Question 1

At the market clearing price,

Accepted Answer

A) there is neither a shortage nor a surplus. 
B) quantity supplied equals quantity demanded. 
C) the supply and demand curves intersect. 
D) All of the above are correct. 
A) there is neither a shortage nor a surplus. 
B) quantity supplied equals quantity demanded. 
C) the supply and demand curves intersect. 
D) All of the above are correct.

Question 2

For typical goods, supply curves are

Accepted Answer

A) downward sloping. 
B) upward sloping. 
C) horizontal. 
D) vertical. 
A) downward sloping. 
B) upward sloping. 
C) horizontal. 
D) vertical.

Question 3

Market clearing price

Accepted Answer

A) refers to a movement along the demand curve. 
B) refers to a supply curve. 
C) exists at a the point at which quantity demanded equals quantity supplied. 
D) refers to a surplus. 
A) refers to a movement along the demand curve. 
B) refers to a supply curve. 
C) exists at a the point at which quantity demanded equals quantity supplied. 
D) refers to a surplus.

Question 4

The law of demand states that

Accepted Answer

A) consumers will exhaust their incomes as they purchase goods and services at given absolute prices. 
B) the quantity demanded of a good is higher at a lower relative price than at a higher relative price. 
C) there is a direct positive relationship between relative price and quantity demanded. 
D) if the price of a good increases both relatively and absolutely, there will be no change in quantity demanded. 
A) consumers will exhaust their incomes as they purchase goods and services at given absolute prices. 
B) the quantity demanded of a good is higher at a lower relative price than at a higher relative price. 
C) there is a direct positive relationship between relative price and quantity demanded. 
D) if the price of a good increases both relatively and absolutely, there will be no change in quantity demanded.

Question 5

-Using the above table, at a price of $5 there will be a

Accepted Answer

A) shortage of 20 units. 
B) shortage of 10 units. 
C) surplus of 20 units. 
D) surplus of 10 units. 
A) shortage of 20 units. 
B) shortage of 10 units. 
C) surplus of 20 units. 
D) surplus of 10 units.

Question 6

Demand is a schedule that shows

Accepted Answer

A) a set of possible prices for a good and the quantities of the good that will be purchased at each of those prices. 
B) how much income it takes to afford various quantities of a good. 
C) the relationship between the cost of producing a good and the price that sellers will charge. 
D) how population changes will affect the amount of a good that is needed. 
A) a set of possible prices for a good and the quantities of the good that will be purchased at each of those prices. 
B) how much income it takes to afford various quantities of a good. 
C) the relationship between the cost of producing a good and the price that sellers will charge. 
D) how population changes will affect the amount of a good that is needed.

Question 7

-Refer to the above figure. A movement from point A to point B indicates

Accepted Answer

A) an increase in demand. 
B) a decrease in demand. 
C) an increase in quantity demanded. 
D) a decrease in quantity demanded. 
A) an increase in demand. 
B) a decrease in demand. 
C) an increase in quantity demanded. 
D) a decrease in quantity demanded.

Question 8

The law of demand states that

Accepted Answer

A) consumers have unlimited demands for a good. 
B) a higher price will lead to increased sales. 
C) the price can never be too high for some consumers. 
D) quantity demanded will vary inversely with the price of the good. 
A) consumers have unlimited demands for a good. 
B) a higher price will lead to increased sales. 
C) the price can never be too high for some consumers. 
D) quantity demanded will vary inversely with the price of the good.

Question 9

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

Accepted Answer

A) a technological improvement. 
B) a technological setback. 
C) an increase in income. 
D) a decrease in income. 
A) a technological improvement. 
B) a technological setback. 
C) an increase in income. 
D) a decrease in income.

Question 10

An increase in the price of corn will lead to

Accepted Answer

A) an upward (and leftward)movement along the demand curve for corn. 
B) a leftward shift in the demand curve for corn. 
C) a rightward shift in the supply curve for corn. 
D) an increase in the quantity of corn consumed. 
A) an upward (and leftward)movement along the demand curve for corn. 
B) a leftward shift in the demand curve for corn. 
C) a rightward shift in the supply curve for corn. 
D) an increase in the quantity of corn consumed.

