Question 1

The "other things being equal" clause in the law of demand does not allow which of the following factors to change?

Accepted Answer

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

Question 2

When there is a surplus of a product in a market the:

Accepted Answer

A)  price will rise. 
B)  price must be above the equilibrium price. 
C)  producers will expand output and sales will rise. 
D)  price must be below the equilibrium price. 
A)  price will rise. 
B)  price must be above the equilibrium price. 
C)  producers will expand output and sales will rise. 
D)  price must be below the equilibrium price.

Question 3

Which of the following could cause the supply of carrots to decrease?

Accepted Answer

A)  Consumers' incomes decrease. 
B)  There is a technological advance in carrot production. 
C)  Fertilizer costs increase. 
D)  The number of farmers growing carrots increases. 
E)  The price of carrots decreases. 
A)  Consumers' incomes decrease. 
B)  There is a technological advance in carrot production. 
C)  Fertilizer costs increase. 
D)  The number of farmers growing carrots increases. 
E)  The price of carrots decreases.

Question 4

Which of the following will not shift the demand curve for grapefruit?

Accepted Answer

A)  An announcement that eating a grapefruit before every meal will induce weight loss. 
B)  A technical development that allows machines to replace the workers who harvest grapefruit. 
C)  An announcement that eating lots of grapefruit causes skin problems. 
D)  A newspaper story reporting that the preference for oranges has skyrocketed. 
E)  An announcement that grapefruit will definitely cost more next week. 
A)  An announcement that eating a grapefruit before every meal will induce weight loss. 
B)  A technical development that allows machines to replace the workers who harvest grapefruit. 
C)  An announcement that eating lots of grapefruit causes skin problems. 
D)  A newspaper story reporting that the preference for oranges has skyrocketed. 
E)  An announcement that grapefruit will definitely cost more next week.

Question 5

Which of the following will cause a movement upward along a supply curve?

Accepted Answer

A)  Increases in raw-material costs. 
B)  Increases in labor costs. 
C)  Increases in the cost of machinery. 
D)  Increases in the market price of a good, other things being equal. 
A)  Increases in raw-material costs. 
B)  Increases in labor costs. 
C)  Increases in the cost of machinery. 
D)  Increases in the market price of a good, other things being equal.

Question 6

If a decrease in the price of good Y causes the demand for good Z to decrease,this indicates that:

Accepted Answer

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

Question 7

Assuming that automobiles are normal goods,a rise in consumer income,other things being equal,will cause:

Accepted Answer

A)  the demand curve for automobiles to shift to the left. 
B)  the demand curve for automobiles to shift to the right. 
C)  a downward movement along the demand curve for automobiles. 
D)  an upward movement along the demand curve for automobiles. 
A)  the demand curve for automobiles to shift to the left. 
B)  the demand curve for automobiles to shift to the right. 
C)  a downward movement along the demand curve for automobiles. 
D)  an upward movement along the demand curve for automobiles.

Question 8

Which of the following would lead to an increase in the demand for computer software?

Accepted Answer

A)  A decrease in the price of computer software. 
B)  A decrease in the price of personal computers. 
C)  An decrease in the cost of producing computer software. 
D)  An decrease in personal income. 
A)  A decrease in the price of computer software. 
B)  A decrease in the price of personal computers. 
C)  An decrease in the cost of producing computer software. 
D)  An decrease in personal income.

Question 9

Which of the following will increase the demand for large automobiles?

Accepted Answer

A)  A fall in the price of small automobiles. 
B)  A rise in insurance rates for large automobiles. 
C)  A fall in the price of large automobiles. 
D)  A rise in buyers' incomes (assuming large automobiles to be a normal good). 
A)  A fall in the price of small automobiles. 
B)  A rise in insurance rates for large automobiles. 
C)  A fall in the price of large automobiles. 
D)  A rise in buyers' incomes (assuming large automobiles to be a normal good).

Question 10

A demand curve for The Steel Porcupines' concert tickets would show the:

Accepted Answer

A)  quality of service that customers demand when they buy a ticket. 
B)  number of people who like to attend the concert. 
C)  number of tickets the promoters are willing to sell at each price. 
D)  number of concert tickets that will be purchased at each price. 
A)  quality of service that customers demand when they buy a ticket. 
B)  number of people who like to attend the concert. 
C)  number of tickets the promoters are willing to sell at each price. 
D)  number of concert tickets that will be purchased at each price.

Question 11

Assuming that hamburgers and hot dogs are substitutes,an increase in the price of hamburgers,other things being equal,results in a:

Accepted Answer

A)  rightward shift in the demand curve for hot dogs. 
B)  leftward shift in the demand curve for hamburgers. 
C)  rightward shift in the demand curve for hamburgers. 
D)  leftward shift in the demand curve for hot dogs. 
A)  rightward shift in the demand curve for hot dogs. 
B)  leftward shift in the demand curve for hamburgers. 
C)  rightward shift in the demand curve for hamburgers. 
D)  leftward shift in the demand curve for hot dogs.

Question 12

Which of the following explain better the fact that computers are cheaper now than 10 years ago?

Accepted Answer

A) c and d. 
B) c and e. 
C) The technology used in the production of computers has improved during this period. 
D) Resources used in the production of computers have become cheaper during this period. 
E) The demand for computers has increased substantially during this period. 
A) c and d. 
B) c and e. 
C) The technology used in the production of computers has improved during this period. 
D) Resources used in the production of computers have become cheaper during this period. 
E) The demand for computers has increased substantially during this period.

Question 13

Which of the following would most likely increase the demand for televisions?

Accepted Answer

A)  A decrease in the price of televisions. 
B)  A decline in consumer income. 
C)  A decrease in the price of home stereo systems, a substitute for televisions. 
D)  A decrease in the price of DVD players, a product that is complementary with televisions. 
A)  A decrease in the price of televisions. 
B)  A decline in consumer income. 
C)  A decrease in the price of home stereo systems, a substitute for televisions. 
D)  A decrease in the price of DVD players, a product that is complementary with televisions.

Question 14

Which of the following pairs of goods would be considered complementary?

Accepted Answer

A)  Coca-Cola and Pepsi. 
B)  Computers and computer software. 
C)  Radios and televisions. 
D)  Mass transit and private automobiles. 
E)  Compact discs and cassette tapes. 
A)  Coca-Cola and Pepsi. 
B)  Computers and computer software. 
C)  Radios and televisions. 
D)  Mass transit and private automobiles. 
E)  Compact discs and cassette tapes.

Question 15

Tasha decides that when homes in her neighborhood are selling for $150,000 she will not sell her home.When average prices rise to $175,000,she decides that she will put her home on the market.This is an example of:

Accepted Answer

A)  market demand. 
B)  market-day supply. 
C)  an excess supply of homes. 
D)  a positively-sloped supply curve. 
E)  a negatively-sloped supply curve. 
A)  market demand. 
B)  market-day supply. 
C)  an excess supply of homes. 
D)  a positively-sloped supply curve. 
E)  a negatively-sloped supply curve.

Question 16

If the demand for a good increases when the price of another good increases,then these goods are:

Accepted Answer

A)  complementary in consumption. 
B)  complementary in production. 
C)  substitute in production. 
D)  substitute in consumption. 
E)  neither substitutes nor complementary. 
A)  complementary in consumption. 
B)  complementary in production. 
C)  substitute in production. 
D)  substitute in consumption. 
E)  neither substitutes nor complementary.

Question 17

When firms advertise their products,they are attempting to:

Accepted Answer

A)  shift the supply curve of the product to the right. 
B)  shift the supply curve of the product to the left. 
C)  shift the demand for the product to the right. 
D)  shift the demand for the product to the left. 
E)  create a surplus of the product. 
A)  shift the supply curve of the product to the right. 
B)  shift the supply curve of the product to the left. 
C)  shift the demand for the product to the right. 
D)  shift the demand for the product to the left. 
E)  create a surplus of the product.

Question 18

According to the law of demand,if:

Accepted Answer

A)  product price increases, quantity demanded will decrease. 
B)  consumer income increases, quantity demanded will increase. 
C)  product price increases, quantity demanded will increase. 
D)  consumer income increases, quantity demanded will decrease. 
E)  supply increases, demand will increase. 
A)  product price increases, quantity demanded will decrease. 
B)  consumer income increases, quantity demanded will increase. 
C)  product price increases, quantity demanded will increase. 
D)  consumer income increases, quantity demanded will decrease. 
E)  supply increases, demand will increase.

Question 19

Assume Congress passes a new tax of $2.00 per pack on cigarettes.The effect on the supply curve is a(n):

Accepted Answer

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

Question 20

Assuming that shoe repair services are an inferior good,an increase in consumer income,other things being equal,will cause a(n):

Accepted Answer

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

Exam 3: Part 1: Market Demand and Supply

The "other things being equal" clause in the law of demand does not allow which of the following factors to change?

When there is a surplus of a product in a market the:

Which of the following could cause the supply of carrots to decrease?

Which of the following will not shift the demand curve for grapefruit?

Which of the following will cause a movement upward along a supply curve?

If a decrease in the price of good Y causes the demand for good Z to decrease,this indicates that:

Assuming that automobiles are normal goods,a rise in consumer income,other things being equal,will cause:

Which of the following would lead to an increase in the demand for computer software?

Which of the following will increase the demand for large automobiles?

A demand curve for The Steel Porcupines' concert tickets would show the:

Assuming that hamburgers and hot dogs are substitutes,an increase in the price of hamburgers,other things being equal,results in a:

Which of the following explain better the fact that computers are cheaper now than 10 years ago?

Which of the following would most likely increase the demand for televisions?

Which of the following pairs of goods would be considered complementary?

Tasha decides that when homes in her neighborhood are selling for $150,000 she will not sell her home.When average prices rise to $175,000,she decides that she will put her home on the market.This is an example of:

If the demand for a good increases when the price of another good increases,then these goods are:

When firms advertise their products,they are attempting to:

According to the law of demand,if:

Assume Congress passes a new tax of $2.00 per pack on cigarettes.The effect on the supply curve is a(n):

Assuming that shoe repair services are an inferior good,an increase in consumer income,other things being equal,will cause a(n):

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