Question 1

An increase in demand for a good can be caused by

Accepted Answer

A) a decrease in the price of a substitute good. 
B) a reduction in income if the good is a normal good. 
C) a decrease in the price of a complementary good. 
D) an increase in price of a complementary good. 
A) a decrease in the price of a substitute good. 
B) a reduction in income if the good is a normal good. 
C) a decrease in the price of a complementary good. 
D) an increase in price of a complementary good.

Question 2

State the law of supply and explain it.

Accepted Answer

The law of supply indicates the direct o

Question 3

A shift in the demand curve to the right represents

Accepted Answer

A) an increase in demand. 
B) a decrease in demand. 
C) an increase in quantity demanded. 
D) a decrease in quantity demanded. 
A) an increase in demand. 
B) a decrease in demand. 
C) an increase in quantity demanded. 
D) a decrease in quantity demanded.

Question 4

All of the following will cause the supply curve of good A to shift rightward EXCEPT

Accepted Answer

A) a reduction in the prices of inputs used to produce good A. 
B) an increase in the number of firms in the industry producing good A. 
C) a decrease in the per-unit tax on good A which producers must pay. 
D) an increase in the market price of good A. 
A) a reduction in the prices of inputs used to produce good A. 
B) an increase in the number of firms in the industry producing good A. 
C) a decrease in the per-unit tax on good A which producers must pay. 
D) an increase in the market price of good A.

Question 5

An increase in demand is shown graphically by

Accepted Answer

A) a shift of the demand curve to the left. 
B) a movement up along the existing curve. 
C) a shift of the demand curve to the right. 
D) a movement down the existing curve. 
A) a shift of the demand curve to the left. 
B) a movement up along the existing curve. 
C) a shift of the demand curve to the right. 
D) a movement down the existing curve.

Question 6

Jane has noticed that she used to pay $2 for coffee and now she pays $2.50.Which of the following statements is true?

Accepted Answer

A) The relative price of coffee has increased compared to tea. 
B) The money price of coffee has increased. 
C) The law of supply explains why the price of coffee has increased. 
D) Jane will stop consuming coffee. 
A) The relative price of coffee has increased compared to tea. 
B) The money price of coffee has increased. 
C) The law of supply explains why the price of coffee has increased. 
D) Jane will stop consuming coffee.

Question 7

If a bottled soft drink and bottled juice are substitutes,when the price of the bottled soft drink rises,

Accepted Answer

A) demand for bottled juice rises. 
B) demand for bottled juice falls. 
C) quantity of bottled juice demanded falls. 
D) quantity of bottled juice demanded rises. 
A) demand for bottled juice rises. 
B) demand for bottled juice falls. 
C) quantity of bottled juice demanded falls. 
D) quantity of bottled juice demanded rises.

Question 8

Two goods are substitutes when

Accepted Answer

A) an increase in the price of one reduces the demand for the other. 
B) an increase in the price of one raises the demand for the other. 
C) the two goods are used together. 
D) the two goods have the same price. 
A) an increase in the price of one reduces the demand for the other. 
B) an increase in the price of one raises the demand for the other. 
C) the two goods are used together. 
D) the two goods have the same price.

Question 9

-Refer to the above figure.Suppose that Cheerios and Apple Jacks are substitutes.Which diagram shows the effect on the demand for Cheerios when the price of Apple Jacks cereal has decreased?

Accepted Answer

A) A 
B) B 
C) neither graph 
D) both graphs 
A) A 
B) B 
C) neither graph 
D) both graphs

Question 10

In any given market,prices are determined by

Accepted Answer

A) specialization of labor. 
B) transactions costs. 
C) supply and demand. 
D) comparative advantage. 
A) specialization of labor. 
B) transactions costs. 
C) supply and demand. 
D) comparative advantage.

Question 11

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

Accepted Answer

A) resource prices. 
B) technology. 
C) producers' expectations. 
D) consumer's income. 
A) resource prices. 
B) technology. 
C) producers' expectations. 
D) consumer's income.

Question 12

Which one of the following statements is true?

Accepted Answer

A) If the money price of a good increases,its relative price necessarily increases. 
B) If the money price of a good increases,its relative price necessarily decreases. 
C) The relative price of a good refers to the opportunity cost of purchasing it. 
D) Rational consumers always ignore the monetary price of a good when deciding whether to buy it. 
A) If the money price of a good increases,its relative price necessarily increases. 
B) If the money price of a good increases,its relative price necessarily decreases. 
C) The relative price of a good refers to the opportunity cost of purchasing it. 
D) Rational consumers always ignore the monetary price of a good when deciding whether to buy it.

