Question 1

The demand by all the consumers of a given good or service is the ________ for the good or service.

Accepted Answer

A) market demand 
B) quantity demanded 
C) law of demand 
D) scheduled demand 
A) market demand 
B) quantity demanded 
C) law of demand 
D) scheduled demand A

Question 2

Figure 3-2  
-Refer to Figure 3-2.A decrease in the price of the product would be represented by a movement from

Accepted Answer

A) A to B. 
B) B to A. 
C) S1 to S2. 
D) S2 to S1. 
A) A to B. 
B) B to A. 
C) S1 to S2. 
D) S2 to S1. B

Question 3

The income effect of a price change refers to the impact of a change in

Accepted Answer

A) income on the price of a good. 
B) demand when income changes. 
C) the quantity demanded when income changes. 
D) the price of a good on a consumer's purchasing power. 
A) income on the price of a good. 
B) demand when income changes. 
C) the quantity demanded when income changes. 
D) the price of a good on a consumer's purchasing power. D

Question 4

Assume that the hourly price for the services of tarot card readers has risen and sales of these services have also risen.One can conclude that

Accepted Answer

A) the law of demand has been violated. 
B) the number of tarot card readers has increased. 
C) the demand for tarot card readers has increased. 
D) tarot card readers are deliberately charging high prices because they provide services for superstitious clients. 
A) the law of demand has been violated. 
B) the number of tarot card readers has increased. 
C) the demand for tarot card readers has increased. 
D) tarot card readers are deliberately charging high prices because they provide services for superstitious clients.

Question 5

Figure 3-7  
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for potatoes and that steak and potatoes are complements.What panel describes what happens in this market when the price of steak rises?

Accepted Answer

A) Panel (a) 
B) Panel (b) 
C) Panel (c) 
D) Panel (d) 
A) Panel (a) 
B) Panel (b) 
C) Panel (c) 
D) Panel (d)

Question 6

Technological advances have resulted in lower prices for digital cameras.What is the impact of this on the market for traditional (non-digital)cameras?

Accepted Answer

A) The demand curve for traditional cameras shifts to the right. 
B) The supply curve for traditional cameras shifts to the right. 
C) The demand curve for traditional cameras shifts to the left. 
D) The supply curve for traditional cameras shifts to the left. 
A) The demand curve for traditional cameras shifts to the right. 
B) The supply curve for traditional cameras shifts to the right. 
C) The demand curve for traditional cameras shifts to the left. 
D) The supply curve for traditional cameras shifts to the left.

Question 7

Which of the following would cause both the equilibrium price and equilibrium quantity of cotton (assume that cotton is a normal good)to increase?

Accepted Answer

A) an increase in consumer income 
B) a drought that sharply reduces cotton output 
C) a decrease in consumer income 
D) unusually good weather that results in a bumper crop of cotton 
A) an increase in consumer income 
B) a drought that sharply reduces cotton output 
C) a decrease in consumer income 
D) unusually good weather that results in a bumper crop of cotton

Question 8

Figure 3-6  
-Refer to Figure 3-6.The figure above represents the market for canvas tote bags.Assume that the price of tote bags is $15.At this price:

Accepted Answer

A) the quantity demanded exceeds the quantity supplied of tote bags by 75.The price will eventually rise to $25 where quantity demanded will equal quantity supplied. 
B) the demand exceeds the supply of tote bags by 55.Some consumers will have an incentive to offer to buy tote bags at a higher price. 
C) there is a shortage,equal to 55 tote bags,that will be eliminated when the price rises to $25. 
D) there is a shortage equal to 55 tote bags;the price of tote bags will rise until demand is equal to supply. 
A) the quantity demanded exceeds the quantity supplied of tote bags by 75.The price will eventually rise to $25 where quantity demanded will equal quantity supplied. 
B) the demand exceeds the supply of tote bags by 55.Some consumers will have an incentive to offer to buy tote bags at a higher price. 
C) there is a shortage,equal to 55 tote bags,that will be eliminated when the price rises to $25. 
D) there is a shortage equal to 55 tote bags;the price of tote bags will rise until demand is equal to supply.

Question 9

Figure 3-6  
-Refer to Figure 3-6.The figure above represents the market for canvas tote bags.Compare the conditions in the market when the price is $50 and when the price is $35.Which of the following describes how the market differs at these prices?

Accepted Answer

A) At each price there is a surplus;the surplus is greater at $35 than at $50. 
B) The difference between quantity supplied and quantity demanded is greater at $50 than at $35. 
C) At each price there is a surplus;firms will lower the equilibrium price in order to eliminate the surplus. 
D) At each price the supply of tote bags exceeds that demand for tote bags. 
A) At each price there is a surplus;the surplus is greater at $35 than at $50. 
B) The difference between quantity supplied and quantity demanded is greater at $50 than at $35. 
C) At each price there is a surplus;firms will lower the equilibrium price in order to eliminate the surplus. 
D) At each price the supply of tote bags exceeds that demand for tote bags.

Question 10

If,for a product,the quantity supplied exceeds the quantity demanded,the market price will fall until

Accepted Answer

A) the quantity demanded exceeds the quantity supplied.The market will then be in equilibrium. 
B) quantity demanded equals quantity supplied.The equilibrium price will then be lower than the market price. 
C) all consumers will be able to afford the product. 
D) quantity demanded equals quantity supplied.The market price will then equal the equilibrium price. 
A) the quantity demanded exceeds the quantity supplied.The market will then be in equilibrium. 
B) quantity demanded equals quantity supplied.The equilibrium price will then be lower than the market price. 
C) all consumers will be able to afford the product. 
D) quantity demanded equals quantity supplied.The market price will then equal the equilibrium price.

Question 11

Which of the following is evidence of a surplus of bananas?

Accepted Answer

A) Firms raise the price of bananas. 
B) The price of bananas is lowered in order to increase sales. 
C) The equilibrium price of bananas rises due to an increase in demand. 
D) The quantity demanded of bananas is greater than the quantity supplied. 
A) Firms raise the price of bananas. 
B) The price of bananas is lowered in order to increase sales. 
C) The equilibrium price of bananas rises due to an increase in demand. 
D) The quantity demanded of bananas is greater than the quantity supplied.

Question 12

The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in purchasing power as a result of the price change.

Accepted Answer

A) True 
 B)False

Question 13

Figure 3-4  
-Refer to Figure 3-4.At a price of $10,how many units will be sold?

Accepted Answer

A) 200 
B) 400 
C) 600 
D) 800 
A) 200 
B) 400 
C) 600 
D) 800

Question 14

In 2004,hurricanes destroyed a large portion of Florida's orange and grapefruit crops.In the market for citrus fruit,

Accepted Answer

A) the supply curve shifted to the right resulting in an increase in the equilibrium price. 
B) the supply curve shifted to the left resulting in an increase in the equilibrium price. 
C) the demand curve shifted to the right resulting in an increase in the equilibrium price. 
D) the demand curve shifted to the left resulting in a decrease in the equilibrium price. 
A) the supply curve shifted to the right resulting in an increase in the equilibrium price. 
B) the supply curve shifted to the left resulting in an increase in the equilibrium price. 
C) the demand curve shifted to the right resulting in an increase in the equilibrium price. 
D) the demand curve shifted to the left resulting in a decrease in the equilibrium price.

Question 15

The ________ effect refers to the change in quantity demanded for a good that results from the effect of a change in the good's price on consumer's purchasing power.

Accepted Answer

A) ceteris paribus 
B) population 
C) substitution 
D) income 
A) ceteris paribus 
B) population 
C) substitution 
D) income

Question 16

Holding everything else constant,an increase in the price of MP3 players will result in

Accepted Answer

A) a decrease in the quantity of MP3 players supplied. 
B) a decrease in the demand for MP3 players. 
C) an increase in the supply of MP3 players. 
D) a decrease in the quantity of MP3 players demanded. 
A) a decrease in the quantity of MP3 players supplied. 
B) a decrease in the demand for MP3 players. 
C) an increase in the supply of MP3 players. 
D) a decrease in the quantity of MP3 players demanded.

Question 17

Figure 3-7  
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for used clothing,an inferior good.Which panel describes what happens in this market as a result of a decrease in income?

Accepted Answer

A) Panel (a) 
B) Panel (b) 
C) Panel (c) 
D) Panel (d) 
A) Panel (a) 
B) Panel (b) 
C) Panel (c) 
D) Panel (d)

Question 18

Figure 3-7  
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets.Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles?

Accepted Answer

A) Panel (a) 
B) Panel (b) 
C) Panel (c) 
D) Panel (d) 
A) Panel (a) 
B) Panel (b) 
C) Panel (c) 
D) Panel (d)

Question 19

Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall.Holding everything else constant,how would this affect the market for Blu-ray players (a complement to LCD televisions)?

Accepted Answer

A) The supply of blu-ray players would increase and the equilibrium price of blu-ray players would decrease. 
B) The demand for blu-ray players would increase and the equilibrium price of blu-ray players would increase. 
C) The demand for blu-ray players would decrease because consumers could afford to buy fewer LCD televisions and blu-ray players. 
D) The demand for blu-ray players would increase and the equilibrium price of blu-ray players would decrease. 
A) The supply of blu-ray players would increase and the equilibrium price of blu-ray players would decrease. 
B) The demand for blu-ray players would increase and the equilibrium price of blu-ray players would increase. 
C) The demand for blu-ray players would decrease because consumers could afford to buy fewer LCD televisions and blu-ray players. 
D) The demand for blu-ray players would increase and the equilibrium price of blu-ray players would decrease.

Question 20

Danielle Ocean pays for monthly pool maintenance for her home swimming pool.Last week the owner of the pool service informed Danielle that he will have to raise his monthly service fee because of increases in the price of pool chemicals.How is the market for pool maintenance services affected by this?

Accepted Answer

A) There is an increase in the supply of pool maintenance services. 
B) There is a decrease in the demand for pool maintenance services. 
C) There is a decrease in the quantity of pool maintenance services supplied. 
D) There is a decrease in the supply of pool maintenance services. 
A) There is an increase in the supply of pool maintenance services. 
B) There is a decrease in the demand for pool maintenance services. 
C) There is a decrease in the quantity of pool maintenance services supplied. 
D) There is a decrease in the supply of pool maintenance services.

The demand by all the consumers of a given good or service is the ________ for the good or service.

Figure 3-2 -Refer to Figure 3-2.A decrease in the price of the product would be represented by a movement from

The income effect of a price change refers to the impact of a change in

Assume that the hourly price for the services of tarot card readers has risen and sales of these services have also risen.One can conclude that

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for potatoes and that steak and potatoes are complements.What panel describes what happens in this market when the price of steak rises?

Technological advances have resulted in lower prices for digital cameras.What is the impact of this on the market for traditional (non-digital)cameras?

Which of the following would cause both the equilibrium price and equilibrium quantity of cotton (assume that cotton is a normal good)to increase?

Figure 3-6 -Refer to Figure 3-6.The figure above represents the market for canvas tote bags.Assume that the price of tote bags is $15.At this price:

Figure 3-6 -Refer to Figure 3-6.The figure above represents the market for canvas tote bags.Compare the conditions in the market when the price is $50 and when the price is $35.Which of the following describes how the market differs at these prices?

If,for a product,the quantity supplied exceeds the quantity demanded,the market price will fall until

Which of the following is evidence of a surplus of bananas?

The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in purchasing power as a result of the price change.

Figure 3-4 -Refer to Figure 3-4.At a price of $10,how many units will be sold?

In 2004,hurricanes destroyed a large portion of Florida's orange and grapefruit crops.In the market for citrus fruit,

The ________ effect refers to the change in quantity demanded for a good that results from the effect of a change in the good's price on consumer's purchasing power.

Holding everything else constant,an increase in the price of MP3 players will result in

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for used clothing,an inferior good.Which panel describes what happens in this market as a result of a decrease in income?

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets.Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles?

Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall.Holding everything else constant,how would this affect the market for Blu-ray players (a complement to LCD televisions)?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

Filters

Exam 3: Where Prices Come From: the Interaction of Demand and Supply

The demand by all the consumers of a given good or service is the ________ for the good or service.

Figure 3-2 -Refer to Figure 3-2.A decrease in the price of the product would be represented by a movement from

The income effect of a price change refers to the impact of a change in

Assume that the hourly price for the services of tarot card readers has risen and sales of these services have also risen.One can conclude that

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for potatoes and that steak and potatoes are complements.What panel describes what happens in this market when the price of steak rises?

Technological advances have resulted in lower prices for digital cameras.What is the impact of this on the market for traditional (non-digital)cameras?

Which of the following would cause both the equilibrium price and equilibrium quantity of cotton (assume that cotton is a normal good)to increase?

Figure 3-6 -Refer to Figure 3-6.The figure above represents the market for canvas tote bags.Assume that the price of tote bags is $15.At this price:

Figure 3-6 -Refer to Figure 3-6.The figure above represents the market for canvas tote bags.Compare the conditions in the market when the price is $50 and when the price is $35.Which of the following describes how the market differs at these prices?

If,for a product,the quantity supplied exceeds the quantity demanded,the market price will fall until

Which of the following is evidence of a surplus of bananas?

The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in purchasing power as a result of the price change.

Figure 3-4 -Refer to Figure 3-4.At a price of $10,how many units will be sold?

In 2004,hurricanes destroyed a large portion of Florida's orange and grapefruit crops.In the market for citrus fruit,

The ________ effect refers to the change in quantity demanded for a good that results from the effect of a change in the good's price on consumer's purchasing power.

Holding everything else constant,an increase in the price of MP3 players will result in

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for used clothing,an inferior good.Which panel describes what happens in this market as a result of a decrease in income?

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets.Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles?

Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall.Holding everything else constant,how would this affect the market for Blu-ray players (a complement to LCD televisions)?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

Filters