Question 1

A surplus occurs when the market price is lower than the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 2

At market equilibrium,

Accepted Answer

A) demand equals supply. 
B) quantity demanded equals quantity supplied. 
C) surpluses are greater than shortages. 
D) shortages are greater than surpluses. 
A) demand equals supply. 
B) quantity demanded equals quantity supplied. 
C) surpluses are greater than shortages. 
D) shortages are greater than surpluses.

Question 3

Refer to the Article Summary.Assume that foreign governments begin to publicize their existing medical services to American medical tourists and more Americans consider hip-replacement surgery to improve their quality of life.What will happen in the market for hip-replacement surgery as a result of these two factors?

Accepted Answer

A) Demand will increase,but these two factors will not shift the supply curve. 
B) Supply will increase,but these two factors will not shift the demand curve. 
C) Demand and supply will both increase. 
D) Demand will increase and supply will decrease. 
A) Demand will increase,but these two factors will not shift the supply curve. 
B) Supply will increase,but these two factors will not shift the demand curve. 
C) Demand and supply will both increase. 
D) Demand will increase and supply will decrease.

Question 4

An increase in the equilibrium quantity of a product will result

Accepted Answer

A) when the quantity of the product supplied exceeds the quantity demanded. 
B) when there is an increase in supply and an increase in demand for the product. 
C) when there is an increase in supply and a decrease in demand for the product. 
D) when there is an decrease in demand and a decrease in the cost of inputs used to make the product. 
A) when the quantity of the product supplied exceeds the quantity demanded. 
B) when there is an increase in supply and an increase in demand for the product. 
C) when there is an increase in supply and a decrease in demand for the product. 
D) when there is an decrease in demand and a decrease in the cost of inputs used to make the product.

Question 5

Which of the following would cause the equilibrium price of ketchup to increase and the equilibrium quantity of ketchup to decrease?

Accepted Answer

A) a decrease in the price of tomatoes 
B) an increase in the price of tomatoes 
C) an increase in the price of mustard,a substitute for ketchup 
D) an increase in the price of french fries,a complement for ketchup 
A) a decrease in the price of tomatoes 
B) an increase in the price of tomatoes 
C) an increase in the price of mustard,a substitute for ketchup 
D) an increase in the price of french fries,a complement for ketchup

Question 6

An increase in population results in an increase in demand.

Accepted Answer

A) True 
 B)False

Question 7

The income effect explains why there is a direct relationship between the price of a product and the quantity of the product demanded.

Accepted Answer

A) True 
 B)False

Question 8

Table 3-2
  
-Refer to Table 3-2.The table above shows the demand schedules for cashews of two individuals (Jordy and Amy)and the rest of the market.If the price of cashews rises from $4 to $6,the market quantity demanded would

Accepted Answer

A) decrease by 33 lbs. 
B) increase by 39 lbs. 
C) increase by 33 lbs. 
D) decrease by 39 lbs. 
A) decrease by 33 lbs. 
B) increase by 39 lbs. 
C) increase by 33 lbs. 
D) decrease by 39 lbs.

Question 9

Factory incentives on cell phones have encouraged consumers to upgrade their phones.How does this affect the market for bluetooth headsets?

Accepted Answer

A) The quantity of bluetooth headsets demanded increases. 
B) The quantity of bluetooth headsets demanded decreases. 
C) The demand for bluetooth headsets increases. 
D) The demand for bluetooth headsets decreases. 
A) The quantity of bluetooth headsets demanded increases. 
B) The quantity of bluetooth headsets demanded decreases. 
C) The demand for bluetooth headsets increases. 
D) The demand for bluetooth headsets decreases.

Question 10

Last month,the Tecumseh Corporation supplied 400 units of three-ring binders at $6 per unit.This month,the company supplied the same quantity of binders at $4 per unit.Based on this evidence,Tecumseh has experienced

Accepted Answer

A) a decrease in supply. 
B) an increase in supply. 
C) an increase in the quantity supplied. 
D) a decrease in the quantity supplied. 
A) a decrease in supply. 
B) an increase in supply. 
C) an increase in the quantity supplied. 
D) a decrease in the quantity supplied.

Question 11

Which of the following describes a characteristic of a perfectly competitive market?

Accepted Answer

A) There are many buyers but few sellers. 
B) There are many sellers but few buyers. 
C) There are many buyers and sellers. 
D) Equilibrium is achieved when demand for the product sold in the market equals the supply. 
A) There are many buyers but few sellers. 
B) There are many sellers but few buyers. 
C) There are many buyers and sellers. 
D) Equilibrium is achieved when demand for the product sold in the market equals the supply.

Question 12

In each of the following situations,list what will happen to the equilibrium price and the equilibrium quantity for a particular product,which is an inferior good.
a.The population decreases and productivity increases
b.Income increases and the price of inputs increase
c.The number of firms in the market decreases and income decreases
d.Consumer preference decreases and the price of a complement increases
e.The price of a substitute in consumption increases and the price of a substitute in production increases

Accepted Answer

a.Price decreases;Quantity may increase

Question 13

Assume that both the demand curve and the supply curve for DVD players shift to the left but the supply curve shifts more than the demand curve.As a result,

Accepted Answer

A) both the equilibrium price and quantity of DVD players will decrease. 
B) the equilibrium price of DVD players will decrease;the equilibrium quantity may increase or decrease. 
C) the equilibrium price of DVD players may increase or decrease;the equilibrium quantity will increase. 
D) the equilibrium price of DVD players will increase;the equilibrium quantity will decrease. 
A) both the equilibrium price and quantity of DVD players will decrease. 
B) the equilibrium price of DVD players will decrease;the equilibrium quantity may increase or decrease. 
C) the equilibrium price of DVD players may increase or decrease;the equilibrium quantity will increase. 
D) the equilibrium price of DVD players will increase;the equilibrium quantity will decrease.

Question 14

If the price of peaches,a substitute for plums,increases the demand for plums will decrease.

Accepted Answer

A) True 
 B)False

Question 15

Select the phrase that correctly completes the following statement."A decrease in the number of manufacturers caused a decrease in the supply of sailboats.As a result,

Accepted Answer

A) the price of sailboats increased and the demand for sailboats decreased." 
B) the equilibrium quantity of sailboats increased." 
C) the price of sailboats increased and the quantity of sailboats demanded decreased." 
D) the price of sailboats increased.The higher price caused the supply of sailboats to increase." 
A) the price of sailboats increased and the demand for sailboats decreased." 
B) the equilibrium quantity of sailboats increased." 
C) the price of sailboats increased and the quantity of sailboats demanded decreased." 
D) the price of sailboats increased.The higher price caused the supply of sailboats to increase."

Question 16

Table 3-3
  
-Refer to Table 3-3.The table contains information about the sorghum market.Use the table to answer the following questions.
a.What are the equilibrium price and quantity of sorghum?
b.Suppose the prevailing price is $6 per bushel.Is there a shortage or a surplus in the market?
c.What is the quantity of the shortage or surplus?
d.How many bushels will be sold if the market price is $6 per bushel?
e.If the market price is $6 per bushel,what must happen to restore equilibrium in the market?
f.At what price will suppliers be able to sell 36,000 bushels of sorghum?
g.Suppose the market price is $14 per bushel.Is there a shortage or a surplus in the market?
h.What is the quantity of the shortage or surplus?
i.How many bushels will be sold if the market price is $14 per bushel?
j.If the market price is $14 per bushel,what must happen to restore equilibrium in the market?

Accepted Answer

a.Equilibrium price = $10;Equilibrium qu

Question 17

During the 1990s positive technological change in the production of chicken caused the price of chicken to fall.Holding everything else constant,how would this affect the market for pork (a substitute for chicken)?

Accepted Answer

A) The supply of pork would increase and the equilibrium price of pork would decrease. 
B) The demand for pork would decrease and the equilibrium price of pork would decrease. 
C) The demand for pork would increase because consumers could afford to buy more chicken and pork. 
D) The demand for pork would decrease and the equilibrium price of pork would increase. 
A) The supply of pork would increase and the equilibrium price of pork would decrease. 
B) The demand for pork would decrease and the equilibrium price of pork would decrease. 
C) The demand for pork would increase because consumers could afford to buy more chicken and pork. 
D) The demand for pork would decrease and the equilibrium price of pork would increase.

Question 18

Table 3-1
  
-Refer to Table 3-1.The table above shows the demand schedules for Kona coffee of two individuals (Luke and Ravi)and the rest of the market.At a price of $4,the quantity demanded in the market would be

Accepted Answer

A) 40 lbs. 
B) 70 lbs. 
C) 110 lbs. 
D) 150 lbs. 
A) 40 lbs. 
B) 70 lbs. 
C) 110 lbs. 
D) 150 lbs.