Question 13

When a shortage exists,

Accepted Answer

A) the price is below the market clearing price. 
B) quantity demanded exceeds quantity supplied. 
C) an excess quantity demanded exists. 
D) all of the above 
A) the price is below the market clearing price. 
B) quantity demanded exceeds quantity supplied. 
C) an excess quantity demanded exists. 
D) all of the above

Question 14

Equilibrium in a market occurs when

Accepted Answer

A) demand and supply indicate a small surplus of a good. 
B) price is at its minimum. 
C) quantity supplied and quantity demanded are equal at the market clearing price. 
D) the market price leads to a decrease in quantity demanded. 
A) demand and supply indicate a small surplus of a good. 
B) price is at its minimum. 
C) quantity supplied and quantity demanded are equal at the market clearing price. 
D) the market price leads to a decrease in quantity demanded.

Question 15

A decrease in demand would be represented by

Accepted Answer

A) the price of a good going from $3 to $4. 
B) an increase in the cost of resources used to produce the good. 
C) a movement along the demand curve. 
D) a shift of the demand curve to the left. 
A) the price of a good going from $3 to $4. 
B) an increase in the cost of resources used to produce the good. 
C) a movement along the demand curve. 
D) a shift of the demand curve to the left.

Question 16

State the law of demand and illustrate it.Explain what is meant by the term "price" in the law of demand.

Accepted Answer

The law of demand states that when the p

Question 17

A shortage creates a situation that forces prices to ________ while a surplus creates a situation that forces prices to ________.

Accepted Answer

A) decrease; increase 
B) decrease; decrease 
C) increase; decrease 
D) increase; increase 
A) decrease; increase 
B) decrease; decrease 
C) increase; decrease 
D) increase; increase

Question 18

If the price of butter increases,the demand for margarine

Accepted Answer

A) will be unchanged. 
B) will shift outward. 
C) will shift inward. 
D) will kink into an S-curve. 
A) will be unchanged. 
B) will shift outward. 
C) will shift inward. 
D) will kink into an S-curve.

Question 19

If Apple's iTunes Music Store increases its "fee" for its music downloads,the law of demand predicts that

Accepted Answer

A) the number of iTunes music downloads would increase. 
B) there would be no change in the demand for iTunes music downloads. 
C) the number of iTunes music downloads would decrease. 
D) iTunes music supply would change but demand would not. 
A) the number of iTunes music downloads would increase. 
B) there would be no change in the demand for iTunes music downloads. 
C) the number of iTunes music downloads would decrease. 
D) iTunes music supply would change but demand would not.

Question 20

In order to increase the supply of a good,producers must

Accepted Answer

A) convince consumers to reduce the quantity demanded. 
B) see an increase in quantity supplied by competitors. 
C) reduce their per-unit costs of producing the good. 
D) cut back on labor to reduce production costs. 
A) convince consumers to reduce the quantity demanded. 
B) see an increase in quantity supplied by competitors. 
C) reduce their per-unit costs of producing the good. 
D) cut back on labor to reduce production costs.

Exam 3: Demand and Supply

An increase in demand for a good can be caused by

State the law of supply and explain it.

A shift in the demand curve to the right represents

All of the following will cause the supply curve of good A to shift rightward EXCEPT

An increase in demand is shown graphically by

Jane has noticed that she used to pay $2 for coffee and now she pays $2.50.Which of the following statements is true?

If a bottled soft drink and bottled juice are substitutes,when the price of the bottled soft drink rises,

Two goods are substitutes when

-Refer to the above figure.Suppose that Cheerios and Apple Jacks are substitutes.Which diagram shows the effect on the demand for Cheerios when the price of Apple Jacks cereal has decreased?

In any given market,prices are determined by

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

Which one of the following statements is true?

When a shortage exists,

Equilibrium in a market occurs when

A decrease in demand would be represented by

State the law of demand and illustrate it.Explain what is meant by the term "price" in the law of demand.

A shortage creates a situation that forces prices to ________ while a surplus creates a situation that forces prices to ________.

If the price of butter increases,the demand for margarine

If Apple's iTunes Music Store increases its "fee" for its music downloads,the law of demand predicts that

In order to increase the supply of a good,producers must

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

A shortage creates a situation that forces prices to while a surplus creates a situation that forces prices to .