Question 1

According to the law of demand,when will higher corn prices reduce the quantity demanded of corn?

Accepted Answer

A)  Always. 
B)  When the supply of corn is fixed. 
C)  When nonprice determinants, like income and the number of buyers, are unchanged. 
D)  When there are no shortages or surpluses of corn. 
A)  Always. 
B)  When the supply of corn is fixed. 
C)  When nonprice determinants, like income and the number of buyers, are unchanged. 
D)  When there are no shortages or surpluses of corn.

Question 2

If there is a surplus in the oil market,then the price of oil will:

Accepted Answer

A)  rise. 
B)  fall. 
C)  remain unchanged. 
D)  react unpredictably. 
A)  rise. 
B)  fall. 
C)  remain unchanged. 
D)  react unpredictably.

Question 3

A surplus of wheat:

Accepted Answer

A)  is impossible if people are hungry. 
B)  is impossible if the price of wheat is below equilibrium. 
C)  will result when the quantity demanded exceeds the quantity supplied at the current price. 
D)  is unlikely to cause any change in the price of wheat. 
E)  indicates that the problem of scarcity of wheat has been solved. 
A)  is impossible if people are hungry. 
B)  is impossible if the price of wheat is below equilibrium. 
C)  will result when the quantity demanded exceeds the quantity supplied at the current price. 
D)  is unlikely to cause any change in the price of wheat. 
E)  indicates that the problem of scarcity of wheat has been solved.

Question 4

The "ceteris paribus" clause in the law of demand does not allow which of the following factors to change?

Accepted Answer

A)  Consumer tastes and preferences. 
B)  The prices of other goods. 
C)  Expectations. 
D)  All of the above. 
A)  Consumer tastes and preferences. 
B)  The prices of other goods. 
C)  Expectations. 
D)  All of the above.

Question 5

A technological improvement in the production of good X causes the:

Accepted Answer

A)  demand curve for X to shift to the right. 
B)  demand curve for X to shift to the left. 
C)  supply curve for X to shift to the right. 
D)  supply curve for X to shift to the left. 
A)  demand curve for X to shift to the right. 
B)  demand curve for X to shift to the left. 
C)  supply curve for X to shift to the right. 
D)  supply curve for X to shift to the left.

Question 6

Exhibit 3-2 Demand curves
  
-In Exhibit 3-2,which of the following could not have caused the shift in the demand curve from D1 to D2?

Accepted Answer

A)  Decrease in the number of consumers. 
B)  Increase in expected future prices. 
C)  Increase in the price of a substitute. 
D)  Decrease in the price of a complement. 
E)  Increase in income. 
A)  Decrease in the number of consumers. 
B)  Increase in expected future prices. 
C)  Increase in the price of a substitute. 
D)  Decrease in the price of a complement. 
E)  Increase in income.

Question 7

In economic terms,to say that there has been an increase in demand for a product means that:

Accepted Answer

A)  the demand curve has shifted to the left. 
B)  the product's price has fallen and as a result consumers are buying a larger quantity of the product. 
C)  the product has become scarce for some reason. 
D)  consumers are now willing to purchase more of the product at each possible price. 
A)  the demand curve has shifted to the left. 
B)  the product's price has fallen and as a result consumers are buying a larger quantity of the product. 
C)  the product has become scarce for some reason. 
D)  consumers are now willing to purchase more of the product at each possible price.

Question 8

If the price of hot dogs increases,what will happen in the market for potato chips,a complementary good?

Accepted Answer

A)  Demand will increase. 
B)  Quantity demanded will increase. 
C)  Demand will decrease. 
D)  Quantity demanded will decrease. 
E)  Supply will decrease. 
A)  Demand will increase. 
B)  Quantity demanded will increase. 
C)  Demand will decrease. 
D)  Quantity demanded will decrease. 
E)  Supply will decrease.

Question 9

A shift occurs in the supply curve for salt when:

Accepted Answer

A)  the price of salt increases. 
B)  improvements are made in the production process. 
C)  salt is found to be associated with high blood pressure. 
D)  consumers expect the price of salt to increase in the future. 
A)  the price of salt increases. 
B)  improvements are made in the production process. 
C)  salt is found to be associated with high blood pressure. 
D)  consumers expect the price of salt to increase in the future.

Question 10

In general,supply curves slope upward because:

Accepted Answer

A)  increases in the price of a good result in lower opportunity costs. 
B)  rising prices provide producers with a greater profit incentive. 
C)  consumers buy a greater quantity. 
D)  technology improves the ability of firms to produce more at each possible price. 
A)  increases in the price of a good result in lower opportunity costs. 
B)  rising prices provide producers with a greater profit incentive. 
C)  consumers buy a greater quantity. 
D)  technology improves the ability of firms to produce more at each possible price.

Question 11

Assume that Coca-Cola and Pepsi-Cola are substitutes.A rise in the price of Coca-Cola will have which of the following effects on the market for Pepsi?

Accepted Answer

A)  A movement down along the Pepsi demand curve. 
B)  A rightward shift in the Pepsi demand curve. 
C)  A movement up along the Pepsi demand curve. 
D)  A leftward shift in the Pepsi demand curve. 
A)  A movement down along the Pepsi demand curve. 
B)  A rightward shift in the Pepsi demand curve. 
C)  A movement up along the Pepsi demand curve. 
D)  A leftward shift in the Pepsi demand curve.

Question 12

If income increases,then with regard to expensive cuts of steak,it is likely that the demand curve:

Accepted Answer

A)  shifts to the right. 
B)  shifts to the left. 
C)  becomes steeper. 
D)  does not change. 
E)  becomes flatter. 
A)  shifts to the right. 
B)  shifts to the left. 
C)  becomes steeper. 
D)  does not change. 
E)  becomes flatter.

Question 13

Which of the following events would increase the supply of tomatoes?

Accepted Answer

A)  The introduction of mechanized tomato pickers, which raises the cost of production. 
B)  An increase in wages for the tomato pickers. 
C)  A decrease in the cost of fertilizers for the tomato plants. 
D)  Unseasonably hot, dry weather in the tomato-growing regions of the nation. 
E)  A decrease in the price of pasta products. 
A)  The introduction of mechanized tomato pickers, which raises the cost of production. 
B)  An increase in wages for the tomato pickers. 
C)  A decrease in the cost of fertilizers for the tomato plants. 
D)  Unseasonably hot, dry weather in the tomato-growing regions of the nation. 
E)  A decrease in the price of pasta products.

Question 14

Assuming that beef and chicken are substitutes,an increase in the price of beef,other things being equal,will:

Accepted Answer

A)  increase the demand for chicken. 
B)  decrease the demand for chicken. 
C)  not change the demand for chicken. 
D)  decrease the demand for beef. 
A)  increase the demand for chicken. 
B)  decrease the demand for chicken. 
C)  not change the demand for chicken. 
D)  decrease the demand for beef.

Question 15

When economists say the quantity supplied of a product has increased,they mean the:

Accepted Answer

A)  supply curve has shifted to the left. 
B)  supply curve has shifted to the right. 
C)  price of the product has risen, and consequently, suppliers are producing more of it. 
D)  price of the product has fallen, and consequently, suppliers are producing less of it. 
A)  supply curve has shifted to the left. 
B)  supply curve has shifted to the right. 
C)  price of the product has risen, and consequently, suppliers are producing more of it. 
D)  price of the product has fallen, and consequently, suppliers are producing less of it.

Question 16

Which of the following would shift the demand curve for autos to the right?

Accepted Answer

A)  A fall in the price of autos. 
B)  A fall in the price of auto insurance. 
C)  A fall in consumers' incomes. 
D)  A fall in the price of steel. 
A)  A fall in the price of autos. 
B)  A fall in the price of auto insurance. 
C)  A fall in consumers' incomes. 
D)  A fall in the price of steel.

Question 17

Suppose all of the major computer manufacturers announced that beginning next month there would be major price reductions on their computers.This would cause the current demand for computers to:

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain unchanged. 
D)  increase and then decrease. 
A)  increase. 
B)  decrease. 
C)  remain unchanged. 
D)  increase and then decrease.

Question 18

Which of the following is closest to the definition of demand?

Accepted Answer

A)  People's willingness to supply goods at specific prices. 
B)  People's willingness to buy goods and services at given prices. 
C)  People's expectations of lower prices of goods and services. 
D)  Producer's expectations of selling more goods. 
E)  The interaction of people's willingness to buy and sell goods. 
A)  People's willingness to supply goods at specific prices. 
B)  People's willingness to buy goods and services at given prices. 
C)  People's expectations of lower prices of goods and services. 
D)  Producer's expectations of selling more goods. 
E)  The interaction of people's willingness to buy and sell goods.

Question 19

Which of the following best represents the effects of a decrease in the price of tomato juice,other things being equal?

Accepted Answer

A)  An upward movement along the demand curve for tomato juice. 
B)  A downward movement along the demand curve for tomato juice. 
C)  A rightward shift in the demand curve for tomato juice. 
D)  A leftward shift in the demand curve for tomato juice. 
A)  An upward movement along the demand curve for tomato juice. 
B)  A downward movement along the demand curve for tomato juice. 
C)  A rightward shift in the demand curve for tomato juice. 
D)  A leftward shift in the demand curve for tomato juice.

Question 20

Which of the following pairs is the best example of complements?

Accepted Answer

A)  Coffee and tea. 
B)  DVDs and tapes. 
C)  Hiking boots and athletic shoes. 
D)  Tortillas and salsa. 
A)  Coffee and tea. 
B)  DVDs and tapes. 
C)  Hiking boots and athletic shoes. 
D)  Tortillas and salsa.

Exam 3: Part 1: Market Demand and Supply

According to the law of demand,when will higher corn prices reduce the quantity demanded of corn?

If there is a surplus in the oil market,then the price of oil will:

A surplus of wheat:

The "ceteris paribus" clause in the law of demand does not allow which of the following factors to change?

A technological improvement in the production of good X causes the:

Exhibit 3-2 Demand curves -In Exhibit 3-2,which of the following could not have caused the shift in the demand curve from D1 to D2?

In economic terms,to say that there has been an increase in demand for a product means that:

If the price of hot dogs increases,what will happen in the market for potato chips,a complementary good?

A shift occurs in the supply curve for salt when:

In general,supply curves slope upward because:

Assume that Coca-Cola and Pepsi-Cola are substitutes.A rise in the price of Coca-Cola will have which of the following effects on the market for Pepsi?

If income increases,then with regard to expensive cuts of steak,it is likely that the demand curve:

Which of the following events would increase the supply of tomatoes?

Assuming that beef and chicken are substitutes,an increase in the price of beef,other things being equal,will:

When economists say the quantity supplied of a product has increased,they mean the:

Which of the following would shift the demand curve for autos to the right?

Suppose all of the major computer manufacturers announced that beginning next month there would be major price reductions on their computers.This would cause the current demand for computers to:

Which of the following is closest to the definition of demand?

Which of the following best represents the effects of a decrease in the price of tomato juice,other things being equal?

Which of the following pairs is the best example of complements?

Introducing the Economic Way of Thinking

A: Appendix: Applying Graphs to Economics

Production Possibilities,Opportunity Cost,and Economic Growth

Part 2: Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

A: Appendix: The Self-Correcting Aggregate Demand and Supply Model

Fiscal Policy

The Public Sector

Federal Deficits,Surpluses,and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

A: Appendix: Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Filters