Question 1

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

Accepted Answer

When the price is above equilibrium, a s

Question 2

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 3

Which of the following would cause an increase in the equilibrium price and an increase in the equilibrium quantity of watermelons?

Accepted Answer

A)  an increase in demand and an increase in supply 
B)  an increase in supply 
C)  an increase in supply and an increase in demand greater than the increase in supply 
D)  a decrease in demand and an increase in supply 
A)  an increase in demand and an increase in supply 
B)  an increase in supply 
C)  an increase in supply and an increase in demand greater than the increase in supply 
D)  a decrease in demand and an increase in supply

Question 4

In October, market analysts predict that the price of platinum will fall in November. What happens in the platinum market in October, holding everything else constant?

Accepted Answer

A)  The supply curve shifts to the right. 
B)  The supply curve shifts to the left. 
C)  The quantity demanded and the quantity supplied of platinum increase. 
D)  The demand curve shifts to the right. 
A)  The supply curve shifts to the right. 
B)  The supply curve shifts to the left. 
C)  The quantity demanded and the quantity supplied of platinum increase. 
D)  The demand curve shifts to the right.

Question 5

'Because apples and oranges are substitutes, an increase in the price of oranges will cause the demand for apples to increase. This initial shift in demand for apples results in a higher price for apples; this higher price will cause the demand curve for apples to shift to the right.' Which of the following correctly comments on this statement?

Accepted Answer

A)  The statement will be true if consumer tastes for apples and oranges do not change. 
B)  The statement is false because a change in the price of apples would not change the demand for apples. 
C)  The statement is false because oranges are inferior goods; apples are normal goods. 
D)  The statement is false because one cannot assume that apples and oranges are substitutes for all consumers. 
A)  The statement will be true if consumer tastes for apples and oranges do not change. 
B)  The statement is false because a change in the price of apples would not change the demand for apples. 
C)  The statement is false because oranges are inferior goods; apples are normal goods. 
D)  The statement is false because one cannot assume that apples and oranges are substitutes for all consumers.

Question 6

What is the difference between an 'increase in demand' and an 'increase in quantity demanded'?

Accepted Answer

A)  There is no difference between the two terms; they both refer to a shift of the demand curve. 
B)  An 'increase in demand' is represented by a rightward shift of the demand curve while an 'increase in quantity demanded' is represented by a movement along a given demand curve. 
C)  There is no difference between the two terms; they both refer to a movement downward along a given demand curve. 
D)  An 'increase in demand' is represented by a movement along a given demand curve, while an 'increase in quantity demanded' is represented by a rightward shift of the demand curve. 
A)  There is no difference between the two terms; they both refer to a shift of the demand curve. 
B)  An 'increase in demand' is represented by a rightward shift of the demand curve while an 'increase in quantity demanded' is represented by a movement along a given demand curve. 
C)  There is no difference between the two terms; they both refer to a movement downward along a given demand curve. 
D)  An 'increase in demand' is represented by a movement along a given demand curve, while an 'increase in quantity demanded' is represented by a rightward shift of the demand curve.

Question 7

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 the price of oranges, a substitute for apples, decreases and the wages of apple workers increase, how will the equilibrium point change?

Accepted Answer

A)  The equilibrium point will move from A to E. 
B)  The equilibrium point will move from A to B. 
C)  The equilibrium point will move from A to C. 
D)  The equilibrium will first move from A to B, then return to A. 
A)  The equilibrium point will move from A to E. 
B)  The equilibrium point will move from A to B. 
C)  The equilibrium point will move from A to C. 
D)  The equilibrium will first move from A to B, then return to A.

Question 8

If, in response to an increase in the price of chocolate, the quantity of chocolate demanded decreases, economists would describe this as

Accepted Answer

A)  a decrease in demand. 
B)  a decrease in quantity demanded. 
C)  a change in consumer income. 
D)  a decrease in consumers' taste for chocolate. 
A)  a decrease in demand. 
B)  a decrease in quantity demanded. 
C)  a change in consumer income. 
D)  a decrease in consumers' taste for chocolate.

Question 9

-Refer to Figure 3-2. A decrease in the expected future price of the product 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 10

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

Accepted Answer

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

Question 11

If, in the market for oranges, the supply has increased then

Accepted Answer

A)  the supply curve for oranges has shifted to the right. 
B)  the supply curve for oranges has shifted to the left. 
C)  there has been a movement upwards along the supply curve for oranges. 
D)  there has been a movement downwards along the supply curve for oranges. 
A)  the supply curve for oranges has shifted to the right. 
B)  the supply curve for oranges has shifted to the left. 
C)  there has been a movement upwards along the supply curve for oranges. 
D)  there has been a movement downwards along the supply curve for oranges.

Question 12

-Refer to Figure 3-1. An increase in population would be represented by a movement from

Accepted Answer

A)  A to B. 
B)  B to A. 
C)  D1 to D2. 
D)  D2 to D1. 
A)  A to B. 
B)  B to A. 
C)  D1 to D2. 
D)  D2 to D1.

Question 13

The phrase 'demand has decreased' means that

Accepted Answer

A)  a demand curve has shifted to the left. 
B)  there has been an upward movement along a demand curve. 
C)  there has been a downward movement along a demand curve. 
D)  a demand curve has shifted to the right. 
A)  a demand curve has shifted to the left. 
B)  there has been an upward movement along a demand curve. 
C)  there has been a downward movement along a demand curve. 
D)  a demand curve has shifted to the right.

Question 14

If, in response to a decrease in the price of grapes, the quantity of grapes demanded increases, economists would describe this as

Accepted Answer

A)  an increase in demand. 
B)  an increase in quantity demanded. 
C)  a change in consumer income. 
D)  an increase in consumers' taste for grapes. 
A)  an increase in demand. 
B)  an increase in quantity demanded. 
C)  a change in consumer income. 
D)  an increase in consumers' taste for grapes.

Question 15

-Refer to Figure 3-2. A decrease in productivity 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 16

Which of the following would shift the supply curve for MP3 players to the left?

Accepted Answer

A)  an increase in the price of an input used to produce MP3 players 
B)  a decrease in consumer tastes for MP3 players 
C)  an increase in the number of firms that produce MP3 players 
D)  an increase in the productivity of the workers who produce MP3 players 
A)  an increase in the price of an input used to produce MP3 players 
B)  a decrease in consumer tastes for MP3 players 
C)  an increase in the number of firms that produce MP3 players 
D)  an increase in the productivity of the workers who produce MP3 players

Question 17

Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity. What happens in the market for tropical hardwood trees if the governments restrict the amount of forest lands that can be logged?

Accepted Answer

A)  D decreases, S no change, P and Q decrease 
B)  S decreases, D no change, P increases, Q decreases 
C)  D and S decrease, P and Q increase 
D)  D no change, S decreases, P increases, Q increases 
A)  D decreases, S no change, P and Q decrease 
B)  S decreases, D no change, P increases, Q decreases 
C)  D and S decrease, P and Q increase 
D)  D no change, S decreases, P increases, Q increases

Question 18

Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for sugar at the intersection of D1 and S1 (point A. If there is an increase in the price of fertilizer used on sugar cane and there is a decrease in tastes for sugar-sweetened soft drinks, 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 19

Holding everything else constant, a decrease in the price of bicycles will result in

Accepted Answer

A)  a decrease in the quantity of bicycles demanded. 
B)  an increase in the demand for bicycles. 
C)  a decrease in the supply of bicycles. 
D)  an increase in the quantity of bicycles demanded. 
A)  a decrease in the quantity of bicycles demanded. 
B)  an increase in the demand for bicycles. 
C)  a decrease in the supply of bicycles. 
D)  an increase in the quantity of bicycles demanded.

Question 20

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

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

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

Which of the following would cause an increase in the equilibrium price and an increase in the equilibrium quantity of watermelons?

In October, market analysts predict that the price of platinum will fall in November. What happens in the platinum market in October, holding everything else constant?

What is the difference between an 'increase in demand' and an 'increase in quantity demanded'?

If, in response to an increase in the price of chocolate, the quantity of chocolate demanded decreases, economists would describe this as

-Refer to Figure 3-2. A decrease in the expected future price of the product would be represented by a movement from

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

If, in the market for oranges, the supply has increased then

-Refer to Figure 3-1. An increase in population would be represented by a movement from

The phrase 'demand has decreased' means that

If, in response to a decrease in the price of grapes, the quantity of grapes demanded increases, economists would describe this as

-Refer to Figure 3-2. A decrease in productivity would be represented by a movement from

Which of the following would shift the supply curve for MP3 players to the left?

Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity. What happens in the market for tropical hardwood trees if the governments restrict the amount of forest lands that can be logged?

Holding everything else constant, a decrease in the price of bicycles will result in

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

Economics Foundations and Models

Choices and Trade - Offs in the Market

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency , Government Price Setting and Taxes

Concumer Choice and Behavioural Economics

Technology , Production and Costs

Firms in Perfectly Compitive Markets

Monopoly Markets

Monopolistic Competition : The Competitive Model in More Realistic Setting

Oligopoly : Firms in Less Competitve Markets

The Market for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities , Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

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

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

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

Which of the following would cause an increase in the equilibrium price and an increase in the equilibrium quantity of watermelons?

In October, market analysts predict that the price of platinum will fall in November. What happens in the platinum market in October, holding everything else constant?

What is the difference between an 'increase in demand' and an 'increase in quantity demanded'?

If, in response to an increase in the price of chocolate, the quantity of chocolate demanded decreases, economists would describe this as

-Refer to Figure 3-2. A decrease in the expected future price of the product would be represented by a movement from

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

If, in the market for oranges, the supply has increased then

-Refer to Figure 3-1. An increase in population would be represented by a movement from

The phrase 'demand has decreased' means that

If, in response to a decrease in the price of grapes, the quantity of grapes demanded increases, economists would describe this as

-Refer to Figure 3-2. A decrease in productivity would be represented by a movement from

Which of the following would shift the supply curve for MP3 players to the left?

Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity. What happens in the market for tropical hardwood trees if the governments restrict the amount of forest lands that can be logged?

Holding everything else constant, a decrease in the price of bicycles will result in

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

Economics Foundations and Models

Choices and Trade - Offs in the Market

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency , Government Price Setting and Taxes

Concumer Choice and Behavioural Economics

Technology , Production and Costs

Firms in Perfectly Compitive Markets

Monopoly Markets

Monopolistic Competition : The Competitive Model in More Realistic Setting

Oligopoly : Firms in Less Competitve Markets

The Market for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities , Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters