Question 1

When income increases, the demand curve for an inferior good

Accepted Answer

A) shifts to the right. 
B) shifts to the left. 
C) moves up along the demand curve for the product. 
D) remains constant. 
A) shifts to the right. 
B) shifts to the left. 
C) moves up along the demand curve for the product. 
D) remains constant.

Question 2

Suppose that, at an official ticket price of $480, there are 6,000 Justin Timberlake fans wanting to attend his concert, but only 4,000 ticketed seats are available. Which one of the following statements is then TRUE?

Accepted Answer

A) There will be scalpers outside the arena selling tickets for $480. 
B) There will be a surplus of tickets. 
C) The market clearing price of the tickets is less than $480. 
D) The market clearing price of the tickets is more than $480. 
A) There will be scalpers outside the arena selling tickets for $480. 
B) There will be a surplus of tickets. 
C) The market clearing price of the tickets is less than $480. 
D) The market clearing price of the tickets is more than $480.

Question 3

The law of supply states that there is

Accepted Answer

A) an inverse relationship between price and technology, ceteris paribus. 
B) a direct relationship between profit and quantity supplied, ceteris paribus. 
C) no relationship between price of resources and number of suppliers, ceteris paribus. 
D) a direct relationship between price and quantity supplied, ceteris paribus. 
A) an inverse relationship between price and technology, ceteris paribus. 
B) a direct relationship between profit and quantity supplied, ceteris paribus. 
C) no relationship between price of resources and number of suppliers, ceteris paribus. 
D) a direct relationship between price and quantity supplied, ceteris paribus.

Question 4

The law of demand includes the statement "other things being equal." These other things include all of the following EXCEPT

Accepted Answer

A) the price of the good itself. 
B) the price of related goods. 
C) incomes. 
D) tastes. 
A) the price of the good itself. 
B) the price of related goods. 
C) incomes. 
D) tastes.

Question 5

Two goods are substitutes when

Accepted Answer

A) an increase in the price of one reduces the demand for the other. 
B) an increase in the price of one raises the demand for the other. 
C) the two goods are used together. 
D) the two goods have the same price. 
A) an increase in the price of one reduces the demand for the other. 
B) an increase in the price of one raises the demand for the other. 
C) the two goods are used together. 
D) the two goods have the same price.

Question 6

A market demand curve is found by

Accepted Answer

A) adding the prices each consumer would pay for each quantity. 
B) adding the prices and the quantities demanded by a consumer. 
C) adding the quantities demanded for each individual consumer at each price. 
D) taking the demand curve of the "representative" consumer. 
A) adding the prices each consumer would pay for each quantity. 
B) adding the prices and the quantities demanded by a consumer. 
C) adding the quantities demanded for each individual consumer at each price. 
D) taking the demand curve of the "representative" consumer.

Question 7

-According to the market data for good X in the above table, a stable equilibrium price is established at

Accepted Answer

A) $2. 
B) $4. 
C) $6. 
D) $8. 
A) $2. 
B) $4. 
C) $6. 
D) $8.

Question 8

Sarah gets a salary increase of 20 percent. Before her raise, she purchased 5 pounds of hamburger and 1 pound of beef stew a month. After her raise, she consumes 2 pounds of hamburger and 3 pounds of beef stew a month. If everything else is held constant, we know that

Accepted Answer

A) hamburger is an inferior good and beef stew is a normal good for Sarah. 
B) hamburger is a normal good and beef stew is an inferior good for Sarah. 
C) both hamburger and beef stew are normal goods for Sarah. 
D) both hamburger and beef stew are inferior goods for Sarah. 
A) hamburger is an inferior good and beef stew is a normal good for Sarah. 
B) hamburger is a normal good and beef stew is an inferior good for Sarah. 
C) both hamburger and beef stew are normal goods for Sarah. 
D) both hamburger and beef stew are inferior goods for Sarah.

