Question 1

A technological improvement lowers the cost of producing corn.As a result, the price of a pound of corn ________ and the quantity of corn ________.

Accepted Answer

A)  rises; increases 
B)  rises; decreases 
C)  falls; increases 
D)  falls; decreases 
E)  falls; does not change 
A)  rises; increases 
B)  rises; decreases 
C)  falls; increases 
D)  falls; decreases 
E)  falls; does not change

Question 2

If income increases and the demand for bus rides decreases,

Accepted Answer

A)  bus rides are a normal good. 
B)  consumers are behaving irrationally. 
C)  bus rides are an inferior good. 
D)  bus rides are a substitute good. 
E)  bus rides must be a complement good with some other good. 
A)  bus rides are a normal good. 
B)  consumers are behaving irrationally. 
C)  bus rides are an inferior good. 
D)  bus rides are a substitute good. 
E)  bus rides must be a complement good with some other good.

Question 3

The law of supply states that, other things remaining the same,

Accepted Answer

A)  demand increases when supply increases. 
B)  if the price of a good increases, firms buy less of it. 
C)  if the price of a good increases, the quantity supplied increases. 
D)  as people's income increase, the supply of goods increases. 
E)  if the price of a good increases, the supply increases. 
A)  demand increases when supply increases. 
B)  if the price of a good increases, firms buy less of it. 
C)  if the price of a good increases, the quantity supplied increases. 
D)  as people's income increase, the supply of goods increases. 
E)  if the price of a good increases, the supply increases.

Question 4

-In the above figure, the movement from point a to point b reflects

Accepted Answer

A)  an increase in the price of pizza. 
B)  an increase in the supply of pizza. 
C)  an increase in the number of producers of pizza. 
D)  a decrease in the cost of the tomato sauce used to produce pizza. 
E)  a decrease in income if pizza is a normal good. 
A)  an increase in the price of pizza. 
B)  an increase in the supply of pizza. 
C)  an increase in the number of producers of pizza. 
D)  a decrease in the cost of the tomato sauce used to produce pizza. 
E)  a decrease in income if pizza is a normal good.

Question 5

-The above figure shows the market for pizza.The market is in equilibrium.Pizza and tacos are substitutes for consumers.The price of tacos falls.What point represents the most likely new price and quantity?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
E)  E 
A)  A 
B)  B 
C)  C 
D)  D 
E)  E

Question 6

The American Dairy Association starts a highly successful advertising campaign that makes most people want to drink more milk.As a result,

Accepted Answer

A)  the demand for milk increases. 
B)  the quantity demanded of milk increases. 
C)  the price of milk falls to encourage people to drink more milk. 
D)  the demand for milk is not affected. 
E)  the demand for milk decreases because the price of milk rises. 
A)  the demand for milk increases. 
B)  the quantity demanded of milk increases. 
C)  the price of milk falls to encourage people to drink more milk. 
D)  the demand for milk is not affected. 
E)  the demand for milk decreases because the price of milk rises.

Question 7

Suppose over the next several years the productivity of firms producing electric cars improves dramatically.The advance in productivity leads to

Accepted Answer

A)  a decrease in the supply of electric cars so that the supply curve shifts leftward. 
B)  a decrease in the supply of electric cars so that the supply curve shifts rightward. 
C)  an increase in the supply of electric cars so that the supply curve shifts leftward. 
D)  an increase in the supply electric cars so that the supply curve shifts rightward. 
E)  no change in the supply of electric cars, only a change in the quantity supplied of electric cars. 
A)  a decrease in the supply of electric cars so that the supply curve shifts leftward. 
B)  a decrease in the supply of electric cars so that the supply curve shifts rightward. 
C)  an increase in the supply of electric cars so that the supply curve shifts leftward. 
D)  an increase in the supply electric cars so that the supply curve shifts rightward. 
E)  no change in the supply of electric cars, only a change in the quantity supplied of electric cars.

Question 8

Changes in which of the following factors do NOT shift the demand curve?

Accepted Answer

A)  the price of the good 
B)  buyers' incomes 
C)  the price of a substitute good 
D)  the number of buyers 
E)  the price expected in the future 
A)  the price of the good 
B)  buyers' incomes 
C)  the price of a substitute good 
D)  the number of buyers 
E)  the price expected in the future

Question 9

Market equilibrium i. can never occur because there are always people who want a good but cannot afford it.
Ii) occurs at the intersection of the supply and demand curves.
Iii) is the point where the price equals the quantity.

Accepted Answer

A)  ii only 
B)  iii only 
C)  ii and iii 
D)  i only 
E)  i and ii 
A)  ii only 
B)  iii only 
C)  ii and iii 
D)  i only 
E)  i and ii

Question 10

-The number of logging firms increases.Which of the figures above best illustrates this change?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
E)  Figure A and Figure D 
A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
E)  Figure A and Figure D

Question 11

A competitive market is in equilibrium.Then there is a decrease in demand and a decrease in supply.The equilibrium price ________, and the equilibrium quantity ________.

Accepted Answer

A)  rises; decreases 
B)  perhaps changes but we can't say if it rises, falls, or stays the same; decreases 
C)  falls; increases 
D)  perhaps changes but we can't say if it rises, falls, or stays the same; increases 
E)  rises; increases 
A)  rises; decreases 
B)  perhaps changes but we can't say if it rises, falls, or stays the same; decreases 
C)  falls; increases 
D)  perhaps changes but we can't say if it rises, falls, or stays the same; increases 
E)  rises; increases

Question 12

A decrease in the price of a complement in production leads to

Accepted Answer

A)  a decrease in the supply of the good in question. 
B)  an increase in the supply of the good in question. 
C)  no change in the supply of the good in question. 
D)  a decrease in the quantity supplied of the good in question. 
E)  an increase in the supply of the good in question and a decrease in the quantity supplied of the good in question. 
A)  a decrease in the supply of the good in question. 
B)  an increase in the supply of the good in question. 
C)  no change in the supply of the good in question. 
D)  a decrease in the quantity supplied of the good in question. 
E)  an increase in the supply of the good in question and a decrease in the quantity supplied of the good in question.

Question 13

Suppose Ramen noodles, an inexpensive but a quite tasty dish, are an inferior good.Why do grocery stores in college towns, that is, towns with a large fraction of college students, stock a lot of Ramen noodles?

Accepted Answer

Generally, college students' incomes are

Question 14

Suppose that the demand curve for desktop computers shifts rightward and at the same time the supply curve shifts leftward.Which of the following could have caused these shifts?

Accepted Answer

A)  Desktop computers are a normal good and incomes increased, while more firms entered the market. 
B)  The price of a laptop computer, a substitute for desktop computers, fell and the cost of producing desktop computers decreased. 
C)  Consumers purchased more computers because of the Christmas season and the labor costs of producing desktop computers decreased. 
D)  Desktop computers are a normal good and incomes increased, while the labor costs of producing personal computers increased. 
E)  Desktop computers are a normal good and incomes decreased, while the labor costs of producing personal computers increased. 
A)  Desktop computers are a normal good and incomes increased, while more firms entered the market. 
B)  The price of a laptop computer, a substitute for desktop computers, fell and the cost of producing desktop computers decreased. 
C)  Consumers purchased more computers because of the Christmas season and the labor costs of producing desktop computers decreased. 
D)  Desktop computers are a normal good and incomes increased, while the labor costs of producing personal computers increased. 
E)  Desktop computers are a normal good and incomes decreased, while the labor costs of producing personal computers increased.

Question 15

In early 2009 the price of computer memory chips rose.In a demand and supply model, shifts in what curve or curves could have brought about the higher price?

Accepted Answer

The higher price could have been brought

Question 16

Suppose the price of leather used to produce shoes increases.The higher price of leather ________ the supply of shoes and the supply curve of shoes ________.

Accepted Answer

A)  increases; shifts rightward 
B)  increases; shifts leftward 
C)  decreases; shifts rightward 
D)  decreases; shifts leftward 
E)  does not change; does not shift 
A)  increases; shifts rightward 
B)  increases; shifts leftward 
C)  decreases; shifts rightward 
D)  decreases; shifts leftward 
E)  does not change; does not shift

Question 17

-In the figure above, if point "a" represents the original equilibrium and point "b" the new equilibrium, then

Accepted Answer

A)  there has been an increase in supply. 
B)  there has been an increase in demand. 
C)  there has been a change in the quantity supplied and no change in supply. 
D)  Both answers B and C are correct. 
E)  Both answers A and B are correct. 
A)  there has been an increase in supply. 
B)  there has been an increase in demand. 
C)  there has been a change in the quantity supplied and no change in supply. 
D)  Both answers B and C are correct. 
E)  Both answers A and B are correct.

Question 18

Researchers have found a hybrid of corn that is cheaper to grow.This technological breakthrough

Accepted Answer

A)  increases the demand for corn. 
B)  increases the supply of corn. 
C)  decreases the supply of corn. 
D)  Both answers A and C are correct. 
E)  Both answers A and B are correct. 
A)  increases the demand for corn. 
B)  increases the supply of corn. 
C)  decreases the supply of corn. 
D)  Both answers A and C are correct. 
E)  Both answers A and B are correct.

Question 19

Soft drinks and milk are substitutes for consumers.Draw a graph showing the effect of an increase in the price of milk on the demand for soft drinks.

Accepted Answer

The answer of Soft drinks and milk are substitutes for...

Question 20

In Great Britain, raising taxes on gasoline has increased the costs of supplying gasoline.As a result, the equilibrium quantity of gasoline ________ and the equilibrium price of gasoline ________.

Accepted Answer

A)  increases; rises 
B)  increases; falls 
C)  decreases; rises 
D)  decreases; falls 
E)  does not change; rises 
A)  increases; rises 
B)  increases; falls 
C)  decreases; rises 
D)  decreases; falls 
E)  does not change; rises

A technological improvement lowers the cost of producing corn.As a result, the price of a pound of corn and the quantity of corn .

If income increases and the demand for bus rides decreases,

The law of supply states that, other things remaining the same,

-In the above figure, the movement from point a to point b reflects

-The above figure shows the market for pizza.The market is in equilibrium.Pizza and tacos are substitutes for consumers.The price of tacos falls.What point represents the most likely new price and quantity?

The American Dairy Association starts a highly successful advertising campaign that makes most people want to drink more milk.As a result,

Suppose over the next several years the productivity of firms producing electric cars improves dramatically.The advance in productivity leads to

Changes in which of the following factors do NOT shift the demand curve?

Market equilibrium i. can never occur because there are always people who want a good but cannot afford it. Ii) occurs at the intersection of the supply and demand curves. Iii) is the point where the price equals the quantity.

-The number of logging firms increases.Which of the figures above best illustrates this change?

A competitive market is in equilibrium.Then there is a decrease in demand and a decrease in supply.The equilibrium price , and the equilibrium quantity .

A decrease in the price of a complement in production leads to

Suppose Ramen noodles, an inexpensive but a quite tasty dish, are an inferior good.Why do grocery stores in college towns, that is, towns with a large fraction of college students, stock a lot of Ramen noodles?

Suppose that the demand curve for desktop computers shifts rightward and at the same time the supply curve shifts leftward.Which of the following could have caused these shifts?

In early 2009 the price of computer memory chips rose.In a demand and supply model, shifts in what curve or curves could have brought about the higher price?

Suppose the price of leather used to produce shoes increases.The higher price of leather the supply of shoes and the supply curve of shoes .

-In the figure above, if point "a" represents the original equilibrium and point "b" the new equilibrium, then

Researchers have found a hybrid of corn that is cheaper to grow.This technological breakthrough

Soft drinks and milk are substitutes for consumers.Draw a graph showing the effect of an increase in the price of milk on the demand for soft drinks.

In Great Britain, raising taxes on gasoline has increased the costs of supplying gasoline.As a result, the equilibrium quantity of gasoline and the equilibrium price of gasoline .

Getting Started

The Usand Global Economies

The Economic Problem

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Supply and Aggregate Demand

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

Exam 4: Demand and Supply

A technological improvement lowers the cost of producing corn.As a result, the price of a pound of corn ________ and the quantity of corn ________.

If income increases and the demand for bus rides decreases,

The law of supply states that, other things remaining the same,

-In the above figure, the movement from point a to point b reflects

-The above figure shows the market for pizza.The market is in equilibrium.Pizza and tacos are substitutes for consumers.The price of tacos falls.What point represents the most likely new price and quantity?

The American Dairy Association starts a highly successful advertising campaign that makes most people want to drink more milk.As a result,

Suppose over the next several years the productivity of firms producing electric cars improves dramatically.The advance in productivity leads to

Changes in which of the following factors do NOT shift the demand curve?

Market equilibrium i. can never occur because there are always people who want a good but cannot afford it. Ii) occurs at the intersection of the supply and demand curves. Iii) is the point where the price equals the quantity.

-The number of logging firms increases.Which of the figures above best illustrates this change?

A competitive market is in equilibrium.Then there is a decrease in demand and a decrease in supply.The equilibrium price ________, and the equilibrium quantity ________.

A decrease in the price of a complement in production leads to

Suppose Ramen noodles, an inexpensive but a quite tasty dish, are an inferior good.Why do grocery stores in college towns, that is, towns with a large fraction of college students, stock a lot of Ramen noodles?

Suppose that the demand curve for desktop computers shifts rightward and at the same time the supply curve shifts leftward.Which of the following could have caused these shifts?

In early 2009 the price of computer memory chips rose.In a demand and supply model, shifts in what curve or curves could have brought about the higher price?

Suppose the price of leather used to produce shoes increases.The higher price of leather ________ the supply of shoes and the supply curve of shoes ________.

-In the figure above, if point "a" represents the original equilibrium and point "b" the new equilibrium, then

Researchers have found a hybrid of corn that is cheaper to grow.This technological breakthrough

Soft drinks and milk are substitutes for consumers.Draw a graph showing the effect of an increase in the price of milk on the demand for soft drinks.

In Great Britain, raising taxes on gasoline has increased the costs of supplying gasoline.As a result, the equilibrium quantity of gasoline ________ and the equilibrium price of gasoline ________.

Getting Started

The Usand Global Economies

The Economic Problem

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Supply and Aggregate Demand

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

A technological improvement lowers the cost of producing corn.As a result, the price of a pound of corn and the quantity of corn .

A competitive market is in equilibrium.Then there is a decrease in demand and a decrease in supply.The equilibrium price , and the equilibrium quantity .

Suppose the price of leather used to produce shoes increases.The higher price of leather the supply of shoes and the supply curve of shoes .

In Great Britain, raising taxes on gasoline has increased the costs of supplying gasoline.As a result, the equilibrium quantity of gasoline and the equilibrium price of gasoline .