Question 1

If supply decreases and demand increases, then the equilibrium

Accepted Answer

A)  price will decrease and quantity will increase 
B)  price will increase and quantity will decrease 
C)  price will increase and quantity could increase, decrease, or remain the same 
D)  price could increase, decrease, or remain the same and quantity will increase 
E)  price will increase, decrease, or remain the same and quantity will decrease 
A)  price will decrease and quantity will increase 
B)  price will increase and quantity will decrease 
C)  price will increase and quantity could increase, decrease, or remain the same 
D)  price could increase, decrease, or remain the same and quantity will increase 
E)  price will increase, decrease, or remain the same and quantity will decrease C

Question 2

If the demand for a good increases when the price of another good increases, then these goods are

Accepted Answer

A)  complementary 
B)  normal 
C)  unrelated 
D)  substitutes 
E)  neither substitutes nor complementary 
A)  complementary 
B)  normal 
C)  unrelated 
D)  substitutes 
E)  neither substitutes nor complementary D

Question 3

The popular diet drug Redux was removed from the market in August 1997, after a Mayo Clinic report linked the drug to heart valve damage.
 a. Explain the effect of this action on membership at Gold's Gym, on enrollment at diet centers such as Weight Watchers, where clients learn to lose weight by exercising and eating right, and on sales of treadmills and exercise bikes.
 b. Would you expect people to switch to other diet drugs now that Redux has been banned? How would you explain the fact that sales of the most popular, and still legal, diet drug phentermine have plummeted since the Mayo clinic report was released?

Accepted Answer

a. It should increase demand for membership at Gold's Gym, for membership at Weight Watchers, and for treadmills and exercise bikes (substitutes for Redux).
 b. Yes, you would expect demand for phentermine to increase, ceteris paribus; however, people's taste for phentermine may have fallen after the Mayo report was issued, because of fear that phentermine, too, may be harmful.

Question 4

-In Exhibit C-6, the equilibrium price is

Accepted Answer

A)  $65 
B)  $60 
C)  $55 
D)  $50 
E)  $45 
A)  $65 
B)  $60 
C)  $55 
D)  $50 
E)  $45

Question 5

Consider two goods: gold jewelry and round-trip bus tickets to Urbana, Illinois. Which statement is most likely correct?

Accepted Answer

A)  They are inferior goods. 
B)  Their demand curves are quite similar. 
C)  They are complementary goods. 
D)  They are substitute goods. 
E)  They are neither inferior, similar, substitutes, nor complements. 
A)  They are inferior goods. 
B)  Their demand curves are quite similar. 
C)  They are complementary goods. 
D)  They are substitute goods. 
E)  They are neither inferior, similar, substitutes, nor complements.

Question 6

-In Exhibit C-10, which of the following could have caused the demand curve to shift from D1 to D2?

Accepted Answer

A)  an increase in income 
B)  an increase in the number of consumers in the market 
C)  an increase in the price of a substitute 
D)  an increase in the price of a complementary good 
E)  an expectation of higher prices in the future 
A)  an increase in income 
B)  an increase in the number of consumers in the market 
C)  an increase in the price of a substitute 
D)  an increase in the price of a complementary good 
E)  an expectation of higher prices in the future

Question 7

If the quantity demanded of a good is 100 units and the quantity supplied is 50 units, then the equilibrium quantity will be larger than 100 units.

Accepted Answer

A) True 
 B)False

Question 8

-In Exhibit C-12, suppose the demand curve shifts from D1 to D2 and the supply curve shifts from S1 to S2. To describe these events, you would say

Accepted Answer

A)  supply decreased and market increased 
B)  supply increased and demand decreased 
C)  supply decreased and demand decreased 
D)  quantity supplied decreased and quantity demanded increased 
E)  supply increased and demand increased 
A)  supply decreased and market increased 
B)  supply increased and demand decreased 
C)  supply decreased and demand decreased 
D)  quantity supplied decreased and quantity demanded increased 
E)  supply increased and demand increased

Question 9

Explain what will happen in the market for pagers as the technology used to produce them improves at the same time that the price of cellular phones decreases.

Accepted Answer

The technological improvement will incre

Question 10

Tickets to the Indiana-Purdue basketball game are usually sold out far in advance of game day and many people are disappointed because they cannot see the game. This suggests

Accepted Answer

A)  the price of the tickets must be higher than the equilibrium price because people consider them valuable 
B)  the price is set below the equilibrium level 
C)  the price is set above the equilibrium level 
D)  there is no excess demand or supply 
E)  the people deciding on what price to charge considered only the fixed capacity of the stadium 
A)  the price of the tickets must be higher than the equilibrium price because people consider them valuable 
B)  the price is set below the equilibrium level 
C)  the price is set above the equilibrium level 
D)  there is no excess demand or supply 
E)  the people deciding on what price to charge considered only the fixed capacity of the stadium

Question 11

Suppose you like shoes and your income doubles. If shoes are a normal good, then the increase in your income will cause

Accepted Answer

A)  the market demand for shoes to shift to the left 
B)  the market demand for shoes to shift to the right 
C)  your quantity demanded of shoes to decrease 
D)  the market's quantity demanded of shoes to decrease 
E)  market demand for shoes to shift to the left and your own quantity demanded of shoes to shift to the right 
A)  the market demand for shoes to shift to the left 
B)  the market demand for shoes to shift to the right 
C)  your quantity demanded of shoes to decrease 
D)  the market's quantity demanded of shoes to decrease 
E)  market demand for shoes to shift to the left and your own quantity demanded of shoes to shift to the right

Question 12

The quantity demanded is always equal to the quantity supplied.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements correctly defines demand?

Accepted Answer

A)  peoples' willingness to supply goods at specific prices 
B)  the willingness and ability of people to buy goods and services at different prices 
C)  people's expectations of lower prices of goods and services 
D)  producer's expectations of selling more goods 
E)  the interaction of people's willingness to buy and sell goods 
A)  peoples' willingness to supply goods at specific prices 
B)  the willingness and ability of people to buy goods and services at different prices 
C)  people's expectations of lower prices of goods and services 
D)  producer's expectations of selling more goods 
E)  the interaction of people's willingness to buy and sell goods

Question 14

An increase in the supply of a good results in

Accepted Answer

A)  producers willing to supply less at every price level 
B)  the supply curve shifting to the left 
C)  some producers dropping out of this market 
D)  producers willing to supply more at every price level 
E)  an increase in the price of the good 
A)  producers willing to supply less at every price level 
B)  the supply curve shifting to the left 
C)  some producers dropping out of this market 
D)  producers willing to supply more at every price level 
E)  an increase in the price of the good

Question 15

Demand curves are downward sloping, reflecting the fact that people will buy

Accepted Answer

A)  less as the price decreases 
B)  more as the price increases 
C)  the same quantity regardless of price 
D)  more as the price decreases 
E)  less as incomes decrease 
A)  less as the price decreases 
B)  more as the price increases 
C)  the same quantity regardless of price 
D)  more as the price decreases 
E)  less as incomes decrease

Question 16

If two goods are substitutes, an increase in the price of one will cause the demand for the other to decrease.

Accepted Answer

A) True 
 B)False

Question 17

If there is an excess supply of a good on the market, then

Accepted Answer

A)  the price is lower than the equilibrium price 
B)  the quantity demanded exceeds the quantity supplied 
C)  the price will fall 
D)  there is a shortage of the good 
E)  the price will rise 
A)  the price is lower than the equilibrium price 
B)  the quantity demanded exceeds the quantity supplied 
C)  the price will fall 
D)  there is a shortage of the good 
E)  the price will rise

Question 18

-In Exhibit C-12, if the demand and supply curves shift from D1 to D2 and S1 to S2, the new equilibrium, when compared to the old, reflects a(n)

Accepted Answer

A)  increase in price and a decrease in quantity 
B)  decrease in price and a decrease in quantity 
C)  increase in price and an increase in quantity 
D)  decrease in price and an increase in quantity 
E)  decrease in price and no change in quantity 
A)  increase in price and a decrease in quantity 
B)  decrease in price and a decrease in quantity 
C)  increase in price and an increase in quantity 
D)  decrease in price and an increase in quantity 
E)  decrease in price and no change in quantity

Question 19

Matt Taylor is one of the fishermen who returns to the dock at the end of a fishing day with 720 fish in his boat. He and 40 other fishermen crowd the dock with their fish supplies while hundreds of people, eager to buy fish, make their demands felt on themarket. Matt knows that for the current fishing day

Accepted Answer

A)  price cannot change 
B)  the market-day supply curve is vertical 
C)  the market-day demand curve is vertical 
D)  quantity demanded is fixed 
E)  his short-run supply curve is upward sloping 
A)  price cannot change 
B)  the market-day supply curve is vertical 
C)  the market-day demand curve is vertical 
D)  quantity demanded is fixed 
E)  his short-run supply curve is upward sloping

Question 20

If two goods are complementary, a(n)

Accepted Answer

A)  decrease in the price of one good will cause a decrease in the demand for the other 
B)  decrease in the price of one good will cause an increase in the demand for the other 
C)  increase in the price of one good will cause an increase in the supply of the other 
D)  increase in the price of one good will cause a decrease in the supply of the other 
E)  increase in the price of one good will cause an increase in the demand for the other 
A)  decrease in the price of one good will cause a decrease in the demand for the other 
B)  decrease in the price of one good will cause an increase in the demand for the other 
C)  increase in the price of one good will cause an increase in the supply of the other 
D)  increase in the price of one good will cause a decrease in the supply of the other 
E)  increase in the price of one good will cause an increase in the demand for the other

If supply decreases and demand increases, then the equilibrium

If the demand for a good increases when the price of another good increases, then these goods are

-In Exhibit C-6, the equilibrium price is

Consider two goods: gold jewelry and round-trip bus tickets to Urbana, Illinois. Which statement is most likely correct?

