Question 1

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. B

Question 2

Here's what we know about last year's weekly demand for 2-night DVD rentals in the Village of Harmony: When P = $3,Qd = 100;at P = $5,Qd = 75;and when P = $7,Qd = 50.This year the village population has increased by 25%.What impact is this most likely to have?

Accepted Answer

A) Each individual's demand for DVD rentals will increase. 
B) Each individual's demand curve for DVD rentals will shift to the left. 
C) The market demand curve for DVD rentals shifts left. 
D) The market demand for DVD rentals increases. 
A) Each individual's demand for DVD rentals will increase. 
B) Each individual's demand curve for DVD rentals will shift to the left. 
C) The market demand curve for DVD rentals shifts left. 
D) The market demand for DVD rentals increases. D

Question 3

Suppose that goods X and Y are substitutes and the price of good Y falls.We would then expect

Accepted Answer

A) the quantity of good Y demanded to increase and the demand for good X to increase also. 
B) an increase in the demand for good X and a decrease in the quantity of good Y demanded. 
C) an increase in the quantity demanded of good Y and a decrease in the demand for good X. 
D) an increase in the demand for both good X and good Y. 
A) the quantity of good Y demanded to increase and the demand for good X to increase also. 
B) an increase in the demand for good X and a decrease in the quantity of good Y demanded. 
C) an increase in the quantity demanded of good Y and a decrease in the demand for good X. 
D) an increase in the demand for both good X and good Y. C

Question 4

Given the market data for good X in the above table,an equilibrium quantity is established at

Accepted Answer

A) 90 units. 
B) 60 units. 
C) 30 units. 
D) 120 units. 
A) 90 units. 
B) 60 units. 
C) 30 units. 
D) 120 units.

Question 5

A direct or positive relationship between price and quantity supplied is

Accepted Answer

A) the market clearing price. 
B) a change in demand. 
C) a supply curve. 
D) a demand curve. 
A) the market clearing price. 
B) a change in demand. 
C) a supply curve. 
D) a demand curve.

Question 6

Which of the following best represents the law of demand?

Accepted Answer

A) As the price of a good decreases,the demand for the good increases. 
B) As the price of a good increases,the quantity demanded of that good decreases. 
C) As the demand for a good increases,the price of that good increases. 
D) As the price of a good decreases,the demand curve for that good shifts to the right. 
A) As the price of a good decreases,the demand for the good increases. 
B) As the price of a good increases,the quantity demanded of that good decreases. 
C) As the demand for a good increases,the price of that good increases. 
D) As the price of a good decreases,the demand curve for that good shifts to the right.

Question 7

In a free market economy,the market clearing (equilibrium)price in the above table would adjust to

Accepted Answer

A) $1. 
B) $3. 
C) $4. 
D) $5. 
A) $1. 
B) $3. 
C) $4. 
D) $5.

Question 8

Last year there were 6 pizza shops in town.This year there are only 4.Other things being equal,the decrease in the number of suppliers will

Accepted Answer

A) cause the market supply curve to shift to the right. 
B) increase the market demand for pizza. 
C) cause a decrease in the quantity supplied at each price. 
D) have no impact on market supply as long as the demand for pizza remains strong. 
A) cause the market supply curve to shift to the right. 
B) increase the market demand for pizza. 
C) cause a decrease in the quantity supplied at each price. 
D) have no impact on market supply as long as the demand for pizza remains strong.

Question 9

Suppose that the price of cornflakes is $3 per box and the price of oatmeal is $4.50 per box.Both boxes contain the same number of ounces of cereal.The relative price of cornflakes in terms of oatmeal is

Accepted Answer

A) 0.67. 
B) 1.0. 
C) 0.75. 
D) 1.50. 
A) 0.67. 
B) 1.0. 
C) 0.75. 
D) 1.50.

Question 10

In the above figure,a surplus exists in the gasoline market when the price is

Accepted Answer

A) $1/gallon. 
B) $2/gallon. 
C) $4/gallon. 
D) below $2/gallon. 
A) $1/gallon. 
B) $2/gallon. 
C) $4/gallon. 
D) below $2/gallon.

Question 11

Which of the following is a determinant of consumer demand?

Accepted Answer

A) Expectation of the future relative price of a product 
B) Taxes imposed on firms that sell the product 
C) Cost of inputs used to produce the product 
D) Number of firms that produce the product 
A) Expectation of the future relative price of a product 
B) Taxes imposed on firms that sell the product 
C) Cost of inputs used to produce the product 
D) Number of firms that produce the product

Question 12

An increase in price will lead to an increase in quantity supplied.This statement is

Accepted Answer

A) the law of supply. 
B) the law of demand. 
C) untrue always. 
D) a normative statement. 
A) the law of supply. 
B) the law of demand. 
C) untrue always. 
D) a normative statement.

Question 13

Briefly discuss the determinants of supply other than price.

Accepted Answer

An increase in the costs of inputs used

Question 14

A supply schedule

Accepted Answer

A) can be used to generate a supply curve. 
B) is a table reflecting the inverse relationship between price and quantity supplied. 
C) shows what happens to quantity supplied when price is held constant. 
D) all of the above. 
A) can be used to generate a supply curve. 
B) is a table reflecting the inverse relationship between price and quantity supplied. 
C) shows what happens to quantity supplied when price is held constant. 
D) all of the above.

Question 15

The law of demand shows that there is

Accepted Answer

A) an inverse relationship between price and profit. 
B) an inverse relationship between price and resource cost. 
C) an inverse relationship between price and quantity demanded. 
D) a direct relationship between price and quantity demanded. 
A) an inverse relationship between price and profit. 
B) an inverse relationship between price and resource cost. 
C) an inverse relationship between price and quantity demanded. 
D) a direct relationship between price and quantity demanded.

Question 16

The law of demand

Accepted Answer

A) is only an assumption that cannot be tested. 
B) only applies to necessities,not to luxuries. 
C) is supported by observations of human behavior in the marketplace. 
D) does not apply to scarce goods. 
A) is only an assumption that cannot be tested. 
B) only applies to necessities,not to luxuries. 
C) is supported by observations of human behavior in the marketplace. 
D) does not apply to scarce goods.

Question 17

-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 increased?

Accepted Answer

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

Question 18

Assuming that turkey,chicken,pork,and beef are substitutes,suppose that the price of turkey has fallen.This will,other things being equal

Accepted Answer

A) reduce demand for chicken,pork,and beef. 
B) leave demand for chicken,pork,and beef unchanged. 
C) increase demand for chicken,pork,and beef. 
D) increase quantity demanded of beef. 
A) reduce demand for chicken,pork,and beef. 
B) leave demand for chicken,pork,and beef unchanged. 
C) increase demand for chicken,pork,and beef. 
D) increase quantity demanded of beef.

Question 19

The money price of a good is also known as its

Accepted Answer

A) relative price. 
B) case price. 
C) absolute price. 
D) subjective price. 
A) relative price. 
B) case price. 
C) absolute price. 
D) subjective price.

Question 20

Which of the following is true of the activities of ticket scalpers?

Accepted Answer

A) These activities cannot generate profits for the scalpers unless ticket prices are currently below market clearing levels. 
B) These activities help reduce the quantities of excess tickets supplied for events in which ticket surpluses currently exist. 
C) Engaging in these activities enable scalpers to push the price above the market clearing level. 
D) Engaging in these activities enable scalpers to push the price below the market clearing level. 
A) These activities cannot generate profits for the scalpers unless ticket prices are currently below market clearing levels. 
B) These activities help reduce the quantities of excess tickets supplied for events in which ticket surpluses currently exist. 
C) Engaging in these activities enable scalpers to push the price above the market clearing level. 
D) Engaging in these activities enable scalpers to push the price below the market clearing level.

Two goods are substitutes when

Here's what we know about last year's weekly demand for 2-night DVD rentals in the Village of Harmony: When P = $3,Qd = 100;at P = $5,Qd = 75;and when P = $7,Qd = 50.This year the village population has increased by 25%.What impact is this most likely to have?

Suppose that goods X and Y are substitutes and the price of good Y falls.We would then expect

Given the market data for good X in the above table,an equilibrium quantity is established at

A direct or positive relationship between price and quantity supplied is

Which of the following best represents the law of demand?

In a free market economy,the market clearing (equilibrium)price in the above table would adjust to

Last year there were 6 pizza shops in town.This year there are only 4.Other things being equal,the decrease in the number of suppliers will

Suppose that the price of cornflakes is $3 per box and the price of oatmeal is $4.50 per box.Both boxes contain the same number of ounces of cereal.The relative price of cornflakes in terms of oatmeal is

In the above figure,a surplus exists in the gasoline market when the price is

Which of the following is a determinant of consumer demand?

An increase in price will lead to an increase in quantity supplied.This statement is

Briefly discuss the determinants of supply other than price.

A supply schedule

The law of demand shows that there is

The law of demand

-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 increased?

Assuming that turkey,chicken,pork,and beef are substitutes,suppose that the price of turkey has fallen.This will,other things being equal

The money price of a good is also known as its

Which of the following is true of the activities of ticket scalpers?

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

The Macroeconomy: Unemployment, inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 3: Demand and Supply

Two goods are substitutes when

Here's what we know about last year's weekly demand for 2-night DVD rentals in the Village of Harmony: When P = $3,Qd = 100;at P = $5,Qd = 75;and when P = $7,Qd = 50.This year the village population has increased by 25%.What impact is this most likely to have?

Suppose that goods X and Y are substitutes and the price of good Y falls.We would then expect

Given the market data for good X in the above table,an equilibrium quantity is established at

A direct or positive relationship between price and quantity supplied is

Which of the following best represents the law of demand?

In a free market economy,the market clearing (equilibrium)price in the above table would adjust to

Last year there were 6 pizza shops in town.This year there are only 4.Other things being equal,the decrease in the number of suppliers will

Suppose that the price of cornflakes is $3 per box and the price of oatmeal is $4.50 per box.Both boxes contain the same number of ounces of cereal.The relative price of cornflakes in terms of oatmeal is

In the above figure,a surplus exists in the gasoline market when the price is

Which of the following is a determinant of consumer demand?

An increase in price will lead to an increase in quantity supplied.This statement is

Briefly discuss the determinants of supply other than price.

A supply schedule

The law of demand shows that there is

The law of demand

-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 increased?

Assuming that turkey,chicken,pork,and beef are substitutes,suppose that the price of turkey has fallen.This will,other things being equal

The money price of a good is also known as its

Which of the following is true of the activities of ticket scalpers?

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

The Macroeconomy: Unemployment, inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters