Question 1

In October, market analysts predict that the price of platinum will fall in November.What happens in the platinum market in October, holding everything else constant?

Accepted Answer

A) The supply curve shifts to the right. 
B) The supply curve shifts to the left. 
C) The quantity demanded and the quantity supplied of platinum increase. 
D) The demand curve shifts to the right.

Question 2

An increase in the demand for lobster due to changes in consumer tastes, accompanied by a decrease in the supply of lobster as a result of bad weather reducing the number of fishermen trapping lobster, will result in

Accepted Answer

A) a decrease in the equilibrium quantity of lobster and no change in the equilibrium price. 
B) an increase in the equilibrium price of lobster and no change in the equilibrium quantity. 
C) an increase in the equilibrium price of lobster; the equilibrium quantity may increase or decrease. 
D) a decrease in the equilibrium quantity of lobster; the equilibrium price may increase or decrease.

Question 3

Which of the following would shift the supply curve for MP3 players to the right?

Accepted Answer

A) an increase in the price of a substitute in production 
B) an increase in consumer income (assuming that all MP3 players are normal goods) 
C) a decrease in the number of firms that produce MP3 players 
D) a decrease in the price of an input used to produce MP3 players

Question 4

What is the difference between an "increase in demand" and an "increase in quantity demanded"?

Accepted Answer

A) There is no difference between the two terms; they both refer to a shift of the demand curve. 
B) An "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve. 
C) There is no difference between the two terms; they both refer to a movement downward along a given demand curve. 
D) An "increase in demand" is represented by a movement along a given demand curve, while an "increase in quantity demanded" is represented by a rightward shift of the demand curve.

Question 5

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)

Question 6

A change in supply is represented by a shift of the supply curve.

Accepted Answer

A) True 
 B)False

Question 7

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.

Question 8

If consumers believe the price of iPads will decrease in the future, this will cause the demand for iPads to decrease now.

Accepted Answer

A) True 
 B)False

Question 9

Table 3.1
 $\begin{array}{|c|c|c|c|c|}
\hline \begin{array}{c}
\text { Loose Leaf Tea } \
\text { Price per kg. } \
\text { (dollars) }
\end{array} & \begin{array}{c}
\text { Sunil's } \
\text { Quantity } \
\text { Demanded } \
\text { (kgs) }
\end{array} & \begin{array}{c}
\text { Mia's } \
\text { Quantity } \
\text { Demanded } \
\text { (kgs) }
\end{array} & \begin{array}{c}
\text { Rest of Market } \
\text { Quantity } \
\text { Demanded } \
\text { (kgs) }
\end{array} & \begin{array}{c}
\text { Market } \
\text { Quantity } \
\text { Demanded } \
\text { (kgs) }
\end{array} \
\hline \$ 8 & 4 & 0 & 30 & \
\hline 6 & 7 & 2 & 40 & \
\hline 5 & 9 & 3 & 51 & \
\hline 4 & 12 & 5 & 64 & \
\hline 3 & 15 & 8 & 90 & \
\hline
\end{array}$
-Refer to Table 3.1.The table above shows the demand schedules for loose-leaf tea of two individuals (Sunil and Mia)and the rest of the market.At a price of $5, the quantity demanded in the market would be

Accepted Answer

A) 51 kgs. 
B) 63 kgs. 
C) 76 kgs 
D) 146 kgs.

Question 10

At auction experts expect a Jacques Plante hockey card to get a higher price than Sidney Crosby's rookie card.Which of the following events would cause the price difference in these cards to get smaller?

Accepted Answer

A) The demand for Crosby cards decreases. 
B) The supply of Crosby rookie cards increases. 
C) The demand for Crosby rookie cards increases and the supply of Plante cards increases. 
D) The demand for Crosby rookie cards decreases and the demand for Plante cards increases.

Question 11

An increase in the quantity of a product supplied is caused by an increase in the price of the product.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following will shift the demand curve for a good?

Accepted Answer

A) a change in the technology used to produce the good 
B) an increase in the price of the good 
C) a decrease in the price of a complementary good 
D) a decrease in the price of the good

Question 13

In 2011, floods damaged the Canadian wheat and barley crops.In the market for grains

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.

Question 14

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.

Question 15

In 2011, floods prevented many prairie farmers from planting their wheat crops.How did this affect the market price and market quantity of wheat?

Accepted Answer

The answer of In 2011, floods prevented many prairie farmers...

Question 16

Auctions in recent years have resulted in higher prices paid for Jacques Plante (goalie)hockey cards than Sidney Crosby (forward)rookie cards.What is a reason for this difference in price?

Accepted Answer

A) There is a surplus of Plante hockey cards and a shortage of Crosby rookie cards. 
B) Many people are more fascinated by hockey goalies than by hockey forwards. 
C) There are more Crosby rookie cards available for collectors to buy than there are Plante cards. 
D) Plante was the first goalie to wear a mask in a game; the demand for his cards rose as wealthy former goalies attempted to buy them as thanks for still having teeth.

Question 17

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.

Question 18

Which of the following is expected to occur as the baby-boom generation ages?

Accepted Answer

A) The demand for baby clothes should increase. 
B) The demand for prescription drugs should decrease. 
C) The demand for medical services should increase. 
D) The demand for larger houses should increase.

Question 19

Figure 3.7
 
-Refer to Figure 3.7.Assume that the graphs in this figure represent the demand and supply curves for Fruitopia, a soft drink.Which panel describes what happens in the market for Fruitopia when the price of Snapple, a substitute product, decreases?

Accepted Answer

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

Question 20

If the number of firms producing mouthwash increases and consumer preference for mouthwash increases, the equilibrium price of mouthwash will definitely increase.

Accepted Answer

A) True 
 B)False

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

In October, market analysts predict that the price of platinum will fall in November.What happens in the platinum market in October, holding everything else constant?

An increase in the demand for lobster due to changes in consumer tastes, accompanied by a decrease in the supply of lobster as a result of bad weather reducing the number of fishermen trapping lobster, will result in

Which of the following would shift the supply curve for MP3 players to the right?

What is the difference between an "increase in demand" and an "increase in quantity demanded"?

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?

A change in supply is represented by a shift of the supply curve.

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

If consumers believe the price of iPads will decrease in the future, this will cause the demand for iPads to decrease now.

At auction experts expect a Jacques Plante hockey card to get a higher price than Sidney Crosby's rookie card.Which of the following events would cause the price difference in these cards to get smaller?

An increase in the quantity of a product supplied is caused by an increase in the price of the product.

Which of the following will shift the demand curve for a good?

In 2011, floods damaged the Canadian wheat and barley crops.In the market for grains

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

In 2011, floods prevented many prairie farmers from planting their wheat crops.How did this affect the market price and market quantity of wheat?

Auctions in recent years have resulted in higher prices paid for Jacques Plante (goalie) hockey cards than Sidney Crosby (forward) rookie cards.What is a reason for this difference in price?

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

Which of the following is expected to occur as the baby-boom generation ages?

Figure 3.7 -Refer to Figure 3.7.Assume that the graphs in this figure represent the demand and supply curves for Fruitopia, a soft drink.Which panel describes what happens in the market for Fruitopia when the price of Snapple, a substitute product, decreases?

If the number of firms producing mouthwash increases and consumer preference for mouthwash increases, the equilibrium price of mouthwash will definitely increase.