Question 1

In a free market,the market price and quantity in the above figure will adjust to equilibrium values of

Accepted Answer

A) $1 per gallon and 50 million gallons. 
B) $4 per gallon and 10 million gallons. 
C) $2 per gallon and 60 million gallons. 
D) $2 per gallon and 30 million gallons. 
A) $1 per gallon and 50 million gallons. 
B) $4 per gallon and 10 million gallons. 
C) $2 per gallon and 60 million gallons. 
D) $2 per gallon and 30 million gallons.

Question 2

Which of the following will NOT cause market supply to increase?

Accepted Answer

A) an increase in the number of firms supplying the product in the market 
B) a change in technology which allows a larger level of production at every price 
C) an increase in the costs of resources used to produce the product 
D) a decrease in labor costs 
A) an increase in the number of firms supplying the product in the market 
B) a change in technology which allows a larger level of production at every price 
C) an increase in the costs of resources used to produce the product 
D) a decrease in labor costs

Question 3

-Refer to the above figure.Which panel shows the effect of an increase in the price of a good on the demand curve of that good?

Accepted Answer

A) Panel A. 
B) Panel B. 
C) Both panels. 
D) Neither panel. 
A) Panel A. 
B) Panel B. 
C) Both panels. 
D) Neither panel.

Question 4

-Refer to the above figure.Moving from point A to point B indicates

Accepted Answer

A) An increase in supply. 
B) An increase in quantity supplied. 
C) A decrease in supply. 
D) A decrease in quantity supplied. 
A) An increase in supply. 
B) An increase in quantity supplied. 
C) A decrease in supply. 
D) A decrease in quantity supplied.

Question 5

-Refer to the above figure.Which of the following statements is true?

Accepted Answer

A) Panel A shows an increase in supply and Panel B shows a decrease in supply. 
B) Both Panels A and B show an increase in supply. 
C) Panel A shows a change in quantity supplied and Panel B shows a change in supply. 
D) Panel A shows a change in supply and Panel B shows a change in quantity supplied. 
A) Panel A shows an increase in supply and Panel B shows a decrease in supply. 
B) Both Panels A and B show an increase in supply. 
C) Panel A shows a change in quantity supplied and Panel B shows a change in supply. 
D) Panel A shows a change in supply and Panel B shows a change in quantity supplied.

Question 6

Any improvement in overall production technology that permits more output to be produced with the same level of inputs causes

Accepted Answer

A) a movement up the supply curve resulting in both a higher equilibrium price and quantity. 
B) a rightward shift of the supply curve so that more is offered at each price. 
C) no movement of the supply curve,but a fall in price and a decrease in quantity supplied. 
D) a leftward shift of the supply curve so that less is offered for sale at each price. 
A) a movement up the supply curve resulting in both a higher equilibrium price and quantity. 
B) a rightward shift of the supply curve so that more is offered at each price. 
C) no movement of the supply curve,but a fall in price and a decrease in quantity supplied. 
D) a leftward shift of the supply curve so that less is offered for sale at each price.

Question 7

-Refer to the above figure.At a price of $2,excess quantity demanded equals

Accepted Answer

A) 0. 
B) 3. 
C) 12. 
D) 15. 
A) 0. 
B) 3. 
C) 12. 
D) 15.

Question 8

Which of the following statements is FALSE?

Accepted Answer

A) An increase in income causes an increase in the demand for a normal good. 
B) An increase in income causes a decrease in the demand for an inferior good. 
C) A decrease in income causes the demand curve for a normal good to shift to the left. 
D) An increase in income causes the demand curve for an inferior good to shift to the right. 
A) An increase in income causes an increase in the demand for a normal good. 
B) An increase in income causes a decrease in the demand for an inferior good. 
C) A decrease in income causes the demand curve for a normal good to shift to the left. 
D) An increase in income causes the demand curve for an inferior good to shift to the right.

Question 9

Which of the following will cause a movement along the demand curve instead of a shift of the demand curve?

