Question 1

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

Accepted Answer

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

Question 2

Figure 3-8  
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D1 and S1 (point A).If there is an increase in the wages of motorcycle workers and an increase in the price of motorcycle insurance,a complement to motorcycles,the equilibrium could move to which point?

Accepted Answer

A) A 
B) B 
C) C 
D) E 
A) A 
B) B 
C) C 
D) E

Question 3

"The price of digital cameras fell because of improvements in production technology.As a result,the demand for non-digital cameras decreased.This caused the price of non-digital cameras to fall; as the price of non-digital cameras fell the demand for non-digital cameras decreased even further." Evaluate this statement.

Accepted Answer

A) The statement is false because the demand for non-digital cameras would increase as the price of digital cameras fell. 
B) The statement is false.A decrease in the price of digital cameras would decrease the demand for non-digital cameras,but a decrease in the price of non-digital cameras would not cause the demand for non-digital cameras to decrease. 
C) The statement is false because it confuses the law of demand with the law of supply. 
D) The statement is false because digital camera producers would not reduce their prices as a result of improvements in technology; doing so would reduce their profits. 
A) The statement is false because the demand for non-digital cameras would increase as the price of digital cameras fell. 
B) The statement is false.A decrease in the price of digital cameras would decrease the demand for non-digital cameras,but a decrease in the price of non-digital cameras would not cause the demand for non-digital cameras to decrease. 
C) The statement is false because it confuses the law of demand with the law of supply. 
D) The statement is false because digital camera producers would not reduce their prices as a result of improvements in technology; doing so would reduce their profits.

Question 4

By drawing a demand curve with price on the vertical axis and quantity on the horizontal axis,economists assume that the most important determinant of the demand for a good is

Accepted Answer

A) consumer income. 
B) consumer tastes and preferences. 
C) the price of the good. 
D) the quality of the good. 
A) consumer income. 
B) consumer tastes and preferences. 
C) the price of the good. 
D) the quality of the good.

Question 5

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 6

The supply curve for umbrellas

Accepted Answer

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

Question 7

According to the Australian Wool Innovation,severe drought conditions in Australia contributed to the lowest level of wool production in 50 years.This record low production has driven up prices sharply in Australian wool markets.Meanwhile,the price of raw cotton increased significantly for the first time in many years.
a.Illustrate this observation with one demand and supply graph for the market for Australian wool and another demand and supply graph for raw cotton.
b.Make sure that your graphs clearly show (1)the initial equilibrium before the decrease in the supply of Australian wool and (2)the final equilibrium.
c.Use arrows to indicate any shifts in the demand and supply curves for each market.
d.Label your graphs fully and write an explanation of your work.

Accepted Answer

a,b and c.See the figure below. @#IMG-DLM& d.In th

Question 8

All else equal,a ________ of display screens used in the manufacture of tablet computers would shift the ________ curve for tablet computers to the left.

Accepted Answer

A) shortage; demand 
B) shortage; supply 
C) surplus; demand 
D) surplus; supply 
A) shortage; demand 
B) shortage; supply 
C) surplus; demand 
D) surplus; supply

Question 9

Would a change in the price of in-line skates cause a change in the supply of in-line skates? Why or why not?

Accepted Answer

No,a change in the price of in-line skat

Question 10

A demand curve shows the relationship between

Accepted Answer

A) the price of a product and the quantity of the product demanded. 
B) the amount of a product sellers are willing to sell at a particular price and the amount consumers are willing to buy at that price. 
C) the quantity that consumers are willing and able to buy and the quantity that sellers are willing and able to offer. 
D) the price of a produce and the demand for the product. 
A) the price of a product and the quantity of the product demanded. 
B) the amount of a product sellers are willing to sell at a particular price and the amount consumers are willing to buy at that price. 
C) the quantity that consumers are willing and able to buy and the quantity that sellers are willing and able to offer. 
D) the price of a produce and the demand for the product.

Question 11

Farmers can plant either corn or soybeans in their fields.Which of the following would cause the supply of soybeans to increase?

