Question 1

Given a market equilibrium point,explain,using the concepts of demand and supply,how it is achieved.

Accepted Answer

Market equilibrium occurs at the point a

Question 2

The law of supply implies that the supply curve is

Accepted Answer

A) flat. 
B) upward sloping. 
C) downward sloping. 
D) vertical. 
A) flat. 
B) upward sloping. 
C) downward sloping. 
D) vertical.

Question 3

Which of the following situations could generate a shortage?

Accepted Answer

A) Demand for a good increases,resulting in a new higher market clearing price. 
B) Demand for a good decreases,resulting in a new lower market clearing price. 
C) Demand for a good increases,but the price is not permitted to rise. 
D) Demand for a good decreases,but the price is not permitted to fall. 
A) Demand for a good increases,resulting in a new higher market clearing price. 
B) Demand for a good decreases,resulting in a new lower market clearing price. 
C) Demand for a good increases,but the price is not permitted to rise. 
D) Demand for a good decreases,but the price is not permitted to fall.

Question 4

-According to the above table,the equilibrium price of DVDs is

Accepted Answer

A) $16. 
B) $14. 
C) $12. 
D) $10. 
A) $16. 
B) $14. 
C) $12. 
D) $10.

Question 5

Mary increases her consumption of Good X after the price of Good Y decreased.For Mary

Accepted Answer

A) Good X and Good Y are substitutes. 
B) Good X and Good Y are complements. 
C) Good X is an inferior good. 
D) Good Y is an inferior good. 
A) Good X and Good Y are substitutes. 
B) Good X and Good Y are complements. 
C) Good X is an inferior good. 
D) Good Y is an inferior good.

Question 6

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

Accepted Answer

A) the price of that good in the law of demand. 
B) consumers' income. 
C) consumers' tastes and preferences. 
D) the number of potential buyers. 
A) the price of that good in the law of demand. 
B) consumers' income. 
C) consumers' tastes and preferences. 
D) the number of potential buyers.

Question 7

The price of a commodity in terms of another commodity is

Accepted Answer

A) the law of demand. 
B) a substitute. 
C) the money price. 
D) the relative price. 
A) the law of demand. 
B) a substitute. 
C) the money price. 
D) the relative price.

Question 8

-Refer to the above figure.At a price of two cents,the quantity of bubble gum demanded will be

Accepted Answer

A) 3. 
B) 2. 
C) 4. 
D) 5. 
A) 3. 
B) 2. 
C) 4. 
D) 5.

Question 9

A surplus exists

Accepted Answer

A) in equilibrium. 
B) when quantity supplied is greater than quantity demanded. 
C) when quantity supplied is less that quantity demanded. 
D) at the market clearing price. 
A) in equilibrium. 
B) when quantity supplied is greater than quantity demanded. 
C) when quantity supplied is less that quantity demanded. 
D) at the market clearing price.

Question 10

A market demand schedule for a product indicates that

Accepted Answer

A) as the product's price falls,consumers buy less of the good. 
B) there is a positive relationship between price and quantity demanded. 
C) as a product's price rises,consumers buy more of the good. 
D) there is a negative relationship between price and quantity demanded. 
A) as the product's price falls,consumers buy less of the good. 
B) there is a positive relationship between price and quantity demanded. 
C) as a product's price rises,consumers buy more of the good. 
D) there is a negative relationship between price and quantity demanded.

Question 11

Which of the following will NOT cause a rightward shift in the supply curve?

Accepted Answer

A) an improvement in technology 
B) a reduction in resource costs 
C) a reduction in the expected future price 
D) none of the above 
A) an improvement in technology 
B) a reduction in resource costs 
C) a reduction in the expected future price 
D) none of the above

Question 12

The direct relationship between changes in price and changes in quantity supplied is

Accepted Answer

A) a change in supply. 
B) shown by a shift in the supply curve. 
C) the law of supply. 
D) the law of relative production. 
A) a change in supply. 
B) shown by a shift in the supply curve. 
C) the law of supply. 
D) the law of relative production.

Question 13

Suppose that the demand curve for apples is downward sloping and the price per bushel increases from $6.50 to $7.50.We would then expect

Accepted Answer

A) the demand for apples to decrease. 
B) the quantity of apples demanded to fall. 
C) the demand curve to shift toward the origin. 
D) the quantity of apples demanded to increase. 
A) the demand for apples to decrease. 
B) the quantity of apples demanded to fall. 
C) the demand curve to shift toward the origin. 
D) the quantity of apples demanded to increase.

Question 14

We observe that people buy less steak and more potatoes when the price of steak relative to potatoes increases.This indicates that steak and potatoes are

Accepted Answer

A) substitutes. 
B) complements. 
C) inferior goods. 
D) unrelated goods. 
A) substitutes. 
B) complements. 
C) inferior goods. 
D) unrelated goods.

Question 15

Which one of the following statements is FALSE?

Accepted Answer

A) Generally,what matters most to consumers is what a good costs in dollars. 
B) The relative price of a good is its price measured relative to the price of other goods. 
C) The nominal price of a good is its price measured in current dollars. 
D) When the price of beer goes up by the same proportion as the prices of all other goods,the relative price of beer does not change. 
A) Generally,what matters most to consumers is what a good costs in dollars. 
B) The relative price of a good is its price measured relative to the price of other goods. 
C) The nominal price of a good is its price measured in current dollars. 
D) When the price of beer goes up by the same proportion as the prices of all other goods,the relative price of beer does not change.

Question 16

When a shortage exists in a market,

Accepted Answer

A) the market clearing price is above equilibrium and market forces will cause the price to fall. 
B) the quantity demanded is less than the quantity supplied at the existing price. 
C) the current price is below the market clearing price and the price will rise. 
D) the quantity supplied is greater than the quantity demanded at the current price. 
A) the market clearing price is above equilibrium and market forces will cause the price to fall. 
B) the quantity demanded is less than the quantity supplied at the existing price. 
C) the current price is below the market clearing price and the price will rise. 
D) the quantity supplied is greater than the quantity demanded at the current price.

Question 17

There will be an increase in supply when

Accepted Answer

A) a consumer's income increases. 
B) there is an improvement in technology. 
C) the demand curve shifts. 
D) the market price rises from $3 to $4. 
A) a consumer's income increases. 
B) there is an improvement in technology. 
C) the demand curve shifts. 
D) the market price rises from $3 to $4.

Question 18

Four points on a demand schedule are given: $12,2 units;$10,1 unit;$15,1.5 units;and $2,4 units.Which combination is inconsistent with the law of demand?

Accepted Answer

A) $12 and 2 units 
B) $10 and 1 unit 
C) $15 and 1.5 units 
D) $2 and 4 units 
A) $12 and 2 units 
B) $10 and 1 unit 
C) $15 and 1.5 units 
D) $2 and 4 units

Question 19

A change in the ceteris paribus conditions for supply will lead to a

Accepted Answer

A) change in quantity supplied. 
B) change in supply. 
C) change in quantity supplied and a change in supply. 
D) change in how consumers view the quality of the good. 
A) change in quantity supplied. 
B) change in supply. 
C) change in quantity supplied and a change in supply. 
D) change in how consumers view the quality of the good.

Question 20

-Refer to the above figure.Which diagram shows the effect on the market of Corn Flakes when the demand for Corn Flakes has increased?

Accepted Answer

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

Given a market equilibrium point,explain,using the concepts of demand and supply,how it is achieved.

The law of supply implies that the supply curve is

Which of the following situations could generate a shortage?

-According to the above table,the equilibrium price of DVDs is

Mary increases her consumption of Good X after the price of Good Y decreased.For Mary

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

The price of a commodity in terms of another commodity is

-Refer to the above figure.At a price of two cents,the quantity of bubble gum demanded will be

A surplus exists

A market demand schedule for a product indicates that

Which of the following will NOT cause a rightward shift in the supply curve?

The direct relationship between changes in price and changes in quantity supplied is

Suppose that the demand curve for apples is downward sloping and the price per bushel increases from $6.50 to $7.50.We would then expect

We observe that people buy less steak and more potatoes when the price of steak relative to potatoes increases.This indicates that steak and potatoes are

Which one of the following statements is FALSE?

When a shortage exists in a market,

There will be an increase in supply when

Four points on a demand schedule are given: $12,2 units;$10,1 unit;$15,1.5 units;and $2,4 units.Which combination is inconsistent with the law of demand?

A change in the ceteris paribus conditions for supply will lead to a

-Refer to the above figure.Which diagram shows the effect on the market of Corn Flakes when the demand for Corn Flakes has increased?

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

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Exam 3: Demand and Supply

Given a market equilibrium point,explain,using the concepts of demand and supply,how it is achieved.

The law of supply implies that the supply curve is

Which of the following situations could generate a shortage?

-According to the above table,the equilibrium price of DVDs is

Mary increases her consumption of Good X after the price of Good Y decreased.For Mary

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

The price of a commodity in terms of another commodity is

-Refer to the above figure.At a price of two cents,the quantity of bubble gum demanded will be

A surplus exists

A market demand schedule for a product indicates that

Which of the following will NOT cause a rightward shift in the supply curve?

The direct relationship between changes in price and changes in quantity supplied is

Suppose that the demand curve for apples is downward sloping and the price per bushel increases from $6.50 to $7.50.We would then expect

We observe that people buy less steak and more potatoes when the price of steak relative to potatoes increases.This indicates that steak and potatoes are

Which one of the following statements is FALSE?

When a shortage exists in a market,

There will be an increase in supply when

Four points on a demand schedule are given: $12,2 units;$10,1 unit;$15,1.5 units;and $2,4 units.Which combination is inconsistent with the law of demand?

A change in the ceteris paribus conditions for supply will lead to a

-Refer to the above figure.Which diagram shows the effect on the market of Corn Flakes when the demand for Corn Flakes has increased?

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