Accepted Answer

A) Income 
B) Tastes and preferences 
C) Expectations of the future price of a good 
D) none of the above 
A) Income 
B) Tastes and preferences 
C) Expectations of the future price of a good 
D) none of the above

Question 10

If there is a shortage in a free market,then

Accepted Answer

A) consumers will offer to pay a lower price for the good,and the price will fall toward the equilibrium level. 
B) consumers will offer to pay a higher price for the good,and the price will rise toward the equilibrium level. 
C) suppliers will decrease their output to match demand. 
D) suppliers will accept any price below equilibrium. 
A) consumers will offer to pay a lower price for the good,and the price will fall toward the equilibrium level. 
B) consumers will offer to pay a higher price for the good,and the price will rise toward the equilibrium level. 
C) suppliers will decrease their output to match demand. 
D) suppliers will accept any price below equilibrium.

Question 11

The price of a new car is $40,000 while the price of a five-year old car of the same brand is $16,000.The next year the price of the new car increases to $44,000 and the price of a five-year old car of the same brand is $17,600.The relative price of the used car

Accepted Answer

A) decreased by $2,400. 
B) decreased by 10 percent. 
C) increased by 10 percent. 
D) remained constant at 0.4. 
A) decreased by $2,400. 
B) decreased by 10 percent. 
C) increased by 10 percent. 
D) remained constant at 0.4.

Question 12

We are given the individual demand curves for all of the people that consume Good Y.Which statement is true about the market demand curve for Good Y?

Accepted Answer

A) The market demand curve is obtained by horizontally summing the individual demand curves. 
B) The market demand curve is obtained by vertically summing the individual demand curves. 
C) The market demand curve cannot be obtained because information on prices is missing. 
D) The market demand curve cannot be obtained from individual demand curves. 
A) The market demand curve is obtained by horizontally summing the individual demand curves. 
B) The market demand curve is obtained by vertically summing the individual demand curves. 
C) The market demand curve cannot be obtained because information on prices is missing. 
D) The market demand curve cannot be obtained from individual demand curves.

Question 13

A demand curve

Accepted Answer

A) slopes down because of the inverse relationship between price and quantity demanded. 
B) slopes up because of the direct relationship between price and quantity demanded. 
C) can slope up or down depending on the tastes of the consumer. 
D) is vertical for necessities,upward sloping for luxury goods,and downward sloping for all other goods. 
A) slopes down because of the inverse relationship between price and quantity demanded. 
B) slopes up because of the direct relationship between price and quantity demanded. 
C) can slope up or down depending on the tastes of the consumer. 
D) is vertical for necessities,upward sloping for luxury goods,and downward sloping for all other goods.

Question 14

Which factor would cause a movement along the demand curve for pizza?

Accepted Answer

A) an increase in the number of students in town 
B) a renewed preference for Italian food 
C) a drop in the price of pizza 
D) an increase in average income 
A) an increase in the number of students in town 
B) a renewed preference for Italian food 
C) a drop in the price of pizza 
D) an increase in average income

Question 15

An improvement in technology in the production of computers would

Accepted Answer

A) increase the demand for computers. 
B) increase the supply of computers. 
C) decrease the demand for computers. 
D) decrease the supply of computers. 
A) increase the demand for computers. 
B) increase the supply of computers. 
C) decrease the demand for computers. 
D) decrease the supply of computers.

Question 16

Which of the following will shift today's supply curve to the right?

Accepted Answer

A) Input prices rise. 
B) Sales taxes increase. 
C) Prices are expected to be higher in the future. 
D) Prices are expected to be lower in the future. 
A) Input prices rise. 
B) Sales taxes increase. 
C) Prices are expected to be higher in the future. 
D) Prices are expected to be lower in the future.

Question 17

An indirect or inverse relationship between price and quantity demanded 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 18

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

Accepted Answer

A) resource prices. 
B) technology. 
C) producers' expectations. 
D) consumer's income. 
A) resource prices. 
B) technology. 
C) producers' expectations. 
D) consumer's income.