Question 9

We know that products G and H are related goods, because when the price of G increases,

Accepted Answer

A) the demand curve for H will shift to the right, because G and H are complementary goods. 
B) the quantity of H demanded will shift along its demand curve, because G and H are complementary goods. 
C) the demand curve for H will shift to the left, because G and H are complementary goods. 
D) the demand curve for H will remain unchanged because G and H are substitute goods. 
A) the demand curve for H will shift to the right, because G and H are complementary goods. 
B) the quantity of H demanded will shift along its demand curve, because G and H are complementary goods. 
C) the demand curve for H will shift to the left, because G and H are complementary goods. 
D) the demand curve for H will remain unchanged because G and H are substitute goods.

Question 10

-Refer to the above figure. The rightward shift of the curve indicates

Accepted Answer

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

Question 11

Mary decreases her consumption of Good X after the price of Good Y decreased. For Mary

Accepted Answer

A) Good X and Good Y are substitutes. 
B) Good X and Good Y are complements. 
C) Good X is an inferior good. 
D) Good Y is an inferior good. 
A) Good X and Good Y are substitutes. 
B) Good X and Good Y are complements. 
C) Good X is an inferior good. 
D) Good Y is an inferior good.

Question 12

Suppliers will provide more of a good when

Accepted Answer

A) the market price increases. 
B) the good is a normal good. 
C) resource prices increase. 
D) there is a decrease in demand. 
A) the market price increases. 
B) the good is a normal good. 
C) resource prices increase. 
D) there is a decrease in demand.

Question 13

If the demand of a good is inversely related to income, it must be

Accepted Answer

A) a bad good. 
B) an inferior good. 
C) a normal good. 
D) an everyday product. 
A) a bad good. 
B) an inferior good. 
C) a normal good. 
D) an everyday product.

Question 14

Which one of the following would cause a rightward shift in the demand curve of digital cameras?

Accepted Answer

A) Digital cameras become easier to use. 
B) The price of digital cameras decreases. 
C) Production methods are modified to make production of digital cameras more efficient. 
D) Government regulations are imposed to limit the number of digital cameras imported. 
A) Digital cameras become easier to use. 
B) The price of digital cameras decreases. 
C) Production methods are modified to make production of digital cameras more efficient. 
D) Government regulations are imposed to limit the number of digital cameras imported.

Question 15

-Refer to the above table. The market quantity supplied when the price is $7 is

Accepted Answer

A) 0. 
B) 20. 
C) 29. 
D) 38. 
A) 0. 
B) 20. 
C) 29. 
D) 38.

Question 16

Kariuki decreases his consumption of grapes after his income goes up. For Kariuki

Accepted Answer

A) grapes and income are substitute goods. 
B) grapes and income are complementary goods. 
C) grapes are an inferior good. 
D) grapes are a superior good. 
A) grapes and income are substitute goods. 
B) grapes and income are complementary goods. 
C) grapes are an inferior good. 
D) grapes are a superior good.

Question 17

The price of a new textbook increased from $60 to $75 in one year, while the price of a used textbook increased by 25 percent. What happened to the relative price of a used textbook?

Accepted Answer

A) It increased by 25 percent. 
B) It increased by 10 percent. 
C) It remained constant. 
D) It can't be determined without knowing the nominal price of the used textbook in at least one of the years. 
A) It increased by 25 percent. 
B) It increased by 10 percent. 
C) It remained constant. 
D) It can't be determined without knowing the nominal price of the used textbook in at least one of the years.

Question 18

-Refer to the above figure. The equilibrium price and quantity are

Accepted Answer

A) $2 and 12 units. 
B) $6 and 9 units. 
C) $8 and 6 units. 
D) $10 and 1 unit. 
A) $2 and 12 units. 
B) $6 and 9 units. 
C) $8 and 6 units. 
D) $10 and 1 unit.

