Question 1

Which of the following will increase the demand for a normal good?

Accepted Answer

A) A decrease in the number of consumers 
B) A decrease in the price of a substitute 
C) An increase in consumer income 
D) An increase in the price of a complement 
E) An increase in the demand for a substitute 
A) A decrease in the number of consumers 
B) A decrease in the price of a substitute 
C) An increase in consumer income 
D) An increase in the price of a complement 
E) An increase in the demand for a substitute

Question 2

Suppose demand and supply in a market can be expressed by these equations:
QD = 40 - 0.5P
QS = 15 + 2P
Calculate the equilibrium price and quantity.

Accepted Answer

To calculate equilibrium price

Question 3

The demand curve is a relationship between the price of a good and the quantity consumers are willing to buy at that price.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following causes a leftward shift of the supply curve?

Accepted Answer

A) An increase in the number of producers 
B) An increase in the cost of production 
C) A government subsidy on production 
D) An increase in the price of the good being sold 
E) An improvement in production technology 
A) An increase in the number of producers 
B) An increase in the cost of production 
C) A government subsidy on production 
D) An increase in the price of the good being sold 
E) An improvement in production technology

Question 5

Suppose more firms enter the computer market.What will happen to demand,quantity demanded,supply,and quantity supplied as a result of this market change?

Accepted Answer

Supply increases but demand do

Question 6

Exhibit 3-1  
-Consider the market represented by the schedule in Exhibit 3-1.At a price of $2 per unit,

Accepted Answer

A) the quantity purchased is 1,000 units. 
B) there will be a tendency for the price to decrease. 
C) there is a surplus of 300 units. 
D) the quantity sold is 350 units. 
E) the quantity purchased equals the quantity sold. 
A) the quantity purchased is 1,000 units. 
B) there will be a tendency for the price to decrease. 
C) there is a surplus of 300 units. 
D) the quantity sold is 350 units. 
E) the quantity purchased equals the quantity sold.

Question 7

A higher price leads to a leftward shift of the demand curve.

Accepted Answer

A) True 
 B)False

Question 8

For each of the following markets,indicate whether the stated change causes a shift in the supply curve,a shift in the demand curve,a movement along the supply curve,and/or a movement along the demand curve.
(A)The housing market: consumers' incomes fall.
(B)The tea market: there is an increase in the production in India.
(C)The coffee market: the price of cream goes up.
(D)The fast-food market: the number of consumers in an area decreases.
(E)The gasoline market: government regulations raise production costs.

Accepted Answer

(A) Shift in the demand for housing; mov

Question 9

Why does the law of demand hold?

Accepted Answer

First,when price rises,real income,or sp

Question 10

A surplus occurs when there is excess supply.

Accepted Answer

A) True 
 B)False

Question 11

If the equilibrium quantity decreases while the equilibrium price increases,which of the following is the most likely reason?

Accepted Answer

A) Supply increases while demand decreases. 
B) Supply increases while demand does not change. 
C) Both supply and demand increase. 
D) Both supply and demand decrease. 
E) Neither supply nor demand changes. 
A) Supply increases while demand decreases. 
B) Supply increases while demand does not change. 
C) Both supply and demand increase. 
D) Both supply and demand decrease. 
E) Neither supply nor demand changes.

Question 12

Which of the following would not affect the supply of automobiles?

Accepted Answer

A) A decrease in the number of automobile producers 
B) An increase in the price of steel 
C) An increase in the productivity of workers 
D) An increase in the price of motor oil 
E) An improvement in the technology of automobile manufacturing 
A) A decrease in the number of automobile producers 
B) An increase in the price of steel 
C) An increase in the productivity of workers 
D) An increase in the price of motor oil 
E) An improvement in the technology of automobile manufacturing

Question 13

If an increase in the price of product X causes an increase in the demand for product Y,we can conclude that

Accepted Answer

A) they are inferior goods. 
B) the price of Y will decrease. 
C) they are complements. 
D) they are substitutes. 
E) the quantity supplied for Y will decrease. 
A) they are inferior goods. 
B) the price of Y will decrease. 
C) they are complements. 
D) they are substitutes. 
E) the quantity supplied for Y will decrease.

Question 14

Exhibit 3-4  
-Refer to Exhibit 3-4.If S1 and D1 are the original supply and demand curves and,ceteris paribus,demand shifts to D2,

Accepted Answer

A) the quantity supplied increases from Q3 to Q4. 
B) the quantity supplied increases from Q2 to Q3. 
C) supply decreases from Q3 to Q2. 
D) the quantity supplied increases from Q2 to Q4. 
E) the quantity demanded increases from Q3 to Q2. 
A) the quantity supplied increases from Q3 to Q4. 
B) the quantity supplied increases from Q2 to Q3. 
C) supply decreases from Q3 to Q2. 
D) the quantity supplied increases from Q2 to Q4. 
E) the quantity demanded increases from Q3 to Q2.

Question 15

Exhibit 3-3  
-Refer to Exhibit 3-3.If the price in this market is $9,

Accepted Answer

A) equilibrium is achieved because producers are able to sell all that they make available in the market. 
B) price will rise because consumers want to buy more than producers are willing to sell. 
C) quantity supplied exceeds the quantity demanded. 
D) price will fall because consumers will not buy as much as producers are willing to sell. 
E) producers are unable to sell all that they are willing to sell. 
A) equilibrium is achieved because producers are able to sell all that they make available in the market. 
B) price will rise because consumers want to buy more than producers are willing to sell. 
C) quantity supplied exceeds the quantity demanded. 
D) price will fall because consumers will not buy as much as producers are willing to sell. 
E) producers are unable to sell all that they are willing to sell.

Question 16

An increase in supply and demand at the same time will always result in a higher equilibrium market price.

Accepted Answer

A) True 
 B)False

Question 17

The supply curve represents the relationship between the quantities of a good that sellers are willing and able to supply and different prices of that good.

Accepted Answer

A) True 
 B)False

Question 18

Suppose demand is represented by the following equation:
QD = 1000 - 0.8P
Write a different equation that illustrates a decrease in demand relative to the original equation.

Accepted Answer

Q<sub>D</sub> = 500

Question 19

When both supply and demand shift right at the same time,

Accepted Answer

A) the change in equilibrium price cannot be predicted,but the change in equilibrium quantity can be predicted. 
B) the change in both equilibrium price and equilibrium quantity can be predicted. 
C) the change in equilibrium price can be predicted,but the change in equilibrium quantity cannot be predicted. 
D) neither the change in equilibrium price nor equilibrium quantity can be predicted. 
E) either the equilibrium price or equilibrium quantity will change,but not both. 
A) the change in equilibrium price cannot be predicted,but the change in equilibrium quantity can be predicted. 
B) the change in both equilibrium price and equilibrium quantity can be predicted. 
C) the change in equilibrium price can be predicted,but the change in equilibrium quantity cannot be predicted. 
D) neither the change in equilibrium price nor equilibrium quantity can be predicted. 
E) either the equilibrium price or equilibrium quantity will change,but not both.

Question 20

As a result of an increase in both supply and demand,the equilibrium price decreases while the equilibrium quantity increases.

Accepted Answer

A) True 
 B)False

Exam 3: The Supply and Demand Model

Which of the following will increase the demand for a normal good?

Suppose demand and supply in a market can be expressed by these equations: QD = 40 - 0.5P QS = 15 + 2P Calculate the equilibrium price and quantity.

The demand curve is a relationship between the price of a good and the quantity consumers are willing to buy at that price.

Which of the following causes a leftward shift of the supply curve?

Suppose more firms enter the computer market.What will happen to demand,quantity demanded,supply,and quantity supplied as a result of this market change?

Exhibit 3-1 -Consider the market represented by the schedule in Exhibit 3-1.At a price of $2 per unit,

A higher price leads to a leftward shift of the demand curve.

Why does the law of demand hold?

A surplus occurs when there is excess supply.

If the equilibrium quantity decreases while the equilibrium price increases,which of the following is the most likely reason?

Which of the following would not affect the supply of automobiles?

If an increase in the price of product X causes an increase in the demand for product Y,we can conclude that

Exhibit 3-4 -Refer to Exhibit 3-4.If S1 and D1 are the original supply and demand curves and,ceteris paribus,demand shifts to D2,

Exhibit 3-3 -Refer to Exhibit 3-3.If the price in this market is $9,

An increase in supply and demand at the same time will always result in a higher equilibrium market price.

The supply curve represents the relationship between the quantities of a good that sellers are willing and able to supply and different prices of that good.

Suppose demand is represented by the following equation: QD = 1000 - 0.8P Write a different equation that illustrates a decrease in demand relative to the original equation.

When both supply and demand shift right at the same time,

As a result of an increase in both supply and demand,the equilibrium price decreases while the equilibrium quantity increases.

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 Calculate the equilibrium price and quantity.

Exhibit 3-4 -Refer to Exhibit 3-4.If S₁ and D₁ are the original supply and demand curves and,ceteris paribus,demand shifts to D₂,

Suppose demand is represented by the following equation: Q_D = 1000 - 0.8P Write a different equation that illustrates a decrease in demand relative to the original equation.