Question 11

The price that we observe in the market 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 12

The market supply curve is found by

Accepted Answer

A) plotting the supply curves of individual firms. 
B) plotting and summing up the supply curves of individual firms. 
C) plotting the supply curves of individual consumers. 
D) taking the supply curve of the representative firm. 
A) plotting the supply curves of individual firms. 
B) plotting and summing up the supply curves of individual firms. 
C) plotting the supply curves of individual consumers. 
D) taking the supply curve of the representative firm.

Question 13

Which of the following statements about a supply curve is FALSE?

Accepted Answer

A) It shows a direct (positive)relationship between price and quantity supplied. 
B) It shows the quantity supplied at each specific price. 
C) It typically slopes downward to the right. 
D) It has a positive slope. 
A) It shows a direct (positive)relationship between price and quantity supplied. 
B) It shows the quantity supplied at each specific price. 
C) It typically slopes downward to the right. 
D) It has a positive slope.

Question 14

For a demand schedule, which of the following is held constant?

Accepted Answer

A) relative prices 
B) quantity demanded 
C) quality of the good 
D) nominal prices 
A) relative prices 
B) quantity demanded 
C) quality of the good 
D) nominal prices

Question 15

In economics, the meaning of demand refers to

Accepted Answer

A) how badly someone wants a good. 
B) the quantities of a good that people will buy at various prices. 
C) the quantities of a good that people will sell at various prices. 
D) the total satisfaction that consuming a good provides people at different prices. 
A) how badly someone wants a good. 
B) the quantities of a good that people will buy at various prices. 
C) the quantities of a good that people will sell at various prices. 
D) the total satisfaction that consuming a good provides people at different prices.

Question 16

When the price of a good falls, there will be

Accepted Answer

A) an outward shift in the good's demand curve. 
B) both an outward shift in the good's demand curve and a movement along the good's demand curve. 
C) a movement along the good's demand curve. 
D) no change in quantity demanded. 
A) an outward shift in the good's demand curve. 
B) both an outward shift in the good's demand curve and a movement along the good's demand curve. 
C) a movement along the good's demand curve. 
D) no change in quantity demanded.

Question 17

-What happens as the result of a surplus?

Accepted Answer

A) There is downward pressure on prices. 
B) There is upward pressure on prices. 
C) Consumers begin to view the good as an inferior good because it is too commonplace. 
D) Demand for the good increases. 
A) There is downward pressure on prices. 
B) There is upward pressure on prices. 
C) Consumers begin to view the good as an inferior good because it is too commonplace. 
D) Demand for the good increases.

Question 18

Equilibrium in a market occurs when

Accepted Answer

A) demand and supply indicate a small surplus of a good. 
B) price is at its minimum. 
C) quantity supplied and quantity demanded are equal at the market clearing price. 
D) the market price leads to a decrease in quantity demanded. 
A) demand and supply indicate a small surplus of a good. 
B) price is at its minimum. 
C) quantity supplied and quantity demanded are equal at the market clearing price. 
D) the market price leads to a decrease in quantity demanded.

Question 19

Which of the following will NOT affect the supply of cars?

Accepted Answer

A) an increase in the price of steel 
B) an improvement in automobile production technology 
C) an increase in the productivity of auto workers 
D) a decrease in the price of cars 
A) an increase in the price of steel 
B) an improvement in automobile production technology 
C) an increase in the productivity of auto workers 
D) a decrease in the price of cars

Question 20

-Refer to the above figure. A movement from Point A to Point B is caused by

Accepted Answer

A) an increase in income. 
B) an expectation of a decrease in the price of the good in that figure. 
C) a decrease in the price of the good in that figure. 
D) all of the above. 
A) an increase in income. 
B) an expectation of a decrease in the price of the good in that figure. 
C) a decrease in the price of the good in that figure. 
D) all of the above.

Exam 3: Demand and Supply

At the market clearing price,

For typical goods, supply curves are

Market clearing price

The law of demand states that

-Using the above table, at a price of $5 there will be a

Demand is a schedule that shows

-Refer to the above figure. A movement from point A to point B indicates

The law of demand states that

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

An increase in the price of corn will lead to

The price that we observe in the market is

The market supply curve is found by

Which of the following statements about a supply curve is FALSE?

For a demand schedule, which of the following is held constant?

In economics, the meaning of demand refers to

When the price of a good falls, there will be

-What happens as the result of a surplus?

Equilibrium in a market occurs when

Which of the following will NOT affect the supply of cars?

-Refer to the above figure. A movement from Point A to Point B is caused by

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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