Question 1

Figure 3-2
  
-Refer to Figure 3-2.A decrease in the number of firms in the market would be represented by a movement from

Accepted Answer

A) A to B. 
B) B to A. 
C) S₁ to S₂. 
D) S₂ to S₁. 
A) A to B. 
B) B to A. 
C) S₁ to S₂. 
D) S₂ to S₁.

Question 2

Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall.Holding everything else constant,how would this affect the market for Blu-ray players (a complement to LCD televisions)?

Accepted Answer

A) The supply of Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease. 
B) The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would increase. 
C) The demand for Blu-ray players would decrease because consumers could afford to buy fewer LCD televisions and Blu-ray players. 
D) The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease. 
A) The supply of Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease. 
B) The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would increase. 
C) The demand for Blu-ray players would decrease because consumers could afford to buy fewer LCD televisions and Blu-ray players. 
D) The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease.

Question 3

The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in purchasing power as a result of the price change.

Accepted Answer

A) True 
 B)False

Question 4

Holding everything else constant,a decrease in the price of bicycles will result in

Accepted Answer

A) a decrease in the quantity of bicycles demanded. 
B) an increase in the demand for bicycles. 
C) a decrease in the supply of bicycles. 
D) an increase in the quantity of bicycles demanded. 
A) a decrease in the quantity of bicycles demanded. 
B) an increase in the demand for bicycles. 
C) a decrease in the supply of bicycles. 
D) an increase in the quantity of bicycles demanded.

Question 5

The cost of raising beef cattle has risen at the same time as consumer preference for beef has fallen.In the market for beef,this would be represented by the equilibrium price ________ and the equilibrium quantity ________.

Accepted Answer

A) increasing; increasing or decreasing 
B) increasing or decreasing; decreasing 
C) decreasing; increasing or decreasing 
D) increasing or decreasing; increasing 
A) increasing; increasing or decreasing 
B) increasing or decreasing; decreasing 
C) decreasing; increasing or decreasing 
D) increasing or decreasing; increasing

Question 6

Which of the following would cause an increase in the supply of cheese?

Accepted Answer

A) a decrease in the price of wine (assuming that cheese and wine are complements) 
B) an increase in the price of cheese 
C) an increase the price of a product that producers sell instead of cheese 
D) an increase in the number of firms that produce cheese 
A) a decrease in the price of wine (assuming that cheese and wine are complements) 
B) an increase in the price of cheese 
C) an increase the price of a product that producers sell instead of cheese 
D) an increase in the number of firms that produce cheese

Question 7

Figure 3-4
  
-Refer to Figure 3-4.At a price of $20,how many units will be supplied?

Accepted Answer

A) 400 
B) 500 
C) 600 
D) 800 
A) 400 
B) 500 
C) 600 
D) 800

Question 8

Figure 3-8
  
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D₂ and S₂ (point E) If the technology to produce motorcycles improves and the number of buyers increases, how will the equilibrium point change?

Accepted Answer

A) The equilibrium point will move from E to A. 
B) The equilibrium point will move from E to B. 
C) The equilibrium point will move from E to C. 
D) The equilibrium point will remain at E. 
A) The equilibrium point will move from E to A. 
B) The equilibrium point will move from E to B. 
C) The equilibrium point will move from E to C. 
D) The equilibrium point will remain at E.

Question 9

The income effect of a price change refers to the impact of a change in

Accepted Answer

A) income on the price of a good. 
B) demand when income changes. 
C) the quantity demanded when income changes. 
D) the price of a good on a consumer's purchasing power. 
A) income on the price of a good. 
B) demand when income changes. 
C) the quantity demanded when income changes. 
D) the price of a good on a consumer's purchasing power.

Question 10

The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in the price of a complementary product.

Accepted Answer

A) True 
 B)False

Question 11

In recent years the cost of producing wines in the U.S.has increased largely due to rising rents for vineyards.At the same time,more and more Americans prefer wine over beer.Which of the following best explains the effect of these events in the wine market?

Accepted Answer

A) The supply curve has shifted to the left and the demand curve has shifted to the right.As a result there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price. 
B) Both the supply and demand curves have shifted to the right.As a result, there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity. 
C) Both the supply and demand curves have shifted to the right.As a result, there has been an increase in both the equilibrium price and the equilibrium quantity. 
D) The supply curve has shifted to the left and the demand curve has shifted to the right.As a result, there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity. 
A) The supply curve has shifted to the left and the demand curve has shifted to the right.As a result there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price. 
B) Both the supply and demand curves have shifted to the right.As a result, there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity. 
C) Both the supply and demand curves have shifted to the right.As a result, there has been an increase in both the equilibrium price and the equilibrium quantity. 
D) The supply curve has shifted to the left and the demand curve has shifted to the right.As a result, there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity.

Question 12

If,in response to a decrease in the price of coffee,the quantity demanded of coffee increases,economists would describe this as

Accepted Answer

A) an increase in demand. 
B) an increase in quantity demanded. 
C) a change in consumer income. 
D) an increase in consumers' taste for coffee. 
A) an increase in demand. 
B) an increase in quantity demanded. 
C) a change in consumer income. 
D) an increase in consumers' taste for coffee.

Question 13

Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln.What is a reason for this difference in price?

Accepted Answer

A) There is a surplus of letters written by Booth and a shortage of letters written by Lincoln. 
B) Many people are more fascinated by villains and anti-heroes than by heroic figures. 
C) There are more letters available for collectors to buy that were written by Lincoln than there are letters that were written by Booth. 
D) Booth was a well-known actor; the demand for his letters rose as wealthy actors attempted to buy them. 
A) There is a surplus of letters written by Booth and a shortage of letters written by Lincoln. 
B) Many people are more fascinated by villains and anti-heroes than by heroic figures. 
C) There are more letters available for collectors to buy that were written by Lincoln than there are letters that were written by Booth. 
D) Booth was a well-known actor; the demand for his letters rose as wealthy actors attempted to buy them.

Question 14

If more insurance companies decide to cover part of the price of voluntary laser eye surgery and more doctors decide to enter the field of laser eye surgery,what will happen in the market for laser eye surgery as a result of these two factors?

Accepted Answer

A) Demand will increase, but these two factors will not shift the supply curve. 
B) Supply will increase, but these two factors will not shift the demand curve. 
C) Demand and supply will both increase. 
D) Demand will increase and supply will decrease. 
A) Demand will increase, but these two factors will not shift the supply curve. 
B) Supply will increase, but these two factors will not shift the demand curve. 
C) Demand and supply will both increase. 
D) Demand will increase and supply will decrease.

Question 15

Let D= demand,S = supply,P = equilibrium price,Q= equilibrium quantity.What happens in the market for walnuts if the Centers for Disease Control and Prevention announces that consuming a half cup of walnuts each week helps to lower bad levels of cholesterol?

Accepted Answer

A) D increases, S no change, P and Q increase 
B) S increases, D no change, P decreases, Q increases 
C) D and S increase, P and Q decrease 
D) D no change, S increases, P decreases, Q decreases 
A) D increases, S no change, P and Q increase 
B) S increases, D no change, P decreases, Q increases 
C) D and S increase, P and Q decrease 
D) D no change, S increases, P decreases, Q decreases

Question 16

Which of the following would cause an increase in the equilibrium price and an increase in the equilibrium quantity of watermelons?

Accepted Answer

A) an increase in demand and an increase in supply 
B) an increase in supply 
C) an increase in supply and an increase in demand greater than the increase in supply 
D) a decrease in demand and an increase in supply 
A) an increase in demand and an increase in supply 
B) an increase in supply 
C) an increase in supply and an increase in demand greater than the increase in supply 
D) a decrease in demand and an increase in supply

Question 17

A change in supply is represented by a shift of the supply curve.

Accepted Answer

A) True 
 B)False

Question 18

The growing popularity of energy conservation has enticed large home improvement stores like Home Depot and Lowes to offer tankless water heaters.How does the fact that home improvement stores now offer these products affect the tankless water heater market?

Accepted Answer

A) The demand curve for tankless water heaters shifts to the right. 
B) The demand curve for tankless water heaters shifts to the left. 
C) The supply curve for tankless water heaters shifts to the right. 
D) The supply curve for tankless water heaters shifts to the left. 
A) The demand curve for tankless water heaters shifts to the right. 
B) The demand curve for tankless water heaters shifts to the left. 
C) The supply curve for tankless water heaters shifts to the right. 
D) The supply curve for tankless water heaters shifts to the left.

Question 19

A change in quantity supplied is represented by a movement along the supply curve.

