Question 1

If a drought in Florida reduces the amount of oranges grown,then

Accepted Answer

A) the demand curve of Florida oranges shifts to the left. 
B) the demand curve of Florida oranges shifts to the right. 
C) the supply curve of Florida oranges shifts to the left. 
D) the supply curve of Florida oranges shifts to the right. 
E) both the supply and demand curve of Florida oranges shift to the right. 
A) the demand curve of Florida oranges shifts to the left. 
B) the demand curve of Florida oranges shifts to the right. 
C) the supply curve of Florida oranges shifts to the left. 
D) the supply curve of Florida oranges shifts to the right. 
E) both the supply and demand curve of Florida oranges shift to the right.

Question 2

A market is in equilibrium

Accepted Answer

A) when the government imposes price controls. 
B) when the price is low. 
C) where the demand and supply curves intersect. 
D) when the price is high. 
E) when equilibrium price equals equilibrium quantity. 
A) when the government imposes price controls. 
B) when the price is low. 
C) where the demand and supply curves intersect. 
D) when the price is high. 
E) when equilibrium price equals equilibrium quantity.

Question 3

The principle that consumers tend to buy less of a good or service when its price increases,all else held equal,is called the law of

Accepted Answer

A) preferences. 
B) increasing cost. 
C) demand. 
D) supply. 
E) maximum satisfaction. 
A) preferences. 
B) increasing cost. 
C) demand. 
D) supply. 
E) maximum satisfaction.

Question 4

According to the law of demand,the price of a product increases when the quantity demanded increases.

Accepted Answer

A) True 
 B)False

Question 5

Suppose a decrease in consumers' incomes causes a decrease in the demand for chicken and an increase in the demand for potatoes.Which good is inferior and which good is normal? How will the equilibrium price and equilibrium quantity change for each good?

Accepted Answer

In this case,chicken is a normal good an

Question 6

A demand curve represents the relationship between consumer income and the quantity demanded.

Accepted Answer

A) True 
 B)False

Question 7

According to the law of demand,one way to reduce the amount of tobacco consumption is to

Accepted Answer

A) lower the price of tobacco. 
B) raise the price of tobacco. 
C) subsidize users of tobacco. 
D) subsidize treatments of diseases related to tobacco consumption. 
E) make tobacco consumption illegal. 
A) lower the price of tobacco. 
B) raise the price of tobacco. 
C) subsidize users of tobacco. 
D) subsidize treatments of diseases related to tobacco consumption. 
E) make tobacco consumption illegal.

Question 8

A demand curve is always flat.

Accepted Answer

A) True 
 B)False

Question 9

Exhibit 3-3  
-Refer to Exhibit 3-3.If the price is $27,

Accepted Answer

A) producers are willing to produce a maximum of 32 units. 
B) there is an equilibrium. 
C) there is a tendency for price to rise. 
D) consumers are willing to buy as much as 25 units. 
E) there is a shortage of 30 units. 
A) producers are willing to produce a maximum of 32 units. 
B) there is an equilibrium. 
C) there is a tendency for price to rise. 
D) consumers are willing to buy as much as 25 units. 
E) there is a shortage of 30 units.

Question 10

Suppose in a financial crisis,major automakers reduce their production of autos while consumers reduce their demand for autos.We can conclude with certainty that in the market of autos,

Accepted Answer

A) both the equilibrium price and equilibrium quantity will increase. 
B) the equilibrium price will decrease and the equilibrium quantity will increase. 
C) the equilibrium price will decrease,but the equilibrium quantity will increase,decrease or remain unchanged. 
D) the equilibrium quantity will decrease,but the equilibrium price will increase,decrease or remain unchanged. 
E) both the equilibrium price and equilibrium quantity will decrease. 
A) both the equilibrium price and equilibrium quantity will increase. 
B) the equilibrium price will decrease and the equilibrium quantity will increase. 
C) the equilibrium price will decrease,but the equilibrium quantity will increase,decrease or remain unchanged. 
D) the equilibrium quantity will decrease,but the equilibrium price will increase,decrease or remain unchanged. 
E) both the equilibrium price and equilibrium quantity will decrease.

Question 11

If a technological improvement took place in the computer industry,we would expect to see the equilibrium price of computers to

Accepted Answer

A) increase and the quantity of computers sold to decrease. 
B) decrease and the quantity of computers sold to increase. 
C) decrease and the quantity of computers sold to decrease. 
D) increase and the quantity of computers sold to increase. 
E) increase and the quantity of computers sold to stay the same. 
A) increase and the quantity of computers sold to decrease. 
B) decrease and the quantity of computers sold to increase. 
C) decrease and the quantity of computers sold to decrease. 
D) increase and the quantity of computers sold to increase. 
E) increase and the quantity of computers sold to stay the same.

Question 12

If the government decides to pay producers of houses $2,000 for every house they produce,

Accepted Answer

A) the opportunity cost of producing a house will fall. 
B) demand for housing will increase. 
C) housing will no longer be scarce. 
D) consumers will buy more houses,even if the price does not fall. 
E) producers will be willing to build more houses,even if the price does not rise. 
A) the opportunity cost of producing a house will fall. 
B) demand for housing will increase. 
C) housing will no longer be scarce. 
D) consumers will buy more houses,even if the price does not fall. 
E) producers will be willing to build more houses,even if the price does not rise.

Question 13

Which of the following causes a movement along the demand curve for apples?

Accepted Answer

A) Consumers expect an increase in the price of apples. 
B) Consumer income decreases. 
C) The price of apples increases. 
D) The price of oranges decreases. 
E) The supply of apples increases. 
A) Consumers expect an increase in the price of apples. 
B) Consumer income decreases. 
C) The price of apples increases. 
D) The price of oranges decreases. 
E) The supply of apples increases.

Question 14

The demand for goods sold in Dollar Stores increases when consumer incomes fall in a recession.We can conclude that goods sold in Dollar Stores

Accepted Answer

A) are normal goods. 
B) are luxury goods. 
C) are inferior goods. 
D) are complements of goods sold in department stores. 
E) have no substitutes. 
A) are normal goods. 
B) are luxury goods. 
C) are inferior goods. 
D) are complements of goods sold in department stores. 
E) have no substitutes.

Question 15

A price at which quantity demanded equals quantity supplied

Accepted Answer

A) will cause a shift in demand. 
B) is an equilibrium price. 
C) could not possibly exist in the short run. 
D) is below the equilibrium price. 
E) is above the equilibrium price. 
A) will cause a shift in demand. 
B) is an equilibrium price. 
C) could not possibly exist in the short run. 
D) is below the equilibrium price. 
E) is above the equilibrium price.

Question 16

Suppose demand and supply in a market can be expressed by these equations:
QD = 40 - 0.5P
QS = 15 + 2P
If the prevailing market price is $14,what are the quantity demanded and the quantity supplied?

Accepted Answer

Substitute 14 for P in each eq

Question 17

When economists say that the demand for a product has decreased,they mean that

Accepted Answer

A) consumers are going to purchase less at any given price. 
B) the price has increased and consumers will purchase less of the product. 
C) the demand curve has shifted to the right. 
D) the product has become more abundant and consumers therefore want it less. 
E) consumers would be willing to pay less to receive the same quantity. 
A) consumers are going to purchase less at any given price. 
B) the price has increased and consumers will purchase less of the product. 
C) the demand curve has shifted to the right. 
D) the product has become more abundant and consumers therefore want it less. 
E) consumers would be willing to pay less to receive the same quantity.

Question 18

Suppose it becomes a common belief among consumers that the current cotton crop falls because of a drought,the price of cotton clothing will rise greatly next year.Then in the current market for cotton clothing,the

Accepted Answer

A) equilibrium price will fall and the equilibrium quantity will rise. 
B) equilibrium price and equilibrium quantity will increase as demand increases. 
C) equilibrium price and equilibrium quantity will decrease as demand increases. 
D) demand for cotton clothing will decrease as consumers search for alternatives. 
E) equilibrium price will rise and the equilibrium quantity will fall. 
A) equilibrium price will fall and the equilibrium quantity will rise. 
B) equilibrium price and equilibrium quantity will increase as demand increases. 
C) equilibrium price and equilibrium quantity will decrease as demand increases. 
D) demand for cotton clothing will decrease as consumers search for alternatives. 
E) equilibrium price will rise and the equilibrium quantity will fall.

