Question 1

If the decrease in supply is less than the decrease in demand, then the equilibrium price will decrease.

Accepted Answer

A) True 
 B)False  True

Question 2

A demand curve

Accepted Answer

A) shows the relationship between price and quantity supplied. 
B) indicates the quantity demanded at each price in a series of prices. 
C) graphs as an upsloping line. 
D) shows the relationship between income and spending. 
A) shows the relationship between price and quantity supplied. 
B) indicates the quantity demanded at each price in a series of prices. 
C) graphs as an upsloping line. 
D) shows the relationship between income and spending. B

Question 3

A decrease in the price of digital cameras will cause the demand for memory cards to shift to the left.

Accepted Answer

A) True 
 B)False  False

Question 4

Use supply and demand analysis to explain what is most likely to happen to the price and quantity of pink salmon when there is a large increase in the supply of pink salmon due to technological improvements in fishing boats that make them larger and more efficient and at the same time there is a small decrease in demand for pink salmon as consumers' tastes change to preferring other kinds of fish.

Accepted Answer

The supply curve will shift to the right

Question 5

In the market for crude oil, if the change in demand due to the falling price of natural gas (a substitute for oil)is greater than the change in supply due to disruptions in oil-well operations in the Middle East, then the equilibrium price of oil will decrease.

Accepted Answer

A) True 
 B)False

Question 6

The supply curve shows the relationship between

Accepted Answer

A) price and quantity supplied. 
B) production costs and the amount demanded. 
C) total business revenues and quantity supplied. 
D) physical inputs of resources and the resulting units of output. 
A) price and quantity supplied. 
B) production costs and the amount demanded. 
C) total business revenues and quantity supplied. 
D) physical inputs of resources and the resulting units of output.

Question 7

An increase in consumer incomes will cause a decrease in the demand for an inferior good.

Accepted Answer

A) True 
 B)False

Question 8

Suppose the U.S. Congress is considering passing an excise tax that would increase the price of a pack of cigarettes by $1.00. What would be the likely effect of this change on the demand and supply of cigarettes? What is likely to happen to cigarette prices and the quantity consumed if the tax bill is enacted?

Accepted Answer

If the excise tax passes, the supply of

Question 9

If there is a surplus in a market, competition among the sellers will drive price down.

Accepted Answer

A) True 
 B)False

Question 10

What is meant by the rationing function of prices?

Accepted Answer

The rationing function of pric

Question 11

Describe in words how one can recognize the market equilibrium point in a graph of a demand schedule and a supply schedule.

Accepted Answer

One can recognize the market equilibrium

Question 12

Surpluses drive market prices up; shortages drive them down.

Accepted Answer

A) True 
 B)False

Question 13

Dynamic pricing refers to

Accepted Answer

A) the ability to set equilibrium prices in real time in response to changing supply and demand conditions. 
B) the rapid inflation that occurs in economies without a stable money supply. 
C) pricing tickets so low that an athletic or artistic event is guaranteed to sell out and create a buzz among fans. 
D) reselling a good at a price above its original purchase price. 
A) the ability to set equilibrium prices in real time in response to changing supply and demand conditions. 
B) the rapid inflation that occurs in economies without a stable money supply. 
C) pricing tickets so low that an athletic or artistic event is guaranteed to sell out and create a buzz among fans. 
D) reselling a good at a price above its original purchase price.

Question 14

"If demand increases and supply decreases, then both the equilibrium price and quantity will increase." What conditions are necessary to make this statement true?

Accepted Answer

For an increase in demand and a decrease

Question 15

List six determinants of market supply.

Accepted Answer

The six determinants of supply are: (1)a

Question 16

In understanding and analyzing "demand," we focus on how much of a product the buyers are

Accepted Answer

A) willing and wanting to buy. 
B) actually buying now and in the recent past. 
C) able to buy with their given income. 
D) willing and able to buy. 
A) willing and wanting to buy. 
B) actually buying now and in the recent past. 
C) able to buy with their given income. 
D) willing and able to buy.

Question 17

The rationing function of prices refers to the fact that government must distribute any surplus goods that may be left in a competitive market.

Accepted Answer

A) True 
 B)False

Question 18

Digital cameras and memory cards are

Accepted Answer

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

Question 19

If we observe that the price of gold is rising and the quantity of gold traded in the market is falling, then this must be the result of an increase in the supply of gold.

Accepted Answer

A) True 
 B)False

Question 20

A normal good is one

Accepted Answer

A) whose amount demanded will increase as its price decreases. 
B) whose amount demanded will increase as its price increases. 
C) whose demand curve will shift leftward as incomes rise. 
D) for which its consumption varies directly with income. 
A) whose amount demanded will increase as its price decreases. 
B) whose amount demanded will increase as its price increases. 
C) whose demand curve will shift leftward as incomes rise. 
D) for which its consumption varies directly with income.

Exam 3: Demand, Supply, and Market Equilibrium

If the decrease in supply is less than the decrease in demand, then the equilibrium price will decrease.

A demand curve

A decrease in the price of digital cameras will cause the demand for memory cards to shift to the left.

In the market for crude oil, if the change in demand due to the falling price of natural gas (a substitute for oil)is greater than the change in supply due to disruptions in oil-well operations in the Middle East, then the equilibrium price of oil will decrease.

The supply curve shows the relationship between

An increase in consumer incomes will cause a decrease in the demand for an inferior good.

If there is a surplus in a market, competition among the sellers will drive price down.

What is meant by the rationing function of prices?

Describe in words how one can recognize the market equilibrium point in a graph of a demand schedule and a supply schedule.

Surpluses drive market prices up; shortages drive them down.

Dynamic pricing refers to

"If demand increases and supply decreases, then both the equilibrium price and quantity will increase." What conditions are necessary to make this statement true?

List six determinants of market supply.

In understanding and analyzing "demand," we focus on how much of a product the buyers are

The rationing function of prices refers to the fact that government must distribute any surplus goods that may be left in a competitive market.

Digital cameras and memory cards are

If we observe that the price of gold is rising and the quantity of gold traded in the market is falling, then this must be the result of an increase in the supply of gold.

A normal good is one

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, RD, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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