Question 1

Which of the following causes a decrease in demand for a normal good?

Accepted Answer

A) Increase in price of a substitute 
B) Increase in price of a complement 
C) Increase in price 
D) Increase in income 
A) Increase in price of a substitute 
B) Increase in price of a complement 
C) Increase in price 
D) Increase in income

Question 2

Suppose Good A is a normal good.Which of the following will increase the demand for Good A?

Accepted Answer

A) An increase in the price of its substitutes 
B) A lower expected future relative price of A 
C) An increase in the price of its complements 
D) A decrease in income 
A) An increase in the price of its substitutes 
B) A lower expected future relative price of A 
C) An increase in the price of its complements 
D) A decrease in income

Question 3

Which of the following is NOT true about the equilibrium price?

Accepted Answer

A) The price where a change in quantity supplied occurs. 
B) The price where the demand curve intersects the supply curve. 
C) The price where quantity demanded equals quantity supplied. 
D) The price where there is neither excess quantity demanded or excess quantity supplied. 
A) The price where a change in quantity supplied occurs. 
B) The price where the demand curve intersects the supply curve. 
C) The price where quantity demanded equals quantity supplied. 
D) The price where there is neither excess quantity demanded or excess quantity supplied.

Question 4

Assume that coffee and tea are substitutes.Given a downward sloping demand curve for tea,an increase in the price of tea will cause

Accepted Answer

A) an increase in the demand for coffee. 
B) a decrease in the demand for coffee. 
C) a leftward shift of the demand curve for tea. 
D) a leftward shift in the demand for coffee. 
A) an increase in the demand for coffee. 
B) a decrease in the demand for coffee. 
C) a leftward shift of the demand curve for tea. 
D) a leftward shift in the demand for coffee.

Question 5

Which of the following will occur as the price of a good decreases?

Accepted Answer

A) The demand curve for that good will shift to the left. 
B) The demand curve for that good will shift to the right. 
C) The quantity demanded for that good will increase. 
D) Demand for that good will increase. 
A) The demand curve for that good will shift to the left. 
B) The demand curve for that good will shift to the right. 
C) The quantity demanded for that good will increase. 
D) Demand for that good will increase.

Question 6

Another name for a surplus is

Accepted Answer

A) excess quantity supplied. 
B) excess quantity demanded. 
C) equilibrium. 
D) market clearing. 
A) excess quantity supplied. 
B) excess quantity demanded. 
C) equilibrium. 
D) market clearing.

Question 7

If we are comparing the price of regular gasoline with the price of super gasoline,then an increase in the relative price of regular gasoline implies that

Accepted Answer

A) the nominal price of regular gasoline increased. 
B) the nominal price of super gasoline decreased. 
C) the relative price of super gasoline decreased. 
D) the relative price of regular gasoline increased. 
A) the nominal price of regular gasoline increased. 
B) the nominal price of super gasoline decreased. 
C) the relative price of super gasoline decreased. 
D) the relative price of regular gasoline increased.

Question 8

-Refer to the above figure.Excess quantity demanded will exist when

Accepted Answer

A) the price is between $0 and $6. 
B) the price equals $6. 
C) the price equals $10. 
D) quantity demanded equals 3. 
A) the price is between $0 and $6. 
B) the price equals $6. 
C) the price equals $10. 
D) quantity demanded equals 3.

Question 9

An excess quantity supplied can be corrected by

Accepted Answer

A) a fall in price. 
B) legally fixing the price at its present level. 
C) a decrease in demand. 
D) an increase in supply. 
A) a fall in price. 
B) legally fixing the price at its present level. 
C) a decrease in demand. 
D) an increase in supply.

Question 10

Which of the following will NOT lead to a decrease in demand for a normal good?

Accepted Answer

A) An increase in income 
B) An increase in the price of an input 
C) A decrease in the price of a complement good 
D) An increase in the number of consumers 
A) An increase in income 
B) An increase in the price of an input 
C) A decrease in the price of a complement good 
D) An increase in the number of consumers

Question 11

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

Accepted Answer

A) a reduction in resource costs 
B) an increase in technology 
C) a reduction in the price of the good 
D) a reduction in the expected future price of the good 
A) a reduction in resource costs 
B) an increase in technology 
C) a reduction in the price of the good 
D) a reduction in the expected future price of the good

Question 12

The money price of a good is that price

Accepted Answer

A) expressed in constant 2005 dollars. 
B) expressed in purchasing power against a common item like bread. 
C) expressed in today's dollars. 
D) that would clear the market. 
A) expressed in constant 2005 dollars. 
B) expressed in purchasing power against a common item like bread. 
C) expressed in today's dollars. 
D) that would clear the market.

Question 13

-According to the above table,at a price of $8 per unit,other things constant,

Accepted Answer

A) consumers will continue to bid prices upward. 
B) there will be no tendency for the market to approach an equilibrium. 
C) a surplus of 100 units will exist. 
D) a shortage of 80 units will exist. 
A) consumers will continue to bid prices upward. 
B) there will be no tendency for the market to approach an equilibrium. 
C) a surplus of 100 units will exist. 
D) a shortage of 80 units will exist.

