Question 1

If two goods, J and K, are complements, then which of the following statements is FALSE?

Accepted Answer

A) They are consumed together. 
B) An increase in the price of J causes the demand for K to rise. 
C) When the quantity demanded of J increases, the demand for K increases. 
D) A decrease in the price of K causes an increase in the demand for J. 
A) They are consumed together. 
B) An increase in the price of J causes the demand for K to rise. 
C) When the quantity demanded of J increases, the demand for K increases. 
D) A decrease in the price of K causes an increase in the demand for J.

Question 2

Suppose an individual experiences a permanent increase in income. As a result of this increased income, further assume that the individual eats dinner at restaurants more frequently each month. This information suggests that dinners at restaurants for this individual are

Accepted Answer

A) an inferior good. 
B) a substitute good. 
C) a normal good. 
D) both complimentary and inferior. 
A) an inferior good. 
B) a substitute good. 
C) a normal good. 
D) both complimentary and inferior.

Question 3

The price of a smartphone increased from $350 to $400 while the price of a smartphone app increased from $1 to $2. The relative price of smartphones in terms of smartphone apps

Accepted Answer

A) increased from 200 to 350. 
B) decreased from 350 to 200. 
C) increased from 0.003 to 0.05. 
D) decreased from 0.35 to 0.2. 
A) increased from 200 to 350. 
B) decreased from 350 to 200. 
C) increased from 0.003 to 0.05. 
D) decreased from 0.35 to 0.2.

Question 4

The price of a commodity in terms of another commodity 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 5

A demand schedule provides

Accepted Answer

A) the quantities of a good people are willing to sell every year. 
B) the amount of a good a person wants to sell during a given time period. 
C) the alternative quantities demanded for a given time period at different possible prices. 
D) the amount of a good a person wants at different times of the day. 
A) the quantities of a good people are willing to sell every year. 
B) the amount of a good a person wants to sell during a given time period. 
C) the alternative quantities demanded for a given time period at different possible prices. 
D) the amount of a good a person wants at different times of the day.

Question 6

A shortage exists

Accepted Answer

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

Question 7

The fact that when the price of a good goes up, people buy less of it is known as the

Accepted Answer

A) law of supply. 
B) law of demand. 
C) concept of market equilibrium. 
D) need for inferior goods. 
A) law of supply. 
B) law of demand. 
C) concept of market equilibrium. 
D) need for inferior goods.

Question 8

The price of a new textbook increased by 25 percent and the price of a used textbook increased by 30 percent. What happened to the relative price of the new textbook?

Accepted Answer

A) It increased by 5 percent. 
B) It increased, but we can't tell by how much without more information. 
C) It decreased by 5 percent. 
D) It decreased, but we can't tell by how much without more information. 
A) It increased by 5 percent. 
B) It increased, but we can't tell by how much without more information. 
C) It decreased by 5 percent. 
D) It decreased, but we can't tell by how much without more information.

Question 9

Suppose that the price of wheat is above its equilibrium price. You would expect to see

Accepted Answer

A) a shortage on the market that causes prices to increase further. 
B) an increase in quantity demanded because of the high price. 
C) a leftward shift of the demand curve because of the high price. 
D) sellers begin to lower their prices because of the surplus of wheat. 
A) a shortage on the market that causes prices to increase further. 
B) an increase in quantity demanded because of the high price. 
C) a leftward shift of the demand curve because of the high price. 
D) sellers begin to lower their prices because of the surplus of wheat.

Question 10

Which of the following is TRUE of the activities of ticket scalpers?

Accepted Answer

A) These activities cannot generate profits for the scalpers unless ticket prices are currently below market clearing levels. 
B) These activities help reduce the quantities of excess tickets supplied for events in which ticket surpluses currently exist. 
C) Engaging in these activities enable scalpers to push the price above the market clearing level. 
D) Engaging in these activities enable scalpers to push the price below the market clearing level. 
A) These activities cannot generate profits for the scalpers unless ticket prices are currently below market clearing levels. 
B) These activities help reduce the quantities of excess tickets supplied for events in which ticket surpluses currently exist. 
C) Engaging in these activities enable scalpers to push the price above the market clearing level. 
D) Engaging in these activities enable scalpers to push the price below the market clearing level.

Question 11

Assuming coffee and cola are substitutes, if the price of coffee rises

Accepted Answer

A) there is a movement along the demand curve for cola. 
B) the demand curve for coffee will shift to the right. 
C) the demand curve for cola will shift to the right. 
D) the demand curve for coffee will shift to the left. 
A) there is a movement along the demand curve for cola. 
B) the demand curve for coffee will shift to the right. 
C) the demand curve for cola will shift to the right. 
D) the demand curve for coffee will shift to the left.

Question 12

Other things being equal, the relationship between price and quantity supplied is

Accepted Answer

A) negative. 
B) constant. 
C) positive. 
D) non-existent. 
A) negative. 
B) constant. 
C) positive. 
D) non-existent.

Question 13

-Refer to the above figure. Which of the following statements is TRUE?

Accepted Answer

A) Panel A shows an increase in supply and Panel B shows a decrease in supply. 
B) Both Panels A and B show an increase in supply. 
C) Panel A shows a change in quantity supplied and Panel B shows a change in supply. 
D) Panel A shows a change in supply and Panel B shows a change in quantity supplied. 
A) Panel A shows an increase in supply and Panel B shows a decrease in supply. 
B) Both Panels A and B show an increase in supply. 
C) Panel A shows a change in quantity supplied and Panel B shows a change in supply. 
D) Panel A shows a change in supply and Panel B shows a change in quantity supplied.

