Question 1

Markets are

Accepted Answer

A) a mechanism through which prices of goods and services are determined by the forces of supply and demand. 
B) specific geographic locations. 
C) hypothetical constructs used to analyze how people form their tastes and preferences. 
D) places where people can inspect goods and services carefully. 
A) a mechanism through which prices of goods and services are determined by the forces of supply and demand. 
B) specific geographic locations. 
C) hypothetical constructs used to analyze how people form their tastes and preferences. 
D) places where people can inspect goods and services carefully.

Question 2

Here's what we know about last year's weekly demand for 2-night DVD rentals in the Village of Harmony: When P = $3, Qd = 100; at P = $5, Qd = 75; and when P = $7, Qd = 50. This year the village population has increased by 25%. What impact is this most likely to have?

Accepted Answer

A) Each individual's demand for DVD rentals will increase. 
B) Each individual's demand curve for DVD rentals will shift to the left. 
C) The market demand curve for DVD rentals shifts left. 
D) The market demand for DVD rentals increases. 
A) Each individual's demand for DVD rentals will increase. 
B) Each individual's demand curve for DVD rentals will shift to the left. 
C) The market demand curve for DVD rentals shifts left. 
D) The market demand for DVD rentals increases.

Question 3

If a decrease in the price of good A causes a decrease in demand for good B, the two goods are

Accepted Answer

A) substitutes. 
B) complements. 
C) normal. 
D) inferior. 
A) substitutes. 
B) complements. 
C) normal. 
D) inferior.

Question 4

-Using the above table, at a price of $70, there is

Accepted Answer

A) a surplus of 150 units. 
B) a shortage of 120 units. 
C) a surplus of 270 units. 
D) a shortage of 150 units. 
A) a surplus of 150 units. 
B) a shortage of 120 units. 
C) a surplus of 270 units. 
D) a shortage of 150 units.

Question 5

A surplus exists

Accepted Answer

A) in equilibrium. 
B) when quantity supplied is greater than quantity demanded. 
C) when quantity supplied is less that quantity demanded. 
D) at the market clearing price. 
A) in equilibrium. 
B) when quantity supplied is greater than quantity demanded. 
C) when quantity supplied is less that quantity demanded. 
D) at the market clearing price.

Question 6

If the price of gasoline rises sharply and the demand for sports utility vehicles falls, then the two goods are

Accepted Answer

A) complements. 
B) normal goods. 
C) substitutes. 
D) inferior goods. 
A) complements. 
B) normal goods. 
C) substitutes. 
D) inferior goods.

Question 7

-Refer to the above figure. Which panel shows the effect of an increase in the price of a good on the demand curve of that good?

Accepted Answer

A) Panel A 
B) Panel B 
C) both panels 
D) neither panel 
A) Panel A 
B) Panel B 
C) both panels 
D) neither panel

Question 8

The price of a first-class stamp in 1957 was 3 cents, and it is 49 cents in 2014. From this we know that

Accepted Answer

A) both the relative and the absolute price of first-class stamps increased from 1957 to 2014. 
B) the money price of first-class stamps increased from 1957 to 2014 but the absolute price of first-class stamps stayed constant. 
C) the money price of first-class stamps increased from 1957 to 2014 and the relative price of first-class stamps decreased. 
D) the money price of first-class stamps increased from 1957 to 2014, but we can't tell if the relative price of first-class stamps increased or decreased without more information. 
A) both the relative and the absolute price of first-class stamps increased from 1957 to 2014. 
B) the money price of first-class stamps increased from 1957 to 2014 but the absolute price of first-class stamps stayed constant. 
C) the money price of first-class stamps increased from 1957 to 2014 and the relative price of first-class stamps decreased. 
D) the money price of first-class stamps increased from 1957 to 2014, but we can't tell if the relative price of first-class stamps increased or decreased without more information.

Question 9

An increase in supply will occur when

Accepted Answer

A) the supply curve shifts downward to the right. 
B) the supply curve shifts upward to the left. 
C) the demand curve shifts downward to the left. 
D) the demand curve shifts upward to the right. 
A) the supply curve shifts downward to the right. 
B) the supply curve shifts upward to the left. 
C) the demand curve shifts downward to the left. 
D) the demand curve shifts upward to the right.

Question 10

The market clearing price of a good is

Accepted Answer

A) the price at which there is at least some of the good available for everyone. 
B) the price at which there is no surplus and no shortage. 
C) the price that consumers prefer. 
D) the price that producers prefer. 
A) the price at which there is at least some of the good available for everyone. 
B) the price at which there is no surplus and no shortage. 
C) the price that consumers prefer. 
D) the price that producers prefer.

Question 11

A change in any of the ceteris paribus conditions for demand leads to a

Accepted Answer

A) a good going from an inferior good to a normal good. 
B) movement along the demand curve. 
C) shift of the demand curve. 
D) change in supply. 
A) a good going from an inferior good to a normal good. 
B) movement along the demand curve. 
C) shift of the demand curve. 
D) change in supply.

Question 12

A demand curve

Accepted Answer

A) slopes down because of the inverse relationship between price and quantity demanded. 
B) slopes up because of the direct relationship between price and quantity demanded. 
C) can slope up or down depending on the tastes of the consumer. 
D) is vertical for necessities, upward sloping for luxury goods, and downward sloping for all other goods. 
A) slopes down because of the inverse relationship between price and quantity demanded. 
B) slopes up because of the direct relationship between price and quantity demanded. 
C) can slope up or down depending on the tastes of the consumer. 
D) is vertical for necessities, upward sloping for luxury goods, and downward sloping for all other goods.

