Question 1

If the price of peaches,a substitute for plums,increases the demand for plums will decrease.

Accepted Answer

A) True 
 B)False

Question 2

Figure 3-7
  
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for rice.What happens in this market if buyers expect the price of rice to fall?

Accepted Answer

A)  Panel (a) 
B)  Panel (b) 
C)  Panel (c) 
D)  Panel (d) 
A)  Panel (a) 
B)  Panel (b) 
C)  Panel (c) 
D)  Panel (d)

Question 3

What is the difference between a demand schedule and a demand curve?

Accepted Answer

A demand schedule is a table that shows

Question 4

Studies have shown that drinking one glass of red wine per day may help prevent heart disease.Assume this is true,and a fungal disease destroys a large portion of the grape harvest of California vineyards.In the market for red wine,these two developments would

Accepted Answer

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

Question 5

Select the phrase that correctly completes the following statement."A positive change in technology caused an increase in the supply of flat-screen televisions.As a result ________."

Accepted Answer

A)  the price of flat-screen televisions decreased and the demand for flat-screen televisions increased 
B)  the equilibrium quantity of flat-screen televisions decreased 
C)  the price of flat-screen televisions decreased and the quantity demanded of flat-screen televisions increased 
D)  the price of flat-screen televisions decreased. The lower price caused the supply of flat-screen televisions to decrease 
A)  the price of flat-screen televisions decreased and the demand for flat-screen televisions increased 
B)  the equilibrium quantity of flat-screen televisions decreased 
C)  the price of flat-screen televisions decreased and the quantity demanded of flat-screen televisions increased 
D)  the price of flat-screen televisions decreased. The lower price caused the supply of flat-screen televisions to decrease

Question 6

Figure 3-7
  
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets.Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles?

Accepted Answer

A)  Panel (a) 
B)  Panel (b) 
C)  Panel (c) 
D)  Panel (d) 
A)  Panel (a) 
B)  Panel (b) 
C)  Panel (c) 
D)  Panel (d)

Question 7

Studies have shown that drinking one glass of red wine per day may help prevent heart disease.Assume this is true,and favorable weather has increased the grape harvest of California vineyards.In the market for red wine,these two developments would

Accepted Answer

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

Question 8

Technological advances have resulted in lower prices for digital cameras.What is the impact of this on the market for traditional (non-digital)cameras?

Accepted Answer

A)  The demand curve for traditional cameras shifts to the right. 
B)  The supply curve for traditional cameras shifts to the right. 
C)  The demand curve for traditional cameras shifts to the left. 
D)  The supply curve for traditional cameras shifts to the left. 
A)  The demand curve for traditional cameras shifts to the right. 
B)  The supply curve for traditional cameras shifts to the right. 
C)  The demand curve for traditional cameras shifts to the left. 
D)  The supply curve for traditional cameras shifts to the left.

Question 9

A shortage occurs when the market price is lower than the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 10

Explain the difference between a normal good and an inferior good.

Accepted Answer

A normal good is something for which the

Question 11

From a supply perspective,what impact would an increase in the price of motorcycles have on the market for motorcycles?

Accepted Answer

An increase in the price of mo

Question 12

An increase in quantity supplied is represented by a rightward shift of the supply curve.

Accepted Answer

A) True 
 B)False

Question 13

Figure 3-2
  
-Refer to Figure 3-2.An increase in the price of substitutes in production would be represented by a movement from

Accepted Answer

A)  A to B. 
B)  B to A. 
C)  S₁ to S₂. 
D)  S₂ to S₁. 
A)  A to B. 
B)  B to A. 
C)  S₁ to S₂. 
D)  S₂ to S₁.

Question 14

What would happen in the market for knee replacement surgery if insurance companies started to cover a smaller portion of the cost of the surgery?

Accepted Answer

A)  Demand will decrease, but this will not shift the supply curve. 
B)  Supply will decrease, but this will not shift the demand curve. 
C)  Demand and supply will both decrease. 
D)  Demand will decrease and supply will increase. 
A)  Demand will decrease, but this will not shift the supply curve. 
B)  Supply will decrease, but this will not shift the demand curve. 
C)  Demand and supply will both decrease. 
D)  Demand will decrease and supply will increase.

