Question 1

In April 2014, the money price of a litre of milk was $2.01 and the money price of a litre of gasoline was $1.30. The real price of a litre of gasoline in terms of milk was

Accepted Answer

A) $0.65. 
B) 0.65 litres of milk. 
C) 2.61 litres of milk. 
D) 1.54 litres of milk. 
E) $0.71. 
A) $0.65. 
B) 0.65 litres of milk. 
C) 2.61 litres of milk. 
D) 1.54 litres of milk. 
E) $0.71.

Question 2

If the market for Twinkies is in equilibrium, then

Accepted Answer

A) Twinkies must be a normal good. 
B) producers would like to sell less at the current price. 
C) consumers would like to buy less at the current price. 
D) the quantity supplied equals the quantity demanded. 
E) the supply of Twinkies will never increase and the demand for Twinkies will never decrease. 
A) Twinkies must be a normal good. 
B) producers would like to sell less at the current price. 
C) consumers would like to buy less at the current price. 
D) the quantity supplied equals the quantity demanded. 
E) the supply of Twinkies will never increase and the demand for Twinkies will never decrease.

Question 3

Since 1980, there has been a dramatic increase in the number of working mothers. Based on this information alone, we can predict that the market for child care services has experienced

Accepted Answer

A) an increase in demand. 
B) a decrease in demand. 
C) an increase in quantity demanded. 
D) a decrease in quantity supplied. 
E) an increase in supply. 
A) an increase in demand. 
B) a decrease in demand. 
C) an increase in quantity demanded. 
D) a decrease in quantity supplied. 
E) an increase in supply.

Question 4

Table 3.5.2
Demand and Supply Schedules for Cups of Coffee each day at CoolU
   
Use the figure below to answer the following questions.
-Refer to Table 3.5.2. Professor Hyper publishes a new study, showing that coffee raises the test performance of students. Students double their demand for coffee and the quantity of coffee demanded at each price doubles. The new equilibrium price is $________, and the new equilibrium quantity is ________ cups a day.

Accepted Answer

A) 1.20; 1,000 
B) 1.30; 1,200 
C) 1.50; 1,600 
D) 1.40; 1,400 
E) 2.20; 800 
A) 1.20; 1,000 
B) 1.30; 1,200 
C) 1.50; 1,600 
D) 1.40; 1,400 
E) 2.20; 800

Question 5

Figure 3.5.2
Original equilibrium at 1.
Use the figure below to answer the following questions.
  
-Refer to Figure 3.5.2, which represents the market for tacos. A new scientific study reveals that tacos cause bad breath. Simultaneously, the cost of producing tacos decreases. What is the new equilibrium, ceteris paribus?

Accepted Answer

A) 2 
B) 3 
C) 9 
D) 4 
E) 7 
A) 2 
B) 3 
C) 9 
D) 4 
E) 7

Question 6

Table 3.5.3
Demand and supply schedules for designer sport t-shirts at CoolU
   
Use the table below to answer the following questions.
-Refer to Table 3.5.3. Suppose that the price of a designer sport t-shirt is $10. The market has ________ leading to ________.

Accepted Answer

A) an equilibrium; no change in the price 
B) a shortage; a fall in the price 
C) a shortage; a rise in the price 
D) a surplus; a fall in the price 
E) a surplus; a rise in the price 
A) an equilibrium; no change in the price 
B) a shortage; a fall in the price 
C) a shortage; a rise in the price 
D) a surplus; a fall in the price 
E) a surplus; a rise in the price

Question 7

Some sales managers are talking shop. Which one of the following quotations does not refer to a rightward shift of the demand curve?

Accepted Answer

A) "Since our competitors raised their prices, our sales have doubled." 
B) "It has been an unusually harsh winter; our sales of wool scarves are up from last year." 
C) "We decided to cut our prices, and the increase in our sales has been remarkable." 
D) "The Green movement has sparked an increase in our sales of biodegradable products." 
E) "People are expecting a harsh winter next year, so the sales of our winter coats have increased." 
A) "Since our competitors raised their prices, our sales have doubled." 
B) "It has been an unusually harsh winter; our sales of wool scarves are up from last year." 
C) "We decided to cut our prices, and the increase in our sales has been remarkable." 
D) "The Green movement has sparked an increase in our sales of biodegradable products." 
E) "People are expecting a harsh winter next year, so the sales of our winter coats have increased."

