Question 1

Which of the following events would increase the supply of tomatoes?

Accepted Answer

A)  an increase in the demand for tomatoes 
B)  an increase in the wages of people harvesting tomatoes 
C)  a decrease in the cost of fertilizers for tomato plants 
D)  an increase in the price of tomatoes 
E)  a decrease in the price of tomatoes 
A)  an increase in the demand for tomatoes 
B)  an increase in the wages of people harvesting tomatoes 
C)  a decrease in the cost of fertilizers for tomato plants 
D)  an increase in the price of tomatoes 
E)  a decrease in the price of tomatoes

Question 2

A short-run decision for a muffin shop would be to lay off some workers.

Accepted Answer

A) True 
 B)False

Question 3

If both supply and demand decrease and the shift in demand dominates, which of the following happens?

Accepted Answer

A)  The equilibrium quantity increases. 
B)  The equilibrium price and the equilibrium quantity decrease. 
C)  The equilibrium price decreases and equilibrium quantity increases. 
D)  The equilibrium quantity increases and the equilibrium price change is indeterminate. 
E)  The equilibrium price increases and the equilibrium quantity decreases. 
A)  The equilibrium quantity increases. 
B)  The equilibrium price and the equilibrium quantity decrease. 
C)  The equilibrium price decreases and equilibrium quantity increases. 
D)  The equilibrium quantity increases and the equilibrium price change is indeterminate. 
E)  The equilibrium price increases and the equilibrium quantity decreases.

Question 4

A surplus of a good means

Accepted Answer

A)  there is an excess demand for this good 
B)  the price is lower than its equilibrium level 
C)  the quantity demanded exceeds the quantity supplied 
D)  the quantity supplied is less than the quantity demanded 
E)  there is an excess supply of the good 
A)  there is an excess demand for this good 
B)  the price is lower than its equilibrium level 
C)  the quantity demanded exceeds the quantity supplied 
D)  the quantity supplied is less than the quantity demanded 
E)  there is an excess supply of the good

Question 5

Which of the following is true about the short-run and long-run supply curves?

Accepted Answer

A)  The long-run supply curve is steeper than the short-run supply curve. 
B)  The long-run supply curve is vertical while the short-run supply curve is flatter. 
C)  The long-run supply curve is horizontal while the short-run supply curve is vertical. 
D)  The long-run supply curve is less steep than the short-run supply curve. 
E)  The long-run and short-run supply curves have the same slope. 
A)  The long-run supply curve is steeper than the short-run supply curve. 
B)  The long-run supply curve is vertical while the short-run supply curve is flatter. 
C)  The long-run supply curve is horizontal while the short-run supply curve is vertical. 
D)  The long-run supply curve is less steep than the short-run supply curve. 
E)  The long-run and short-run supply curves have the same slope.

Question 6

Equilibrium price is best described as the price

Accepted Answer

A)  at which excess demand is less than excess supply 
B)  at which there is an excess demand 
C)  at which there is an excess supply 
D)  that tends to fall because of an excess supply 
E)  at which excess demand and excess supply equal zero 
A)  at which excess demand is less than excess supply 
B)  at which there is an excess demand 
C)  at which there is an excess supply 
D)  that tends to fall because of an excess supply 
E)  at which excess demand and excess supply equal zero

Question 7

At a price of $5, Sam buys 10 units of a product. When the price increases to $6, Sambuys 8 units. Martha says Sam's demand has decreased. Is Martha correct?

Accepted Answer

A)  Yes, Martha is correct. Sam's demand decreased from 10 to 8 units. 
B)  No, Martha is incorrect. Sam's demand increased because price increased from $5 to $6. 
C)  No, Martha is incorrect. The quantity demanded decreased from 10 to 8 units but his demand remains unchanged. 
D)  No, Martha is incorrect. The quantity supplied to Sam has decreased from 8 units to 10 units but his demand remains unchanged. 
E)  No, Martha is incorrect. Sam's demand has increased, and his quantity demanded has decreased from 10 units to 8 units. 
A)  Yes, Martha is correct. Sam's demand decreased from 10 to 8 units. 
B)  No, Martha is incorrect. Sam's demand increased because price increased from $5 to $6. 
C)  No, Martha is incorrect. The quantity demanded decreased from 10 to 8 units but his demand remains unchanged. 
D)  No, Martha is incorrect. The quantity supplied to Sam has decreased from 8 units to 10 units but his demand remains unchanged. 
E)  No, Martha is incorrect. Sam's demand has increased, and his quantity demanded has decreased from 10 units to 8 units.

Question 8

In the summer of 1993, there were devastating floods in the midwestern portion of the United States where corn is produced. What effect do you think these floods had on the price of corn and beef? What do you think happened to Canadian corn farmers?

Accepted Answer

Corn prices rose because of a decrease i

Question 9

An increase in consumers' incomes raises the equilibrium price and quantity of fine clothing.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is true of the relationship between price and quantity supplied?

