Question 1

Figure 3-1  
-Refer to Figure 3-1.A decrease in the price of a complementary 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 2

'Because chips and salsa are complements,an increase in the price of chips will cause the demand for salsa to decrease.This initial shift in demand for chips results in a higher price for chips;this higher price will cause the demand curve for chips 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 chips and salsa do not change. 
B) The statement is false because a change in the price of chips would not change the demand for chips. 
C) The statement is false because salsa is an inferior good;chips are normal goods. 
D) The statement is false because one cannot assume that chips and salsa are complements for all consumers. 
A) The statement will be true if consumer tastes for chips and salsa do not change. 
B) The statement is false because a change in the price of chips would not change the demand for chips. 
C) The statement is false because salsa is an inferior good;chips are normal goods. 
D) The statement is false because one cannot assume that chips and salsa are complements for all consumers.

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

A supply schedule

Accepted Answer

A) is a table that shows the relationship between the price of a product and the quantity of the product supplied. 
B) is a curve that shows the relationship between the price of a product and the quantity of the product supplied. 
C) is the relationship between the supply of a good and the cost of producing the good. 
D) is a table that shows the relationship between the price of a product and the quantity of the product that producers and consumers are willing to exchange. 
A) is a table that shows the relationship between the price of a product and the quantity of the product supplied. 
B) is a curve that shows the relationship between the price of a product and the quantity of the product supplied. 
C) is the relationship between the supply of a good and the cost of producing the good. 
D) is a table that shows the relationship between the price of a product and the quantity of the product that producers and consumers are willing to exchange.

Question 5

The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in the price of a complementary product.

Accepted Answer

A) True 
 B)False

Question 6

If an increase in income leads to a decrease in the demand for popcorn,then popcorn is

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 7

Tomas increased his consumption of potato chips when the price of pistachios increased.For Tomas,potato chips and pistachios are

Accepted Answer

A) substitutes in consumption. 
B) both inferior goods. 
C) complements in consumption. 
D) both luxury goods. 
A) substitutes in consumption. 
B) both inferior goods. 
C) complements in consumption. 
D) both luxury goods.

Question 8

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

Accepted Answer

A normal good is something for which the

Question 9

The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in purchasing power as a result of the price change.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

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 12

Technological advancements have led to lower prices and an increase in the sale of digital cameras.How does this affect the digital photo printing paper market?

Accepted Answer

A) The demand curve for digital photo printing paper shifts to the right. 
B) The demand curve for digital photo printing paper shifts to the left. 
C) The supply curve for digital photo printing paper shifts to the right. 
D) The supply curve for digital photo printing paper shifts to the left. 
A) The demand curve for digital photo printing paper shifts to the right. 
B) The demand curve for digital photo printing paper shifts to the left. 
C) The supply curve for digital photo printing paper shifts to the right. 
D) The supply curve for digital photo printing paper shifts to the left.

Question 13

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 14

An increase in the quantity of a product supplied is caused by an increase in the price of the product.

Accepted Answer

A) True 
 B)False

Question 15

When the price of a good falls,consumers buy a larger quantity because of the ________ effect and the ________ effect.

Accepted Answer

A) substitution;income 
B) normal;inferior 
C) substitute;complement 
D) supply;demand 
A) substitution;income 
B) normal;inferior 
C) substitute;complement 
D) supply;demand

Question 16

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 17

A decrease in the equilibrium quantity for a product will result

Accepted Answer

A) when the quantity demanded for the product exceeds the quantity supplied. 
B) when there is a decrease in supply and a decrease in demand for the product. 
C) when there is an increase in supply and a decrease in demand for the product. 
D) when there is a decrease in demand and a decrease in the number of firms producing the product. 
A) when the quantity demanded for the product exceeds the quantity supplied. 
B) when there is a decrease in supply and a decrease in demand for the product. 
C) when there is an increase in supply and a decrease in demand for the product. 
D) when there is a decrease in demand and a decrease in the number of firms producing the product.

Question 18

Figure 3-7  
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for used clothing,an inferior good.Which panel describes what happens in this market as a result of a decrease in income?

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 19

A decrease in quantity supplied is represented by a leftward shift of the supply curve.

Accepted Answer

A) True 
 B)False

Question 20

A normal good is a good for which the demand increases as income decreases,holding everything else constant.

Accepted Answer

A) True 
 B)False

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

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

A supply schedule

The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in the price of a complementary product.

If an increase in income leads to a decrease in the demand for popcorn,then popcorn is

Tomas increased his consumption of potato chips when the price of pistachios increased.For Tomas,potato chips and pistachios are

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

The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in purchasing power as a result of the price change.

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

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

Technological advancements have led to lower prices and an increase in the sale of digital cameras.How does this affect the digital photo printing paper market?

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

An increase in the quantity of a product supplied is caused by an increase in the price of the product.

When the price of a good falls,consumers buy a larger quantity because of the effect and the effect.

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

A decrease in the equilibrium quantity for a product will result

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for used clothing,an inferior good.Which panel describes what happens in this market as a result of a decrease in income?

A decrease in quantity supplied is represented by a leftward shift of the supply curve.

A normal good is a good for which the demand increases as income decreases,holding everything else constant.

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

Consumer Choice and Behavioural Economics

Technology, Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

The Markets 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 From: the Interaction of Demand and Supply

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

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

A supply schedule

The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in the price of a complementary product.

If an increase in income leads to a decrease in the demand for popcorn,then popcorn is

Tomas increased his consumption of potato chips when the price of pistachios increased.For Tomas,potato chips and pistachios are

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

The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in purchasing power as a result of the price change.

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

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

Technological advancements have led to lower prices and an increase in the sale of digital cameras.How does this affect the digital photo printing paper market?

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

An increase in the quantity of a product supplied is caused by an increase in the price of the product.

When the price of a good falls,consumers buy a larger quantity because of the ________ effect and the ________ effect.

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

A decrease in the equilibrium quantity for a product will result

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for used clothing,an inferior good.Which panel describes what happens in this market as a result of a decrease in income?

A decrease in quantity supplied is represented by a leftward shift of the supply curve.

A normal good is a good for which the demand increases as income decreases,holding everything else constant.

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

Consumer Choice and Behavioural Economics

Technology, Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

The Markets 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

When the price of a good falls,consumers buy a larger quantity because of the effect and the effect.