Question 1

Which of the following would cause an increase in the supply of peanut butter?

Accepted Answer

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

Question 2

An increase in the price of pineapples will result in

Accepted Answer

A) a smaller quantity of pineapples supplied. 
B) a larger quantity of pineapples supplied. 
C) a decrease in the demand for pineapples. 
D) an increase in the supply of pineapples. 
A) a smaller quantity of pineapples supplied. 
B) a larger quantity of pineapples supplied. 
C) a decrease in the demand for pineapples. 
D) an increase in the supply of pineapples.

Question 3

In recent years, the cost of producing organic produce in the United States has decreased largely due technological advancement.At the same time, more and more Americans prefer organic produce over conventional produce.Which of the following best explains the effect of these events in the organic produce 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 quantity and an uncertain effect on the equilibrium price. 
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 quantity and an uncertain effect on the equilibrium price. 
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 4

Danielle Ocean pays for monthly pool maintenance for her home swimming pool.Last week, the owner of the pool service informed Danielle that he will have to raise his monthly service fee because of increases in the price of pool chemicals.How is the market for pool maintenance services affected by this?

Accepted Answer

A) There is an increase in the supply of pool maintenance services. 
B) There is a decrease in the demand for pool maintenance services. 
C) There is a decrease in the quantity of pool maintenance services supplied. 
D) There is a decrease in the supply of pool maintenance services. 
A) There is an increase in the supply of pool maintenance services. 
B) There is a decrease in the demand for pool maintenance services. 
C) There is a decrease in the quantity of pool maintenance services supplied. 
D) There is a decrease in the supply of pool maintenance services.

Question 5

If the population increases and input prices decrease, the equilibrium quantity of a product will definitely increase.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) there would be a surplus of 8 units. 
B) there would be a shortage of 8 units. 
C) there would be a surplus of 0 units. 
D) there would be a shortage of 4 units. 
A) there would be a surplus of 8 units. 
B) there would be a shortage of 8 units. 
C) there would be a surplus of 0 units. 
D) there would be a shortage of 4 units.

Question 7

A supply schedule

Accepted Answer

A) is a table that shows the relationship between the price of a product and the quantity of the product supplied. 
B) is a curve that shows the relationship between the price of a product and the quantity of the product supplied. 
C) is the relationship between the supply of a product and the cost of producing the product. 
D) is a table that shows the relationship between the price of a product and the quantity of the product that producers and consumers are willing to exchange. 
A) is a table that shows the relationship between the price of a product and the quantity of the product supplied. 
B) is a curve that shows the relationship between the price of a product and the quantity of the product supplied. 
C) is the relationship between the supply of a product and the cost of producing the product. 
D) is a table that shows the relationship between the price of a product and the quantity of the product that producers and consumers are willing to exchange.

Question 8

Table 3-1
  
-Refer to Table 3-1.The table above shows the demand schedules for loose-leaf tea of two individuals (Sunil and Mia)and the rest of the market.If the price of loose-leaf tea rises from $3 to $4, the market quantity demanded would

Accepted Answer

A) decrease by 32 lbs. 
B) increase by 64 lbs. 
C) increase by 32 lbs. 
D) decrease by 64 lbs. 
A) decrease by 32 lbs. 
B) increase by 64 lbs. 
C) increase by 32 lbs. 
D) decrease by 64 lbs.

Question 9

"Because apples and oranges are substitutes, an increase in the price of oranges will cause the demand for apples to increase.This initial shift in demand for apples results in a higher price for apples; this higher price will cause the demand curve for apples to shift to the right." Which of the following correctly comments on this statement?

Accepted Answer

A) The statement will be true if consumer tastes for apples and oranges do not change. 
B) The statement is false because a change in the price of apples would not change the demand for apples. 
C) The statement is false because oranges are inferior goods; apples are normal goods. 
D) The statement is false because one cannot assume that apples and oranges are substitutes for all consumers. 
A) The statement will be true if consumer tastes for apples and oranges do not change. 
B) The statement is false because a change in the price of apples would not change the demand for apples. 
C) The statement is false because oranges are inferior goods; apples are normal goods. 
D) The statement is false because one cannot assume that apples and oranges are substitutes for all consumers.

Question 10

Figure 3-7
  
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for women's clothing.Which panel best describes what happens in this market when the wages of seamstresses rise?

Accepted Answer

A) Panel (a) 
B) Panel (b) 
C) Panel (c) 
D) Panel (d) 
A) Panel (a) 
B) Panel (b) 
C) Panel (c) 
D) Panel (d)

Question 11

Figure 3-2
  
-Refer to Figure 3-2.An increase 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 12

An increase in the price of off-road vehicles will result in

Accepted Answer

A) a smaller quantity of off-road vehicles supplied. 
B) a larger quantity of off-road vehicles supplied. 
C) an increase in the demand for off-road vehicles. 
D) a decrease in the supply of off-road vehicles. 
A) a smaller quantity of off-road vehicles supplied. 
B) a larger quantity of off-road vehicles supplied. 
C) an increase in the demand for off-road vehicles. 
D) a decrease in the supply of off-road vehicles.

