Question 1

An increase in the price of steel to producers of refrigerators will cause

Accepted Answer

A) the quantity demanded for steel to increase. 
B) the demand for refrigerators to decrease. 
C) the quantity supplied of refrigerators to increase. 
D) the supply curve for refrigerators to shift left. 
A) the quantity demanded for steel to increase. 
B) the demand for refrigerators to decrease. 
C) the quantity supplied of refrigerators to increase. 
D) the supply curve for refrigerators to shift left.

Question 2

Suppose that milk producers expect that the price of milk is going to drop next week. This would cause

Accepted Answer

A) a decrease in the supply of milk today. 
B) an increase in the supply of milk today. 
C) an increase in the demand for milk today. 
D) the selling price of milk to rise today. 
A) a decrease in the supply of milk today. 
B) an increase in the supply of milk today. 
C) an increase in the demand for milk today. 
D) the selling price of milk to rise today.

Question 3

When income rises,

Accepted Answer

A) demand for a normal good rises. 
B) demand for a normal good falls. 
C) demand for an inferior good rises. 
D) quantity of a normal good demanded rises. 
A) demand for a normal good rises. 
B) demand for a normal good falls. 
C) demand for an inferior good rises. 
D) quantity of a normal good demanded rises.

Question 4

The law of demand implies that the demand curve

Accepted Answer

A) has a negative slope. 
B) has a positive slope. 
C) shifts to the right when the price of a good increases. 
D) shifts to the left when the price of a good decreases. 
A) has a negative slope. 
B) has a positive slope. 
C) shifts to the right when the price of a good increases. 
D) shifts to the left when the price of a good decreases.

Question 5

State the law of supply and explain it.

Accepted Answer

The law of supply indicates the direct o

Question 6

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

Accepted Answer

A) income 
B) tastes and preferences 
C) prices of related goods and services 
D) All of the above are correct. 
A) income 
B) tastes and preferences 
C) prices of related goods and services 
D) All of the above are correct.

Question 7

Which of the following will NOT lead to a decrease in demand for a normal good?

Accepted Answer

A) An increase in income 
B) An increase in the price of an input 
C) A decrease in the price of a complement good 
D) An increase in the number of consumers 
A) An increase in income 
B) An increase in the price of an input 
C) A decrease in the price of a complement good 
D) An increase in the number of consumers

Question 8

-The market clearing price of a good is

Accepted Answer

A) the price at which there is at least some of the good available for everyone. 
B) the price at which there is no surplus and no shortage. 
C) the price that consumers prefer. 
D) the price that producers prefer. 
A) the price at which there is at least some of the good available for everyone. 
B) the price at which there is no surplus and no shortage. 
C) the price that consumers prefer. 
D) the price that producers prefer.

Question 9

We observe that people buy less steak and more potatoes when the price of steak relative to potatoes increases. This indicates that steak and potatoes are

Accepted Answer

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

Question 10

A normal good is one for which

Accepted Answer

A) demand increases as income increases. 
B) demand increases as income decreases. 
C) the demand curve is horizontal. 
D) demand increases as the price of a substitute increases. 
A) demand increases as income increases. 
B) demand increases as income decreases. 
C) the demand curve is horizontal. 
D) demand increases as the price of a substitute increases.

Question 11

A change in the ceteris paribus conditions for supply will lead to a

Accepted Answer

A) change in quantity supplied. 
B) change in supply. 
C) change in quantity supplied and a change in supply. 
D) change in how consumers view the quality of the good. 
A) change in quantity supplied. 
B) change in supply. 
C) change in quantity supplied and a change in supply. 
D) change in how consumers view the quality of the good.

Question 12

A demand curve for a normal good

Accepted Answer

A) slopes upward and to the right. 
B) is constructed based on the assumption that income is rising. 
C) is constructed based on the assumption that an inverse relationship exists between price and income. 
D) shows the inverse relationship between price and quantity demanded. 
A) slopes upward and to the right. 
B) is constructed based on the assumption that income is rising. 
C) is constructed based on the assumption that an inverse relationship exists between price and income. 
D) shows the inverse relationship between price and quantity demanded.

Question 13

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

Accepted Answer

A) A decrease in the price of milk is followed by an increase in milk purchases. 
B) A decrease in the price of milk is followed by a decrease in milk purchases. 
C) An increase in the price of milk has no effect on the amount of milk purchased. 
D) The amount of milk purchased increases when the price is constant. 
A) A decrease in the price of milk is followed by an increase in milk purchases. 
B) A decrease in the price of milk is followed by a decrease in milk purchases. 
C) An increase in the price of milk has no effect on the amount of milk purchased. 
D) The amount of milk purchased increases when the price is constant.

Question 14

When there is an excess quantity supplied,

Accepted Answer

A) the market is in equilibrium. 
B) quantity demanded is greater than quantity supplied. 
C) quantity demanded is less than quantity supplied. 
D) prices will remain stable. 
A) the market is in equilibrium. 
B) quantity demanded is greater than quantity supplied. 
C) quantity demanded is less than quantity supplied. 
D) prices will remain stable.

Question 15

A movement along a demand curve is

Accepted Answer

A) a change in demand and can be caused by a change in consumers' income. 
B) a change in the quantity demanded and is caused by a change in the price of the good. 
C) a change in the quantity demanded and can be caused by a change in consumers' income. 
D) a change in demand and is caused by a change in the price of the good. 
A) a change in demand and can be caused by a change in consumers' income. 
B) a change in the quantity demanded and is caused by a change in the price of the good. 
C) a change in the quantity demanded and can be caused by a change in consumers' income. 
D) a change in demand and is caused by a change in the price of the good.

Question 16

The relationship between a change in the price of a complementary good and demand for another complementary good is

Accepted Answer

A) positive. 
B) negative. 
C) inconclusive. 
D) zero. 
A) positive. 
B) negative. 
C) inconclusive. 
D) zero.

Question 17

All of the following cause a shift in the demand curve EXCEPT a change in the

Accepted Answer

A) price of related goods. 
B) price of the good or service. 
C) consumer income. 
D) number of consumers. 
A) price of related goods. 
B) price of the good or service. 
C) consumer income. 
D) number of consumers.

Question 18

Total market supply can be derived by

Accepted Answer

A) horizontally summing individual supply curves at each and every price level. 
B) vertically summing individual supply curves at the current technology level. 
C) adding up the largest quantity demanded at various prices. 
D) looking at the changes in the price of raw materials needed to produce the product. 
A) horizontally summing individual supply curves at each and every price level. 
B) vertically summing individual supply curves at the current technology level. 
C) adding up the largest quantity demanded at various prices. 
D) looking at the changes in the price of raw materials needed to produce the product.

Question 19

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

Accepted Answer

A) an improvement in technology 
B) a reduction in resource costs 
C) a reduction in the expected future price 
D) none of the above 
A) an improvement in technology 
B) a reduction in resource costs 
C) a reduction in the expected future price 
D) none of the above

Question 20

When the price of tablet devices decreased in the 2010s, there was an increase in the demand for computing apps because tablet devices and computing apps are

Accepted Answer

A) substitute goods. 
B) capital goods. 
C) inferior goods. 
D) complementary goods. 
A) substitute goods. 
B) capital goods. 
C) inferior goods. 
D) complementary goods.

Exam 3: Demand and Supply

An increase in the price of steel to producers of refrigerators will cause

Suppose that milk producers expect that the price of milk is going to drop next week. This would cause

When income rises,

The law of demand implies that the demand curve

State the law of supply and explain it.

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

Which of the following will NOT lead to a decrease in demand for a normal good?

-The market clearing price of a good is

We observe that people buy less steak and more potatoes when the price of steak relative to potatoes increases. This indicates that steak and potatoes are

A normal good is one for which

A change in the ceteris paribus conditions for supply will lead to a

A demand curve for a normal good

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

When there is an excess quantity supplied,

A movement along a demand curve is

The relationship between a change in the price of a complementary good and demand for another complementary good is

All of the following cause a shift in the demand curve EXCEPT a change in the

Total market supply can be derived by

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

When the price of tablet devices decreased in the 2010s, there was an increase in the demand for computing apps because tablet devices and computing apps are

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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