Question 1

As the number of firms in a market decreases,the supply curve will shift to the left and the equilibrium price will rise.

Accepted Answer

A) True 
 B)False

Question 2

Under Big W's everyday low pricing policy,the everyday low prices

Accepted Answer

A)  ended up being the highest prices ever charged by the company. 
B)  were always lower than the sale prices under the previous policy. 
C)  were not actually charged every day, but only once a month during half-off sales. 
D)  ended up being higher than the sale prices under the previous pricing policy. 
A)  ended up being the highest prices ever charged by the company. 
B)  were always lower than the sale prices under the previous policy. 
C)  were not actually charged every day, but only once a month during half-off sales. 
D)  ended up being higher than the sale prices under the previous pricing policy.

Question 3

Assume that the price for swimming pool maintenance services has risen and sales of these services have fallen.One can conclude that

Accepted Answer

A)  the law of supply has been violated. 
B)  the demand for swimming pool maintenance services has increased. 
C)  the supply of swimming pool maintenance services has decreased. 
D)  swimming pool maintenance services are becoming more technologically advanced. 
A)  the law of supply has been violated. 
B)  the demand for swimming pool maintenance services has increased. 
C)  the supply of swimming pool maintenance services has decreased. 
D)  swimming pool maintenance services are becoming more technologically advanced.

Question 4

Figure 3-1  
-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 5

If the price of music downloads were to decrease,then

Accepted Answer

A)  the demand for MP3 players would decrease. 
B)  the demand for MP3 players would increase. 
C)  the supply of MP3 players would increase. 
D)  the quantity demanded of MP3 players would decrease. 
A)  the demand for MP3 players would decrease. 
B)  the demand for MP3 players would increase. 
C)  the supply of MP3 players would increase. 
D)  the quantity demanded of MP3 players would decrease.

Question 6

All else being equal,as the price of a product falls,the quantity supplied increases.

Accepted Answer

A) True 
 B)False

Question 7

If a decrease in income leads to an increase in the demand for sardines,then sardines are

Accepted Answer

A)  an inferior good. 
B)  a neutral good. 
C)  a necessity. 
D)  a normal good. 
A)  an inferior good. 
B)  a neutral good. 
C)  a necessity. 
D)  a normal good.

Question 8

The supply curve for watches

Accepted Answer

A)  shows the supply of watches consumers are willing and able to buy at any given price. 
B)  is downward sloping. 
C)  shows the relationship between the quantity of watches firms are willing and able to supply and the quantity of watches consumers are willing and able to purchase. 
D)  shows the relationship between the price of watches and the quantity of watches supplied. 
A)  shows the supply of watches consumers are willing and able to buy at any given price. 
B)  is downward sloping. 
C)  shows the relationship between the quantity of watches firms are willing and able to supply and the quantity of watches consumers are willing and able to purchase. 
D)  shows the relationship between the price of watches and the quantity of watches supplied.

Question 9

Which of the following is a common mistake consumers commit when they make decisions?

Accepted Answer

A)  They take into account non-monetary opportunity costs but ignore monetary costs. 
B)  They are overly pessimistic about their future behaviour. 
C)  They fail to ignore sunk costs. 
D)  They sometimes value fairness too much. 
A)  They take into account non-monetary opportunity costs but ignore monetary costs. 
B)  They are overly pessimistic about their future behaviour. 
C)  They fail to ignore sunk costs. 
D)  They sometimes value fairness too much.

Question 10

If,in the market for peaches,the supply curve has shifted to the left

Accepted Answer

A)  the supply of peaches has increased. 
B)  the supply of peaches has decreased. 
C)  the quantity of peaches supplied has increased. 
D)  the quantity of peaches supplied has decreased. 
A)  the supply of peaches has increased. 
B)  the supply of peaches has decreased. 
C)  the quantity of peaches supplied has increased. 
D)  the quantity of peaches supplied has decreased.

Question 11

Figure 3-5  
-Refer to Figure 3-5.At a price of $20,

Accepted Answer

A)  there would be a surplus of 8 units. 
B)  there would be a shortage of 8 units. 
C)  there would be a surplus of 0 units. 
D)  there would be a shortage of 4 units. 
A)  there would be a surplus of 8 units. 
B)  there would be a shortage of 8 units. 
C)  there would be a surplus of 0 units. 
D)  there would be a shortage of 4 units.

Question 12

Standard economic theory asserts that sunk costs are irrelevant in making economic decisions,yet studies conducted by behavioural economists reveal that sunk costs often affect economic decisions.Which of the following could explain this observation?

Accepted Answer

A)  People measure the value of a good in terms of its purchase price. 
B)  Even though sunk costs cannot be recovered, they have been incurred and therefore should be treated as part of the product's value. 
C)  If consumers maximise their utility, it makes sense to consider the full purchase price of a product in their consumption decisions. 
D)  Sunk costs have a higher opportunity cost than costs that can be recovered. 
A)  People measure the value of a good in terms of its purchase price. 
B)  Even though sunk costs cannot be recovered, they have been incurred and therefore should be treated as part of the product's value. 
C)  If consumers maximise their utility, it makes sense to consider the full purchase price of a product in their consumption decisions. 
D)  Sunk costs have a higher opportunity cost than costs that can be recovered.

Question 13

What would happen in the market for laser eye surgery if insurance companies started to cover a portion of the price of voluntary procedures?

Accepted Answer

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

Question 14

Chips and salsa are complements.If the price of salsa decreases,the demand for chips will increase.

Accepted Answer

A) True 
 B)False

Question 15

If,for a product,the quantity supplied exceeds the quantity demanded,the market price will fall until

Accepted Answer

A)  the quantity demanded exceeds the quantity supplied. The market will then be in equilibrium. 
B)  quantity demanded equals quantity supplied. The equilibrium price will then be lower than the market price. 
C)  all consumers will be able to afford the product. 
D)  quantity demanded equals quantity supplied. The market price will then equal the equilibrium price. 
A)  the quantity demanded exceeds the quantity supplied. The market will then be in equilibrium. 
B)  quantity demanded equals quantity supplied. The equilibrium price will then be lower than the market price. 
C)  all consumers will be able to afford the product. 
D)  quantity demanded equals quantity supplied. The market price will then equal the equilibrium price.

Question 16

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

Accepted Answer

A supply schedule is a table that shows

Question 17

A change in supply is represented by a shift of the supply curve.

Accepted Answer

A) True 
 B)False

Question 18

Figure 3-4  
-Refer to Figure 3-4.If the current market price is $15,the market will achieve equilibrium by

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 19

Figure 3-1  
-Refer to Figure 3-1.A decrease in the price of a substitute good 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 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

As the number of firms in a market decreases,the supply curve will shift to the left and the equilibrium price will rise.

Under Big W's everyday low pricing policy,the everyday low prices

Assume that the price for swimming pool maintenance services has risen and sales of these services have fallen.One can conclude that

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

If the price of music downloads were to decrease,then

All else being equal,as the price of a product falls,the quantity supplied increases.

If a decrease in income leads to an increase in the demand for sardines,then sardines are

The supply curve for watches

Which of the following is a common mistake consumers commit when they make decisions?

If,in the market for peaches,the supply curve has shifted to the left

Figure 3-5 -Refer to Figure 3-5.At a price of $20,

Standard economic theory asserts that sunk costs are irrelevant in making economic decisions,yet studies conducted by behavioural economists reveal that sunk costs often affect economic decisions.Which of the following could explain this observation?

What would happen in the market for laser eye surgery if insurance companies started to cover a portion of the price of voluntary procedures?

Chips and salsa are complements.If the price of salsa decreases,the demand for chips will increase.

If,for a product,the quantity supplied exceeds the quantity demanded,the market price will fall until

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

A change in supply is represented by a shift of the supply curve.

Figure 3-4 -Refer to Figure 3-4.If the current market price is $15,the market will achieve equilibrium by

Figure 3-1 -Refer to Figure 3-1.A decrease in the price of a substitute good would be represented by a movement from

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

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

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

As the number of firms in a market decreases,the supply curve will shift to the left and the equilibrium price will rise.

Under Big W's everyday low pricing policy,the everyday low prices

Assume that the price for swimming pool maintenance services has risen and sales of these services have fallen.One can conclude that

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

If the price of music downloads were to decrease,then

All else being equal,as the price of a product falls,the quantity supplied increases.

If a decrease in income leads to an increase in the demand for sardines,then sardines are

The supply curve for watches

Which of the following is a common mistake consumers commit when they make decisions?

If,in the market for peaches,the supply curve has shifted to the left

Figure 3-5 -Refer to Figure 3-5.At a price of $20,

Standard economic theory asserts that sunk costs are irrelevant in making economic decisions,yet studies conducted by behavioural economists reveal that sunk costs often affect economic decisions.Which of the following could explain this observation?

What would happen in the market for laser eye surgery if insurance companies started to cover a portion of the price of voluntary procedures?

Chips and salsa are complements.If the price of salsa decreases,the demand for chips will increase.

If,for a product,the quantity supplied exceeds the quantity demanded,the market price will fall until

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

A change in supply is represented by a shift of the supply curve.

Figure 3-4 -Refer to Figure 3-4.If the current market price is $15,the market will achieve equilibrium by

Figure 3-1 -Refer to Figure 3-1.A decrease in the price of a substitute good would be represented by a movement from

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

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

Filters