Question 1

Figure 3-1
  
-Refer to Figure 3-1.An increase in the price of a substitute would be represented by a movement from

Accepted Answer

A) A to B. 
B) B to A. 
C) D₁ to D₂. 
D) D₂ to D₁. 
A) A to B. 
B) B to A. 
C) D₁ to D₂. 
D) D₂ to D₁.

Question 2

Suppose favorable weather resulted in a bumper crop of oranges in Florida.In the market for oranges

Accepted Answer

A) the supply curve shifted to the right resulting in a decrease in the equilibrium price. 
B) the supply curve shifted to the right resulting in an increase in the equilibrium price. 
C) the demand curve shifted to the left resulting in a decrease in the equilibrium price. 
D) the demand curve shifted to the right resulting in an increase in the equilibrium price. 
A) the supply curve shifted to the right resulting in a decrease in the equilibrium price. 
B) the supply curve shifted to the right resulting in an increase in the equilibrium price. 
C) the demand curve shifted to the left resulting in a decrease in the equilibrium price. 
D) the demand curve shifted to the right resulting in an increase in the equilibrium price.

Question 3

Which of the following statements is true?

Accepted Answer

A) An increase in demand causes a change in equilibrium price; the change in price does not cause a further change in demand or supply. 
B) A decrease in supply causes equilibrium price to rise; the increase in price then results in a decrease in demand. 
C) If both demand and supply increase there must be an increase in equilibrium price; equilibrium quantity may either increase or decrease. 
D) If demand decreases and supply increases one cannot determine if equilibrium price will increase or decrease without knowing which change is greater. 
A) An increase in demand causes a change in equilibrium price; the change in price does not cause a further change in demand or supply. 
B) A decrease in supply causes equilibrium price to rise; the increase in price then results in a decrease in demand. 
C) If both demand and supply increase there must be an increase in equilibrium price; equilibrium quantity may either increase or decrease. 
D) If demand decreases and supply increases one cannot determine if equilibrium price will increase or decrease without knowing which change is greater.

Question 4

At a product's equilibrium price

Accepted Answer

A) anyone who needs the product will be able to buy the product, regardless of ability to pay. 
B) the federal government will provide the product to anyone who cannot afford it. 
C) not all sellers who are willing to accept the price will find buyers for their products. 
D) any buyer who is willing and able to pay the price will find a seller for the product. 
A) anyone who needs the product will be able to buy the product, regardless of ability to pay. 
B) the federal government will provide the product to anyone who cannot afford it. 
C) not all sellers who are willing to accept the price will find buyers for their products. 
D) any buyer who is willing and able to pay the price will find a seller for the product.

Question 5

What are the two effects that explain the Law of Demand? Briefly explain each effect.

Accepted Answer

The two effects that explain the Law of

Question 6

The income effect explains why there is a direct relationship between the price of a product and the quantity of the product demanded.

Accepted Answer

A) True 
 B)False

Question 7

Figure 3-1
  
-Refer to Figure 3-1.A decrease in taste or preference would be represented by a movement from

Accepted Answer

A) A to B. 
B) B to A. 
C) D₁ to D₂. 
D) D₂ to D₁. 
A) A to B. 
B) B to A. 
C) D₁ to D₂. 
D) D₂ to D₁.

Question 8

In each of the following situations,list what will happen to the equilibrium price and the equilibrium quantity for a particular product,which is an inferior good.
a.The population increases and productivity increases
b.The income increases and the price of inputs decrease
c.The number of firms in the market decreases and income increases
d.Consumer preference increases and the price of a complement decreases
e.The price of a substitute in consumption decreases and the price of a substitute in production decreases

Accepted Answer

a. Quantity increases; Price may increas

Question 9

What is a surplus? What is a shortage?

Accepted Answer

A surplus is a situation in wh

Question 10

If tablet computers are considered substitutes for e-readers,the decline in the price of e-readers would,all else equal

Accepted Answer

A) increase the demand for tablet computers. 
B) decrease the demand for tablet computers. 
C) increase the quantity of tablet computers demanded. 
D) decrease the quantity of tablet computers demanded. 
A) increase the demand for tablet computers. 
B) decrease the demand for tablet computers. 
C) increase the quantity of tablet computers demanded. 
D) decrease the quantity of tablet computers demanded.

