Question 1

One reason why the quantity demanded of a good tends to fall as its price rises is that:

Accepted Answer

A) the increase in price shifts the supply curve upward. 
B) the increase in price shifts the demand curve downward. 
C) at higher prices, suppliers are willing to supply less. 
D) people feel poorer and cut down on their use of the good. 
E) demand has to fall to restore equilibrium after a price rise. 
A) the increase in price shifts the supply curve upward. 
B) the increase in price shifts the demand curve downward. 
C) at higher prices, suppliers are willing to supply less. 
D) people feel poorer and cut down on their use of the good. 
E) demand has to fall to restore equilibrium after a price rise.

Question 2

Equilibrium occurs where the demand curve intersects the supply curve.

Accepted Answer

A) True 
 B)False

Question 3

An equilibrium point could conceivably lie on the supply schedule, but not the demand schedule.

Accepted Answer

A) True 
 B)False

Question 4

If you observe a stationary price for some commodity, you can guess that demand and supply curves intersect at that price.

Accepted Answer

A) True 
 B)False

Question 5

According to the law of demand:

Accepted Answer

A) the intersection of demand and supply establishes the market equilibrium point. 
B) consumers' tastes can influence the quantity demanded. 
C) there is an inverse relationship between price and the quantity demanded. 
D) "all other things held equal" is an important concept. 
E) there is a direct relationship between price and the quantity demanded. 
A) the intersection of demand and supply establishes the market equilibrium point. 
B) consumers' tastes can influence the quantity demanded. 
C) there is an inverse relationship between price and the quantity demanded. 
D) "all other things held equal" is an important concept. 
E) there is a direct relationship between price and the quantity demanded.

Question 6

Given a fixed supply of lamb chops, a reduction in the price of pork chops (close substitutes)will tend to:

Accepted Answer

A) shift the demand curve for lamb chops to the right. 
B) shift the demand curve for pork chops to the right. 
C) shift the demand curve for pork chops to the left. 
D) raise the price of lamb chops. 
E) lower the price of lamb chops. 
A) shift the demand curve for lamb chops to the right. 
B) shift the demand curve for pork chops to the right. 
C) shift the demand curve for pork chops to the left. 
D) raise the price of lamb chops. 
E) lower the price of lamb chops.

Question 7

Use the following to answer questions :
Figure 3-1  
-Let P* and Q* represent market clearing price and quantity, respectively.Given the supply and demand curves drawn in Figure 3-1, the appearance of foreign suppliers willing to sell any quantity at a price slightly higher than equilibrium can be expected to cause:

Accepted Answer

A) P* and Q* to climb. 
B) P* and Q* to fall. 
C) P* to climb while Q* falls. 
D) Q* to fall while P* holds steady. 
E) none of the above. 
A) P* and Q* to climb. 
B) P* and Q* to fall. 
C) P* to climb while Q* falls. 
D) Q* to fall while P* holds steady. 
E) none of the above.

Question 8

A price at which the amount people wish to buy exceeds the amount that people wish to produce (given upward-sloping supply curves):

Accepted Answer

A) lies above the equilibrium, market clearing price. 
B) lies below the market clearing price. 
C) will induce a shift in the demand schedule to achieve equilibrium. 
D) is impossible. 
E) is none of the above. 
A) lies above the equilibrium, market clearing price. 
B) lies below the market clearing price. 
C) will induce a shift in the demand schedule to achieve equilibrium. 
D) is impossible. 
E) is none of the above.

Question 9

Use the following to answer questions :
Figure 3-3  
-Assume that automotive workers go on strike, so that the production of cars falls.Given the supply and demand curves in Figure 3-3, which of the following would result in comparison to the initial equilibrium position?

Accepted Answer

A) Prices fall, Quantity falls 
B) Prices rise, Quantity falls 
C) Prices rise, Quantity rises 
D) Prices and Quantity do not change. 
E) None of the above. 
A) Prices fall, Quantity falls 
B) Prices rise, Quantity falls 
C) Prices rise, Quantity rises 
D) Prices and Quantity do not change. 
E) None of the above.

Question 10

If the price of bread is causing quantity demanded to increase but not quantity supplied, the price will begin to be pushed upward.

Accepted Answer

A) True 
 B)False

Question 11

One reason that supply curves display positive slope is that:

Accepted Answer

A) expanded production may require the use of superior resources. 
B) people are not willing to pay a higher price for more goods. 
C) expanded industry output might cause a labor shortage and subsequently increase the wage rate included in the cost of production. 
D) extra production brings in the more efficient, lower-cost producers. 
E) the law of diminishing returns is important to producers. 
A) expanded production may require the use of superior resources. 
B) people are not willing to pay a higher price for more goods. 
C) expanded industry output might cause a labor shortage and subsequently increase the wage rate included in the cost of production. 
D) extra production brings in the more efficient, lower-cost producers. 
E) the law of diminishing returns is important to producers.

Question 12

Assume that the demand for penicillin as reflected in the figure below is P = 40 - .1Q, while supply is P = 10 + .9Q.Market equilibrium would be given by:

Accepted Answer

A) P = 37, Q = 30 
B) P = 30, Q = 37 
C) P = 40, Q = 36 
D) P = 370, Q = 30 
E) None of the above 
A) P = 37, Q = 30 
B) P = 30, Q = 37 
C) P = 40, Q = 36 
D) P = 370, Q = 30 
E) None of the above

Question 13

The high and rising price of lobsters must be indicative of monopoly in the lobster fishing market.

Accepted Answer

A) True 
 B)False

Question 14

Lower prices coax out higher quantities demanded along a downward-sloping demand curve.

Accepted Answer

A) True 
 B)False

Question 15

When a big movement of hogs to market causes pork prices to fall, this will tend to push beef prices down also.

Accepted Answer

A) True 
 B)False

Question 16

An increase in price will lead to a lower quantity demanded because:

Accepted Answer

A) suppliers will supply only the smaller amount. 
B) some individuals will no longer purchase the good. 
C) individuals purchase less of the good. 
D) a and b. 
E) b and c. 
A) suppliers will supply only the smaller amount. 
B) some individuals will no longer purchase the good. 
C) individuals purchase less of the good. 
D) a and b. 
E) b and c.

Question 17

Upward-sloping supply curves are the result of:

Accepted Answer

A) increasing returns to scale. 
B) increasing costs of labor. 
C) changes in government policies. 
D) changes in technology. 
E) none of the above 
A) increasing returns to scale. 
B) increasing costs of labor. 
C) changes in government policies. 
D) changes in technology. 
E) none of the above

Question 18

In a competitive market, price is determined by:

Accepted Answer

A) the costs of producing the good in question. 
B) the supply of the good. 
C) the decisions of the buyers about how much they are willing to pay. 
D) the interaction of tastes and demand. 
E) all of the above. 
A) the costs of producing the good in question. 
B) the supply of the good. 
C) the decisions of the buyers about how much they are willing to pay. 
D) the interaction of tastes and demand. 
E) all of the above.

Question 19

Use the following to answer questions :
Figure 3-1  
-Let P* and Q* represent market clearing price and quantity, respectively.Given the supply and demand curves drawn in Figure 3-1, an increase in the price of an input employed in the production of Q can be expected to cause:

Accepted Answer

A) P* and Q* to climb. 
B) P* to climb while Q* falls. 
C) P* to climb while Q* holds steady. 
D) P* to fall while Q* climbs. 
E) P* and Q* to fall. 
A) P* and Q* to climb. 
B) P* to climb while Q* falls. 
C) P* to climb while Q* holds steady. 
D) P* to fall while Q* climbs. 
E) P* and Q* to fall.

Question 20

An increase in demand means a movement to a higher price along a given demand curve.

Accepted Answer

A) True 
 B)False

One reason why the quantity demanded of a good tends to fall as its price rises is that:

Equilibrium occurs where the demand curve intersects the supply curve.

An equilibrium point could conceivably lie on the supply schedule, but not the demand schedule.

If you observe a stationary price for some commodity, you can guess that demand and supply curves intersect at that price.

According to the law of demand:

Given a fixed supply of lamb chops, a reduction in the price of pork chops (close substitutes)will tend to:

A price at which the amount people wish to buy exceeds the amount that people wish to produce (given upward-sloping supply curves):

Use the following to answer questions : Figure 3-3 -Assume that automotive workers go on strike, so that the production of cars falls.Given the supply and demand curves in Figure 3-3, which of the following would result in comparison to the initial equilibrium position?

