Question 1

Scalping and other black market activities arise when

Accepted Answer

A) the prices of goods are allowed to adjust to their equilibrium levels. 
B) the quantities of goods demanded and supplied are allowed to adjust to their equilibrium levels. 
C) the prices of goods are restricted to levels above equilibrium prices. 
D) the prices of goods are restricted to levels below equilibrium prices. 
A) the prices of goods are allowed to adjust to their equilibrium levels. 
B) the quantities of goods demanded and supplied are allowed to adjust to their equilibrium levels. 
C) the prices of goods are restricted to levels above equilibrium prices. 
D) the prices of goods are restricted to levels below equilibrium prices.

Question 2

Which one of the following is NOT a determinant of demand?

Accepted Answer

A) Prices of related goods 
B) Cost of inputs in production 
C) Income 
D) Future price expectations 
A) Prices of related goods 
B) Cost of inputs in production 
C) Income 
D) Future price expectations

Question 3

More cattle are found to have mad cow disease. As a result, consumer confidence in the safety of beef is shaken. What would an economist predict will happen in the beef market?

Accepted Answer

A) As consumer preferences move away from beef, there is an upward movement along the beef demand curve. 
B) The demand curve will shift to the left. 
C) The demand curve does not shift but consumers move to a point lower down the curve. 
D) Absolutely no change in either the quantity demand or the demand for beef. 
A) As consumer preferences move away from beef, there is an upward movement along the beef demand curve. 
B) The demand curve will shift to the left. 
C) The demand curve does not shift but consumers move to a point lower down the curve. 
D) Absolutely no change in either the quantity demand or the demand for beef.

Question 4

If the market price falls from P0 to P1 in the above figure, then

Accepted Answer

A) a new equilibrium quantity is established. 
B) there is a shortage equal to the distance EF. 
C) there will be a further tendency for price to fall. 
D) there is a surplus of goods on the market equal to the distance Q1, Q2. 
A) a new equilibrium quantity is established. 
B) there is a shortage equal to the distance EF. 
C) there will be a further tendency for price to fall. 
D) there is a surplus of goods on the market equal to the distance Q1, Q2.

Question 5

Which of the following will cause a movement along the demand curve instead of a shift of the demand curve?

Accepted Answer

A) Income 
B) Tastes and preferences 
C) Expectations of the future price of a good 
D) none of the above 
A) Income 
B) Tastes and preferences 
C) Expectations of the future price of a good 
D) none of the above

Question 6

Suppose Good A is a normal good. Which of the following will increase the demand for Good A?

Accepted Answer

A) An increase in the price of its substitutes 
B) A lower expected future relative price of A 
C) An increase in the price of its complements 
D) A decrease in income 
A) An increase in the price of its substitutes 
B) A lower expected future relative price of A 
C) An increase in the price of its complements 
D) A decrease in income

Question 7

Suppose we observe that the demand for eggs increases when people buy more potatoes. We can conclude that eggs and potatoes are

Accepted Answer

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

Question 8

The market demand curve for a particular good

Accepted Answer

A) is the horizontal sum of all individual demand curves for the good. 
B) may be less than an individual demand curve for the good. 
C) may or may not show a direct relationship between price and quantity demanded. 
D) will not be affected by any of the determinants of individual demand. 
A) is the horizontal sum of all individual demand curves for the good. 
B) may be less than an individual demand curve for the good. 
C) may or may not show a direct relationship between price and quantity demanded. 
D) will not be affected by any of the determinants of individual demand.

Question 9

Which of the following is NOT a determinant of demand?

Accepted Answer

A) consumers' incomes 
B) prices of other goods 
C) consumers' tastes 
D) production technology 
A) consumers' incomes 
B) prices of other goods 
C) consumers' tastes 
D) production technology

Question 10

-Refer to the above figure. A movement from point A to point B for a good is most likely a result of

Accepted Answer

A) an increase in the price of that good. 
B) a decrease in the price of that good. 
C) an expectation of an increase in the relative price of that good. 
D) an expectation of a decrease in the relative price of that good. 
A) an increase in the price of that good. 
B) a decrease in the price of that good. 
C) an expectation of an increase in the relative price of that good. 
D) an expectation of a decrease in the relative price of that good.

Question 11

If we are comparing the price of regular gasoline with the price of super gasoline, then an increase in the relative price of regular gasoline implies that

Accepted Answer

A) the nominal price of regular gasoline increased. 
B) the nominal price of super gasoline decreased. 
C) the relative price of super gasoline decreased. 
D) the relative price of regular gasoline increased. 
A) the nominal price of regular gasoline increased. 
B) the nominal price of super gasoline decreased. 
C) the relative price of super gasoline decreased. 
D) the relative price of regular gasoline increased.

Question 12

A demand curve represents a(n)

Accepted Answer

A) direct relationship between price and quantity demanded. 
B) direct relationship between price and demand. 
C) indirect or inverse relationship between price and quantity demanded. 
D) indirect relationship between price and supply. 
A) direct relationship between price and quantity demanded. 
B) direct relationship between price and demand. 
C) indirect or inverse relationship between price and quantity demanded. 
D) indirect relationship between price and supply.

Question 13

If the demand of a good is inversely related to income, it must be

Accepted Answer

A) a bad good. 
B) an inferior good. 
C) a normal good. 
D) an everyday product. 
A) a bad good. 
B) an inferior good. 
C) a normal good. 
D) an everyday product.

Question 14

-Refer to the above figure. Excess quantity demanded will exist when

Accepted Answer

A) the price is between $0 and $6. 
B) the price equals $6. 
C) the price equals $10. 
D) quantity demanded equals 3. 
A) the price is between $0 and $6. 
B) the price equals $6. 
C) the price equals $10. 
D) quantity demanded equals 3.

Question 15

-Refer to the above table. What is the market quantity demanded at a price of $8?

Accepted Answer

A) 5 
B) 15 
C) 35 
D) 44 
A) 5 
B) 15 
C) 35 
D) 44

Question 16

-Refer to the above figure for a particular good. The rightward shift of the curve could have been caused by

Accepted Answer

A) a decrease in the price of an input. 
B) a decrease in the price of that good. 
C) an increase in the price of a complementary good. 
D) an increase in the price of a substitute good. 
A) a decrease in the price of an input. 
B) a decrease in the price of that good. 
C) an increase in the price of a complementary good. 
D) an increase in the price of a substitute good.

Question 17

If bagels and croissants are substitute goods, which of the following is likely to occur if the price of bagels has decreased?

Accepted Answer

A) The demand curve for bagels shifts to the right. 
B) A leftward movement along the bagel demand curve. 
C) The demand curve for croissants shifts to the right. 
D) The demand curve for croissants shifts to the left. 
A) The demand curve for bagels shifts to the right. 
B) A leftward movement along the bagel demand curve. 
C) The demand curve for croissants shifts to the right. 
D) The demand curve for croissants shifts to the left.

Question 18

The price of a loaf of bread is $1.50, the price of a gallon of milk is $3.00, and the price of a pound of butter is $2.40. The price of a loaf of bread relative to a gallon of milk is ________, while the price of a gallon of milk relative to a pound of butter is ________.

Accepted Answer

A) 0.5; 0.8. 
B) 0.5; 1.25. 
C) 2.0; 1.25. 
D) 2.0; 0.8. 
A) 0.5; 0.8. 
B) 0.5; 1.25. 
C) 2.0; 1.25. 
D) 2.0; 0.8.

Question 19

Suppose that the price of wheat is above its equilibrium price. You would expect to see

Accepted Answer

A) a shortage on the market that causes prices to increase further. 
B) an increase in quantity demanded because of the high price. 
C) a leftward shift of the demand curve because of the high price. 
D) sellers begin to lower their prices because of the surplus of wheat. 
A) a shortage on the market that causes prices to increase further. 
B) an increase in quantity demanded because of the high price. 
C) a leftward shift of the demand curve because of the high price. 
D) sellers begin to lower their prices because of the surplus of wheat.

Question 20

-Refer to the above figure. Which of the following statements is true?

Accepted Answer

A) Panel A shows an increase in supply and Panel B shows a decrease in supply. 
B) Both Panels A and B show an increase in supply. 
C) Panel A shows a change in quantity supplied and Panel B shows a change in supply. 
D) Panel A shows a change in supply and Panel B shows a change in quantity supplied. 
A) Panel A shows an increase in supply and Panel B shows a decrease in supply. 
B) Both Panels A and B show an increase in supply. 
C) Panel A shows a change in quantity supplied and Panel B shows a change in supply. 
D) Panel A shows a change in supply and Panel B shows a change in quantity supplied.

Exam 3: Demand and Supply

Scalping and other black market activities arise when

Which one of the following is NOT a determinant of demand?

More cattle are found to have mad cow disease. As a result, consumer confidence in the safety of beef is shaken. What would an economist predict will happen in the beef market?

If the market price falls from P0 to P1 in the above figure, then

Which of the following will cause a movement along the demand curve instead of a shift of the demand curve?

Suppose Good A is a normal good. Which of the following will increase the demand for Good A?

Suppose we observe that the demand for eggs increases when people buy more potatoes. We can conclude that eggs and potatoes are

The market demand curve for a particular good

Which of the following is NOT a determinant of demand?

-Refer to the above figure. A movement from point A to point B for a good is most likely a result of

If we are comparing the price of regular gasoline with the price of super gasoline, then an increase in the relative price of regular gasoline implies that

A demand curve represents a(n)

If the demand of a good is inversely related to income, it must be

-Refer to the above figure. Excess quantity demanded will exist when

-Refer to the above table. What is the market quantity demanded at a price of $8?

-Refer to the above figure for a particular good. The rightward shift of the curve could have been caused by

If bagels and croissants are substitute goods, which of the following is likely to occur if the price of bagels has decreased?

The price of a loaf of bread is $1.50, the price of a gallon of milk is $3.00, and the price of a pound of butter is $2.40. The price of a loaf of bread relative to a gallon of milk is ________, while the price of a gallon of milk relative to a pound of butter is ________.

Suppose that the price of wheat is above its equilibrium price. You would expect to see

-Refer to the above figure. Which of the following statements is true?

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

The price of a loaf of bread is $1.50, the price of a gallon of milk is $3.00, and the price of a pound of butter is $2.40. The price of a loaf of bread relative to a gallon of milk is , while the price of a gallon of milk relative to a pound of butter is .