Accepted Answer

A) an increase in the price of soybeans 
B) a decrease in the price of corn 
C) an increase in the demand for corn 
D) an increase in the price of soybean seeds 
A) an increase in the price of soybeans 
B) a decrease in the price of corn 
C) an increase in the demand for corn 
D) an increase in the price of soybean seeds

Question 12

In July,market analysts predict that the price of gold will rise in August.What happens in the gold market in July,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 gold increase. 
D) The demand curve shifts to the left. 
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 gold increase. 
D) The demand curve shifts to the left.

Question 13

The market for tablet computers has become very competitive.The increase in competition in this market is an example of how the market responds to

Accepted Answer

A) decreases in the price of desktop computers (a substitute for the product). 
B) increases in income. 
C) changes in population. 
D) changes in consumer tastes. 
A) decreases in the price of desktop computers (a substitute for the product). 
B) increases in income. 
C) changes in population. 
D) changes in consumer tastes.

Question 14

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 15

Which of the following is evidence of a shortage of chocolate?

Accepted Answer

A) Firms lower the price of chocolate. 
B) The price of chocolate is raised in order to increase sales. 
C) The equilibrium price of chocolate falls due to a decrease in demand. 
D) The quantity of chocolate demanded is greater than the quantity supplied. 
A) Firms lower the price of chocolate. 
B) The price of chocolate is raised in order to increase sales. 
C) The equilibrium price of chocolate falls due to a decrease in demand. 
D) The quantity of chocolate demanded is greater than the quantity supplied.

Question 16

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.

Question 17

Consider the collectors' market for first editions of two popular children's books,Harry Potter and the Order of the Phoenix by J.K.Rowling and Ruby in the Smoke by Philip Pullman.Sales of the Harry Potter novel are much greater than sales of Ruby in the Smoke yet the price of the Harry Potter novel is much lower than the price of Pullman's novel.
a.On one large diagram,draw a demand and supply graph for first editions of Harry Potter and the Order of the Phoenix and another demand and supply graph for first editions of Ruby in the Smoke.
b.Show how it is possible for the price of the Harry Potter novel to be much lower than the price of Pullman's novel,even though the demand for the Harry Potter novel is much greater than the demand for Ruby in the Smoke.
c.Provide a written explanation to accompany your graphical illustration.

Accepted Answer

a.and b.See the figure below. @#IMG-DLM& 
c.The de

Question 18

If in the market for bananas the supply curve has shifted to the right,then

Accepted Answer

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

Question 19

A surplus is defined as the situation that exists when the quantity of a good supplied is greater than the quantity demanded.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

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

By drawing a demand curve with price on the vertical axis and quantity on the horizontal axis,economists assume that the most important determinant of the demand for a good is

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

The supply curve for umbrellas

All else equal,a of display screens used in the manufacture of tablet computers would shift the curve for tablet computers to the left.

Would a change in the price of in-line skates cause a change in the supply of in-line skates? Why or why not?

A demand curve shows the relationship between

Farmers can plant either corn or soybeans in their fields.Which of the following would cause the supply of soybeans to increase?

In July,market analysts predict that the price of gold will rise in August.What happens in the gold market in July,holding everything else constant?

The market for tablet computers has become very competitive.The increase in competition in this market is an example of how the market responds to

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

Which of the following is evidence of a shortage of chocolate?

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

If in the market for bananas the supply curve has shifted to the right,then

A surplus is defined as the situation that exists when the quantity of a good supplied is greater than the quantity demanded.

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

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Filters

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

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

By drawing a demand curve with price on the vertical axis and quantity on the horizontal axis,economists assume that the most important determinant of the demand for a good is

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

The supply curve for umbrellas

All else equal,a ________ of display screens used in the manufacture of tablet computers would shift the ________ curve for tablet computers to the left.

Would a change in the price of in-line skates cause a change in the supply of in-line skates? Why or why not?

A demand curve shows the relationship between

Farmers can plant either corn or soybeans in their fields.Which of the following would cause the supply of soybeans to increase?

In July,market analysts predict that the price of gold will rise in August.What happens in the gold market in July,holding everything else constant?

The market for tablet computers has become very competitive.The increase in competition in this market is an example of how the market responds to

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

Which of the following is evidence of a shortage of chocolate?

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

If in the market for bananas the supply curve has shifted to the right,then

A surplus is defined as the situation that exists when the quantity of a good supplied is greater than the quantity demanded.

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

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Filters

All else equal,a of display screens used in the manufacture of tablet computers would shift the curve for tablet computers to the left.