Question 19

Kariuki decreases his consumption of grapes after his income goes up.For Kariuki

Accepted Answer

A) grapes and income are substitute goods. 
B) grapes and income are complementary goods. 
C) grapes are an inferior good. 
D) grapes are a superior good. 
A) grapes and income are substitute goods. 
B) grapes and income are complementary goods. 
C) grapes are an inferior good. 
D) grapes are a superior good.

Question 20

Which of the following statements is FALSE?

Accepted Answer

A) If there is an increase in the demand for a product,consumers want to buy more of the product at each and every possible price. 
B) A decrease in demand shifts the demand curve leftward toward the origin,while a decrease in quantity demanded involves a movement upward along a particular demand curve. 
C) If the price of a good rises,quantity demanded of the good decreases and the demand curve shifts toward the origin as long as supply is static. 
D) A change in the demand for a product is caused by factors other than changes in the product's price. 
A) If there is an increase in the demand for a product,consumers want to buy more of the product at each and every possible price. 
B) A decrease in demand shifts the demand curve leftward toward the origin,while a decrease in quantity demanded involves a movement upward along a particular demand curve. 
C) If the price of a good rises,quantity demanded of the good decreases and the demand curve shifts toward the origin as long as supply is static. 
D) A change in the demand for a product is caused by factors other than changes in the product's price.

In a free market,the market price and quantity in the above figure will adjust to equilibrium values of

Which of the following will NOT cause market supply to increase?

-Refer to the above figure.Which panel shows the effect of an increase in the price of a good on the demand curve of that good?

-Refer to the above figure.Moving from point A to point B indicates

-Refer to the above figure.Which of the following statements is true?

Any improvement in overall production technology that permits more output to be produced with the same level of inputs causes

-Refer to the above figure.At a price of $2,excess quantity demanded equals

Which of the following statements is FALSE?

Which of the following will cause a movement along the demand curve instead of a shift of the demand curve?

If there is a shortage in a free market,then

The price of a new car is $40,000 while the price of a five-year old car of the same brand is $16,000.The next year the price of the new car increases to $44,000 and the price of a five-year old car of the same brand is $17,600.The relative price of the used car

We are given the individual demand curves for all of the people that consume Good Y.Which statement is true about the market demand curve for Good Y?

A demand curve

Which factor would cause a movement along the demand curve for pizza?

An improvement in technology in the production of computers would

Which of the following will shift today's supply curve to the right?

An indirect or inverse relationship between price and quantity demanded is

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

Kariuki decreases his consumption of grapes after his income goes up.For Kariuki

Which of the following statements is FALSE?

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

In a free market,the market price and quantity in the above figure will adjust to equilibrium values of

Which of the following will NOT cause market supply to increase?

-Refer to the above figure.Which panel shows the effect of an increase in the price of a good on the demand curve of that good?

-Refer to the above figure.Moving from point A to point B indicates

-Refer to the above figure.Which of the following statements is true?

Any improvement in overall production technology that permits more output to be produced with the same level of inputs causes

-Refer to the above figure.At a price of $2,excess quantity demanded equals

Which of the following statements is FALSE?

Which of the following will cause a movement along the demand curve instead of a shift of the demand curve?

If there is a shortage in a free market,then

The price of a new car is $40,000 while the price of a five-year old car of the same brand is $16,000.The next year the price of the new car increases to $44,000 and the price of a five-year old car of the same brand is $17,600.The relative price of the used car

We are given the individual demand curves for all of the people that consume Good Y.Which statement is true about the market demand curve for Good Y?

A demand curve

Which factor would cause a movement along the demand curve for pizza?

An improvement in technology in the production of computers would

Which of the following will shift today's supply curve to the right?

An indirect or inverse relationship between price and quantity demanded is

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

Kariuki decreases his consumption of grapes after his income goes up.For Kariuki

Which of the following statements is FALSE?

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