Question 11

Which of the following statements is true?

Accepted Answer

A) A decrease in demand causes a decrease in equilibrium price; the decrease in price causes supply to decrease. 
B) A decrease in demand causes equilibrium price to fall; the decrease in price then results in a decrease in quantity supplied. 
C) If both demand and supply increase, there must be an increase in equilibrium price; equilibrium quantity may either increase or decrease. 
D) If demand decreases and supply increases one cannot determine if equilibrium price will increase or decrease without knowing which change is greater. 
A) A decrease in demand causes a decrease in equilibrium price; the decrease in price causes supply to decrease. 
B) A decrease in demand causes equilibrium price to fall; the decrease in price then results in a decrease in quantity supplied. 
C) If both demand and supply increase, there must be an increase in equilibrium price; equilibrium quantity may either increase or decrease. 
D) If demand decreases and supply increases one cannot determine if equilibrium price will increase or decrease without knowing which change is greater.

Question 12

Last month,the Tecumseh Corporation supplied 400 units of three-ring binders at $6 per unit.This month,the company supplied the same quantity of binders at $4 per unit.Based on this evidence,Tecumseh has experienced

Accepted Answer

A) a decrease in supply. 
B) an increase in supply. 
C) an increase in the quantity supplied. 
D) a decrease in the quantity supplied. 
A) a decrease in supply. 
B) an increase in supply. 
C) an increase in the quantity supplied. 
D) a decrease in the quantity supplied.

Question 13

Table 3-6
 $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Price per } \
\text { Bushel }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Demanded } \
\text { (bushels) }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Supplied } \
\text { (bushels) }
\end{array} \
\hline \$ 2 & 40,000 & 0 \
\hline 4 & 36,000 & 4,000 \
\hline 6 & 30,000 & 8,000 \
\hline 8 & 24,000 & 16,000 \
\hline 10 & 20,000 & 20,000 \
\hline 12 & 18,000 & 28,000 \
\hline 14 & 12,000 & 36,000 \
\hline 16 & 6,000 & 40,000 \
\hline
\end{array}$$
-Refer to Table 3-6.The table contains information about the sorghum market.Use the table to answer the following questions.
a.What are the equilibrium price and quantity of sorghum?
b.Suppose the prevailing price is $6 per bushel.Is there a shortage or a surplus in the market?
c.What is the quantity of the shortage or surplus?
d.How many bushels will be sold if the market price is $6 per bushel?
e.If the market price is $6 per bushel,what must happen to restore equilibrium in the market?
f.At what price will suppliers be able to sell 36,000 bushels of sorghum?
g.Suppose the market price is $14 per bushel.Is there a shortage or a surplus in the market?
h.What is the quantity of the shortage or surplus?
i.How many bushels will be sold if the market price is $14 per bushel?
j.If the market price is $14 per bushel,what must happen to restore equilibrium in the market?

Accepted Answer

a. Equilibrium price = $10; Equilibrium

Question 14

If an increase in income leads to an decrease in the demand for salami,then salami is

Accepted Answer

A) an inferior good. 
B) a neutral good. 
C) a necessity. 
D) a normal good. 
A) an inferior good. 
B) a neutral good. 
C) a necessity. 
D) a normal good.

Question 15

For each of the following pairs of products state which are complements,which are substitutes,and which are unrelated.
a.Swim fins and scuba tanks
b.Coca Cola and Volkswagens
c.Printers and ink cartridges
d.Ice and ice chests
e.Heineken and Corona

Accepted Answer

a. Complements
b. Un

Question 16

In July,market analysts predict that the price of gold will rise in August.What happens in the gold market in July,holding everything else constant?

Accepted Answer

A) The supply curve shifts to the right. 
B) The supply curve shifts to the left. 
C) The quantity demanded and the quantity supplied of gold increase. 
D) The demand curve shifts to the left. 
A) The supply curve shifts to the right. 
B) The supply curve shifts to the left. 
C) The quantity demanded and the quantity supplied of gold increase. 
D) The demand curve shifts to the left.