-In Exhibit C-10, which of the following could have caused the demand curve to shift from D₁ to D₂?

If the quantity demanded of a good is 100 units and the quantity supplied is 50 units, then the equilibrium quantity will be larger than 100 units.

-In Exhibit C-12, suppose the demand curve shifts from D₁ to D₂and the supply curve shifts from S₁ to S₂. To describe these events, you would say

Explain what will happen in the market for pagers as the technology used to produce them improves at the same time that the price of cellular phones decreases.

Tickets to the Indiana-Purdue basketball game are usually sold out far in advance of game day and many people are disappointed because they cannot see the game. This suggests

Suppose you like shoes and your income doubles. If shoes are a normal good, then the increase in your income will cause

The quantity demanded is always equal to the quantity supplied.

Which of the following statements correctly defines demand?

An increase in the supply of a good results in

Demand curves are downward sloping, reflecting the fact that people will buy

If two goods are substitutes, an increase in the price of one will cause the demand for the other to decrease.

If there is an excess supply of a good on the market, then

-In Exhibit C-12, if the demand and supply curves shift from D₁ to D₂ and S₁ to S₂, the new equilibrium, when compared to the old, reflects a(n)

If two goods are complementary, a(n)

Introduction

Production Possibilities and Opportunity Costs

Elasticity

Happiness, Utility, and Consumer Choice

Price Ceilings and Price Floors

Entrepreneurship and Business Ownership

Costs of Production

Maximizing Profit

Identifying Markets and Market Structures

Price and Output in Monopoly, Monopolistic Competition, and Perfect Competition

Price and Output Determination Under Oligopoly

Antitrust and Regulation

Externalities, Market Failure, and Public Choice

Wage Rates in Competitive Labor Markets

Wages and Employment: Monopsony and Labor Unions

Interest, Rent, and Profit

Income Distribution and Poverty

International Trade

Exchange Rates, Balance of Payments, and International Debt

The Economic Problems of Less-Developed Economies

Filters

Exam 3: Demand and Supply

If supply decreases and demand increases, then the equilibrium

If the demand for a good increases when the price of another good increases, then these goods are

-In Exhibit C-6, the equilibrium price is

Consider two goods: gold jewelry and round-trip bus tickets to Urbana, Illinois. Which statement is most likely correct?

-In Exhibit C-10, which of the following could have caused the demand curve to shift from D1 to D2?

If the quantity demanded of a good is 100 units and the quantity supplied is 50 units, then the equilibrium quantity will be larger than 100 units.

-In Exhibit C-12, suppose the demand curve shifts from D1 to D2 and the supply curve shifts from S1 to S2. To describe these events, you would say

Explain what will happen in the market for pagers as the technology used to produce them improves at the same time that the price of cellular phones decreases.

Tickets to the Indiana-Purdue basketball game are usually sold out far in advance of game day and many people are disappointed because they cannot see the game. This suggests

Suppose you like shoes and your income doubles. If shoes are a normal good, then the increase in your income will cause

The quantity demanded is always equal to the quantity supplied.

Which of the following statements correctly defines demand?

An increase in the supply of a good results in

Demand curves are downward sloping, reflecting the fact that people will buy

If two goods are substitutes, an increase in the price of one will cause the demand for the other to decrease.

If there is an excess supply of a good on the market, then

-In Exhibit C-12, if the demand and supply curves shift from D1 to D2 and S1 to S2, the new equilibrium, when compared to the old, reflects a(n)

If two goods are complementary, a(n)

Introduction

Production Possibilities and Opportunity Costs

Elasticity

Happiness, Utility, and Consumer Choice

Price Ceilings and Price Floors

Entrepreneurship and Business Ownership

Costs of Production

Maximizing Profit

Identifying Markets and Market Structures

Price and Output in Monopoly, Monopolistic Competition, and Perfect Competition

Price and Output Determination Under Oligopoly

Antitrust and Regulation

Externalities, Market Failure, and Public Choice

Wage Rates in Competitive Labor Markets

Wages and Employment: Monopsony and Labor Unions

Interest, Rent, and Profit

Income Distribution and Poverty

International Trade

Exchange Rates, Balance of Payments, and International Debt

The Economic Problems of Less-Developed Economies

Filters

-In Exhibit C-10, which of the following could have caused the demand curve to shift from D₁ to D₂?

-In Exhibit C-12, suppose the demand curve shifts from D₁ to D₂and the supply curve shifts from S₁ to S₂. To describe these events, you would say

-In Exhibit C-12, if the demand and supply curves shift from D₁ to D₂ and S₁ to S₂, the new equilibrium, when compared to the old, reflects a(n)