Question 19

Exhibit 3-4  
-Refer to Exhibit 3-4.If S1 and D1 are the original supply and demand curves and they shift to S2 and D2,respectively,then the new equilibrium price and quantity will be

Accepted Answer

A) P2 and Q4. 
B) P4 and Q2. 
C) P1 and Q3. 
D) P3 and Q1. 
E) P4 and Q1. 
A) P2 and Q4. 
B) P4 and Q2. 
C) P1 and Q3. 
D) P3 and Q1. 
E) P4 and Q1.

Question 20

If incomes increase,then the ____ in the market for luxury cars as normal goods ____.

Accepted Answer

A) supply; decreases 
B) supply; increases 
C) demand; increases 
D) demand; decreases 
E) both supply and demand; increase 
A) supply; decreases 
B) supply; increases 
C) demand; increases 
D) demand; decreases 
E) both supply and demand; increase

Exam 3: The Supply and Demand Model

If a drought in Florida reduces the amount of oranges grown,then

A market is in equilibrium

The principle that consumers tend to buy less of a good or service when its price increases,all else held equal,is called the law of

According to the law of demand,the price of a product increases when the quantity demanded increases.

Suppose a decrease in consumers' incomes causes a decrease in the demand for chicken and an increase in the demand for potatoes.Which good is inferior and which good is normal? How will the equilibrium price and equilibrium quantity change for each good?

A demand curve represents the relationship between consumer income and the quantity demanded.

According to the law of demand,one way to reduce the amount of tobacco consumption is to

A demand curve is always flat.

Exhibit 3-3 -Refer to Exhibit 3-3.If the price is $27,

Suppose in a financial crisis,major automakers reduce their production of autos while consumers reduce their demand for autos.We can conclude with certainty that in the market of autos,

If a technological improvement took place in the computer industry,we would expect to see the equilibrium price of computers to

If the government decides to pay producers of houses $2,000 for every house they produce,

Which of the following causes a movement along the demand curve for apples?

The demand for goods sold in Dollar Stores increases when consumer incomes fall in a recession.We can conclude that goods sold in Dollar Stores

A price at which quantity demanded equals quantity supplied

Suppose demand and supply in a market can be expressed by these equations: QD = 40 - 0.5P QS = 15 + 2P If the prevailing market price is $14,what are the quantity demanded and the quantity supplied?

When economists say that the demand for a product has decreased,they mean that

Suppose it becomes a common belief among consumers that the current cotton crop falls because of a drought,the price of cotton clothing will rise greatly next year.Then in the current market for cotton clothing,the

Exhibit 3-4 -Refer to Exhibit 3-4.If S1 and D1 are the original supply and demand curves and they shift to S2 and D2,respectively,then the new equilibrium price and quantity will be

If incomes increase,then the ____ in the market for luxury cars as normal goods ____.

The Central Idea

Observing and Explaining the Economy

Subtleties of the Supply and Demand Model: Price Floors,price Ceilings,and Elasticity

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Interaction of People in Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, transfers, and Income Distribution

Public Goods, externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth and Globalization

International Trade

International Finance

Reading,understanding,and Creating Graphs

Consumer Theory With Indifference Curves

Producer Theory With Isoquants

Present Discounted Value

The Miracle of Compound Growth

Deriving the Growth Accounting Formula

Deriving the Formula for the Keynesian Multiplier and the Forward-Looking Consumption Model

Filters

Suppose demand and supply in a market can be expressed by these equations: Q_D = 40 - 0.5P Q_S = 15 + 2P If the prevailing market price is $14,what are the quantity demanded and the quantity supplied?

Exhibit 3-4 -Refer to Exhibit 3-4.If S₁ and D₁ are the original supply and demand curves and they shift to S₂ and D₂,respectively,then the new equilibrium price and quantity will be

If incomes increase,then the in the market for luxury cars as normal goods .