Question 14

-Refer to the above figure for the market of Cheerios. Which diagram depicts the effect of an increase in the price of Cheerios?

Accepted Answer

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

Question 15

What type of relationship does the law of demand demonstrate?

Accepted Answer

A) direct 
B) positive 
C) inverse 
D) static 
A) direct 
B) positive 
C) inverse 
D) static

Question 16

Market clearing price

Accepted Answer

A) refers to a movement along the demand curve. 
B) refers to a supply curve. 
C) exists at a the point at which quantity demanded equals quantity supplied. 
D) refers to a surplus. 
A) refers to a movement along the demand curve. 
B) refers to a supply curve. 
C) exists at a the point at which quantity demanded equals quantity supplied. 
D) refers to a surplus.

Question 17

When a rise in the price of one item results in a decrease in the demand for another good, then the two goods are

Accepted Answer

A) substitute goods. 
B) complementary goods. 
C) inferior goods. 
D) satisfying the law of supply. 
A) substitute goods. 
B) complementary goods. 
C) inferior goods. 
D) satisfying the law of supply.

Question 18

-Refer to the above figure. Suppose that Cheerios and Apple Jacks are substitutes. Which diagram shows the effect on the demand for Cheerios when the price of Apple Jacks cereal has increased?

Accepted Answer

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

Question 19

An increase in the price of input used to produce a product will lead to

Accepted Answer

A) a decrease in the demand for that product. 
B) a decrease in quantity supplied of that product 
C) a decrease in the supply of that product. 
D) an increase in the supply of that product. 
A) a decrease in the demand for that product. 
B) a decrease in quantity supplied of that product 
C) a decrease in the supply of that product. 
D) an increase in the supply of that product.

Question 20

Which of the following is an example of the law of supply?

Accepted Answer

A) The price of gum has increased so producers are making more gum. 
B) The price of labor has increased and producers decrease supply. 
C) The amount of a good purchased increases when the price decreases. 
D) Producers provide less of a good when the price increases. 
A) The price of gum has increased so producers are making more gum. 
B) The price of labor has increased and producers decrease supply. 
C) The amount of a good purchased increases when the price decreases. 
D) Producers provide less of a good when the price increases.

If two goods, J and K, are complements, then which of the following statements is FALSE?

Suppose an individual experiences a permanent increase in income. As a result of this increased income, further assume that the individual eats dinner at restaurants more frequently each month. This information suggests that dinners at restaurants for this individual are

The price of a smartphone increased from $350 to $400 while the price of a smartphone app increased from $1 to $2. The relative price of smartphones in terms of smartphone apps

The price of a commodity in terms of another commodity is

A demand schedule provides

A shortage exists

The fact that when the price of a good goes up, people buy less of it is known as the

The price of a new textbook increased by 25 percent and the price of a used textbook increased by 30 percent. What happened to the relative price of the new textbook?

Suppose that the price of wheat is above its equilibrium price. You would expect to see

Which of the following is TRUE of the activities of ticket scalpers?

Assuming coffee and cola are substitutes, if the price of coffee rises

Other things being equal, the relationship between price and quantity supplied is

-Refer to the above figure. Which of the following statements is TRUE?

-Refer to the above figure for the market of Cheerios. Which diagram depicts the effect of an increase in the price of Cheerios?

What type of relationship does the law of demand demonstrate?

Market clearing price

When a rise in the price of one item results in a decrease in the demand for another good, then the two goods are

-Refer to the above figure. Suppose that Cheerios and Apple Jacks are substitutes. Which diagram shows the effect on the demand for Cheerios when the price of Apple Jacks cereal has increased?

An increase in the price of input used to produce a product will lead to

Which of the following is an example of the law of supply?

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

If two goods, J and K, are complements, then which of the following statements is FALSE?

Suppose an individual experiences a permanent increase in income. As a result of this increased income, further assume that the individual eats dinner at restaurants more frequently each month. This information suggests that dinners at restaurants for this individual are

The price of a smartphone increased from $350 to $400 while the price of a smartphone app increased from $1 to $2. The relative price of smartphones in terms of smartphone apps

The price of a commodity in terms of another commodity is

A demand schedule provides

A shortage exists

The fact that when the price of a good goes up, people buy less of it is known as the

The price of a new textbook increased by 25 percent and the price of a used textbook increased by 30 percent. What happened to the relative price of the new textbook?

Suppose that the price of wheat is above its equilibrium price. You would expect to see

Which of the following is TRUE of the activities of ticket scalpers?

Assuming coffee and cola are substitutes, if the price of coffee rises

Other things being equal, the relationship between price and quantity supplied is

-Refer to the above figure. Which of the following statements is TRUE?

-Refer to the above figure for the market of Cheerios. Which diagram depicts the effect of an increase in the price of Cheerios?

What type of relationship does the law of demand demonstrate?

Market clearing price

When a rise in the price of one item results in a decrease in the demand for another good, then the two goods are

-Refer to the above figure. Suppose that Cheerios and Apple Jacks are substitutes. Which diagram shows the effect on the demand for Cheerios when the price of Apple Jacks cereal has increased?

An increase in the price of input used to produce a product will lead to

Which of the following is an example of the law of supply?

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