Question 1

A turnip is an inferior good if

Accepted Answer

A) an increase in the price of a turnip decreases the quantity of turnips that consumers want to buy. 
B) an increase in income decreases the demand for turnips. 
C) an increase in income increases the demand for turnips. 
D) turnips violate the law of demand. 
E) turnips are a low quality good. 
A) an increase in the price of a turnip decreases the quantity of turnips that consumers want to buy. 
B) an increase in income decreases the demand for turnips. 
C) an increase in income increases the demand for turnips. 
D) turnips violate the law of demand. 
E) turnips are a low quality good.

Question 2

A relative price is all of the following except

Accepted Answer

A) the ratio of one price to another. 
B) an opportunity cost. 
C) a quantity of a "basket" of goods and services forgone. 
D) determined by demand and supply. 
E) the lowest possible price available. 
A) the ratio of one price to another. 
B) an opportunity cost. 
C) a quantity of a "basket" of goods and services forgone. 
D) determined by demand and supply. 
E) the lowest possible price available.

Question 3

William Gregg owned a mill in South Carolina.In December 1862, he placed a notice in the Edgehill Advertiser announcing his willingness to exchange cloth for food and other items.Here is an extract: 1 yard of cloth for 1 pound of bacon
2 yards of cloth for 1 pound of butter
4 yards of cloth for 1 pound of wool
8 yards of cloth for 1 bushel of salt
If the money price of bacon was 20¢ a pound and the money price of salt was $2.00 a bushel, people would

Accepted Answer

A) buy bacon and trade it for cloth because they could buy 8 yards of cloth for only $1.60, and use that cloth to obtain a bushel of salt. 
B) not buy bacon and trade it for cloth because they would have to buy 8 yards of cloth for $1.60 and then give Mr. Gregg an extra $0.40 to buy a bushel of salt. 
C) buy bacon and trade it for cloth and then trade the cloth for salt because salt is more important for life than either cloth or bacon. 
D) not buy bacon and trade it for cloth because the relative price of 1 bushel of salt is only 1/8 yard of cloth. 
E) buy bacon and trade it for cloth because cloth is more expensive than bacon. 
A) buy bacon and trade it for cloth because they could buy 8 yards of cloth for only $1.60, and use that cloth to obtain a bushel of salt. 
B) not buy bacon and trade it for cloth because they would have to buy 8 yards of cloth for $1.60 and then give Mr. Gregg an extra $0.40 to buy a bushel of salt. 
C) buy bacon and trade it for cloth and then trade the cloth for salt because salt is more important for life than either cloth or bacon. 
D) not buy bacon and trade it for cloth because the relative price of 1 bushel of salt is only 1/8 yard of cloth. 
E) buy bacon and trade it for cloth because cloth is more expensive than bacon.

Question 4

When the demand for good A increases,

Accepted Answer

A) the equilibrium price and equilibrium quantity will increase. 
B) the equilibrium price will rise, but the equilibrium quantity will decrease. 
C) the equilibrium price and equilibrium quantity will decrease. 
D) the equilibrium price will decrease, but the equilibrium quantity will increase. 
E) a surplus will result. 
A) the equilibrium price and equilibrium quantity will increase. 
B) the equilibrium price will rise, but the equilibrium quantity will decrease. 
C) the equilibrium price and equilibrium quantity will decrease. 
D) the equilibrium price will decrease, but the equilibrium quantity will increase. 
E) a surplus will result.

Question 5

When the price of good A rises, the supply curve of good B shifts rightward.Which of the following statements are true?

Accepted Answer

A) A and B are substitutes. 
B) A and B are complements. 
C) A and B are substitutes in production. 
D) A and B are complements in production. 
E) A is a factor used in the production of B. 
A) A and B are substitutes. 
B) A and B are complements. 
C) A and B are substitutes in production. 
D) A and B are complements in production. 
E) A is a factor used in the production of B.

Question 6

If both demand and supply increase, then the equilibrium price

Accepted Answer

A) and equilibrium quantity increases. 
B) falls but the equilibrium quantity increases. 
C) could either rise or fall, but the equilibrium quantity increases. 
D) rises, and the equilibrium quantity could either increase or decrease. 
E) falls, and the equilibrium quantity could either increase or decrease. 
A) and equilibrium quantity increases. 
B) falls but the equilibrium quantity increases. 
C) could either rise or fall, but the equilibrium quantity increases. 
D) rises, and the equilibrium quantity could either increase or decrease. 
E) falls, and the equilibrium quantity could either increase or decrease.

Question 7

Use the table below to answer the following questions.
Table 3.4.1
  
-Refer to Table 3.4.1.A surplus occurs if

Accepted Answer

A) the price is $2 a unit. 
B) the price is $3 a unit. 
C) the price is above $4 a unit. 
D) the price is $1 a unit. 
E) the price is $4 a unit. 
A) the price is $2 a unit. 
B) the price is $3 a unit. 
C) the price is above $4 a unit. 
D) the price is $1 a unit. 
E) the price is $4 a unit.

Question 8

The fact that a fall in the price of a good results in a decrease in the quantity of the good supplied illustrates

Accepted Answer

A) the law of supply. 
B) the law of demand. 
C) a change in supply. 
D) the nature of an inferior good. 
E) technological improvement. 
A) the law of supply. 
B) the law of demand. 
C) a change in supply. 
D) the nature of an inferior good. 
E) technological improvement.

Question 9

The demand and supply model determines

Accepted Answer

A) relative prices. 
B) money prices. 
C) supply prices. 
D) demand prices. 
E) absolute prices. 
A) relative prices. 
B) money prices. 
C) supply prices. 
D) demand prices. 
E) absolute prices.

Question 10

Use the figure below to answer the following questions.
   
Figure 3.5.2
Original equilibrium at 1.
-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 increases.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 11

The price of a good will rise if

Accepted Answer

A) demand for the good decreases. 
B) supply of the good decreases. 
C) there is a surplus of the good. 
D) the price of a substitute for the good decreases. 
E) the good is an inferior good and income increases. 
A) demand for the good decreases. 
B) supply of the good decreases. 
C) there is a surplus of the good. 
D) the price of a substitute for the good decreases. 
E) the good is an inferior good and income increases.

Question 12

Which of the following shifts the supply curve for good X leftward?

Accepted Answer

A) a situation in which the quantity demanded of X exceeds the quantity supplied of X 
B) an increase in the cost of the machinery used to produce X 
C) a technological advance in the production of X 
D) a decrease in the wages of workers employed to produce X 
E) a situation in which the quantity supplied of X exceeds the quantity demanded of X 
A) a situation in which the quantity demanded of X exceeds the quantity supplied of X 
B) an increase in the cost of the machinery used to produce X 
C) a technological advance in the production of X 
D) a decrease in the wages of workers employed to produce X 
E) a situation in which the quantity supplied of X exceeds the quantity demanded of X

Question 13

Networks increase the price they charge cable television firms for programming.As a result, the price of cable television rises.Choose the correct statement.

Accepted Answer

A) A movement occurs up along the demand curve for cable television and the quantity demanded increases. 
B) The demand curve for cable television shifts rightward. 
C) The demand curve for cable television shifts leftward. 
D) A movement occurs up along the demand curve for cable television and the quantity demanded decreases. 
E) The price of cable television does not change because subscribers are already paying a high enough price. 
A) A movement occurs up along the demand curve for cable television and the quantity demanded increases. 
B) The demand curve for cable television shifts rightward. 
C) The demand curve for cable television shifts leftward. 
D) A movement occurs up along the demand curve for cable television and the quantity demanded decreases. 
E) The price of cable television does not change because subscribers are already paying a high enough price.

Question 14

The price of a good will fall if

Accepted Answer

A) there is a shortage of the good. 
B) demand for the good increases. 
C) there is a surplus of the good. 
D) the supply of the good decreases. 
E) demand for the good does not change. 
A) there is a shortage of the good. 
B) demand for the good increases. 
C) there is a surplus of the good. 
D) the supply of the good decreases. 
E) demand for the good does not change.