Question 14

-Refer to the above figure.At a price of $10,excess quantity supplied equals

Accepted Answer

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

Question 15

The market demand curve for a particular good

Accepted Answer

A) is the horizontal sum of all individual demand curves for the good. 
B) may be less than an individual demand curve for the good. 
C) may or may not show a direct relationship between price and quantity demanded. 
D) will not be affected by any of the determinants of individual demand. 
A) is the horizontal sum of all individual demand curves for the good. 
B) may be less than an individual demand curve for the good. 
C) may or may not show a direct relationship between price and quantity demanded. 
D) will not be affected by any of the determinants of individual demand.

Question 16

Other things being equal,the relationship between price and quantity supplied is

Accepted Answer

A) negative. 
B) constant. 
C) positive. 
D) non-existent. 
A) negative. 
B) constant. 
C) positive. 
D) non-existent.

Question 17

If the price of airline travel in Europe falls and the demand for train travel in Europe also falls,then the two goods are

Accepted Answer

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

Question 18

Sarah gets a salary increase of 20 percent.Before her raise,she purchased 5 pounds of hamburger and 1 pound of beef stew a month.After her raise,she consumes 2 pounds of hamburger and 3 pounds of beef stew a month.If everything else is held constant,we know that

Accepted Answer

A) hamburger is an inferior good and beef stew is a normal good for Sarah. 
B) hamburger is a normal good and beef stew is an inferior good for Sarah. 
C) both hamburger and beef stew are normal goods for Sarah. 
D) both hamburger and beef stew are inferior goods for Sarah. 
A) hamburger is an inferior good and beef stew is a normal good for Sarah. 
B) hamburger is a normal good and beef stew is an inferior good for Sarah. 
C) both hamburger and beef stew are normal goods for Sarah. 
D) both hamburger and beef stew are inferior goods for Sarah.

Question 19

A shortage exists

Accepted Answer

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

Question 20

If more foreign auto plants relocate to the United States,we would expect

Accepted Answer

A) the U.S.supply curve for automobiles to shift to the right. 
B) the U.S.supply curve for automobiles would shift to the left. 
C) that the U.S.auto market would not respond. 
D) that U.S.auto demand might change,but U.S.auto supply would remain static. 
A) the U.S.supply curve for automobiles to shift to the right. 
B) the U.S.supply curve for automobiles would shift to the left. 
C) that the U.S.auto market would not respond. 
D) that U.S.auto demand might change,but U.S.auto supply would remain static.

Which of the following causes a decrease in demand for a normal good?

Suppose Good A is a normal good.Which of the following will increase the demand for Good A?

Which of the following is NOT true about the equilibrium price?

Assume that coffee and tea are substitutes.Given a downward sloping demand curve for tea,an increase in the price of tea will cause

Which of the following will occur as the price of a good decreases?

Another name for a surplus is

If we are comparing the price of regular gasoline with the price of super gasoline,then an increase in the relative price of regular gasoline implies that

-Refer to the above figure.Excess quantity demanded will exist when

An excess quantity supplied can be corrected by

Which of the following will NOT lead to a decrease in demand for a normal good?

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

The money price of a good is that price

-According to the above table,at a price of $8 per unit,other things constant,

-Refer to the above figure.At a price of $10,excess quantity supplied equals

The market demand curve for a particular good

Other things being equal,the relationship between price and quantity supplied is

If the price of airline travel in Europe falls and the demand for train travel in Europe also falls,then the two goods are

Sarah gets a salary increase of 20 percent.Before her raise,she purchased 5 pounds of hamburger and 1 pound of beef stew a month.After her raise,she consumes 2 pounds of hamburger and 3 pounds of beef stew a month.If everything else is held constant,we know that

A shortage exists

If more foreign auto plants relocate to the United States,we would expect

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

Which of the following causes a decrease in demand for a normal good?

Suppose Good A is a normal good.Which of the following will increase the demand for Good A?

Which of the following is NOT true about the equilibrium price?

Assume that coffee and tea are substitutes.Given a downward sloping demand curve for tea,an increase in the price of tea will cause

Which of the following will occur as the price of a good decreases?

Another name for a surplus is

If we are comparing the price of regular gasoline with the price of super gasoline,then an increase in the relative price of regular gasoline implies that

-Refer to the above figure.Excess quantity demanded will exist when

An excess quantity supplied can be corrected by

Which of the following will NOT lead to a decrease in demand for a normal good?

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

The money price of a good is that price

-According to the above table,at a price of $8 per unit,other things constant,

-Refer to the above figure.At a price of $10,excess quantity supplied equals

The market demand curve for a particular good

Other things being equal,the relationship between price and quantity supplied is

If the price of airline travel in Europe falls and the demand for train travel in Europe also falls,then the two goods are

Sarah gets a salary increase of 20 percent.Before her raise,she purchased 5 pounds of hamburger and 1 pound of beef stew a month.After her raise,she consumes 2 pounds of hamburger and 3 pounds of beef stew a month.If everything else is held constant,we know that

A shortage exists

If more foreign auto plants relocate to the United States,we would expect

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