Question 19

What is the difference between a demand schedule and a demand curve?

Accepted Answer

A demand schedule is a table that shows

Question 20

Assume that the price for lawn care has fallen and sales of lawn care services have also fallen.One can conclude that

Accepted Answer

A) the law of supply has been violated. 
B) the number of lawn care service companies has increased. 
C) the demand for lawn care service has decreased. 
D) lawn care services are deliberately charging low prices because they want to discourage people from maintaining their own lawns. 
A) the law of supply has been violated. 
B) the number of lawn care service companies has increased. 
C) the demand for lawn care service has decreased. 
D) lawn care services are deliberately charging low prices because they want to discourage people from maintaining their own lawns.

A surplus occurs when the market price is lower than the equilibrium price.

At market equilibrium,

An increase in the equilibrium quantity of a product will result

Which of the following would cause the equilibrium price of ketchup to increase and the equilibrium quantity of ketchup to decrease?

An increase in population results in an increase in demand.

The income effect explains why there is a direct relationship between the price of a product and the quantity of the product demanded.

Table 3-2 -Refer to Table 3-2.The table above shows the demand schedules for cashews of two individuals (Jordy and Amy)and the rest of the market.If the price of cashews rises from $4 to $6,the market quantity demanded would

Factory incentives on cell phones have encouraged consumers to upgrade their phones.How does this affect the market for bluetooth headsets?

Last month,the Tecumseh Corporation supplied 400 units of three-ring binders at $6 per unit.This month,the company supplied the same quantity of binders at $4 per unit.Based on this evidence,Tecumseh has experienced

Which of the following describes a characteristic of a perfectly competitive market?

Assume that both the demand curve and the supply curve for DVD players shift to the left but the supply curve shifts more than the demand curve.As a result,

If the price of peaches,a substitute for plums,increases the demand for plums will decrease.

Select the phrase that correctly completes the following statement."A decrease in the number of manufacturers caused a decrease in the supply of sailboats.As a result,

During the 1990s positive technological change in the production of chicken caused the price of chicken to fall.Holding everything else constant,how would this affect the market for pork (a substitute for chicken)?

Table 3-1 -Refer to Table 3-1.The table above shows the demand schedules for Kona coffee of two individuals (Luke and Ravi)and the rest of the market.At a price of $4,the quantity demanded in the market would be

What is the difference between a demand schedule and a demand curve?

Assume that the price for lawn care has fallen and sales of lawn care services have also fallen.One can conclude that

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Economic Efficiency,government Price Setting,and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation,unemployment,and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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

A surplus occurs when the market price is lower than the equilibrium price.

At market equilibrium,

An increase in the equilibrium quantity of a product will result

Which of the following would cause the equilibrium price of ketchup to increase and the equilibrium quantity of ketchup to decrease?

An increase in population results in an increase in demand.

The income effect explains why there is a direct relationship between the price of a product and the quantity of the product demanded.

Table 3-2 -Refer to Table 3-2.The table above shows the demand schedules for cashews of two individuals (Jordy and Amy)and the rest of the market.If the price of cashews rises from $4 to $6,the market quantity demanded would

Factory incentives on cell phones have encouraged consumers to upgrade their phones.How does this affect the market for bluetooth headsets?

Last month,the Tecumseh Corporation supplied 400 units of three-ring binders at $6 per unit.This month,the company supplied the same quantity of binders at $4 per unit.Based on this evidence,Tecumseh has experienced

Which of the following describes a characteristic of a perfectly competitive market?

Assume that both the demand curve and the supply curve for DVD players shift to the left but the supply curve shifts more than the demand curve.As a result,

If the price of peaches,a substitute for plums,increases the demand for plums will decrease.

Select the phrase that correctly completes the following statement."A decrease in the number of manufacturers caused a decrease in the supply of sailboats.As a result,

During the 1990s positive technological change in the production of chicken caused the price of chicken to fall.Holding everything else constant,how would this affect the market for pork (a substitute for chicken)?

Table 3-1 -Refer to Table 3-1.The table above shows the demand schedules for Kona coffee of two individuals (Luke and Ravi)and the rest of the market.At a price of $4,the quantity demanded in the market would be

What is the difference between a demand schedule and a demand curve?

Assume that the price for lawn care has fallen and sales of lawn care services have also fallen.One can conclude that

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Economic Efficiency,government Price Setting,and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation,unemployment,and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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