Question 1

-Using the above figure, at which price is there neither excess quantity demanded nor excess quantity supplied?

Accepted Answer

A) P₁ 
B) P₂ 
C) P₃ 
D) none of these 
A) P₁ 
B) P₂ 
C) P₃ 
D) none of these

Question 2

An inferior good is one for which

Accepted Answer

A) demand increases as income increases. 
B) demand decreases as income increases. 
C) the demand curve is vertical. 
D) the demand curve slopes up. 
A) demand increases as income increases. 
B) demand decreases as income increases. 
C) the demand curve is vertical. 
D) the demand curve slopes up.

Question 3

Which of the following causes a decrease in demand for a normal good?

Accepted Answer

A) increase in price of a substitute 
B) increase in price of a complement 
C) increase in price 
D) increase in income 
A) increase in price of a substitute 
B) increase in price of a complement 
C) increase in price 
D) increase in income

Question 4

The demand curve shows the relationship between quantity demanded and

Accepted Answer

A) income. 
B) price. 
C) supply. 
D) quantity supplied. 
A) income. 
B) price. 
C) supply. 
D) quantity supplied.

Question 5

-Refer to the above figure. Corn is an input for producing Corn Flakes. Which diagram shows the effect on the supply of Corn Flakes when the price of corn has increased?

Accepted Answer

A) graph C 
B) graph D 
C) neither graph 
D) both graphs 
A) graph C 
B) graph D 
C) neither graph 
D) both graphs

Question 6

An expected increase in the future price of automobiles will lead to

Accepted Answer

A) an outward shift in demand for automobiles today. 
B) a reduction in the demand for gasoline today. 
C) a movement down the demand schedule for automobiles. 
D) no predictable impact on today's demand for automobiles. 
A) an outward shift in demand for automobiles today. 
B) a reduction in the demand for gasoline today. 
C) a movement down the demand schedule for automobiles. 
D) no predictable impact on today's demand for automobiles.

Question 7

Which of the following will occur as the price of a good decreases?

Accepted Answer

A) The demand curve for that good will shift to the left. 
B) The demand curve for that good will shift to the right. 
C) The quantity demanded for that good will increase. 
D) Demand for that good will increase. 
A) The demand curve for that good will shift to the left. 
B) The demand curve for that good will shift to the right. 
C) The quantity demanded for that good will increase. 
D) Demand for that good will increase.

Question 8

An expected future increase in the price of gasoline may

Accepted Answer

A) increase the demand for gasoline now. 
B) decrease the demand for gasoline now. 
C) increase the supply of gasoline now. 
D) make gasoline an inferior good. 
A) increase the demand for gasoline now. 
B) decrease the demand for gasoline now. 
C) increase the supply of gasoline now. 
D) make gasoline an inferior good.

Question 9

If goods X and Y are substitute goods, then an increase in the price of Y, other things being equal,

Accepted Answer

A) results in a decrease in the amounts of both X and Y consumed. 
B) decreases the quantity demanded of Y, but has no effect on the amount of X consumed. 
C) results in a decrease in the quantity of Y consumed, but increases the demand for X. 
D) has no real effect on the quantity demanded of good Y, but increases the demand for X. 
A) results in a decrease in the amounts of both X and Y consumed. 
B) decreases the quantity demanded of Y, but has no effect on the amount of X consumed. 
C) results in a decrease in the quantity of Y consumed, but increases the demand for X. 
D) has no real effect on the quantity demanded of good Y, but increases the demand for X.

Question 10

The market supply curve can be derived by

Accepted Answer

A) vertically adding the individual supplies at each quantity level. 
B) multiplying the price and quantity supplied at each price level. 
C) horizontally adding the individual supplies at each price level. 
D) looking at the capacity utilization in the largest firms in the industry. 
A) vertically adding the individual supplies at each quantity level. 
B) multiplying the price and quantity supplied at each price level. 
C) horizontally adding the individual supplies at each price level. 
D) looking at the capacity utilization in the largest firms in the industry.

Question 11

A shift of the demand curve to the left represents

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 12

What situation gives rise to a surplus?

Accepted Answer

A) The market clearing price of the good is too high. 
B) The current price of the good is below its market clearing price. 
C) The current price of the good is above its market clearing price. 
D) Supply of the good decreases, but the market price is not permitted to change. 
A) The market clearing price of the good is too high. 
B) The current price of the good is below its market clearing price. 
C) The current price of the good is above its market clearing price. 
D) Supply of the good decreases, but the market price is not permitted to change.

Question 13

A significant increase in the price of tennis balls will most likely lead to

Accepted Answer

A) an increase in the demand for tennis racquets. 
B) an inward shift in the demand for tennis balls. 
C) a movement along the demand curve for tennis racquets. 
D) an inward shift in the demand for tennis racquets. 
A) an increase in the demand for tennis racquets. 
B) an inward shift in the demand for tennis balls. 
C) a movement along the demand curve for tennis racquets. 
D) an inward shift in the demand for tennis racquets.

Question 14

-In the above figure, the demand curve for Good A shifts from D₁ to D₂ in Graph A when the price of Good B changes from P₁ to P₂ in Graph B. We can conclude that

Accepted Answer

A) Good A and Good B are substitutes. 
B) Good A and Good B are complements. 
C) Good A is a normal good but Good B is an inferior good. 
D) Good A and Good B are unrelated. 
A) Good A and Good B are substitutes. 
B) Good A and Good B are complements. 
C) Good A is a normal good but Good B is an inferior good. 
D) Good A and Good B are unrelated.

Question 15

Distinguish between a change in demand and a change in quantity demanded.

Accepted Answer

A change in quantity demanded is caused

Question 16

A movement along a demand curve is

Accepted Answer

A) a change in demand and can be caused by a change in consumers' income. 
B) a change in the quantity demanded and is caused by a change in the price of the good. 
C) a change in the quantity demanded and can be caused by a change in consumers' income. 
D) a change in demand and is caused by a change in the price of the good. 
A) a change in demand and can be caused by a change in consumers' income. 
B) a change in the quantity demanded and is caused by a change in the price of the good. 
C) a change in the quantity demanded and can be caused by a change in consumers' income. 
D) a change in demand and is caused by a change in the price of the good.

Question 17

Explain how a market demand curve is constructed.

Accepted Answer

The market demand curve is the horizonta

Question 18

-Refer to the above figure. Moving from point A to point B indicates

Accepted Answer

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

Question 19

Which of the following statements is FALSE about the demand curve?

Accepted Answer

A) An increase in demand shifts the demand curve to the left, closer to the price axis. 
B) When only the price of a good changes, there is movement along the demand curve but no change in demand. 
C) A change in demand is graphically shown by shifting the entire demand curve. 
D) When demand decreases, there is a drop in the quantity demanded at each price. 
A) An increase in demand shifts the demand curve to the left, closer to the price axis. 
B) When only the price of a good changes, there is movement along the demand curve but no change in demand. 
C) A change in demand is graphically shown by shifting the entire demand curve. 
D) When demand decreases, there is a drop in the quantity demanded at each price.

Question 20

A demand curve for a normal good

Accepted Answer

A) slopes upward and to the right. 
B) is constructed based on the assumption that income is rising. 
C) is constructed based on the assumption that an inverse relationship exists between price and income. 
D) shows the inverse relationship between price and quantity demanded. 
A) slopes upward and to the right. 
B) is constructed based on the assumption that income is rising. 
C) is constructed based on the assumption that an inverse relationship exists between price and income. 
D) shows the inverse relationship between price and quantity demanded.

-Using the above figure, at which price is there neither excess quantity demanded nor excess quantity supplied?

An inferior good is one for which

Which of the following causes a decrease in demand for a normal good?

The demand curve shows the relationship between quantity demanded and

-Refer to the above figure. Corn is an input for producing Corn Flakes. Which diagram shows the effect on the supply of Corn Flakes when the price of corn has increased?

An expected increase in the future price of automobiles will lead to

Which of the following will occur as the price of a good decreases?

An expected future increase in the price of gasoline may

If goods X and Y are substitute goods, then an increase in the price of Y, other things being equal,

The market supply curve can be derived by

A shift of the demand curve to the left represents

What situation gives rise to a surplus?

A significant increase in the price of tennis balls will most likely lead to

-In the above figure, the demand curve for Good A shifts from D₁ to D₂ in Graph A when the price of Good B changes from P₁ to P₂ in Graph B. We can conclude that

Distinguish between a change in demand and a change in quantity demanded.

A movement along a demand curve is

Explain how a market demand curve is constructed.

-Refer to the above figure. Moving from point A to point B indicates

Which of the following statements is FALSE about the demand curve?

A demand curve for a normal good

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

-Using the above figure, at which price is there neither excess quantity demanded nor excess quantity supplied?

An inferior good is one for which

Which of the following causes a decrease in demand for a normal good?

The demand curve shows the relationship between quantity demanded and

-Refer to the above figure. Corn is an input for producing Corn Flakes. Which diagram shows the effect on the supply of Corn Flakes when the price of corn has increased?

An expected increase in the future price of automobiles will lead to

Which of the following will occur as the price of a good decreases?

An expected future increase in the price of gasoline may

If goods X and Y are substitute goods, then an increase in the price of Y, other things being equal,

The market supply curve can be derived by

A shift of the demand curve to the left represents

What situation gives rise to a surplus?

A significant increase in the price of tennis balls will most likely lead to

-In the above figure, the demand curve for Good A shifts from D₁ to D₂ in Graph A when the price of Good B changes from P₁ to P₂ in Graph B. We can conclude that

Distinguish between a change in demand and a change in quantity demanded.

A movement along a demand curve is

Explain how a market demand curve is constructed.

-Refer to the above figure. Moving from point A to point B indicates

Which of the following statements is FALSE about the demand curve?

A demand curve for a normal good

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