Question 15

George Gnat subscribes to a monthly pest control service for his home.Last week,the owner of the service informed George that he will have to raise his monthly service fee because of increases in the price of gasoline used by his workers on their service trips.How is the market for pest control services affected by this?

Accepted Answer

A)  There is an increase in the supply of pest control services. 
B)  There is a decrease in the demand for pest control services. 
C)  There is a decrease in the quantity of pest control services supplied. 
D)  There is a decrease in the supply of pest control services. 
A)  There is an increase in the supply of pest control services. 
B)  There is a decrease in the demand for pest control services. 
C)  There is a decrease in the quantity of pest control services supplied. 
D)  There is a decrease in the supply of pest control services.

Question 16

Figure 3-3
  
-Refer to Figure 3-3.The figure above shows the supply and demand curves for two markets: the market for an original Picasso painting and the market for designer jeans.Which graph most likely represents which market?

Accepted Answer

A)  Graph B represents the market for an original Picasso painting and Graph A represents the market for designer jeans. 
B)  Graph A represents the market for an original Picasso painting and Graph B represents the market for designer jeans. 
C)  Graph A represents both the market for an original Picasso painting and designer jeans. 
D)  Graph B represents both the market for an original Picasso painting and designer jeans. 
A)  Graph B represents the market for an original Picasso painting and Graph A represents the market for designer jeans. 
B)  Graph A represents the market for an original Picasso painting and Graph B represents the market for designer jeans. 
C)  Graph A represents both the market for an original Picasso painting and designer jeans. 
D)  Graph B represents both the market for an original Picasso painting and designer jeans.

Question 17

Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall.Holding everything else constant,how would this affect the market for Blu-ray players (a complement to LCD televisions)?

Accepted Answer

A)  The supply of Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease. 
B)  The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would increase. 
C)  The demand for Blu-ray players would decrease because consumers could afford to buy fewer LCD televisions and Blu-ray players. 
D)  The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease. 
A)  The supply of Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease. 
B)  The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would increase. 
C)  The demand for Blu-ray players would decrease because consumers could afford to buy fewer LCD televisions and Blu-ray players. 
D)  The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease.

Question 18

Which of the following statements is true?

Accepted Answer

A)  An increase in supply causes a change in equilibrium price; the change in price does not cause a further change in demand or supply. 
B)  A decrease in supply causes equilibrium price to rise; the increase in price then results in a decrease in demand. 
C)  If both demand and supply increase there must be an increase in equilibrium price; equilibrium quantity may either increase or decrease. 
D)  If demand decreases and supply increases one cannot determine if equilibrium price will increase or decrease without knowing which change is greater. 
A)  An increase in supply causes a change in equilibrium price; the change in price does not cause a further change in demand or supply. 
B)  A decrease in supply causes equilibrium price to rise; the increase in price then results in a decrease in demand. 
C)  If both demand and supply increase there must be an increase in equilibrium price; equilibrium quantity may either increase or decrease. 
D)  If demand decreases and supply increases one cannot determine if equilibrium price will increase or decrease without knowing which change is greater.

Question 19

If the price of prime rib falls,the income effect due to the price change will cause

Accepted Answer

A)  an increase in the demand for prime rib. 
B)  an increase in the demand for flank steak, a substitute for prime rib. 
C)  an increase in the quantity of prime rib demanded. 
D)  an increase in the quantity of prime rib supplied. 
A)  an increase in the demand for prime rib. 
B)  an increase in the demand for flank steak, a substitute for prime rib. 
C)  an increase in the quantity of prime rib demanded. 
D)  an increase in the quantity of prime rib supplied.

Question 20

Table 3-3
 $\begin{array}{|c|c|c|c|c|}
\hline&&&\text { Rest of }\
\text { Kona Coffee } &\text { Luke's } &\text { Ravi's }&\text { Market }&\text { Market }\
\text { Tea } & \text { Quantity } & \text { Quantity }& \text { Quantity }& \text { Quantity }\
\text { Price per lb. }&\text { Demanded } &\text { Demanded } &\text { Demanded } &\text { Demanded }   \
 \text { (dollars) } & \text { (lbs.) } & \text { (lbs.) } & \text { (lbs.) }& \text { (lbs.) } \
\hline \$ 10 & 3 & 0 & 23 & \
\hline 8 & 9 & 3 & 32 & \
\hline 6 & 14 & 7 & 68 & \
\hline 5 & 18 & 12 & 85 & \
\hline 4 & 22 & 18 & 110 & \
\hline
\end{array}$
-Refer to Table 3-3.The table above shows the demand schedules for Kona coffee of two individuals (Luke and Ravi)and the rest of the market.If the price of Kona coffee falls from $6 to $4,the market quantity demanded would

Accepted Answer

A)  decrease by 89 lbs. 
B)  increase by 26 lbs. 
C)  increase by 61 lbs. 
D)  increase by 110 lbs. 
A)  decrease by 89 lbs. 
B)  increase by 26 lbs. 
C)  increase by 61 lbs. 
D)  increase by 110 lbs.

If the price of peaches,a substitute for plums,increases the demand for plums will decrease.

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for rice.What happens in this market if buyers expect the price of rice to fall?

What is the difference between a demand schedule and a demand curve?

Studies have shown that drinking one glass of red wine per day may help prevent heart disease.Assume this is true,and a fungal disease destroys a large portion of the grape harvest of California vineyards.In the market for red wine,these two developments would

Select the phrase that correctly completes the following statement."A positive change in technology caused an increase in the supply of flat-screen televisions.As a result ________."

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets.Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles?

Studies have shown that drinking one glass of red wine per day may help prevent heart disease.Assume this is true,and favorable weather has increased the grape harvest of California vineyards.In the market for red wine,these two developments would

Technological advances have resulted in lower prices for digital cameras.What is the impact of this on the market for traditional (non-digital)cameras?

A shortage occurs when the market price is lower than the equilibrium price.

Explain the difference between a normal good and an inferior good.

From a supply perspective,what impact would an increase in the price of motorcycles have on the market for motorcycles?

An increase in quantity supplied is represented by a rightward shift of the supply curve.

Figure 3-2 -Refer to Figure 3-2.An increase in the price of substitutes in production would be represented by a movement from

What would happen in the market for knee replacement surgery if insurance companies started to cover a smaller portion of the cost of the surgery?

Figure 3-3 -Refer to Figure 3-3.The figure above shows the supply and demand curves for two markets: the market for an original Picasso painting and the market for designer jeans.Which graph most likely represents which market?

Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall.Holding everything else constant,how would this affect the market for Blu-ray players (a complement to LCD televisions)?

Which of the following statements is true?

If the price of prime rib falls,the income effect due to the price change will cause

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 peaches,a substitute for plums,increases the demand for plums will decrease.

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for rice.What happens in this market if buyers expect the price of rice to fall?

What is the difference between a demand schedule and a demand curve?

Studies have shown that drinking one glass of red wine per day may help prevent heart disease.Assume this is true,and a fungal disease destroys a large portion of the grape harvest of California vineyards.In the market for red wine,these two developments would

Select the phrase that correctly completes the following statement."A positive change in technology caused an increase in the supply of flat-screen televisions.As a result ________."

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets.Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles?

Studies have shown that drinking one glass of red wine per day may help prevent heart disease.Assume this is true,and favorable weather has increased the grape harvest of California vineyards.In the market for red wine,these two developments would

Technological advances have resulted in lower prices for digital cameras.What is the impact of this on the market for traditional (non-digital)cameras?

A shortage occurs when the market price is lower than the equilibrium price.

Explain the difference between a normal good and an inferior good.

From a supply perspective,what impact would an increase in the price of motorcycles have on the market for motorcycles?

An increase in quantity supplied is represented by a rightward shift of the supply curve.

Figure 3-2 -Refer to Figure 3-2.An increase in the price of substitutes in production would be represented by a movement from

What would happen in the market for knee replacement surgery if insurance companies started to cover a smaller portion of the cost of the surgery?

Figure 3-3 -Refer to Figure 3-3.The figure above shows the supply and demand curves for two markets: the market for an original Picasso painting and the market for designer jeans.Which graph most likely represents which market?

Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall.Holding everything else constant,how would this affect the market for Blu-ray players (a complement to LCD televisions)?

Which of the following statements is true?

If the price of prime rib falls,the income effect due to the price change will cause

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