Question 1

Suppose you make jewellery. If the price of silver falls, what would we expect you to do?

Accepted Answer

A)  be willing and able to produce less jewellery than before at each possible price 
B)  be willing and able to produce more jewellery than before at each possible price 
C)  face a greater demand for your jewellery 
D)  face a weaker demand for your jewellery 
A)  be willing and able to produce less jewellery than before at each possible price 
B)  be willing and able to produce more jewellery than before at each possible price 
C)  face a greater demand for your jewellery 
D)  face a weaker demand for your jewellery

Question 2

The law of supply states that, other things equal, when the price of a good rises, the quantity supplied of the good falls.

Accepted Answer

A) True 
 B)False

Question 3

If two goods are complements, what happens if there is a decrease in the price of one good?

Accepted Answer

A)  It increases the quantity demanded of the other good. 
B)  It reduces the demand for the other good. 
C)  It reduces the quantity demanded of the other good. 
D)  It raises the demand for the other good. 
A)  It increases the quantity demanded of the other good. 
B)  It reduces the demand for the other good. 
C)  It reduces the quantity demanded of the other good. 
D)  It raises the demand for the other good.

Question 4

What would result from an increase in the number of scholarships issued for university education?

Accepted Answer

A)  an increase in the supply of education 
B)  a decrease in the supply of education 
C)  an increase in the demand for education 
D)  a decrease in the demand for education 
A)  an increase in the supply of education 
B)  a decrease in the supply of education 
C)  an increase in the demand for education 
D)  a decrease in the demand for education

Question 5

Suppose that Carolyn receives a pay increase. What would we expect?

Accepted Answer

A)  Carolyn's demand for normal goods to remain unchanged. 
B)  Carolyn's demand for inferior goods to decrease. 
C)  Carolyn's demand for luxury goods to decrease. 
D)  Carolyn's demand for normal goods to decrease. 
A)  Carolyn's demand for normal goods to remain unchanged. 
B)  Carolyn's demand for inferior goods to decrease. 
C)  Carolyn's demand for luxury goods to decrease. 
D)  Carolyn's demand for normal goods to decrease.

Question 6

Funsters Inc. sells its most popular doll for $35. It has just learned that its leading competitor is mass producing an excellent copy and plans to flood the market with their $10 doll in six weeks. What should Funsters do?

Accepted Answer

A)  increase the supply of their doll now before the other doll hits the market 
B)  fight fire with fire and decrease supply for six weeks, then increase the supply of its doll too 
C)  continue business as usual, since consumers will not buy the cheaper imitation 
D)  discontinue their doll 
A)  increase the supply of their doll now before the other doll hits the market 
B)  fight fire with fire and decrease supply for six weeks, then increase the supply of its doll too 
C)  continue business as usual, since consumers will not buy the cheaper imitation 
D)  discontinue their doll

Question 7

Figure 4-5
  
-Refer to the Figure 4-5. Which of the four graphs represents the market for oranges after disease impacts much of the Florida orange harvest?

Accepted Answer

A)  graph A 
B)  graph B 
C)  graph C 
D)  graph D 
A)  graph A 
B)  graph B 
C)  graph C 
D)  graph D

Question 8

Market demand is given as QD = 40 - 2P. Market supply is given as QS = 2P. If price increases from $4 to $7, what is the price elasticity of demand?

Accepted Answer

A)  0.1 
B)  0.4 
C)  1.6 
D)  4.7 
A)  0.1 
B)  0.4 
C)  1.6 
D)  4.7

Question 9

Figure 4-5
  
-Refer to the Figure 4-5. Which of the four graphs shown illustrates a decrease in quantity demanded?

Accepted Answer

A)  graph A 
B)  graph B 
C)  graph C 
D)  graph D 
A)  graph A 
B)  graph B 
C)  graph C 
D)  graph D

Question 10

In a market, the price of any good adjusts until quantity demanded equals quantity supplied.

Accepted Answer

A) True 
 B)False

Question 11

Market demand is given as Qd = 300 - 2P. Market supply is given as Qs = 2P + 100. What would result if the market price were $15?

Accepted Answer

A)  a shortage of 25 
B)  a surplus of 25 
C)  a surplus of 140 
D)  a shortage of 140 
A)  a shortage of 25 
B)  a surplus of 25 
C)  a surplus of 140 
D)  a shortage of 140

Question 12

Assume the following demand and supply equations: Qd=900-20P, and Qs=150+10P.
a) Graph the two curves.
b) Calculate the slopes of the two curves.
c) Calculate the equilibrium price and quantity.
d) If the price was $30, how much would the quantity demanded be? (Show it on the graph)
e) If the price was $30, how much would the quantity supplied be? (Show it on the graph)

Accepted Answer

a) An easy way to draw the curves is to

Question 13

This question deals with demand and supply and refers you to the table below.
a. Given the table, graph the demand and supply curves for flashlights. Make certain to label equilibrium price and equilibrium quantity.
 
b. What is the equilibrium price and equilibrium quantity?
c. Suppose the price is currently at $5. What problem would exist in the economy? What would you expect to happen to price? Show this on your graph.
d. Suppose the price is currently $2. What problem exists in the economy? What would you expect to happen to price? Show this on your graph.

Accepted Answer

a. @#IMG-DLM& 
b. Equilibrium price would be $4 an

Question 14

Figure 4-6
  
-Refer to the Figure 4-6. What is the shift from D to D₁
Called?

Accepted Answer

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

Question 15

What is step one in the three-step program for analyzing changes in equilibrium?

Accepted Answer

A)  Decide in which direction the curve shifts. 
B)  Decide whether the event shifts the supply or demand curve. 
C)  Use the supply-and-demand diagram to see how the shift changes the original equilibrium. 
D)  Analyze how equilibrium price and quantity have changed. 
A)  Decide in which direction the curve shifts. 
B)  Decide whether the event shifts the supply or demand curve. 
C)  Use the supply-and-demand diagram to see how the shift changes the original equilibrium. 
D)  Analyze how equilibrium price and quantity have changed.

Question 16

What happens when there is a surplus in a market?

Accepted Answer

A)  There is upward pressure on price. 
B)  There is downward pressure on price. 
C)  The market is operating below the equilibrium level. 
D)  There are too many buyers chasing too few goods. 
A)  There is upward pressure on price. 
B)  There is downward pressure on price. 
C)  The market is operating below the equilibrium level. 
D)  There are too many buyers chasing too few goods.

Question 17

Figure 4-1
  
-Refer to the Figure 4-1. What could cause the movement from S to S1?

Accepted Answer

A)  a decrease in the price of the good 
B)  an improvement in technology 
C)  an increase in income 
D)  an increase in input prices 
A)  a decrease in the price of the good 
B)  an improvement in technology 
C)  an increase in income 
D)  an increase in input prices

Question 18

If buyers now wanted to purchase larger quantities of a soft drink, what do we know about its demand curve?

Accepted Answer

A)  The demand curve for soft drinks would shift to the left. 
B)  We would move down the demand curve for soft drinks. 
C)  The demand curve for soft drinks would shift to the right. 
D)  We would move up the demand curve for soft drinks. 
A)  The demand curve for soft drinks would shift to the left. 
B)  We would move down the demand curve for soft drinks. 
C)  The demand curve for soft drinks would shift to the right. 
D)  We would move up the demand curve for soft drinks.

Question 19

Market demand is given as Qd = 300 - 0.5P. Market supply is given as Qs = 50 + 2P. What would result if the market price were $140?

Accepted Answer

A)  a shortage of 100 
B)  a surplus of 100 
C)  a surplus of 280 
D)  a shortage of 280 
A)  a shortage of 100 
B)  a surplus of 100 
C)  a surplus of 280 
D)  a shortage of 280

Question 20

A movement along a supply curve is called a change in supply while a shift of the curve is called a change in quantity supplied.

Accepted Answer

A) True 
 B)False

Suppose you make jewellery. If the price of silver falls, what would we expect you to do?

The law of supply states that, other things equal, when the price of a good rises, the quantity supplied of the good falls.

If two goods are complements, what happens if there is a decrease in the price of one good?

What would result from an increase in the number of scholarships issued for university education?

Suppose that Carolyn receives a pay increase. What would we expect?

Funsters Inc. sells its most popular doll for $35. It has just learned that its leading competitor is mass producing an excellent copy and plans to flood the market with their $10 doll in six weeks. What should Funsters do?

Figure 4-5 -Refer to the Figure 4-5. Which of the four graphs represents the market for oranges after disease impacts much of the Florida orange harvest?

Market demand is given as QD = 40 - 2P. Market supply is given as QS = 2P. If price increases from $4 to $7, what is the price elasticity of demand?

Figure 4-5 -Refer to the Figure 4-5. Which of the four graphs shown illustrates a decrease in quantity demanded?

In a market, the price of any good adjusts until quantity demanded equals quantity supplied.

Market demand is given as Qd = 300 - 2P. Market supply is given as Qs = 2P + 100. What would result if the market price were $15?

Figure 4-6 -Refer to the Figure 4-6. What is the shift from D to D₁ Called?

What is step one in the three-step program for analyzing changes in equilibrium?

What happens when there is a surplus in a market?

Figure 4-1 -Refer to the Figure 4-1. What could cause the movement from S to S1?

If buyers now wanted to purchase larger quantities of a soft drink, what do we know about its demand curve?

Market demand is given as Qd = 300 - 0.5P. Market supply is given as Qs = 50 + 2P. What would result if the market price were $140?

A movement along a supply curve is called a change in supply while a shift of the curve is called a change in quantity supplied.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 4: The Market Forces of Supply and Demand

Suppose you make jewellery. If the price of silver falls, what would we expect you to do?

The law of supply states that, other things equal, when the price of a good rises, the quantity supplied of the good falls.

If two goods are complements, what happens if there is a decrease in the price of one good?

What would result from an increase in the number of scholarships issued for university education?

Suppose that Carolyn receives a pay increase. What would we expect?

Funsters Inc. sells its most popular doll for $35. It has just learned that its leading competitor is mass producing an excellent copy and plans to flood the market with their $10 doll in six weeks. What should Funsters do?

Figure 4-5 -Refer to the Figure 4-5. Which of the four graphs represents the market for oranges after disease impacts much of the Florida orange harvest?

Market demand is given as QD = 40 - 2P. Market supply is given as QS = 2P. If price increases from $4 to $7, what is the price elasticity of demand?

Figure 4-5 -Refer to the Figure 4-5. Which of the four graphs shown illustrates a decrease in quantity demanded?

In a market, the price of any good adjusts until quantity demanded equals quantity supplied.

Market demand is given as Qd = 300 - 2P. Market supply is given as Qs = 2P + 100. What would result if the market price were $15?

Figure 4-6 -Refer to the Figure 4-6. What is the shift from D to D₁ Called?

What is step one in the three-step program for analyzing changes in equilibrium?

What happens when there is a surplus in a market?

Figure 4-1 -Refer to the Figure 4-1. What could cause the movement from S to S1?

If buyers now wanted to purchase larger quantities of a soft drink, what do we know about its demand curve?

Market demand is given as Qd = 300 - 0.5P. Market supply is given as Qs = 50 + 2P. What would result if the market price were $140?

A movement along a supply curve is called a change in supply while a shift of the curve is called a change in quantity supplied.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters