Question 1

The concept of "demand" in economics refers to

Accepted Answer

A) the different quantities of a good or service people will buy at different possible prices. 
B) the different types of goods and services that people of different income levels want to buy. 
C) how changes in the prices of all goods affect people's buying behavior. 
D) changes in people's consumption behavior over time. 
A) the different quantities of a good or service people will buy at different possible prices. 
B) the different types of goods and services that people of different income levels want to buy. 
C) how changes in the prices of all goods affect people's buying behavior. 
D) changes in people's consumption behavior over time. A

Question 2

Which of the following is NOT a non-price determinant of demand?

Accepted Answer

A) the price of the good or service 
B) tastes and preferences 
C) expectations of future prices 
D) prices of related goods and services 
A) the price of the good or service 
B) tastes and preferences 
C) expectations of future prices 
D) prices of related goods and services A

Question 3

-Refer to the above figure.Which panel shows the effect of an increase in the price of a good on the demand curve of that good?

Accepted Answer

A) Panel A. 
B) Panel B. 
C) Both panels. 
D) Neither panel. 
A) Panel A. 
B) Panel B. 
C) Both panels. 
D) Neither panel. D

Question 4

A demand curve

Accepted Answer

A) slopes down because of the inverse relationship between price and quantity demanded. 
B) slopes up because of the direct relationship between price and quantity demanded. 
C) can slope up or down depending on the tastes of the consumer. 
D) is vertical for necessities,upward sloping for luxury goods,and downward sloping for all other goods. 
A) slopes down because of the inverse relationship between price and quantity demanded. 
B) slopes up because of the direct relationship between price and quantity demanded. 
C) can slope up or down depending on the tastes of the consumer. 
D) is vertical for necessities,upward sloping for luxury goods,and downward sloping for all other goods.

Question 5

Fashion trends are a nonprice determinant for demand because

Accepted Answer

A) they cause a movement along the demand curve. 
B) they influence people's tastes and preferences in clothing. 
C) they change the supply of accessories. 
D) they do not affect demand. 
A) they cause a movement along the demand curve. 
B) they influence people's tastes and preferences in clothing. 
C) they change the supply of accessories. 
D) they do not affect demand.

Question 6

The law of demand implies that the demand curve

Accepted Answer

A) has a negative slope. 
B) has a positive slope. 
C) shifts to the right when the price of a good increases. 
D) shifts to the left when the price of a good decreases. 
A) has a negative slope. 
B) has a positive slope. 
C) shifts to the right when the price of a good increases. 
D) shifts to the left when the price of a good decreases.

Question 7

If the price of hot dogs increases,the demand for hot dog buns will

Accepted Answer

A) increase. 
B) decrease. 
C) remain constant. 
D) shift to the right. 
A) increase. 
B) decrease. 
C) remain constant. 
D) shift to the right.

Question 8

Mary decreases her consumption of Good X after the price of Good Y decreased.For Mary

Accepted Answer

A) Good X and Good Y are substitutes. 
B) Good X and Good Y are complements. 
C) Good X is an inferior good. 
D) Good Y is an inferior good. 
A) Good X and Good Y are substitutes. 
B) Good X and Good Y are complements. 
C) Good X is an inferior good. 
D) Good Y is an inferior good.

Question 9

Regarding the law of supply,which of the following statements is correct?

Accepted Answer

A) As the price of a good or service rises,the quantity supplied will increase. 
B) As the price of a good or service rises,the quantity supplied will decrease. 
C) The ceteris paribus assumption does not apply. 
D) As demand falls,supply rises. 
A) As the price of a good or service rises,the quantity supplied will increase. 
B) As the price of a good or service rises,the quantity supplied will decrease. 
C) The ceteris paribus assumption does not apply. 
D) As demand falls,supply rises.

Question 10

The supply curve shows the relationship between the

Accepted Answer

A) cost of production and the price of the product. 
B) cost of resources and cost of production. 
C) price of the product and quantity supplied. 
D) quantity demanded and the quantity supplied. 
A) cost of production and the price of the product. 
B) cost of resources and cost of production. 
C) price of the product and quantity supplied. 
D) quantity demanded and the quantity supplied.

Question 11

The price of a new textbook increases from $120 to $160,while the price of used copies of the textbook increased from $80 to $100.Other things being equal,we would expect

Accepted Answer

A) the quantity demanded of the used textbook to increase and the quantity demanded of the new textbook to decrease. 
B) the quantity demanded of both to fall. 
C) the demand for the new textbook to increase and the demand for the used textbook to decrease. 
D) the quantity demanded of the used textbook to decrease and the quantity demanded of the new textbook to increase. 
A) the quantity demanded of the used textbook to increase and the quantity demanded of the new textbook to decrease. 
B) the quantity demanded of both to fall. 
C) the demand for the new textbook to increase and the demand for the used textbook to decrease. 
D) the quantity demanded of the used textbook to decrease and the quantity demanded of the new textbook to increase.