Question 13

Technological advancements have led to lower prices and an increase in the sale of digital cameras.How does this affect the digital photo printing paper market?

Accepted Answer

A) The demand curve for digital photo printing paper shifts to the right. 
B) The demand curve for digital photo printing paper shifts to the left. 
C) The supply curve for digital photo printing paper shifts to the right. 
D) The supply curve for digital photo printing paper shifts to the left. 
A) The demand curve for digital photo printing paper shifts to the right. 
B) The demand curve for digital photo printing paper shifts to the left. 
C) The supply curve for digital photo printing paper shifts to the right. 
D) The supply curve for digital photo printing paper shifts to the left.

Question 14

Draw a supply and demand graph showing an equilibrium price of $50 and an equilibrium quantity of 200 units.Explain what would happen if the selling price was $75, and illustrate this on the graph.Explain what would happen if the selling price was $25, and illustrate this on the graph.Be sure to label each axis and curve on the graph.

Accepted Answer

The answer of Draw a supply and demand graph showing...

Question 15

Table 3-3
  
-Refer to Table 3-3.The table contains information about the corn market.Use the table to answer the following questions.
a.What are the equilibrium price and quantity of corn?
b.Suppose the prevailing price is $9 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 $9 per bushel?
e.If the market price is $9 per bushel, what must happen to restore equilibrium in the market?
f.At what price will suppliers be able to sell 24,000 bushels of corn?
g.Suppose the market price is $21 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 $21 per bushel?
j.If the market price is $21 per bushel, what must happen to restore equilibrium in the market?

Accepted Answer

a.Equilibrium price = $15; Equilibrium q

Question 16

Figure 3-8
  
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for sugar at the intersection of D₁ and S₁ (point A). If there is an increase in the price of fertilizer used on sugar cane and there is a decrease in tastes for sugar-sweetened soft drinks, how will the equilibrium point change?

Accepted Answer

A) The equilibrium point will move from A to B. 
B) The equilibrium point will move from A to C. 
C) There will be no change in the equilibrium point. 
D) The equilibrium point will move from A to E. 
A) The equilibrium point will move from A to B. 
B) The equilibrium point will move from A to C. 
C) There will be no change in the equilibrium point. 
D) The equilibrium point will move from A to E.

Question 17

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 18

Assume that both the demand curve and the supply curve for MP3 players shift to the right but the demand curve shifts more than the supply curve.As a result

Accepted Answer

A) both the equilibrium price and quantity of MP3 players will increase. 
B) the equilibrium price of MP3 players will increase; the equilibrium quantity may increase or decrease. 
C) the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will increase. 
D) the equilibrium price of MP3 players will decrease; the equilibrium quantity may increase or decrease. 
A) both the equilibrium price and quantity of MP3 players will increase. 
B) the equilibrium price of MP3 players will increase; the equilibrium quantity may increase or decrease. 
C) the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will increase. 
D) the equilibrium price of MP3 players will decrease; the equilibrium quantity may increase or decrease.

Question 19

Figure 3-4
  
-Refer to Figure 3-4.If the current market price is $15, the market will achieve equilibrium 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.

Question 20

Which of the following would definitely 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

Which of the following would cause an increase in the supply of peanut butter?

An increase in the price of pineapples will result in

If the population increases and input prices decrease, the equilibrium quantity of a product will definitely increase.

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

A supply schedule

Table 3-1 -Refer to Table 3-1.The table above shows the demand schedules for loose-leaf tea of two individuals (Sunil and Mia)and the rest of the market.If the price of loose-leaf tea rises from $3 to $4, the market quantity demanded would

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for women's clothing.Which panel best describes what happens in this market when the wages of seamstresses rise?

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

An increase in the price of off-road vehicles will result in

Technological advancements have led to lower prices and an increase in the sale of digital cameras.How does this affect the digital photo printing paper market?

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.

Assume that both the demand curve and the supply curve for MP3 players shift to the right but the demand curve shifts more than the supply curve.As a result

Figure 3-4 -Refer to Figure 3-4.If the current market price is $15, the market will achieve equilibrium by

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

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

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

Which of the following would cause an increase in the supply of peanut butter?

An increase in the price of pineapples will result in

If the population increases and input prices decrease, the equilibrium quantity of a product will definitely increase.

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

A supply schedule

Table 3-1 -Refer to Table 3-1.The table above shows the demand schedules for loose-leaf tea of two individuals (Sunil and Mia)and the rest of the market.If the price of loose-leaf tea rises from $3 to $4, the market quantity demanded would

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for women's clothing.Which panel best describes what happens in this market when the wages of seamstresses rise?

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

An increase in the price of off-road vehicles will result in

Technological advancements have led to lower prices and an increase in the sale of digital cameras.How does this affect the digital photo printing paper market?

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.

Assume that both the demand curve and the supply curve for MP3 players shift to the right but the demand curve shifts more than the supply curve.As a result

Figure 3-4 -Refer to Figure 3-4.If the current market price is $15, the market will achieve equilibrium by

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

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