Question 1

If the price of margarine falls,the demand for butter will

Accepted Answer

A) remain unchanged. 
B) increase. 
C) decrease. 
D) rise at first and then fall. 
A) remain unchanged. 
B) increase. 
C) decrease. 
D) rise at first and then fall.

Question 2

We are given the individual demand curves for all of the people that consume Good Y.Which statement is true about the market demand curve for Good Y?

Accepted Answer

A) The market demand curve is obtained by horizontally summing the individual demand curves. 
B) The market demand curve is obtained by vertically summing the individual demand curves. 
C) The market demand curve cannot be obtained because information on prices is missing. 
D) The market demand curve cannot be obtained from individual demand curves. 
A) The market demand curve is obtained by horizontally summing the individual demand curves. 
B) The market demand curve is obtained by vertically summing the individual demand curves. 
C) The market demand curve cannot be obtained because information on prices is missing. 
D) The market demand curve cannot be obtained from individual demand curves.

Question 3

The price of a gallon of gasoline increased from $2.00 to $2.25 while the price of a ride on the city bus increased from 50 cents to 75 cents.The relative price of riding the city bus

Accepted Answer

A) increased from 0.25 to 0.6. 
B) decreased from 4.0 to 3.0. 
C) stayed constant at 0.25. 
D) stayed constant at 4.0. 
A) increased from 0.25 to 0.6. 
B) decreased from 4.0 to 3.0. 
C) stayed constant at 0.25. 
D) stayed constant at 4.0.

Question 4

At a market clearing price,

Accepted Answer

A) the quantity demanded will just equal the quantity supplied. 
B) there will be an excess quantity demanded. 
C) there will be a tendency for price to rise over time. 
D) the demand function will shift outward. 
A) the quantity demanded will just equal the quantity supplied. 
B) there will be an excess quantity demanded. 
C) there will be a tendency for price to rise over time. 
D) the demand function will shift outward.

Question 5

Which of the following illustrates the law of demand?

Accepted Answer

A) More people watch college basketball in March than in November. 
B) The number of long distance calls in the United States is greater on Christmas than on Valentine's Day. 
C) College enrollment increases when federal tuition grants are readily available to students. 
D) The prevailing wage rate in an industry determines how many people choose to work in the industry. 
A) More people watch college basketball in March than in November. 
B) The number of long distance calls in the United States is greater on Christmas than on Valentine's Day. 
C) College enrollment increases when federal tuition grants are readily available to students. 
D) The prevailing wage rate in an industry determines how many people choose to work in the industry.

Question 6

Markets are

Accepted Answer

A) a mechanism through which prices of goods and services are determined by the forces of supply and demand. 
B) specific geographic locations. 
C) hypothetical constructs used to analyze how people form their tastes and preferences. 
D) places where people can inspect goods and services carefully. 
A) a mechanism through which prices of goods and services are determined by the forces of supply and demand. 
B) specific geographic locations. 
C) hypothetical constructs used to analyze how people form their tastes and preferences. 
D) places where people can inspect goods and services carefully.

Question 7

Which of the following will NOT cause market supply to increase?

Accepted Answer

A) an increase in the number of firms supplying the product in the market 
B) a change in technology which allows a larger level of production at every price 
C) an increase in the costs of resources used to produce the product 
D) a decrease in labor costs 
A) an increase in the number of firms supplying the product in the market 
B) a change in technology which allows a larger level of production at every price 
C) an increase in the costs of resources used to produce the product 
D) a decrease in labor costs

Question 8

In economic terminology,an inferior good is a good

Accepted Answer

A) that no one will purchase. 
B) that doesn't work properly. 
C) that has no monetary value. 
D) for which demand increases as income decreases. 
A) that no one will purchase. 
B) that doesn't work properly. 
C) that has no monetary value. 
D) for which demand increases as income decreases.

Question 9

Market demand is

Accepted Answer

A) the total quantities demanded of all consumers of a particular item at given prices. 
B) a movement along the demand curve in response to the market. 
C) total equilibrium demand for the market. 
D) the demand for and supply of a good or service. 
A) the total quantities demanded of all consumers of a particular item at given prices. 
B) a movement along the demand curve in response to the market. 
C) total equilibrium demand for the market. 
D) the demand for and supply of a good or service.

Question 10

An increase in the number of consumers in a market would cause

Accepted Answer

A) an increase in quantity demanded. 
B) an increase in quantity supplied. 
C) an increase in demand. 
D) an increase in supply. 
A) an increase in quantity demanded. 
B) an increase in quantity supplied. 
C) an increase in demand. 
D) an increase in supply.

Question 11

A market demand curve is found by

Accepted Answer

A) adding the prices each consumer would pay for each quantity. 
B) adding the prices and the quantities demanded by a consumer. 
C) adding the quantities demanded for each individual consumer at each price. 
D) taking the demand curve of the "representative" consumer. 
A) adding the prices each consumer would pay for each quantity. 
B) adding the prices and the quantities demanded by a consumer. 
C) adding the quantities demanded for each individual consumer at each price. 
D) taking the demand curve of the "representative" consumer.

Question 12

John increases his consumption of Good X and Good Y when his income increases.For John

Accepted Answer

A) Good X and Good Y are substitute goods. 
B) Good X and Good Y are complement goods. 
C) Good X is an inferior good. 
D) Good X and Y are normal goods 
A) Good X and Good Y are substitute goods. 
B) Good X and Good Y are complement goods. 
C) Good X is an inferior good. 
D) Good X and Y are normal goods

Question 13

A market demand schedule for a product indicates that

Accepted Answer

A) as the product's price falls,consumers buy less of the good. 
B) there is a positive relationship between price and quantity demanded. 
C) as a product's price rises,consumers buy more of the good. 
D) there is a negative relationship between price and quantity demanded. 
A) as the product's price falls,consumers buy less of the good. 
B) there is a positive relationship between price and quantity demanded. 
C) as a product's price rises,consumers buy more of the good. 
D) there is a negative relationship between price and quantity demanded.

Question 14

-According to the above figure for a gasoline market,at a price of $1 per gallon of gasoline,there would be

Accepted Answer

A) a shortage of 30 million gallons. 
B) a surplus of 30 million gallons. 
C) a shortage of 20 million gallons. 
D) a surplus of 50 million gallons. 
A) a shortage of 30 million gallons. 
B) a surplus of 30 million gallons. 
C) a shortage of 20 million gallons. 
D) a surplus of 50 million gallons.

Question 15

Assume that coffee and tea are substitutes.Given a downward sloping demand curve for tea,an increase in the price of tea will cause

Accepted Answer

A) an increase in the demand for coffee. 
B) a decrease in the demand for coffee. 
C) a leftward shift of the demand curve for tea. 
D) a leftward shift in the demand for coffee. 
A) an increase in the demand for coffee. 
B) a decrease in the demand for coffee. 
C) a leftward shift of the demand curve for tea. 
D) a leftward shift in the demand for coffee.

Question 16

-Suppose a change takes place and the new equilibrium is at point A in the above figure.This change could have been caused by

Accepted Answer

A) an increase in the per-unit tax on CDs. 
B) a decrease in the income of consumers. 
C) a reduction in the wages paid to workers in the CD industry. 
D) a reduction in the price of CD players. 
A) an increase in the per-unit tax on CDs. 
B) a decrease in the income of consumers. 
C) a reduction in the wages paid to workers in the CD industry. 
D) a reduction in the price of CD players.

Question 17

Suppose that,at a rental rate of $1000 per month,650 residents wish to rent apartments and that landlords offer 800 apartments available for rent.Which one of the following statements is then true?

Accepted Answer

A) There is a shortage of 150 apartments. 
B) There is an excess demand for apartments. 
C) The market clearing rental price of apartments is too low. 
D) The market clearing rental price of apartments is less than $1000 per month. 
A) There is a shortage of 150 apartments. 
B) There is an excess demand for apartments. 
C) The market clearing rental price of apartments is too low. 
D) The market clearing rental price of apartments is less than $1000 per month.

Question 18

Any improvement in overall production technology that permits more output to be produced with the same level of inputs causes

Accepted Answer

A) a movement up the supply curve resulting in both a higher equilibrium price and quantity. 
B) a rightward shift of the supply curve so that more is offered at each price. 
C) no movement of the supply curve,but a fall in price and a decrease in quantity supplied. 
D) a leftward shift of the supply curve so that less is offered for sale at each price. 
A) a movement up the supply curve resulting in both a higher equilibrium price and quantity. 
B) a rightward shift of the supply curve so that more is offered at each price. 
C) no movement of the supply curve,but a fall in price and a decrease in quantity supplied. 
D) a leftward shift of the supply curve so that less is offered for sale at each price.

Question 19

Which of the following statements is correct?

Accepted Answer

A) A shortage and scarcity are the same thing. 
B) A shortage occurs when the quantity demanded is less than the quantity supplied at a price below the market clearing price. 
C) A shortage occurs when the quantity demanded is greater than the quantity supplied at a price below the market clearing price. 
D) A shortage occurs when the quantity demanded is less than the quantity supplied at a price above the market clearing price. 
A) A shortage and scarcity are the same thing. 
B) A shortage occurs when the quantity demanded is less than the quantity supplied at a price below the market clearing price. 
C) A shortage occurs when the quantity demanded is greater than the quantity supplied at a price below the market clearing price. 
D) A shortage occurs when the quantity demanded is less than the quantity supplied at a price above the market clearing price.

Question 20

A subsidy to carrot farmers will

Accepted Answer

A) increase the quantity of carrots demanded. 
B) decrease the quantity of carrots supplied. 
C) increase the supply of carrots. 
D) leave both the supply and demand of carrots unchanged. 
A) increase the quantity of carrots demanded. 
B) decrease the quantity of carrots supplied. 
C) increase the supply of carrots. 
D) leave both the supply and demand of carrots unchanged.

Exam 3: Demand and Supply

If the price of margarine falls,the demand for butter will

We are given the individual demand curves for all of the people that consume Good Y.Which statement is true about the market demand curve for Good Y?

The price of a gallon of gasoline increased from $2.00 to $2.25 while the price of a ride on the city bus increased from 50 cents to 75 cents.The relative price of riding the city bus

At a market clearing price,

Which of the following illustrates the law of demand?

Markets are

Which of the following will NOT cause market supply to increase?

In economic terminology,an inferior good is a good

Market demand is

An increase in the number of consumers in a market would cause

A market demand curve is found by

John increases his consumption of Good X and Good Y when his income increases.For John

A market demand schedule for a product indicates that

-According to the above figure for a gasoline market,at a price of $1 per gallon of gasoline,there would be

Assume that coffee and tea are substitutes.Given a downward sloping demand curve for tea,an increase in the price of tea will cause

-Suppose a change takes place and the new equilibrium is at point A in the above figure.This change could have been caused by

Suppose that,at a rental rate of $1000 per month,650 residents wish to rent apartments and that landlords offer 800 apartments available for rent.Which one of the following statements is then true?

Any improvement in overall production technology that permits more output to be produced with the same level of inputs causes

Which of the following statements is correct?

A subsidy to carrot farmers will

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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