Question 19

Total market demand can be calculated by

Accepted Answer

A) horizontally summing individual demand curves at each and every price level. 
B) vertically summing individual demand curves at each and every income level. 
C) adding up the largest quantity demanded by each individual. 
D) looking at the changes in the products' popularity. 
A) horizontally summing individual demand curves at each and every price level. 
B) vertically summing individual demand curves at each and every income level. 
C) adding up the largest quantity demanded by each individual. 
D) looking at the changes in the products' popularity.

Question 20

By summing the quantities demanded by individuals at each price we obtain the

Accepted Answer

A) equilibrium price. 
B) market demand curve. 
C) market supply curve. 
D) individual demand curve. 
A) equilibrium price. 
B) market demand curve. 
C) market supply curve. 
D) individual demand curve.

When income increases, the demand curve for an inferior good

Suppose that, at an official ticket price of $480, there are 6,000 Justin Timberlake fans wanting to attend his concert, but only 4,000 ticketed seats are available. Which one of the following statements is then TRUE?

The law of supply states that there is

The law of demand includes the statement "other things being equal." These other things include all of the following EXCEPT

Two goods are substitutes when

A market demand curve is found by

-According to the market data for good X in the above table, a stable equilibrium price is established at

Sarah gets a salary increase of 20 percent. Before her raise, she purchased 5 pounds of hamburger and 1 pound of beef stew a month. After her raise, she consumes 2 pounds of hamburger and 3 pounds of beef stew a month. If everything else is held constant, we know that

We know that products G and H are related goods, because when the price of G increases,

-Refer to the above figure. The rightward shift of the curve indicates

Mary decreases her consumption of Good X after the price of Good Y decreased. For Mary

Suppliers will provide more of a good when

If the demand of a good is inversely related to income, it must be

Which one of the following would cause a rightward shift in the demand curve of digital cameras?

-Refer to the above table. The market quantity supplied when the price is $7 is

Kariuki decreases his consumption of grapes after his income goes up. For Kariuki

The price of a new textbook increased from $60 to $75 in one year, while the price of a used textbook increased by 25 percent. What happened to the relative price of a used textbook?

-Refer to the above figure. The equilibrium price and quantity are

Total market demand can be calculated by

By summing the quantities demanded by individuals at each price we obtain the

The Nature of Economics

Scarcity and the World of Trade-Offs

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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Exam 3: Demand and Supply

When income increases, the demand curve for an inferior good

Suppose that, at an official ticket price of $480, there are 6,000 Justin Timberlake fans wanting to attend his concert, but only 4,000 ticketed seats are available. Which one of the following statements is then TRUE?

The law of supply states that there is

The law of demand includes the statement "other things being equal." These other things include all of the following EXCEPT

Two goods are substitutes when

A market demand curve is found by

-According to the market data for good X in the above table, a stable equilibrium price is established at

Sarah gets a salary increase of 20 percent. Before her raise, she purchased 5 pounds of hamburger and 1 pound of beef stew a month. After her raise, she consumes 2 pounds of hamburger and 3 pounds of beef stew a month. If everything else is held constant, we know that

We know that products G and H are related goods, because when the price of G increases,

-Refer to the above figure. The rightward shift of the curve indicates

Mary decreases her consumption of Good X after the price of Good Y decreased. For Mary

Suppliers will provide more of a good when

If the demand of a good is inversely related to income, it must be

Which one of the following would cause a rightward shift in the demand curve of digital cameras?

-Refer to the above table. The market quantity supplied when the price is $7 is

Kariuki decreases his consumption of grapes after his income goes up. For Kariuki

The price of a new textbook increased from $60 to $75 in one year, while the price of a used textbook increased by 25 percent. What happened to the relative price of a used textbook?

-Refer to the above figure. The equilibrium price and quantity are

Total market demand can be calculated by

By summing the quantities demanded by individuals at each price we obtain the

The Nature of Economics

Scarcity and the World of Trade-Offs

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters