Question 1

The principle that producers sell more of a good or service when the price increases,all else held equal,is called the law of

Accepted Answer

A) increasing profit. 
B) supply. 
C) demand. 
D) opportunity cost. 
E) reduced real income. 
A) increasing profit. 
B) supply. 
C) demand. 
D) opportunity cost. 
E) reduced real income.

Question 2

Suppose you observe that taxi fares per trip increased when more commuters took taxis.Which of the following is the best possible explanation?

Accepted Answer

A) The law of demand was violated. 
B) The law of supply was violated. 
C) The price of gasoline went up. 
D) People were irrational. 
E) Commuters did not have any choice. 
A) The law of demand was violated. 
B) The law of supply was violated. 
C) The price of gasoline went up. 
D) People were irrational. 
E) Commuters did not have any choice.

Question 3

When there is an increase in quantity supplied,

Accepted Answer

A) producers are forced to supply more by government mandate. 
B) producers are displaying a decreased willingness to produce because price has risen. 
C) technology must have improved. 
D) there must have been an increase in output price,ceteris paribus. 
E) consumers are unlikely to buy the additional product. 
A) producers are forced to supply more by government mandate. 
B) producers are displaying a decreased willingness to produce because price has risen. 
C) technology must have improved. 
D) there must have been an increase in output price,ceteris paribus. 
E) consumers are unlikely to buy the additional product.

Question 4

When consumers expect the price of a good to go down in the future,demand will

Accepted Answer

A) decrease in the future. 
B) decrease today. 
C) increase in the future. 
D) not change. 
E) increase today. 
A) decrease in the future. 
B) decrease today. 
C) increase in the future. 
D) not change. 
E) increase today.

Question 5

Suppose the price of beer fall in your city while police officers more strictly enforce the no drink-and-drive policy.Which of the following is the best explanation?
(A)Less beer is being supplied locally.
(B)Police arrests are reducing beer consumption.
(C)Police arrests are closing more stores that sell beer.

Accepted Answer

The best explanation is (B)bec

Question 6

For each of the following four sentences,determine whether the terminology of the supply and demand model is used correctly.
(A)"Pizza prices increased; therefore,the demand for pizza went down."
(B)"The demand for pizza increased; therefore,the price went up."
(C)"Pizza prices fell,decreasing the supply of pizza."
(D)"The supply of pizza increased; therefore,pizza prices declined."

Accepted Answer

Statement (A)is not correct because high

Question 7

A supply schedule is a

Accepted Answer

A) table of prices and quantities people are willing to sell at each price. 
B) graph of prices and quantities supplied. 
C) graph of costs and associated quantities supplied. 
D) table of prices and quantities people are willing to buy at each price. 
E) graph of prices and revenues. 
A) table of prices and quantities people are willing to sell at each price. 
B) graph of prices and quantities supplied. 
C) graph of costs and associated quantities supplied. 
D) table of prices and quantities people are willing to buy at each price. 
E) graph of prices and revenues.

Question 8

What is the principle that explains the relationship between price and quantity demanded?

Accepted Answer

The answer of What is the principle that explains the...

Question 9

If the price of ice cream decreases,then the

Accepted Answer

A) quantity demanded for ice cream will increase. 
B) demand for ice cream will decrease. 
C) demand for ice cream will increase. 
D) quantity demanded for ice cream will decrease. 
E) supply of ice cream will decrease. 
A) quantity demanded for ice cream will increase. 
B) demand for ice cream will decrease. 
C) demand for ice cream will increase. 
D) quantity demanded for ice cream will decrease. 
E) supply of ice cream will decrease.

Question 10

The positive relationship between price and quantity supplied,other things being equal,is considered to be

Accepted Answer

A) universally true for all markets. 
B) never true in heavily regulated markets. 
C) sometimes true in all markets. 
D) true only in market-based economies. 
E) true only when consumers act irrationally. 
A) universally true for all markets. 
B) never true in heavily regulated markets. 
C) sometimes true in all markets. 
D) true only in market-based economies. 
E) true only when consumers act irrationally.

Question 11

If the demand curve for product J shifts to the left as the price of product K increases,then J and K are complementary goods.

Accepted Answer

A) True 
 B)False

Question 12

Market equilibrium is determined by

Accepted Answer

A) the producers in the market. 
B) the largest consumers in the market. 
C) all producers and consumers together. 
D) the consumers in the market. 
E) the largest firms in the market. 
A) the producers in the market. 
B) the largest consumers in the market. 
C) all producers and consumers together. 
D) the consumers in the market. 
E) the largest firms in the market.

Question 13

The typical slope of a demand curve

Accepted Answer

A) is positive. 
B) is negative. 
C) is zero. 
D) is infinity. 
E) depends on factors such as income and consumer expectations. 
A) is positive. 
B) is negative. 
C) is zero. 
D) is infinity. 
E) depends on factors such as income and consumer expectations.

Question 14

As a result of an increase in supply,ceteris paribus,the equilibrium price decreases and the equilibrium quantity increases.

Accepted Answer

A) True 
 B)False

Question 15

A market equilibrium predicts both the price and quantity bought and sold in a market.

Accepted Answer

A) True 
 B)False

Question 16

Exhibit 3-4  
-Refer to Exhibit 3-4.If S2 and D2 are the original supply and demand curves and,ceteris paribus,supply shifts to S1,

Accepted Answer

A) the quantity demanded decreases from Q4 to Q2. 
B) supply decreases. 
C) the quantity demanded increases from Q2 to Q4. 
D) the quantity supplied increases from Q3 to Q4. 
E) the equilibrium price falls from P2 to P1. 
A) the quantity demanded decreases from Q4 to Q2. 
B) supply decreases. 
C) the quantity demanded increases from Q2 to Q4. 
D) the quantity supplied increases from Q3 to Q4. 
E) the equilibrium price falls from P2 to P1.

Question 17

Suppose that Sunny D is an inferior good.Which of the following is true given an increase in consumer income?

Accepted Answer

A) An upward movement along the demand curve of Sunny D 
B) A downward movement along the demand curve of Sunny D 
C) A leftward shift in the demand curve of Sunny D 
D) A rightward shift in the demand curve of Sunny D 
E) No change in the demand curve of Sunny D 
A) An upward movement along the demand curve of Sunny D 
B) A downward movement along the demand curve of Sunny D 
C) A leftward shift in the demand curve of Sunny D 
D) A rightward shift in the demand curve of Sunny D 
E) No change in the demand curve of Sunny D

Question 18

Peanut butter and jelly are complements so that if the price of peanut butter increases,the

Accepted Answer

A) quantity demanded for jelly increases. 
B) quantity demanded for jelly decreases. 
C) demand for jelly increases. 
D) demand for jelly decreases. 
E) demand for jelly remains the same. 
A) quantity demanded for jelly increases. 
B) quantity demanded for jelly decreases. 
C) demand for jelly increases. 
D) demand for jelly decreases. 
E) demand for jelly remains the same.

Question 19

When incomes are rising,new car sales increase while used car sales decrease.This indicates that

Accepted Answer

A) used cars and new cars are both normal goods. 
B) used cars are inferior goods and new cars are normal goods. 
C) used cars and new cars are complements. 
D) used cars and new cars are substitutes. 
E) used cars are normal goods and new cars are inferior goods. 
A) used cars and new cars are both normal goods. 
B) used cars are inferior goods and new cars are normal goods. 
C) used cars and new cars are complements. 
D) used cars and new cars are substitutes. 
E) used cars are normal goods and new cars are inferior goods.

Question 20

The supply curve

Accepted Answer

A) has quantity produced on the vertical axis. 
B) is a graph of a supply schedule. 
C) represents production quotas. 
D) sometimes slopes downward. 
E) is always a straight line. 
A) has quantity produced on the vertical axis. 
B) is a graph of a supply schedule. 
C) represents production quotas. 
D) sometimes slopes downward. 
E) is always a straight line.

Exam 3: The Supply and Demand Model

The principle that producers sell more of a good or service when the price increases,all else held equal,is called the law of

Suppose you observe that taxi fares per trip increased when more commuters took taxis.Which of the following is the best possible explanation?

When there is an increase in quantity supplied,

When consumers expect the price of a good to go down in the future,demand will

A supply schedule is a

What is the principle that explains the relationship between price and quantity demanded?

If the price of ice cream decreases,then the

The positive relationship between price and quantity supplied,other things being equal,is considered to be

If the demand curve for product J shifts to the left as the price of product K increases,then J and K are complementary goods.

Market equilibrium is determined by

The typical slope of a demand curve

As a result of an increase in supply,ceteris paribus,the equilibrium price decreases and the equilibrium quantity increases.

A market equilibrium predicts both the price and quantity bought and sold in a market.

Exhibit 3-4 -Refer to Exhibit 3-4.If S2 and D2 are the original supply and demand curves and,ceteris paribus,supply shifts to S1,

Suppose that Sunny D is an inferior good.Which of the following is true given an increase in consumer income?

Peanut butter and jelly are complements so that if the price of peanut butter increases,the

When incomes are rising,new car sales increase while used car sales decrease.This indicates that

The supply curve

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

Exhibit 3-4 -Refer to Exhibit 3-4.If S₂ and D₂ are the original supply and demand curves and,ceteris paribus,supply shifts to S₁,