Question 1

If the price of a product is above equilibrium,what forces it down?

Accepted Answer

When the price is above equilibrium,a surplus occurs.Some producers who are unable to sell the product will have an incentive to offer to sell the product at a lower price.A lower price will simultaneously decrease the quantity supplied and increase the quantity demanded.This downward pressure on price continues until the surplus is eliminated and equilibrium is achieved.

Question 2

A supply schedule

Accepted Answer

A)  is a table that shows the relationship between the price of a product and the quantity of the product supplied. 
B)  is a curve that shows the relationship between the price of a product and the quantity of the product supplied. 
C)  is the relationship between the supply of a product and the cost of producing the product. 
D)  is a table that shows the relationship between the price of a product and the quantity of the product that producers and consumers are willing to exchange. 
A)  is a table that shows the relationship between the price of a product and the quantity of the product supplied. 
B)  is a curve that shows the relationship between the price of a product and the quantity of the product supplied. 
C)  is the relationship between the supply of a product and the cost of producing the product. 
D)  is a table that shows the relationship between the price of a product and the quantity of the product that producers and consumers are willing to exchange. A

Question 3

Suppose that when the price of ice cream increases,Liza decreases her purchase of hot fudge.To Liza

Accepted Answer

A)  ice cream and hot fudge are complements. 
B)  ice cream and hot fudge and substitutes. 
C)  ice cream and hot fudge are normal goods. 
D)  ice cream is a normal good and hot fudge is an inferior good. 
A)  ice cream and hot fudge are complements. 
B)  ice cream and hot fudge and substitutes. 
C)  ice cream and hot fudge are normal goods. 
D)  ice cream is a normal good and hot fudge is an inferior good. A

Question 4

An increase in the equilibrium price for a product will result

Accepted Answer

A)  when the quantity of the product demanded exceeds the quantity supplied. 
B)  when there is a decrease in supply and an increase in demand for the product. 
C)  when there is a decrease in supply and a decrease in demand for the product. 
D)  when there is an increase in demand and an increase in the number of firms producing the product. 
A)  when the quantity of the product demanded exceeds the quantity supplied. 
B)  when there is a decrease in supply and an increase in demand for the product. 
C)  when there is a decrease in supply and a decrease in demand for the product. 
D)  when there is an increase in demand and an increase in the number of firms producing the product.

Question 5

Suppose that McDonald's successfully implements self-serve kiosks in their restaurants,which allows the company to reduce the number of employees at each location.All else equal,this technological improvement would

Accepted Answer

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

Question 6

Last month,the Tecumseh Corporation supplied 400 units of three-ring binders at $6 per unit.This month,the company supplied the same quantity of binders at $4 per unit.Based on this evidence,Tecumseh has experienced

Accepted Answer

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

Question 7

An decrease in quantity supplied is represented by a leftward shift of the supply curve.

Accepted Answer

A) True 
 B)False

Question 8

Assume that the hourly price for the services of tarot card readers has risen and sales of these services have also risen.One can conclude that

Accepted Answer

A)  the law of demand has been violated. 
B)  the number of tarot card readers has increased. 
C)  the demand for tarot card readers has increased. 
D)  tarot card readers are deliberately charging high prices because they provide services for superstitious clients. 
A)  the law of demand has been violated. 
B)  the number of tarot card readers has increased. 
C)  the demand for tarot card readers has increased. 
D)  tarot card readers are deliberately charging high prices because they provide services for superstitious clients.

Question 9

An inferior good is a good for which the quantity demanded increases as the price decreases,holding everything else constant.

Accepted Answer

A) True 
 B)False

Question 10

Studies have shown that smoking cigarettes can cause heart disease.Assume this is true,and favorable weather has increased the tobacco harvest in North Carolina.In the market for cigarettes,these two developments would

Accepted Answer

A)  decrease demand and decrease supply, resulting in an increase in the equilibrium quantity and a decrease in the equilibrium price of cigarettes. 
B)  increase demand and increase supply resulting in an increase in the equilibrium quantity and an uncertain effect on the equilibrium price of cigarettes. 
C)  decrease demand and increase supply, resulting in a decrease in the equilibrium price and an uncertain effect on the equilibrium quantity of cigarettes. 
D)  decrease demand and increase supply, resulting in an increase in both the equilibrium price and the equilibrium quantity of cigarettes. 
A)  decrease demand and decrease supply, resulting in an increase in the equilibrium quantity and a decrease in the equilibrium price of cigarettes. 
B)  increase demand and increase supply resulting in an increase in the equilibrium quantity and an uncertain effect on the equilibrium price of cigarettes. 
C)  decrease demand and increase supply, resulting in a decrease in the equilibrium price and an uncertain effect on the equilibrium quantity of cigarettes. 
D)  decrease demand and increase supply, resulting in an increase in both the equilibrium price and the equilibrium quantity of cigarettes.

Question 11

Discuss the correct and incorrect economic analysis in the following statement.
"If good weather in Hawaii creates a bumper crop of pineapples,the supply of pineapples will increase.This will result in a price decrease,which will then cause the supply of pineapples to decrease."

Accepted Answer

The supply of pineapples will

Question 12

Figure 3-4
  
-Refer to Figure 3-4.If the price is $25

Accepted Answer

A)  there is a surplus of 300 units. 
B)  there is a shortage of 300 units. 
C)  there is a surplus of 200 units. 
D)  there is a shortage of 200 units. 
A)  there is a surplus of 300 units. 
B)  there is a shortage of 300 units. 
C)  there is a surplus of 200 units. 
D)  there is a shortage of 200 units.

Question 13

Figure 3-5
  
-Refer to Figure 3-5.At a price of $15,the quantity sold

Accepted Answer

A)  is 2 units. 
B)  is 4 units. 
C)  is 6 units. 
D)  cannot be determined. 
A)  is 2 units. 
B)  is 4 units. 
C)  is 6 units. 
D)  cannot be determined.

Question 14

If the demand for a product decreases and the supply of the same product increases,the equilibrium quantity will increase.

Accepted Answer

A) True 
 B)False

Question 15

The income effect of a price change refers to the impact of a change in

Accepted Answer

A)  income on the price of a good. 
B)  demand when income changes. 
C)  the quantity demanded when income changes. 
D)  the price of a good on a consumer's purchasing power. 
A)  income on the price of a good. 
B)  demand when income changes. 
C)  the quantity demanded when income changes. 
D)  the price of a good on a consumer's purchasing power.

Question 16

Which of the following has occurred as the millennial generation has come of age?

Accepted Answer

A)  The demand for "fast casual" food has decreased in the U.S. market. 
B)  The demand for golf equipment has decreased in the U.S. market. 
C)  The demand for traditional fast food has increased in the U.S. market. 
D)  all of the above 
A)  The demand for "fast casual" food has decreased in the U.S. market. 
B)  The demand for golf equipment has decreased in the U.S. market. 
C)  The demand for traditional fast food has increased in the U.S. market. 
D)  all of the above

Question 17

Figure 3-4
  
-Refer to Figure 3-4.If the current market price is $10,the market will achieve equilibrium through

Accepted Answer

A)  a price increase, increasing the supply and decreasing the demand. 
B)  a price decrease, decreasing the supply and increasing the demand. 
C)  a price decrease, decreasing the quantity supplied and increasing the quantity demanded. 
D)  a price increase, increasing the quantity supplied and decreasing the quantity demanded. 
A)  a price increase, increasing the supply and decreasing the demand. 
B)  a price decrease, decreasing the supply and increasing the demand. 
C)  a price decrease, decreasing the quantity supplied and increasing the quantity demanded. 
D)  a price increase, increasing the quantity supplied and decreasing the quantity demanded.

Question 18

Scarcity is defined as the situation that exists when the quantity demanded for a good is greater than the quantity supplied.

Accepted Answer

A) True 
 B)False

Question 19

Figure 3-8
  
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₁ and S₁ (point A) If there is a shortage of apples, how will the equilibrium point change?

Accepted Answer

A)  The equilibrium point will move from A to B. 
B)  The equilibrium point will move from A to C. 
C)  There will be no change in the equilibrium point. 
D)  The equilibrium point will move from A to E. 
A)  The equilibrium point will move from A to B. 
B)  The equilibrium point will move from A to C. 
C)  There will be no change in the equilibrium point. 
D)  The equilibrium point will move from A to E.

Question 20

For each of the following pairs of products,state which are complements,which are substitutes,and which are unrelated.
a.Swim fins and scuba tanks
b.Coca Cola and Volkswagens
c.Printers and ink cartridges
d.Ice and ice chests
e.Heineken and Corona

Accepted Answer

a∙Complements
b∙Unre

If the price of a product is above equilibrium,what forces it down?

A supply schedule

Suppose that when the price of ice cream increases,Liza decreases her purchase of hot fudge.To Liza

An increase in the equilibrium price for a product will result

Suppose that McDonald's successfully implements self-serve kiosks in their restaurants,which allows the company to reduce the number of employees at each location.All else equal,this technological improvement would

Last month,the Tecumseh Corporation supplied 400 units of three-ring binders at $6 per unit.This month,the company supplied the same quantity of binders at $4 per unit.Based on this evidence,Tecumseh has experienced

An decrease in quantity supplied is represented by a leftward shift of the supply curve.

Assume that the hourly price for the services of tarot card readers has risen and sales of these services have also risen.One can conclude that

An inferior good is a good for which the quantity demanded increases as the price decreases,holding everything else constant.

Studies have shown that smoking cigarettes can cause heart disease.Assume this is true,and favorable weather has increased the tobacco harvest in North Carolina.In the market for cigarettes,these two developments would

Discuss the correct and incorrect economic analysis in the following statement. "If good weather in Hawaii creates a bumper crop of pineapples,the supply of pineapples will increase.This will result in a price decrease,which will then cause the supply of pineapples to decrease."

Figure 3-4 -Refer to Figure 3-4.If the price is $25

Figure 3-5 -Refer to Figure 3-5.At a price of $15,the quantity sold

If the demand for a product decreases and the supply of the same product increases,the equilibrium quantity will increase.

The income effect of a price change refers to the impact of a change in

Which of the following has occurred as the millennial generation has come of age?

Figure 3-4 -Refer to Figure 3-4.If the current market price is $10,the market will achieve equilibrium through

Scarcity is defined as the situation that exists when the quantity demanded for a good is greater than the quantity supplied.

Figure 3-8 -Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₁ and S₁ (point A) If there is a shortage of apples, how will the equilibrium point change?

For each of the following pairs of products,state which are complements,which are substitutes,and which are unrelated. a.Swim fins and scuba tanks b.Coca Cola and Volkswagens c.Printers and ink cartridges d.Ice and ice chests e.Heineken and Corona

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Market Efficiency and Market Failure

The Economics of Health Care

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,Production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

Filters

Exam 3: Where Prices Come From: The Interaction of Demand and Supply

If the price of a product is above equilibrium,what forces it down?

A supply schedule

Suppose that when the price of ice cream increases,Liza decreases her purchase of hot fudge.To Liza

An increase in the equilibrium price for a product will result

Suppose that McDonald's successfully implements self-serve kiosks in their restaurants,which allows the company to reduce the number of employees at each location.All else equal,this technological improvement would

Last month,the Tecumseh Corporation supplied 400 units of three-ring binders at $6 per unit.This month,the company supplied the same quantity of binders at $4 per unit.Based on this evidence,Tecumseh has experienced

An decrease in quantity supplied is represented by a leftward shift of the supply curve.

Assume that the hourly price for the services of tarot card readers has risen and sales of these services have also risen.One can conclude that

An inferior good is a good for which the quantity demanded increases as the price decreases,holding everything else constant.

Studies have shown that smoking cigarettes can cause heart disease.Assume this is true,and favorable weather has increased the tobacco harvest in North Carolina.In the market for cigarettes,these two developments would

Discuss the correct and incorrect economic analysis in the following statement. "If good weather in Hawaii creates a bumper crop of pineapples,the supply of pineapples will increase.This will result in a price decrease,which will then cause the supply of pineapples to decrease."

Figure 3-4 -Refer to Figure 3-4.If the price is $25

Figure 3-5 -Refer to Figure 3-5.At a price of $15,the quantity sold

If the demand for a product decreases and the supply of the same product increases,the equilibrium quantity will increase.

The income effect of a price change refers to the impact of a change in

Which of the following has occurred as the millennial generation has come of age?

Figure 3-4 -Refer to Figure 3-4.If the current market price is $10,the market will achieve equilibrium through

Scarcity is defined as the situation that exists when the quantity demanded for a good is greater than the quantity supplied.

Figure 3-8 -Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₁ and S₁ (point A) If there is a shortage of apples, how will the equilibrium point change?

For each of the following pairs of products,state which are complements,which are substitutes,and which are unrelated. a.Swim fins and scuba tanks b.Coca Cola and Volkswagens c.Printers and ink cartridges d.Ice and ice chests e.Heineken and Corona

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Market Efficiency and Market Failure

The Economics of Health Care

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,Production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

Filters