Question 13

The price that we observe in the market is

Accepted Answer

A) the law of demand. 
B) a substitute. 
C) the money price. 
D) the relative price. 
A) the law of demand. 
B) a substitute. 
C) the money price. 
D) the relative price.

Question 14

We observe that people buy less steak and more potatoes when the price of steak relative to potatoes increases. This indicates that steak and potatoes are

Accepted Answer

A) substitutes. 
B) complements. 
C) inferior goods. 
D) unrelated goods. 
A) substitutes. 
B) complements. 
C) inferior goods. 
D) unrelated goods.

Question 15

An increase in the number of consumers in a market would cause

Accepted Answer

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

Question 16

After the price of smartphone apps falls, Justin buys fewer flash drives but he buys a new smartphone. For Justin

Accepted Answer

A) smartphone apps and flash drives are complements, and smartphone apps and smartphones are substitutes. 
B) smartphone apps, flash drives, and smartphones are all complements. 
C) smartphone apps and flash drives are substitutes, and smartphone apps and smartphones are complements. 
D) smartphone apps, flash drives, and smartphones are not all complements. 
A) smartphone apps and flash drives are complements, and smartphone apps and smartphones are substitutes. 
B) smartphone apps, flash drives, and smartphones are all complements. 
C) smartphone apps and flash drives are substitutes, and smartphone apps and smartphones are complements. 
D) smartphone apps, flash drives, and smartphones are not all complements.

Question 17

The supply curve shows the relationship between the

Accepted Answer

A) cost of production and the price of the product. 
B) cost of resources and cost of production. 
C) price of the product and quantity supplied. 
D) quantity demanded and the quantity supplied. 
A) cost of production and the price of the product. 
B) cost of resources and cost of production. 
C) price of the product and quantity supplied. 
D) quantity demanded and the quantity supplied.

Question 18

The law of demand implies that the demand curve

Accepted Answer

A) has a negative slope. 
B) has a positive slope. 
C) shifts to the right when the price of a good increases. 
D) shifts to the left when the price of a good decreases. 
A) has a negative slope. 
B) has a positive slope. 
C) shifts to the right when the price of a good increases. 
D) shifts to the left when the price of a good decreases.

Question 19

If the price of airline travel in Europe falls and the demand for train travel in Europe also falls, then the two goods are

Accepted Answer

A) complements. 
B) normal goods. 
C) substitutes. 
D) inferior goods. 
A) complements. 
B) normal goods. 
C) substitutes. 
D) inferior goods.

Question 20

When the price of a good rises, there is

Accepted Answer

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

Markets are

Here's what we know about last year's weekly demand for 2-night DVD rentals in the Village of Harmony: When P = $3, Qd = 100; at P = $5, Qd = 75; and when P = $7, Qd = 50. This year the village population has increased by 25%. What impact is this most likely to have?

If a decrease in the price of good A causes a decrease in demand for good B, the two goods are

-Using the above table, at a price of $70, there is

A surplus exists

If the price of gasoline rises sharply and the demand for sports utility vehicles falls, then the two goods are

-Refer to the above figure. Which panel shows the effect of an increase in the price of a good on the demand curve of that good?

The price of a first-class stamp in 1957 was 3 cents, and it is 49 cents in 2014. From this we know that

An increase in supply will occur when

The market clearing price of a good is

A change in any of the ceteris paribus conditions for demand leads to a

A demand curve

The price that we observe in the market is

We observe that people buy less steak and more potatoes when the price of steak relative to potatoes increases. This indicates that steak and potatoes are

An increase in the number of consumers in a market would cause

After the price of smartphone apps falls, Justin buys fewer flash drives but he buys a new smartphone. For Justin

The supply curve shows the relationship between the

The law of demand implies that the demand curve

If the price of airline travel in Europe falls and the demand for train travel in Europe also falls, then the two goods are

When the price of a good rises, there is

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

Markets are

Here's what we know about last year's weekly demand for 2-night DVD rentals in the Village of Harmony: When P = $3, Qd = 100; at P = $5, Qd = 75; and when P = $7, Qd = 50. This year the village population has increased by 25%. What impact is this most likely to have?

If a decrease in the price of good A causes a decrease in demand for good B, the two goods are

-Using the above table, at a price of $70, there is

A surplus exists

If the price of gasoline rises sharply and the demand for sports utility vehicles falls, then the two goods are

-Refer to the above figure. Which panel shows the effect of an increase in the price of a good on the demand curve of that good?

The price of a first-class stamp in 1957 was 3 cents, and it is 49 cents in 2014. From this we know that

An increase in supply will occur when

The market clearing price of a good is

A change in any of the ceteris paribus conditions for demand leads to a

A demand curve

The price that we observe in the market is

We observe that people buy less steak and more potatoes when the price of steak relative to potatoes increases. This indicates that steak and potatoes are

An increase in the number of consumers in a market would cause

After the price of smartphone apps falls, Justin buys fewer flash drives but he buys a new smartphone. For Justin

The supply curve shows the relationship between the

The law of demand implies that the demand curve

If the price of airline travel in Europe falls and the demand for train travel in Europe also falls, then the two goods are

When the price of a good rises, there is

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