If the price of bread is causing quantity demanded to increase but not quantity supplied, the price will begin to be pushed upward.

One reason that supply curves display positive slope is that:

Assume that the demand for penicillin as reflected in the figure below is P = 40 - .1Q, while supply is P = 10 + .9Q.Market equilibrium would be given by:

The high and rising price of lobsters must be indicative of monopoly in the lobster fishing market.

Lower prices coax out higher quantities demanded along a downward-sloping demand curve.

When a big movement of hogs to market causes pork prices to fall, this will tend to push beef prices down also.

An increase in price will lead to a lower quantity demanded because:

Upward-sloping supply curves are the result of:

In a competitive market, price is determined by:

Use the following to answer questions : Figure 3-1 -Let P* and Q* represent market clearing price and quantity, respectively.Given the supply and demand curves drawn in Figure 3-1, an increase in the price of an input employed in the production of Q can be expected to cause:

An increase in demand means a movement to a higher price along a given demand curve.

The Central Concepts of Economics

The Modern Mixed Economy

Supply and Demand: Elasticity and Applications

Demand and Consumer Behavior

Production and Business Organization

Analysis of Costs

Analysis of Perfectly Competitive Markets

Imperfect Competition and Monopoly

Competition Among the Few

Economics of Uncertainty

The Labor Market

Land, Natural Resources, and the Environment

Capital, Interest, and Profits Part Four: Applications of Economic Principles

Government Taxation and Expenditure

Efficiency Vsequality: The Big Trade-Off

International Trade

Overview of Macroeconomics

Geometrical Analysis of Consumer Equilibrium

Production Cost Theory and Decisions of the Firm

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Exam 3: Basic Elements of Supply and Demand Part

One reason why the quantity demanded of a good tends to fall as its price rises is that:

Equilibrium occurs where the demand curve intersects the supply curve.

An equilibrium point could conceivably lie on the supply schedule, but not the demand schedule.

If you observe a stationary price for some commodity, you can guess that demand and supply curves intersect at that price.

According to the law of demand:

Given a fixed supply of lamb chops, a reduction in the price of pork chops (close substitutes)will tend to:

A price at which the amount people wish to buy exceeds the amount that people wish to produce (given upward-sloping supply curves):

Use the following to answer questions : Figure 3-3 -Assume that automotive workers go on strike, so that the production of cars falls.Given the supply and demand curves in Figure 3-3, which of the following would result in comparison to the initial equilibrium position?

If the price of bread is causing quantity demanded to increase but not quantity supplied, the price will begin to be pushed upward.

One reason that supply curves display positive slope is that:

Assume that the demand for penicillin as reflected in the figure below is P = 40 - .1Q, while supply is P = 10 + .9Q.Market equilibrium would be given by:

The high and rising price of lobsters must be indicative of monopoly in the lobster fishing market.

Lower prices coax out higher quantities demanded along a downward-sloping demand curve.

When a big movement of hogs to market causes pork prices to fall, this will tend to push beef prices down also.

An increase in price will lead to a lower quantity demanded because:

Upward-sloping supply curves are the result of:

In a competitive market, price is determined by:

Use the following to answer questions : Figure 3-1 -Let P* and Q* represent market clearing price and quantity, respectively.Given the supply and demand curves drawn in Figure 3-1, an increase in the price of an input employed in the production of Q can be expected to cause:

An increase in demand means a movement to a higher price along a given demand curve.

The Central Concepts of Economics

The Modern Mixed Economy

Supply and Demand: Elasticity and Applications

Demand and Consumer Behavior

Production and Business Organization

Analysis of Costs

Analysis of Perfectly Competitive Markets

Imperfect Competition and Monopoly

Competition Among the Few

Economics of Uncertainty

The Labor Market

Land, Natural Resources, and the Environment

Capital, Interest, and Profits Part Four: Applications of Economic Principles

Government Taxation and Expenditure

Efficiency Vsequality: The Big Trade-Off

International Trade

Overview of Macroeconomics

Geometrical Analysis of Consumer Equilibrium

Production Cost Theory and Decisions of the Firm

Filters