Question 15

"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 16

Use the figure below to answer the following questions.
Table 3.5.2
Demand and Supply Schedules for Cups of Coffee each day at CoolU
  
-Refer to Table 3.5.2.If the price is set at $0.80 per cup, there is ________ leading to a price ________.

Accepted Answer

A) a shortage; rise 
B) a shortage; fall 
C) a surplus; rise 
D) a surplus; fall 
E) an equilibrium; rise 
A) a shortage; rise 
B) a shortage; fall 
C) a surplus; rise 
D) a surplus; fall 
E) an equilibrium; rise

Question 17

Use the figure below to answer the following questions.
   
Figure 3.2.2
-Refer to Figure 3.2.2.Which one of the following represents a decrease in quantity demanded?

Accepted Answer

A) a shift from D₁ to D₂ 
B) a shift from D₂ to D₁ 
C) a movement from A to B 
D) a movement from B to A 
E) none of the above 
A) a shift from D₁ to D₂ 
B) a shift from D₂ to D₁ 
C) a movement from A to B 
D) a movement from B to A 
E) none of the above

Question 18

If the price is above the equilibrium price, then

Accepted Answer

A) none of the good will be sold. 
B) the price must rise further to reach the new market equilibrium. 
C) a surplus exists. 
D) a shortage exists. 
E) price will not change; producers will cut back production until the market is in equilibrium. 
A) none of the good will be sold. 
B) the price must rise further to reach the new market equilibrium. 
C) a surplus exists. 
D) a shortage exists. 
E) price will not change; producers will cut back production until the market is in equilibrium.

Question 19

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 20

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.

A turnip is an inferior good if

A relative price is all of the following except

When the demand for good A increases,

When the price of good A rises, the supply curve of good B shifts rightward.Which of the following statements are true?

If both demand and supply increase, then the equilibrium price

Use the table below to answer the following questions. Table 3.4.1 -Refer to Table 3.4.1.A surplus occurs if

The fact that a fall in the price of a good results in a decrease in the quantity of the good supplied illustrates

The demand and supply model determines

The price of a good will rise if

Which of the following shifts the supply curve for good X leftward?

Networks increase the price they charge cable television firms for programming.As a result, the price of cable television rises.Choose the correct statement.

The price of a good will fall if

"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 .

Use the figure below to answer the following questions. Table 3.5.2 Demand and Supply Schedules for Cups of Coffee each day at CoolU -Refer to Table 3.5.2.If the price is set at $0.80 per cup, there is leading to a price .

Use the figure below to answer the following questions. Figure 3.2.2 -Refer to Figure 3.2.2.Which one of the following represents a decrease in quantity demanded?

If the price is above the equilibrium price, then

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 .

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

What Is Economics

The Economic Problem

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Filters

Exam 3: Demand and Supply

A turnip is an inferior good if

A relative price is all of the following except

When the demand for good A increases,

When the price of good A rises, the supply curve of good B shifts rightward.Which of the following statements are true?

If both demand and supply increase, then the equilibrium price

Use the table below to answer the following questions. Table 3.4.1 -Refer to Table 3.4.1.A surplus occurs if

The fact that a fall in the price of a good results in a decrease in the quantity of the good supplied illustrates

The demand and supply model determines

The price of a good will rise if

Which of the following shifts the supply curve for good X leftward?

Networks increase the price they charge cable television firms for programming.As a result, the price of cable television rises.Choose the correct statement.

The price of a good will fall if

"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 ________.

Use the figure below to answer the following questions. Table 3.5.2 Demand and Supply Schedules for Cups of Coffee each day at CoolU -Refer to Table 3.5.2.If the price is set at $0.80 per cup, there is ________ leading to a price ________.

Use the figure below to answer the following questions. Figure 3.2.2 -Refer to Figure 3.2.2.Which one of the following represents a decrease in quantity demanded?

If the price is above the equilibrium price, then

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 ________.

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

What Is Economics

The Economic Problem

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Filters

"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 .

Use the figure below to answer the following questions. Table 3.5.2 Demand and Supply Schedules for Cups of Coffee each day at CoolU -Refer to Table 3.5.2.If the price is set at $0.80 per cup, there is leading to a price .

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 .