Question 17

An decrease in quantity supplied is represented by a leftward shift of the supply curve.

Accepted Answer

A) True 
 B)False

Question 18

Figure 3-5
  
-Refer to Figure 3-5.At a price of $20,the quantity sold

Accepted Answer

A) is 0 units. 
B) is 4 units. 
C) is 8 units. 
D) cannot be determined. 
A) is 0 units. 
B) is 4 units. 
C) is 8 units. 
D) cannot be determined.

Question 19

Explain the differences between a change in supply and a change in quantity supplied.

Accepted Answer

A change in supply refers to a shift of

Question 20

A movement along the demand curve for toothpaste would be caused by

Accepted Answer

A) a change in the price of toothbrushes. 
B) a change in consumer income. 
C) a change in the price of toothpaste. 
D) a change in population. 
A) a change in the price of toothbrushes. 
B) a change in consumer income. 
C) a change in the price of toothpaste. 
D) a change in population.

Figure 3-1 -Refer to Figure 3-1.An increase in the price of a substitute would be represented by a movement from

Suppose favorable weather resulted in a bumper crop of oranges in Florida.In the market for oranges

Which of the following statements is true?

At a product's equilibrium price

What are the two effects that explain the Law of Demand? Briefly explain each effect.

The income effect explains why there is a direct relationship between the price of a product and the quantity of the product demanded.

Figure 3-1 -Refer to Figure 3-1.A decrease in taste or preference would be represented by a movement from

What is a surplus? What is a shortage?

If tablet computers are considered substitutes for e-readers,the decline in the price of e-readers would,all else equal

Which of the following statements is true?

Last month,the Tecumseh Corporation supplied 400 units of three-ring binders at $6 per unit.This month,the company supplied the same quantity of binders at $4 per unit.Based on this evidence,Tecumseh has experienced

If an increase in income leads to an decrease in the demand for salami,then salami is

For each of the following pairs of products state which are complements,which are substitutes,and which are unrelated. a.Swim fins and scuba tanks b.Coca Cola and Volkswagens c.Printers and ink cartridges d.Ice and ice chests e.Heineken and Corona

In July,market analysts predict that the price of gold will rise in August.What happens in the gold market in July,holding everything else constant?

An decrease in quantity supplied is represented by a leftward shift of the supply curve.

Figure 3-5 -Refer to Figure 3-5.At a price of $20,the quantity sold

Explain the differences between a change in supply and a change in quantity supplied.

A movement along the demand curve for toothpaste would be caused by

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

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Exam 3: Where Prices Come From: the Interaction of Demand and Supply

Figure 3-1 -Refer to Figure 3-1.An increase in the price of a substitute would be represented by a movement from

Suppose favorable weather resulted in a bumper crop of oranges in Florida.In the market for oranges

Which of the following statements is true?

At a product's equilibrium price

What are the two effects that explain the Law of Demand? Briefly explain each effect.

The income effect explains why there is a direct relationship between the price of a product and the quantity of the product demanded.

Figure 3-1 -Refer to Figure 3-1.A decrease in taste or preference would be represented by a movement from

What is a surplus? What is a shortage?

If tablet computers are considered substitutes for e-readers,the decline in the price of e-readers would,all else equal

Which of the following statements is true?

Last month,the Tecumseh Corporation supplied 400 units of three-ring binders at $6 per unit.This month,the company supplied the same quantity of binders at $4 per unit.Based on this evidence,Tecumseh has experienced

If an increase in income leads to an decrease in the demand for salami,then salami is

For each of the following pairs of products state which are complements,which are substitutes,and which are unrelated. a.Swim fins and scuba tanks b.Coca Cola and Volkswagens c.Printers and ink cartridges d.Ice and ice chests e.Heineken and Corona

In July,market analysts predict that the price of gold will rise in August.What happens in the gold market in July,holding everything else constant?

An decrease in quantity supplied is represented by a leftward shift of the supply curve.

Figure 3-5 -Refer to Figure 3-5.At a price of $20,the quantity sold

Explain the differences between a change in supply and a change in quantity supplied.

A movement along the demand curve for toothpaste would be caused by

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters