Question 1

A change in all of the following variables will change the market demand for a product except

Accepted Answer

A) the price of the product. 
B) population and demographics. 
C) income. 
D) tastes. 
A) the price of the product. 
B) population and demographics. 
C) income. 
D) tastes.

Question 2

Figure 3-6
  
-Refer to Figure 3-6.The figure above represents the market for canvas tote bags.Assume that the price of tote bags is $15.At this price

Accepted Answer

A) the quantity demanded exceeds the quantity supplied by 75. The price will eventually rise to $25 where quantity demanded will equal quantity supplied. 
B) the demand exceeds the supply of tote bags by 55. Some consumers will have an incentive to offer to buy tote bags at a higher price. 
C) there is a shortage, equal to 55 tote bags, that will be eliminated when the price rises to $25. 
D) there is a shortage equal to 55 tote bags; the price of tote bags will rise until demand is equal to supply. 
A) the quantity demanded exceeds the quantity supplied by 75. The price will eventually rise to $25 where quantity demanded will equal quantity supplied. 
B) the demand exceeds the supply of tote bags by 55. Some consumers will have an incentive to offer to buy tote bags at a higher price. 
C) there is a shortage, equal to 55 tote bags, that will be eliminated when the price rises to $25. 
D) there is a shortage equal to 55 tote bags; the price of tote bags will rise until demand is equal to supply.

Question 3

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 4

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 5

Figure 3-4
  
-Refer to Figure 3-4.If the current market price is $10, the market will achieve equilibrium through

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.

Question 6

What would happen in the market for laser eye surgery if insurance companies started to cover a portion of the price of voluntary procedures?

Accepted Answer

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

Question 7

If the number of firms producing mouthwash increases and consumer preference for mouthwash increases, the equilibrium price of mouthwash will definitely increase.

Accepted Answer

A) True 
 B)False

Question 8

If the price of peaches, a substitute for plums, decreases the demand for plums will increase.

Accepted Answer

A) True 
 B)False

Question 9

Suppose that when the price of raspberries increases, Lonnie increases his purchases of papayas.To Lonnie,

Accepted Answer

A) raspberries and papayas are complements. 
B) raspberries and papayas are inferior goods. 
C) raspberries and papayas are normal goods. 
D) raspberries and papayas are substitutes. 
A) raspberries and papayas are complements. 
B) raspberries and papayas are inferior goods. 
C) raspberries and papayas are normal goods. 
D) raspberries and papayas are substitutes.

Question 10

Indicate whether each of the following situations would shift the supply curve to the left, to the right, or not at all.
a.An increase in the number of firms in the market
b.An increase in the current price of the product
c.A decrease in productivity
d.An increase in the expected future price of a product
e.A decrease in the price of an input

Accepted Answer

a.Shift to the right

Question 11

Let D = demand, S = supply, P = equilibrium price, and Q = equilibrium quantity.What happens in the market for electric vehicles if the government offers incentives to manufacturers to produce more electric vehicles?

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 12

Which of the following would shift the supply curve for MP3 players to the left?

Accepted Answer

A) an increase in the price of an input used to produce MP3 players 
B) a decrease in consumer tastes for MP3 players 
C) an increase in the number of firms that produce MP3 players 
D) an increase in the productivity of the workers who produce MP3 players 
A) an increase in the price of an input used to produce MP3 players 
B) a decrease in consumer tastes for MP3 players 
C) an increase in the number of firms that produce MP3 players 
D) an increase in the productivity of the workers who produce MP3 players

Question 13

A shortage occurs when the market price is lower than the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 14

Assume that California Merlot is a normal good.Prices of California Merlot have risen steadily in recent years.Over this same period, prices for French oak barrels used for wine storage have dropped and consumer incomes have risen.Which of the following best explains the rising prices of California Merlots?

Accepted Answer

A) The supply curve for Merlot has shifted to the right while the demand curve for Merlot has shifted to the left. 
B) The demand curve for Merlot has shifted to the right more than the supply curve has shifted to the right. 
C) The demand curve and the supply curve for Merlot have both shifted to the left. 
D) The supply curve for Merlot has shifted to the right more than the demand curve has shifted to the right. 
A) The supply curve for Merlot has shifted to the right while the demand curve for Merlot has shifted to the left. 
B) The demand curve for Merlot has shifted to the right more than the supply curve has shifted to the right. 
C) The demand curve and the supply curve for Merlot have both shifted to the left. 
D) The supply curve for Merlot has shifted to the right more than the demand curve has shifted to the right.

Question 15

The law of demand implies, holding everything else constant, that as the price of gelato

Accepted Answer

A) increases, the demand for gelato will increase. 
B) increases, the quantity of gelato demanded will increase. 
C) decreases, the quantity of gelato demanded will increase. 
D) decreases, the demand for gelato will increase. 
A) increases, the demand for gelato will increase. 
B) increases, the quantity of gelato demanded will increase. 
C) decreases, the quantity of gelato demanded will increase. 
D) decreases, the demand for gelato will increase.

Question 16

By 2017, Pepsi and Coke were attempting to increase their profits in the bottled water market by introducing premium water brands.Pepsi and Coke introduced LIFEWTR and Smartwater, respectively, while competitors like Nestle and Danone produced their own versions of premium water.The premium water brands marketed to compete with LIFEWTR and Smartwater would be considered

Accepted Answer

A) complements to LIFEWTR and Smartwater. 
B) substitutes for LIFEWTR and Smartwater. 
C) inferior goods compared to LIFEWTR and Smartwater. 
D) normal goods compared to LIFEWTR and Smartwater. 
A) complements to LIFEWTR and Smartwater. 
B) substitutes for LIFEWTR and Smartwater. 
C) inferior goods compared to LIFEWTR and Smartwater. 
D) normal goods compared to LIFEWTR and Smartwater.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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 19

Tomas increased his consumption of potato chips when the price of pistachios increased.For Tomas, potato chips and pistachios are

Accepted Answer

A) substitutes. 
B) both inferior goods. 
C) complements. 
D) both luxury goods. 
A) substitutes. 
B) both inferior goods. 
C) complements. 
D) both luxury goods.

Question 20

Figure 3-1
  
-Refer to Figure 3-1.An increase in the expected future price of the product 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.

A change in all of the following variables will change the market demand for a product except

Figure 3-6 -Refer to Figure 3-6.The figure above represents the market for canvas tote bags.Assume that the price of tote bags is $15.At this price

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

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?

Figure 3-4 -Refer to Figure 3-4.If the current market price is $10, the market will achieve equilibrium through

What would happen in the market for laser eye surgery if insurance companies started to cover a portion of the price of voluntary procedures?

If the number of firms producing mouthwash increases and consumer preference for mouthwash increases, the equilibrium price of mouthwash will definitely increase.

If the price of peaches, a substitute for plums, decreases the demand for plums will increase.

Suppose that when the price of raspberries increases, Lonnie increases his purchases of papayas.To Lonnie,

Let D = demand, S = supply, P = equilibrium price, and Q = equilibrium quantity.What happens in the market for electric vehicles if the government offers incentives to manufacturers to produce more electric vehicles?

Which of the following would shift the supply curve for MP3 players to the left?

A shortage occurs when the market price is lower than the equilibrium price.

The law of demand implies, holding everything else constant, that as the price of gelato

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

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)?

Tomas increased his consumption of potato chips when the price of pistachios increased.For Tomas, potato chips and pistachios are

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

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

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

A change in all of the following variables will change the market demand for a product except

Figure 3-6 -Refer to Figure 3-6.The figure above represents the market for canvas tote bags.Assume that the price of tote bags is $15.At this price

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

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?

Figure 3-4 -Refer to Figure 3-4.If the current market price is $10, the market will achieve equilibrium through

What would happen in the market for laser eye surgery if insurance companies started to cover a portion of the price of voluntary procedures?

If the number of firms producing mouthwash increases and consumer preference for mouthwash increases, the equilibrium price of mouthwash will definitely increase.

If the price of peaches, a substitute for plums, decreases the demand for plums will increase.

Suppose that when the price of raspberries increases, Lonnie increases his purchases of papayas.To Lonnie,

Let D = demand, S = supply, P = equilibrium price, and Q = equilibrium quantity.What happens in the market for electric vehicles if the government offers incentives to manufacturers to produce more electric vehicles?

Which of the following would shift the supply curve for MP3 players to the left?

A shortage occurs when the market price is lower than the equilibrium price.

The law of demand implies, holding everything else constant, that as the price of gelato

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

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)?

Tomas increased his consumption of potato chips when the price of pistachios increased.For Tomas, potato chips and pistachios are

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

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters