Question 1

A decrease in quantity demanded because of an increase in price is represented by a

Accepted Answer

A)  rightward shift of the demand curve. 
B)  leftward shift of the demand curve. 
C)  movement up and to the left along the demand curve. 
D)  movement down and to the right along the demand curve.

Question 2

The quantity demanded of a good or service is the amount that

Accepted Answer

A)  a consumer would like to buy but might not be able to afford. 
B)  is actually bought during a given time period at a given price. 
C)  consumers plan to buy during a given time period at a given price. 
D)  firms are willing to sell during a given time period at a given price.

Question 3

The equilibrium quantity of a good will increase and its equilibrium price might rise, fall, or stay the same when

Accepted Answer

A)  its demand and supply both increase. 
B)  its demand increases and supply decreases. 
C)  its demand decreases and supply increases. 
D)  its demand and supply both decrease.

Question 4

When supply and demand both increase, the

Accepted Answer

A)  quantity definitely decreases. 
B)  quantity definitely increases. 
C)  price definitely increases. 
D)  price definitely decreases.

Question 5

Suppose the equilibrium price of bottled water has risen from $1.00 per bottle to $2.00 per bottle and the equilibrium quantity has increased. These changes are a result of a ________ shift of the ________ curve for bottled water.

Accepted Answer

A)  rightward; demand 
B)  rightward; supply 
C)  leftward; supply 
D)  leftward; demand

Question 6

Twenty years ago a stove cost $300 and a refrigerator cost $1,500. Today a stove costs $600, while a refrigerator costs $1,800. Which of the following statements is TRUE?

Accepted Answer

A)  The relative price of stoves and refrigerators has not changed. 
B)  The relative price of a refrigerator has increased. 
C)  The relative price of a stove has increased. 
D)  The money price of a refrigerator has fallen.

Question 7

What is the effect on the price and quantity of a product if the demand decreases and the supply simultaneously increases?

Accepted Answer

The answer of What is the effect on the price...

Question 8

-The figure above shows supply curves for soft drinks. Suppose the economy is at point a. A decrease in the price of sugar used to make soft drinks is shown as a movement from point a to a point such as

Accepted Answer

A)  none of the points that are illustrated. 
B)  point b. 
C)  point c. 
D)  point d.

Question 9

The quantity demanded is

Accepted Answer

A)  always equal to the equilibrium quantity. 
B)  independent of the price of the good. 
C)  the amount of a good that consumers plan to purchase at a particular price. 
D)  independent of consumers' buying plans.

Question 10

Coffee and sugar are complements. If a poor sugar harvest leads to an increase in the price of sugar, there will also be

Accepted Answer

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

Question 11

-The equilibrium price in the above figure is

Accepted Answer

A)  $2. 
B)  $4. 
C)  $6. 
D)  $8.

Question 12

All shredded wheat producers have decided to add a new ingredient to shredded wheat, the "crunch enhancer." Crunch enhancer keeps cereals crisper longer in milk and, as a result, consumers decide they like shredded wheat more than before. What happens to the supply and demand curves for shredded wheat now that is costs more to produce and consumers like it better?

Accepted Answer

A)  The supply and demand curves both shift rightward. 
B)  The supply curve shifts rightward and the demand curve doesn't shift. 
C)  The supply curve shifts leftward and the demand curve shifts rightward. 
D)  The supply curve shifts leftward and the demand curve doesn't shift.

Question 13

Your friend Tony opened a pizzeria. You helped him to advertise his pizza, which is in fact the best pizza in town. As a result, the demand for Tony's pizza increases and your friend, noticing lines of customers, raises the price of his pizza. But then he fears that the higher price will cause demand to decline, which will cause the price to drop. Is Tony right in his analysis of the situation? Explain.

Accepted Answer

The answer of Your friend Tony opened a pizzeria. You...

Question 14

Suppose people buy more of good 1 when the price of good 2 falls. These goods are

Accepted Answer

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

Question 15

-The above figures show the market for hamburger meat. Which figure shows the effect of a newly invented machine which grinds beef at twice the speed previously possible?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D

Question 16

At a price of $10 in the above figure, there is

Accepted Answer

A)  a surplus of 200 units. 
B)  a shortage of 200 units. 
C)  a surplus of 400 units. 
D)  a shortage of 400 units.

Question 17

Which of the following influences does NOT shift the supply curve?

Accepted Answer

A)  a rise in the wages paid workers who produce the good 
B)  the development of new technology 
C)  people deciding that they want to buy more of the product 
D)  a decrease in the number of suppliers

Question 18

In the above figure, in order for the equilibrium price to remain constant while the equilibrium quantity increases, the

Accepted Answer

A)  supply and demand curves both would have to shift leftward. 
B)  supply curve would have to shift leftward and the demand curve would have to shift rightward. 
C)  supply curve would have to shift rightward and the demand curve would have to shift leftward. 
D)  supply and demand curves both would have to shift rightward.

Question 19

-The figure above shows supply curves for soft drinks. Suppose the economy is at point a. A movement to point c could be the result of

Accepted Answer

A)  a decrease in technology. 
B)  a decrease in the relative price of a soft drink. 
C)  an increase in the relative price of a soft drink. 
D)  an increase in the money price of a soft drink.

Question 20

-In the figure above, which movement could be the result of the development of a new, more efficient refining technology?

Accepted Answer

A)  point a to point e 
B)  point a to point b 
C)  point a to point c 
D)  point a to point d

Exam 3: Demand and Supply