Question 12

Suppose we observe that the demand for eggs increases when people buy more potatoes.We can conclude that eggs and potatoes are

Accepted Answer

A) inferior goods. 
B) normal goods. 
C) complements. 
D) substitutes. 
A) inferior goods. 
B) normal goods. 
C) complements. 
D) substitutes.

Question 13

Which one of the following would cause an increase in the supply of cardboard?

Accepted Answer

A) a decrease in the demand for cardboard 
B) an increase in the price of cardboard 
C) an increase in taxes applied to cardboard producers 
D) an improvement in the technology used to produce cardboard 
A) a decrease in the demand for cardboard 
B) an increase in the price of cardboard 
C) an increase in taxes applied to cardboard producers 
D) an improvement in the technology used to produce cardboard

Question 14

The absolute price of a good is its

Accepted Answer

A) relative price. 
B) money price. 
C) subjective price. 
D) projected price. 
A) relative price. 
B) money price. 
C) subjective price. 
D) projected price.

Question 15

-Refer to the above figure.The highest price that consumers would be willing to pay for quantity Q2 is

Accepted Answer

A) P2. 
B) P0. 
C) P1. 
D) cannot be determined from the diagram. 
A) P2. 
B) P0. 
C) P1. 
D) cannot be determined from the diagram.

Question 16

Which of the following is an example of the law of demand?

Accepted Answer

A) An increase in the price of magnetic optical disks is followed by a reduction in the amount of magnetic optical disks purchased. 
B) An increase in the price of tablets is followed by an increase in the sale of tablets. 
C) A decrease in the price of milk has no effect on the amount of milk consumed. 
D) The amount of smartphones sold increases while the price of smartphones is constant. 
A) An increase in the price of magnetic optical disks is followed by a reduction in the amount of magnetic optical disks purchased. 
B) An increase in the price of tablets is followed by an increase in the sale of tablets. 
C) A decrease in the price of milk has no effect on the amount of milk consumed. 
D) The amount of smartphones sold increases while the price of smartphones is constant.

Question 17

Which of the following is a determinant of supply?

Accepted Answer

A) Tastes and preferences of consumers 
B) Technology 
C) Consumer income 
D) Number of consumers 
A) Tastes and preferences of consumers 
B) Technology 
C) Consumer income 
D) Number of consumers

Question 18

-In the above figure,a surplus exists in the gasoline market when the price is

Accepted Answer

A) $1/gallon. 
B) $2/gallon. 
C) $4/gallon. 
D) below $2/gallon. 
A) $1/gallon. 
B) $2/gallon. 
C) $4/gallon. 
D) below $2/gallon.

Question 19

Suppose that a new study finds that eating more peanut butter will improve a person's health.As a result,

Accepted Answer

A) the demand for peanut butter will fall. 
B) the demand for peanut butter will rise. 
C) the price of peanut butter will fall. 
D) a smaller amount of peanut butter will be purchased. 
A) the demand for peanut butter will fall. 
B) the demand for peanut butter will rise. 
C) the price of peanut butter will fall. 
D) a smaller amount of peanut butter will be purchased.

Question 20

When the price of a good rises,there is

Accepted Answer

A) an increase in supply. 
B) a decrease in supply. 
C) a decrease in quantity supplied. 
D) an increase in quantity supplied. 
A) an increase in supply. 
B) a decrease in supply. 
C) a decrease in quantity supplied. 
D) an increase in quantity supplied.

Exam 3: Demand and Supply

The concept of "demand" in economics refers to

Which of the following is NOT a non-price determinant of demand?

-Refer to the above figure.Which panel shows the effect of an increase in the price of a good on the demand curve of that good?

A demand curve

Fashion trends are a nonprice determinant for demand because

The law of demand implies that the demand curve

If the price of hot dogs increases,the demand for hot dog buns will

Mary decreases her consumption of Good X after the price of Good Y decreased.For Mary

Regarding the law of supply,which of the following statements is correct?

The supply curve shows the relationship between the

The price of a new textbook increases from $120 to $160,while the price of used copies of the textbook increased from $80 to $100.Other things being equal,we would expect

Suppose we observe that the demand for eggs increases when people buy more potatoes.We can conclude that eggs and potatoes are

Which one of the following would cause an increase in the supply of cardboard?

The absolute price of a good is its

-Refer to the above figure.The highest price that consumers would be willing to pay for quantity Q2 is

Which of the following is an example of the law of demand?

Which of the following is a determinant of supply?

-In the above figure,a surplus exists in the gasoline market when the price is

Suppose that a new study finds that eating more peanut butter will improve a person's health.As a result,

When the price of a good rises,there is

The Nature of Economics

Scarcity and the World of Trade-Offs

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

-Refer to the above figure.The highest price that consumers would be willing to pay for quantity Q₂ is