Accepted Answer

A)  Whatever the price level, quantity supplied is equal to quantity demanded. 
B)  More is supplied at lower prices. 
C)  As the price rises, consumers are willing to purchase more of the good supplied. 
D)  Except for market-day supply, an increase in price generates an increase in quantity supplied. 
E)  An increase in price leads to a decrease in quantity supplied. 
A)  Whatever the price level, quantity supplied is equal to quantity demanded. 
B)  More is supplied at lower prices. 
C)  As the price rises, consumers are willing to purchase more of the good supplied. 
D)  Except for market-day supply, an increase in price generates an increase in quantity supplied. 
E)  An increase in price leads to a decrease in quantity supplied.

Question 11

The short-run supply curve for a good is upward sloping because it is possible for producers to completely adjust the resources used in production in response to price changes.

Accepted Answer

A) True 
 B)False

Question 12

The demand for fish today decreases if there are expectations that the price of fish may increase in the future.

Accepted Answer

A) True 
 B)False

Question 13

Expectations of future prices affect demand but not supply.

Accepted Answer

A) True 
 B)False

Question 14

If both supply and demand decrease, which of the following happens?

Accepted Answer

A)  The equilibrium quantity increases. 
B)  The equilibrium price and the equilibrium quantity increase. 
C)  The equilibrium price and the equilibrium quantity decrease. 
D)  The equilibrium price decreases and the equilibrium quantity is indeterminate. 
E)  The equilibrium quantity decreases and the equilibrium price change is indeterminate. 
A)  The equilibrium quantity increases. 
B)  The equilibrium price and the equilibrium quantity increase. 
C)  The equilibrium price and the equilibrium quantity decrease. 
D)  The equilibrium price decreases and the equilibrium quantity is indeterminate. 
E)  The equilibrium quantity decreases and the equilibrium price change is indeterminate.

Question 15

If parking is a very scarce commodity on your campus, but a parking lot with bus service is available at a distant location for no charge, what policy would you recommend to the president to increase the student use of this distant, but "free," lot?

Accepted Answer

If the price of clos

Question 16

A change in demand for milk is caused by a change in the price of milk.

Accepted Answer

A) True 
 B)False

Question 17

An increase in the demand for a good refers to a shift in the

Accepted Answer

A)  demand curve to the left 
B)  demand curve to the right 
C)  quantity demanded to the right 
D)  quantity demanded to the left 
E)  price of the good 
A)  demand curve to the left 
B)  demand curve to the right 
C)  quantity demanded to the right 
D)  quantity demanded to the left 
E)  price of the good

Question 18

-In Exhibit C-9, the original market equilibrium is determined by D1 and S1. Suppose demand shifts to D2. The new equilibrium price is _________ than the originaland ______________.

Accepted Answer

A)  lower; quantity is greater 
B)  higher; quantity is lower 
C)  lower; quantity is greater. 
D)  higher; quantity is greater 
E)  lower; quantity is unchanged 
A)  lower; quantity is greater 
B)  higher; quantity is lower 
C)  lower; quantity is greater. 
D)  higher; quantity is greater 
E)  lower; quantity is unchanged

Question 19

An excess supply will cause price to fall.

Accepted Answer

A) True 
 B)False

Question 20

If the quantity demanded of flashlights is 140,000 and the quantity supplied of flashlights is 80,000, then there is an excess supply of 60,000 flashlights.

Accepted Answer

A) True 
 B)False

Exam 3: Demand and Supply

Which of the following events would increase the supply of tomatoes?

A short-run decision for a muffin shop would be to lay off some workers.

If both supply and demand decrease and the shift in demand dominates, which of the following happens?

A surplus of a good means

Which of the following is true about the short-run and long-run supply curves?

Equilibrium price is best described as the price

At a price of $5, Sam buys 10 units of a product. When the price increases to $6, Sambuys 8 units. Martha says Sam's demand has decreased. Is Martha correct?

In the summer of 1993, there were devastating floods in the midwestern portion of the United States where corn is produced. What effect do you think these floods had on the price of corn and beef? What do you think happened to Canadian corn farmers?

An increase in consumers' incomes raises the equilibrium price and quantity of fine clothing.

Which of the following is true of the relationship between price and quantity supplied?

The short-run supply curve for a good is upward sloping because it is possible for producers to completely adjust the resources used in production in response to price changes.

The demand for fish today decreases if there are expectations that the price of fish may increase in the future.

Expectations of future prices affect demand but not supply.

If both supply and demand decrease, which of the following happens?

If parking is a very scarce commodity on your campus, but a parking lot with bus service is available at a distant location for no charge, what policy would you recommend to the president to increase the student use of this distant, but "free," lot?

A change in demand for milk is caused by a change in the price of milk.

An increase in the demand for a good refers to a shift in the

-In Exhibit C-9, the original market equilibrium is determined by D1 and S1. Suppose demand shifts to D2. The new equilibrium price is _________ than the originaland ______________.

An excess supply will cause price to fall.

If the quantity demanded of flashlights is 140,000 and the quantity supplied of flashlights is 80,000, then there is an excess supply of 60,000 flashlights.

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-9, the original market equilibrium is determined by D₁ and S₁. Suppose demand shifts to D₂. The new equilibrium price is _ than the originaland ______.