Accepted Answer

A) True 
 B)False

Question 20

Figure 3-5
  
-Refer to Figure 3-5.In a free market such as that depicted above,a surplus is eliminated by

Accepted Answer

A) a price increase, increasing the supply and decreasing the demand. 
B) a price decrease, decreasing the supply and increasing the demand. 
C) a price decrease, decreasing the quantity supplied and increasing the quantity demanded. 
D) a price increase, increasing the quantity supplied and decreasing the quantity demanded. 
A) a price increase, increasing the supply and decreasing the demand. 
B) a price decrease, decreasing the supply and increasing the demand. 
C) a price decrease, decreasing the quantity supplied and increasing the quantity demanded. 
D) a price increase, increasing the quantity supplied and decreasing the quantity demanded.

Figure 3-2 -Refer to Figure 3-2.A decrease in the number of firms in the market would be represented by a movement from

Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall.Holding everything else constant,how would this affect the market for Blu-ray players (a complement to LCD televisions)?

The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in purchasing power as a result of the price change.

Holding everything else constant,a decrease in the price of bicycles will result in

The cost of raising beef cattle has risen at the same time as consumer preference for beef has fallen.In the market for beef,this would be represented by the equilibrium price and the equilibrium quantity .

Which of the following would cause an increase in the supply of cheese?

Figure 3-4 -Refer to Figure 3-4.At a price of $20,how many units will be supplied?

The income effect of a price change refers to the impact of a change in

The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in the price of a complementary product.

In recent years the cost of producing wines in the U.S.has increased largely due to rising rents for vineyards.At the same time,more and more Americans prefer wine over beer.Which of the following best explains the effect of these events in the wine market?

If,in response to a decrease in the price of coffee,the quantity demanded of coffee increases,economists would describe this as

Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln.What is a reason for this difference in price?

If more insurance companies decide to cover part of the price of voluntary laser eye surgery and more doctors decide to enter the field of laser eye surgery,what will happen in the market for laser eye surgery as a result of these two factors?

Let D= demand,S = supply,P = equilibrium price,Q= equilibrium quantity.What happens in the market for walnuts if the Centers for Disease Control and Prevention announces that consuming a half cup of walnuts each week helps to lower bad levels of cholesterol?

Which of the following would cause an increase in the equilibrium price and an increase in the equilibrium quantity of watermelons?

A change in supply is represented by a shift of the supply curve.

The growing popularity of energy conservation has enticed large home improvement stores like Home Depot and Lowes to offer tankless water heaters.How does the fact that home improvement stores now offer these products affect the tankless water heater market?

A change in quantity supplied is represented by a movement along the supply curve.

Figure 3-5 -Refer to Figure 3-5.In a free market such as that depicted above,a surplus is eliminated 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

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

Figure 3-2 -Refer to Figure 3-2.A decrease in the number of firms in the market would be represented by a movement from

Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall.Holding everything else constant,how would this affect the market for Blu-ray players (a complement to LCD televisions)?

The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in purchasing power as a result of the price change.

Holding everything else constant,a decrease in the price of bicycles will result in

The cost of raising beef cattle has risen at the same time as consumer preference for beef has fallen.In the market for beef,this would be represented by the equilibrium price ________ and the equilibrium quantity ________.

Which of the following would cause an increase in the supply of cheese?

Figure 3-4 -Refer to Figure 3-4.At a price of $20,how many units will be supplied?

The income effect of a price change refers to the impact of a change in

The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in the price of a complementary product.

In recent years the cost of producing wines in the U.S.has increased largely due to rising rents for vineyards.At the same time,more and more Americans prefer wine over beer.Which of the following best explains the effect of these events in the wine market?

If,in response to a decrease in the price of coffee,the quantity demanded of coffee increases,economists would describe this as

Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln.What is a reason for this difference in price?

If more insurance companies decide to cover part of the price of voluntary laser eye surgery and more doctors decide to enter the field of laser eye surgery,what will happen in the market for laser eye surgery as a result of these two factors?

Let D= demand,S = supply,P = equilibrium price,Q= equilibrium quantity.What happens in the market for walnuts if the Centers for Disease Control and Prevention announces that consuming a half cup of walnuts each week helps to lower bad levels of cholesterol?

Which of the following would cause an increase in the equilibrium price and an increase in the equilibrium quantity of watermelons?

A change in supply is represented by a shift of the supply curve.

The growing popularity of energy conservation has enticed large home improvement stores like Home Depot and Lowes to offer tankless water heaters.How does the fact that home improvement stores now offer these products affect the tankless water heater market?

A change in quantity supplied is represented by a movement along the supply curve.

Figure 3-5 -Refer to Figure 3-5.In a free market such as that depicted above,a surplus is eliminated 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

The cost of raising beef cattle has risen at the same time as consumer preference for beef has fallen.In the market for beef,this would be represented by the equilibrium price and the equilibrium quantity .