What happened to the relative price of the new textbook?

-According to the above table, at a price of $16 per DVD, there 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

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