Question 8

Table 3.5.2
Demand and Supply Schedules for Cups of Coffee each day at CoolU
   
Use the figure below to answer the following questions.
-Refer to Table 3.5.2. Professor Hyper publishes a new study, showing that coffee raises the test performance of students. Students double their demand for coffee and the quantity of coffee demanded at each price doubles. In addition, a premature frost destroys half the coffee trees and the supply of coffee is cut in half. The new equilibrium price is $________ and the new equilibrium quantity is ________ cups a day.

Accepted Answer

A) 1.10; 400 
B) 1.10; 1,600 
C) 1.10; 800 
D) 1.50; 800 
E) 1.50; 400. 
A) 1.10; 400 
B) 1.10; 1,600 
C) 1.10; 800 
D) 1.50; 800 
E) 1.50; 400.

Question 9

Use the information below to answer the following questions.
Fact 3.5.1
The market for coffee is initially in equilibrium. Pepsi is a substitute for coffee; cream is a complement of coffee. Consider the market for coffee. Assume that all ceteris paribus assumptions continue to hold except for the event listed.
-Refer to Fact 3.5.1. A technological improvement lowers the cost of producing coffee. At the same time, preferences for coffee decrease. The equilibrium quantity of coffee

Accepted Answer

A) increases. 
B) decreases. 
C) remains the same. 
D) increases or decreases depending on whether the price of coffee falls or rises. 
E) increases, decreases, or remains the same depending on the relative shifts of the demand and supply curves. 
A) increases. 
B) decreases. 
C) remains the same. 
D) increases or decreases depending on whether the price of coffee falls or rises. 
E) increases, decreases, or remains the same depending on the relative shifts of the demand and supply curves.

Question 10

"As fewer people buy computers, the demand for Internet service will decrease and the price of Internet service will increase. The rise in the price of Internet service will increase the supply of Internet service." This statement is ________ because ________.

Accepted Answer

A) false; the decrease in the demand for Internet service creates a surplus and to eliminate the surplus, supply increases 
B) true; when the demand for Internet service increases, the supply of Internet service increases so that the price of Internet service does not increase 
C) true, when the demand for Internet service increases, the supply of Internet service increases too so that no surplus occurs 
D) true; the increase in the price of Internet service increases the supply of Internet service to eliminate the shortage 
E) false; a decrease in demand for Internet service does not increase the price of Internet service and an increase in the price of Internet service does not increase the supply of Internet service 
A) false; the decrease in the demand for Internet service creates a surplus and to eliminate the surplus, supply increases 
B) true; when the demand for Internet service increases, the supply of Internet service increases so that the price of Internet service does not increase 
C) true, when the demand for Internet service increases, the supply of Internet service increases too so that no surplus occurs 
D) true; the increase in the price of Internet service increases the supply of Internet service to eliminate the shortage 
E) false; a decrease in demand for Internet service does not increase the price of Internet service and an increase in the price of Internet service does not increase the supply of Internet service

Question 11

Figure 3.4.1
Use the figure below to answer the following questions.
  
-At price P1 in Figure 3.4.1

Accepted Answer

A) there is a surplus in the amount of Q₄ - Q₂. 
B) there is a shortage in the amount of Q₄ - Q₂. 
C) there is a tendency for the price to fall. 
D) the equilibrium quantity is Q₂. 
E) the equilibrium quantity is Q₄. 
A) there is a surplus in the amount of Q₄ - Q₂. 
B) there is a shortage in the amount of Q₄ - Q₂. 
C) there is a tendency for the price to fall. 
D) the equilibrium quantity is Q₂. 
E) the equilibrium quantity is Q₄.

Question 12

Which market is an example of a market for services?

Accepted Answer

A) orange market 
B) tennis lessons market 
C) manufactured input market 
D) energy market 
E) labour market 
A) orange market 
B) tennis lessons market 
C) manufactured input market 
D) energy market 
E) labour market

Question 13

The demand curve is P = 700 - 20QD. The supply curve is P = 300 + 20QS. At market equilibrium, the equilibrium quantity is ________ and the equilibrium price is ________.

Accepted Answer

A) 10; 500 
B) 500; 10 
C) 0.10; 20 
D) 20; 0.10 
E) 400; 40 
A) 10; 500 
B) 500; 10 
C) 0.10; 20 
D) 20; 0.10 
E) 400; 40

Question 14

If demand increases and supply decreases, then the

Accepted Answer

A) equilibrium quantity increases but the effect on the equilibrium price is unknown. 
B) equilibrium quantity decreases but the effect on the equilibrium price is unknown. 
C) equilibrium price falls but the effect on the equilibrium quantity is unknown. 
D) equilibrium price rises but the effect on the equilibrium quantity is unknown. 
E) effect on both equilibrium price and quantity is unknown. 
A) equilibrium quantity increases but the effect on the equilibrium price is unknown. 
B) equilibrium quantity decreases but the effect on the equilibrium price is unknown. 
C) equilibrium price falls but the effect on the equilibrium quantity is unknown. 
D) equilibrium price rises but the effect on the equilibrium quantity is unknown. 
E) effect on both equilibrium price and quantity is unknown.

Question 15

The demand curve is P = 700 - 10QD. The supply curve is P = 400 + 5QS. At market equilibrium, the equilibrium quantity is ________ and the equilibrium price is ________.

Accepted Answer

A) 20; 500 
B) 5; 0.05 
C) 0.05; 5 
D) 500; 20 
E) 300; 15 
A) 20; 500 
B) 5; 0.05 
C) 0.05; 5 
D) 500; 20 
E) 300; 15

Question 16

Some producers are chatting over a beer. Which one of the following quotations refers to a movement along the supply curve?

Accepted Answer

A) "Wage increases have forced us to raise our prices." 
B) "Our new, sophisticated equipment will enable us to undercut our competitors." 
C) "Raw material prices have sky-rocketed; we will have to pass the cost on to our customers." 
D) "We anticipate a big increase in demand. Our product price should rise, so we are planning for an increase in output." 
E) "New competitors in the industry are causing prices to fall." 
A) "Wage increases have forced us to raise our prices." 
B) "Our new, sophisticated equipment will enable us to undercut our competitors." 
C) "Raw material prices have sky-rocketed; we will have to pass the cost on to our customers." 
D) "We anticipate a big increase in demand. Our product price should rise, so we are planning for an increase in output." 
E) "New competitors in the industry are causing prices to fall."

Question 17

Which one of the following will definitely lower the equilibrium price?

Accepted Answer

A) an increase in both demand and supply 
B) a decrease in both demand and supply 
C) an increase in demand combined with a decrease in supply 
D) a decrease in demand combined with an increase in supply 
E) a decrease in supply combined with an increase in demand 
A) an increase in both demand and supply 
B) a decrease in both demand and supply 
C) an increase in demand combined with a decrease in supply 
D) a decrease in demand combined with an increase in supply 
E) a decrease in supply combined with an increase in demand

Question 18

A decrease in the quantity supplied of a good is shown by

Accepted Answer

A) a movement down along the supply curve. 
B) a leftward shift of the supply curve. 
C) a movement up along the supply curve. 
D) a rightward shift of the supply curve. 
E) an initial rightward shift and then leftward shift of the supply curve. 
A) a movement down along the supply curve. 
B) a leftward shift of the supply curve. 
C) a movement up along the supply curve. 
D) a rightward shift of the supply curve. 
E) an initial rightward shift and then leftward shift of the supply curve.

Question 19

Use the information below to answer the following questions.
Fact 3.5.1
The market for coffee is initially in equilibrium. Pepsi is a substitute for coffee; cream is a complement of coffee. Consider the market for coffee. Assume that all ceteris paribus assumptions continue to hold except for the event listed.
-Refer to Fact 3.5.1. An increase in the price of Pepsi, a substitute for coffee will

Accepted Answer

A) increase the price and the quantity demanded of coffee. 
B) increase the price and the quantity supplied of coffee. 
C) decrease the price and the quantity demanded of coffee. 
D) decrease the price and the quantity supplied of coffee. 
E) increase the supply of coffee. 
A) increase the price and the quantity demanded of coffee. 
B) increase the price and the quantity supplied of coffee. 
C) decrease the price and the quantity demanded of coffee. 
D) decrease the price and the quantity supplied of coffee. 
E) increase the supply of coffee.

Question 20

If A and B are substitutes and the price of A rises, we will observe

Accepted Answer

A) an increase in the equilibrium price and the equilibrium quantity of B. 
B) a decrease in the equilibrium price and the equilibrium quantity of B. 
C) an increase in the equilibrium price but a decrease in the equilibrium quantity of B. 
D) a decrease in equilibrium price but an increase in the equilibrium quantity of B. 
E) a decrease in the demand for A. 
A) an increase in the equilibrium price and the equilibrium quantity of B. 
B) a decrease in the equilibrium price and the equilibrium quantity of B. 
C) an increase in the equilibrium price but a decrease in the equilibrium quantity of B. 
D) a decrease in equilibrium price but an increase in the equilibrium quantity of B. 
E) a decrease in the demand for A.

In April 2014, the money price of a litre of milk was $2.01 and the money price of a litre of gasoline was $1.30. The real price of a litre of gasoline in terms of milk was

If the market for Twinkies is in equilibrium, then

Since 1980, there has been a dramatic increase in the number of working mothers. Based on this information alone, we can predict that the market for child care services has experienced

Table 3.5.3 Demand and supply schedules for designer sport t-shirts at CoolU Use the table below to answer the following questions. -Refer to Table 3.5.3. Suppose that the price of a designer sport t-shirt is $10. The market has leading to .

Some sales managers are talking shop. Which one of the following quotations does not refer to a rightward shift of the demand curve?

"As fewer people buy computers, the demand for Internet service will decrease and the price of Internet service will increase. The rise in the price of Internet service will increase the supply of Internet service." This statement is because .

Figure 3.4.1 Use the figure below to answer the following questions. -At price P₁ in Figure 3.4.1

Which market is an example of a market for services?

The demand curve is P = 700 - 20QD. The supply curve is P = 300 + 20QS. At market equilibrium, the equilibrium quantity is and the equilibrium price is .

If demand increases and supply decreases, then the

The demand curve is P = 700 - 10QD. The supply curve is P = 400 + 5QS. At market equilibrium, the equilibrium quantity is and the equilibrium price is .

Some producers are chatting over a beer. Which one of the following quotations refers to a movement along the supply curve?

Which one of the following will definitely lower the equilibrium price?

A decrease in the quantity supplied of a good is shown by

If A and B are substitutes and the price of A rises, we will observe

What Is Economics

The Economic Problem

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 3: Demand and Supply

In April 2014, the money price of a litre of milk was $2.01 and the money price of a litre of gasoline was $1.30. The real price of a litre of gasoline in terms of milk was

If the market for Twinkies is in equilibrium, then

Since 1980, there has been a dramatic increase in the number of working mothers. Based on this information alone, we can predict that the market for child care services has experienced

Table 3.5.3 Demand and supply schedules for designer sport t-shirts at CoolU Use the table below to answer the following questions. -Refer to Table 3.5.3. Suppose that the price of a designer sport t-shirt is $10. The market has ________ leading to ________.

Some sales managers are talking shop. Which one of the following quotations does not refer to a rightward shift of the demand curve?

"As fewer people buy computers, the demand for Internet service will decrease and the price of Internet service will increase. The rise in the price of Internet service will increase the supply of Internet service." This statement is ________ because ________.

Figure 3.4.1 Use the figure below to answer the following questions. -At price P1 in Figure 3.4.1

Which market is an example of a market for services?

The demand curve is P = 700 - 20QD. The supply curve is P = 300 + 20QS. At market equilibrium, the equilibrium quantity is ________ and the equilibrium price is ________.

If demand increases and supply decreases, then the

The demand curve is P = 700 - 10QD. The supply curve is P = 400 + 5QS. At market equilibrium, the equilibrium quantity is ________ and the equilibrium price is ________.

Some producers are chatting over a beer. Which one of the following quotations refers to a movement along the supply curve?

Which one of the following will definitely lower the equilibrium price?

A decrease in the quantity supplied of a good is shown by

If A and B are substitutes and the price of A rises, we will observe

What Is Economics

The Economic Problem

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Table 3.5.3 Demand and supply schedules for designer sport t-shirts at CoolU Use the table below to answer the following questions. -Refer to Table 3.5.3. Suppose that the price of a designer sport t-shirt is $10. The market has leading to .

"As fewer people buy computers, the demand for Internet service will decrease and the price of Internet service will increase. The rise in the price of Internet service will increase the supply of Internet service." This statement is because .

Figure 3.4.1 Use the figure below to answer the following questions. -At price P₁ in Figure 3.4.1

The demand curve is P = 700 - 20QD. The supply curve is P = 300 + 20QS. At market equilibrium, the equilibrium quantity is and the equilibrium price is .

The demand curve is P = 700 - 10QD. The supply curve is P = 400 + 5QS. At market equilibrium, the equilibrium quantity is and the equilibrium price is .