Question 1

What information is provided by a demand curve? What variables are measured along the axes of the graph?

Accepted Answer

The demand curve is a graphical represen

Question 2

The price of one product in terms of another commodity is called its

Accepted Answer

A) relative price. 
B) money price. 
C) financial price. 
D) converse price. 
A) relative price. 
B) money price. 
C) financial price. 
D) converse price.

Question 3

The market clearing price of a good is

Accepted Answer

A) the price at which there is at least some of the good available for everyone. 
B) the price at which there is no surplus and no shortage. 
C) the price that consumers prefer. 
D) the price that producers prefer. 
A) the price at which there is at least some of the good available for everyone. 
B) the price at which there is no surplus and no shortage. 
C) the price that consumers prefer. 
D) the price that producers prefer.

Question 4

Which of the following will cause the demand curve for cable TV services to shift to the left?

Accepted Answer

A) a rise in the price of cable TV services 
B) a decrease in average incomes of cable TV subscribers 
C) an increase in population 
D) the creation of several hit TV series 
A) a rise in the price of cable TV services 
B) a decrease in average incomes of cable TV subscribers 
C) an increase in population 
D) the creation of several hit TV series

Question 5

-Refer to the above figure.Which panel demonstrates the law of demand?

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 6

The quantity supplied of a particular good is the amount of the good that

Accepted Answer

A) households are willing to consume at each particular price. 
B) firms will actually end up buying at a particular price during a given time period. 
C) firms are willing to sell at each price during a particular time period. 
D) households want firms to sell at each price during a particular time period. 
A) households are willing to consume at each particular price. 
B) firms will actually end up buying at a particular price during a given time period. 
C) firms are willing to sell at each price during a particular time period. 
D) households want firms to sell at each price during a particular time period.

Question 7

More cattle are found to have mad cow disease.As a result,consumer confidence in the safety of beef is shaken.What would an economist predict will happen in the beef market?

Accepted Answer

A) As consumer preferences move away from beef,there is an upward movement along the beef demand curve. 
B) The demand curve will shift to the left. 
C) The demand curve does not shift but consumers move to a point lower down the curve. 
D) Absolutely no change in either the quantity demand or the demand for beef. 
A) As consumer preferences move away from beef,there is an upward movement along the beef demand curve. 
B) The demand curve will shift to the left. 
C) The demand curve does not shift but consumers move to a point lower down the curve. 
D) Absolutely no change in either the quantity demand or the demand for beef.

Question 8

How is the market supply curve found? In what ways is the process similar to the way the market demand curve is determined? In what ways are they different?

Accepted Answer

The market supply curve is obtained by h

Question 9

We observe that people buy less steak and more potatoes when the price of steak relative to potatoes increases.This indicates that steak and potatoes are

Accepted Answer

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

Question 10

The imposition of a per unit tax on a product

Accepted Answer

A) will cause the supply curve to shift downward and to the right. 
B) will cause the supply curve to shift upward and to the left. 
C) will reduce the quantity supplied of the product. 
D) will encourage producers to increase the quantity supplied of the product. 
A) will cause the supply curve to shift downward and to the right. 
B) will cause the supply curve to shift upward and to the left. 
C) will reduce the quantity supplied of the product. 
D) will encourage producers to increase the quantity supplied of the product.

Question 11

If there is a shortage in a free market,then

Accepted Answer

A) consumers will offer to pay a lower price for the good,and the price will fall toward the equilibrium level. 
B) consumers will offer to pay a higher price for the good,and the price will rise toward the equilibrium level. 
C) suppliers will decrease their output to match demand. 
D) suppliers will accept any price below equilibrium. 
A) consumers will offer to pay a lower price for the good,and the price will fall toward the equilibrium level. 
B) consumers will offer to pay a higher price for the good,and the price will rise toward the equilibrium level. 
C) suppliers will decrease their output to match demand. 
D) suppliers will accept any price below equilibrium.

Question 12

Other things being equal,an increase in wages paid to workers in the steel industry will cause

Accepted Answer

A) the quantity of steel demanded to increase. 
B) the quantity of steel supplied to decrease. 
C) the supply of steel to decrease. 
D) the demand for steel to decrease. 
A) the quantity of steel demanded to increase. 
B) the quantity of steel supplied to decrease. 
C) the supply of steel to decrease. 
D) the demand for steel to decrease.

Question 13

What would happen in the market for prescription drugs if people begin to view over-the-counter remedies as a good substitute for prescription medications?

Accepted Answer

A) Prescription medications will become an inferior good. 
B) There is an upward movement along the demand curve for prescription medications. 
C) There is a downward movement along the demand curve for prescription medications. 
D) The demand for prescription medications will decrease. 
A) Prescription medications will become an inferior good. 
B) There is an upward movement along the demand curve for prescription medications. 
C) There is a downward movement along the demand curve for prescription medications. 
D) The demand for prescription medications will decrease.

Question 14

If the price of one good goes up and the demand of a related good goes down,the two goods are

Accepted Answer

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

Question 15

$$\begin{array} { c c c } 
\hline \begin{array} { c } 
\text { Price } \
\text { Per Tablet }
\end{array} & \begin{array} { c } 
\text { Quantity Demanded } \
\text { Per Month }
\end{array} & \begin{array} { r } 
\text { Quantity Supplied } \
\text { Per Month }
\end{array} \
\hline \$ 800 & 2,000 & 12,000 \
750 & 3,000 & 11,000 \
700 & 4,000 & 10,000 \
650 & 5,000 & 9,000 \
600 & 6,000 & 8,000 \
550 & 7,000 & 7,000 \
500 & 8,000 & 6,000 \
450 & 10,000 & 4,000\\hline 
\end{array}$$
-Refer to the above table.At a price of $450,there is an

Accepted Answer

A) equilibrium. 
B) excess quantity supplied of 4,000 tablets. 
C) excess quantity demanded of 6,000 tablets. 
D) excess quantity demanded of 9,000 tablets. 
A) equilibrium. 
B) excess quantity supplied of 4,000 tablets. 
C) excess quantity demanded of 6,000 tablets. 
D) excess quantity demanded of 9,000 tablets.

Question 16

Another term for the equilibrium price is

Accepted Answer

A) excess demand. 
B) nominal price. 
C) law of demand. 
D) market clearing price. 
A) excess demand. 
B) nominal price. 
C) law of demand. 
D) market clearing price.

Question 17

A demand curve for a normal good

Accepted Answer

A) slopes upward and to the right. 
B) is constructed based on the assumption that income is rising. 
C) is constructed based on the assumption that an inverse relationship exists between price and income. 
D) shows the inverse relationship between price and quantity demanded. 
A) slopes upward and to the right. 
B) is constructed based on the assumption that income is rising. 
C) is constructed based on the assumption that an inverse relationship exists between price and income. 
D) shows the inverse relationship between price and quantity demanded.

Question 18

The law of demand states that

Accepted Answer

A) consumers have unlimited demands for a good. 
B) a higher price will lead to increased sales. 
C) the price can never be too high for some consumers. 
D) quantity demanded will vary inversely with the price of the good. 
A) consumers have unlimited demands for a good. 
B) a higher price will lead to increased sales. 
C) the price can never be too high for some consumers. 
D) quantity demanded will vary inversely with the price of the good.

Question 19

The law of demand includes the statement "other things being equal." These other things include all of the following EXCEPT

Accepted Answer

A) the price of the good itself. 
B) the price of related goods. 
C) incomes. 
D) tastes. 
A) the price of the good itself. 
B) the price of related goods. 
C) incomes. 
D) tastes.

Question 20

Which of the following statements is FALSE?

Accepted Answer

A) If there is an increase in the demand for a product,consumers want to buy more of the product at each and every possible price. 
B) A decrease in demand shifts the demand curve leftward toward the origin,while a decrease in quantity demanded involves a movement upward along a particular demand curve. 
C) If the price of a good rises,quantity demanded of the good decreases and the demand curve shifts toward the origin as long as supply is static. 
D) A change in the demand for a product is caused by factors other than changes in the product's price. 
A) If there is an increase in the demand for a product,consumers want to buy more of the product at each and every possible price. 
B) A decrease in demand shifts the demand curve leftward toward the origin,while a decrease in quantity demanded involves a movement upward along a particular demand curve. 
C) If the price of a good rises,quantity demanded of the good decreases and the demand curve shifts toward the origin as long as supply is static. 
D) A change in the demand for a product is caused by factors other than changes in the product's price.

Exam 3: Demand and Supply

What information is provided by a demand curve? What variables are measured along the axes of the graph?

The price of one product in terms of another commodity is called its

The market clearing price of a good is

Which of the following will cause the demand curve for cable TV services to shift to the left?

-Refer to the above figure.Which panel demonstrates the law of demand?

The quantity supplied of a particular good is the amount of the good that

More cattle are found to have mad cow disease.As a result,consumer confidence in the safety of beef is shaken.What would an economist predict will happen in the beef market?

How is the market supply curve found? In what ways is the process similar to the way the market demand curve is determined? In what ways are they different?

We observe that people buy less steak and more potatoes when the price of steak relative to potatoes increases.This indicates that steak and potatoes are

The imposition of a per unit tax on a product

If there is a shortage in a free market,then

Other things being equal,an increase in wages paid to workers in the steel industry will cause

What would happen in the market for prescription drugs if people begin to view over-the-counter remedies as a good substitute for prescription medications?

If the price of one good goes up and the demand of a related good goes down,the two goods are

Price Per Tablet Quantity Demanded Per Month Quantity Supplied Per Month \ 800 2,000 12,000 750 3,000 11,000 700 4,000 10,000 650 5,000 9,000 600 6,000 8,000 550 7,000 7,000 500 8,000 6,000 450 10,000 4,000 -Refer to the above table.At a price of $450,there is an

Another term for the equilibrium price is

A demand curve for a normal good

The law of demand states that

The law of demand includes the statement "other things being equal." These other things include all of the following EXCEPT

Which of the following statements is FALSE?

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

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