Question 1

If the price of an item can freely adjust,a market will

Accepted Answer

A) always move towards equilibrium. 
B) always have an excess quantity demanded. 
C) always have an excess quantity supplied. 
D) never move towards equilibrium because prices are always increasing. 
A) always move towards equilibrium. 
B) always have an excess quantity demanded. 
C) always have an excess quantity supplied. 
D) never move towards equilibrium because prices are always increasing.

Question 2

When a rise in the price of one item results in a decrease in the demand for another good,then the two goods are

Accepted Answer

A) substitute goods. 
B) complementary goods. 
C) inferior goods. 
D) satisfying the law of supply. 
A) substitute goods. 
B) complementary goods. 
C) inferior goods. 
D) satisfying the law of supply.

Question 3

A demand curve is a

Accepted Answer

A) graphical representation of the demand schedule. 
B) graphical representation of alternative demands. 
C) horizontal line connecting amounts demanded at various income levels. 
D) graphical relationship,that includes several things such as tastes,time,and supply. 
A) graphical representation of the demand schedule. 
B) graphical representation of alternative demands. 
C) horizontal line connecting amounts demanded at various income levels. 
D) graphical relationship,that includes several things such as tastes,time,and supply.

Question 4

$$\begin{array} { r c c } 
\begin{array} { c } 
\text { Price } \
\text { per CD }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { DVDs } \
\text { Demanded } \
\text { per Month }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { DVDs } \
\text { Supplied } \
\text { per Month }
\end{array} \
\hline \$ 20 & 500 & 9000 \
18 & 1000 & 6000 \
16 & 1500 & 4500 \
14 & 2000 & 3500 \
12 & 2500 & 2500 \
10 & 3000 & 1500 \
8 & 3500 & 800 \
6 & 4000 & 100\\hline 
\end{array}$$
-According to the above table,the equilibrium price of DVDs is

Accepted Answer

A) $16. 
B) $14. 
C) $12. 
D) $10. 
A) $16. 
B) $14. 
C) $12. 
D) $10.

Question 5

Sarah gets a salary increase of 20 percent.Before her raise,she purchased 5 pounds of hamburger and 1 pound of beef stew a month.After her raise,she consumes 2 pounds of hamburger and 3 pounds of beef stew a month.If everything else is held constant,we know that

Accepted Answer

A) hamburger is an inferior good and beef stew is a normal good for Sarah. 
B) hamburger is a normal good and beef stew is an inferior good for Sarah. 
C) both hamburger and beef stew are normal goods for Sarah. 
D) both hamburger and beef stew are inferior goods for Sarah. 
A) hamburger is an inferior good and beef stew is a normal good for Sarah. 
B) hamburger is a normal good and beef stew is an inferior good for Sarah. 
C) both hamburger and beef stew are normal goods for Sarah. 
D) both hamburger and beef stew are inferior goods for Sarah.

Question 6

Suppliers will provide more of a good when

Accepted Answer

A) the market price increases. 
B) the good is a normal good. 
C) resource prices increase. 
D) there is a decrease in demand. 
A) the market price increases. 
B) the good is a normal good. 
C) resource prices increase. 
D) there is a decrease in demand.

Question 7

Scalping and other black market activities arise when

Accepted Answer

A) the prices of goods are allowed to adjust to their equilibrium levels. 
B) the quantities of goods demanded and supplied are allowed to adjust to their equilibrium levels. 
C) the prices of goods are restricted to levels above equilibrium prices. 
D) the prices of goods are restricted to levels below equilibrium prices. 
A) the prices of goods are allowed to adjust to their equilibrium levels. 
B) the quantities of goods demanded and supplied are allowed to adjust to their equilibrium levels. 
C) the prices of goods are restricted to levels above equilibrium prices. 
D) the prices of goods are restricted to levels below equilibrium prices.

Question 8

A significant increase in the price of tennis balls will most likely lead to

Accepted Answer

A) an increase in the demand for tennis racquets. 
B) an inward shift in the demand for tennis balls. 
C) a movement along the demand curve for tennis racquets. 
D) an inward shift in the demand for tennis racquets. 
A) an increase in the demand for tennis racquets. 
B) an inward shift in the demand for tennis balls. 
C) a movement along the demand curve for tennis racquets. 
D) an inward shift in the demand for tennis racquets.

Question 9

A demand curve represents a(n)

Accepted Answer

A) direct relationship between price and quantity demanded. 
B) direct relationship between price and demand. 
C) indirect or inverse relationship between price and quantity demanded. 
D) indirect relationship between price and supply. 
A) direct relationship between price and quantity demanded. 
B) direct relationship between price and demand. 
C) indirect or inverse relationship between price and quantity demanded. 
D) indirect relationship between price and supply.

Question 10

-Refer to the above figure.Which panel best demonstrates the demand curve?

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 11

-Refer to the above figure.Which of the following statements is true?

Accepted Answer

A) Panel A shows a decrease in demand and Panel B shows an increase in demand. 
B) Both Panels A and B show an increase in demand. 
C) Panel A shows a change in demand and Panel B shows a change in quantity demanded. 
D) Panel A shows a change in quantity demanded and Panel B shows a change in demand. 
A) Panel A shows a decrease in demand and Panel B shows an increase in demand. 
B) Both Panels A and B show an increase in demand. 
C) Panel A shows a change in demand and Panel B shows a change in quantity demanded. 
D) Panel A shows a change in quantity demanded and Panel B shows a change in demand.

Question 12

A movement along a supply curve is induced by a change in

Accepted Answer

A) input prices. 
B) taxes and subsidies. 
C) price expectations. 
D) the product's own price. 
A) input prices. 
B) taxes and subsidies. 
C) price expectations. 
D) the product's own price.

Question 13

-In a free market,the market price and quantity in the above figure will adjust to equilibrium values of

Accepted Answer

A) $1 per gallon and 50 million gallons. 
B) $4 per gallon and 10 million gallons. 
C) $2 per gallon and 60 million gallons. 
D) $2 per gallon and 30 million gallons. 
A) $1 per gallon and 50 million gallons. 
B) $4 per gallon and 10 million gallons. 
C) $2 per gallon and 60 million gallons. 
D) $2 per gallon and 30 million gallons.

Question 14

-According to the above figure,a shortage will occur at a price at which

Accepted Answer

A) quantity demanded equals quantity supplied. 
B) quantity demanded exceeds quantity supplied. 
C) quantity supplied exceeds quantity demanded. 
D) government sets a price above equilibrium. 
A) quantity demanded equals quantity supplied. 
B) quantity demanded exceeds quantity supplied. 
C) quantity supplied exceeds quantity demanded. 
D) government sets a price above equilibrium.

Question 15

An improvement in technology in the production of computers would

Accepted Answer

A) increase the demand for computers. 
B) increase the supply of computers. 
C) decrease the demand for computers. 
D) decrease the supply of computers. 
A) increase the demand for computers. 
B) increase the supply of computers. 
C) decrease the demand for computers. 
D) decrease the supply of computers.

Question 16

Which of the following would cause an increase in the market supply of mountain bikes?

Accepted Answer

A) a decrease in the demand for mountain bikes 
B) an increase in taxes levied on mountain bike manufacturers 
C) an increase in the cost of components used to assemble mountain bikes 
D) an increase in the number of firms making mountain bikes 
A) a decrease in the demand for mountain bikes 
B) an increase in taxes levied on mountain bike manufacturers 
C) an increase in the cost of components used to assemble mountain bikes 
D) an increase in the number of firms making mountain bikes

Question 17

-Refer to the above figure.Which of the following statements is true?

Accepted Answer

A) Panel A shows an increase in supply and Panel B shows a decrease in supply. 
B) Both Panels A and B show an increase in supply. 
C) Panel A shows a change in quantity supplied and Panel B shows a change in supply. 
D) Panel A shows a change in supply and Panel B shows a change in quantity supplied. 
A) Panel A shows an increase in supply and Panel B shows a decrease in supply. 
B) Both Panels A and B show an increase in supply. 
C) Panel A shows a change in quantity supplied and Panel B shows a change in supply. 
D) Panel A shows a change in supply and Panel B shows a change in quantity supplied.

Question 18

In economics,the meaning of demand refers to

Accepted Answer

A) how badly someone wants a good. 
B) the quantities of a good that people will buy at various prices. 
C) the quantities of a good that people will sell at various prices. 
D) the total satisfaction that consuming a good provides people at different prices. 
A) how badly someone wants a good. 
B) the quantities of a good that people will buy at various prices. 
C) the quantities of a good that people will sell at various prices. 
D) the total satisfaction that consuming a good provides people at different prices.

Question 19

Consider the following: $$\begin{array} { l c c } 
\text { Item } & \text { Price/Last Year } & \text { Price/This Year } \
\hline \text { Hamburgers } & \$ 3.00 & \$ 4.00 \
\text { Movies } & \$ 5.00 & \$ 6.00 \
\hline
\end{array}$$ The relative price of hamburgers this year has

Accepted Answer

A) increased. 
B) decreased. 
C) stayed the same. 
D) Not enough information has been given to calculate an answer. 
A) increased. 
B) decreased. 
C) stayed the same. 
D) Not enough information has been given to calculate an answer.

Question 20

In 1950,a phone call at a pay phone cost 5 cents and a first-class stamp cost 3 cents.Today,those prices are 50 cents and 44 cents respectively.What has happened to the price of each good relative to the other? What has happened to the price of each good relative to all other goods?

Accepted Answer

The price of a phone call has decreased

Exam 3: Demand and Supply

If the price of an item can freely adjust,a market will

When a rise in the price of one item results in a decrease in the demand for another good,then the two goods are

A demand curve is a

Price per CD Quantity of DVDs Demanded per Month Quantity of DVDs Supplied per Month \ 20 500 9000 18 1000 6000 16 1500 4500 14 2000 3500 12 2500 2500 10 3000 1500 8 3500 800 6 4000 100 -According to the above table,the equilibrium price of DVDs is

Sarah gets a salary increase of 20 percent.Before her raise,she purchased 5 pounds of hamburger and 1 pound of beef stew a month.After her raise,she consumes 2 pounds of hamburger and 3 pounds of beef stew a month.If everything else is held constant,we know that

Suppliers will provide more of a good when

Scalping and other black market activities arise when

A significant increase in the price of tennis balls will most likely lead to

A demand curve represents a(n)

-Refer to the above figure.Which panel best demonstrates the demand curve?

-Refer to the above figure.Which of the following statements is true?

A movement along a supply curve is induced by a change in

-In a free market,the market price and quantity in the above figure will adjust to equilibrium values of

-According to the above figure,a shortage will occur at a price at which

An improvement in technology in the production of computers would

Which of the following would cause an increase in the market supply of mountain bikes?

-Refer to the above figure.Which of the following statements is true?

In economics,the meaning of demand refers to

Consider the following: Item Price/Last Year Price/This Year Hamburgers \ 3.00 \ 4.00 Movies \ 5.00 \ 6.00 The relative price of hamburgers this year has

In 1950,a phone call at a pay phone cost 5 cents and a first-class stamp cost 3 cents.Today,those prices are 50 cents and 44 cents respectively.What has happened to the price of each good relative to the other? What has happened to the price of each good relative to all other goods?

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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