Question 1

If some consumers are 'first adopters', that is, they value having the latest technology products, a firm introduces new products because:

Accepted Answer

A) its competitors will not develop similar products. 
B) its older models have stopped selling. 
C) .it wants to improve existing models. 
D) by introducing new features, it can increase the demand for new models.

Question 2

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 3

An increase in consumer income causes a decrease in the demand for soft drinks (an inferior good here), accompanied by an increase in the supply of soft drinks as a result of falling sweetener prices, will result in:

Accepted Answer

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

Question 4

If the population increases and input prices decrease, the equilibrium quantity of a product will definitely increase.

Accepted Answer

A) True 
 B)False

Question 5

If a demand curve shifts to the right, then:

Accepted Answer

A) demand has increased. 
B) quantity demanded has increased. 
C) demand has decreased. 
D) quantity demanded has decreased.

Question 6

If the quantity of chocolate demanded decreases as the price of chocolate increases, economists would describe this as:

Accepted Answer

A) a decrease in demand. 
B) a decrease in quantity demanded. 
C) a change in consumer income. 
D) a decrease in consumers' taste for chocolate.

Question 7

Assume that the price for swimming pool maintenance services has risen and sales of these services have fallen. One can conclude that:

Accepted Answer

A) the law of supply has been violated. 
B) the demand for swimming pool maintenance services has increased. 
C) the supply of swimming pool maintenance services has decreased. 
D) swimming pool maintenance services are becoming more technologically advanced.

Question 8

If an increase in leather prices caused a decrease in the supply of baseball gloves, ________.

Accepted Answer

A) the price of baseballs increased, and the demand for baseballs decreased 
B) the equilibrium quantity of baseballs increased 
C) the price of baseballs increased, and the quantity demanded of baseballs decreased 
D) the price of baseballs increased; the higher price caused the supply of baseballs to increase

Question 9

Figure 3.1
 
-Refer to Figure 3.1. An increase in the expected future price of the product would be represented by a movement from:

Accepted Answer

A) A to B. 
B) B to A. 
C) D₁ to D₂. 
D) D₂ to D₁.

Question 10

Which of the following is evidence of a shortage of macadamias?

Accepted Answer

A) Firms lower the price of macadamias. 
B) The price of cashews is lowered in order to make up for the macadamia shortage. 
C) The equilibrium price of macadamias falls due to a decrease in demand. 
D) The quantity demanded of macadamias is greater than the quantity supplied.

Question 11

In January, buyers of gold expect that the price of gold will rise in February. What happens in the gold market in January, holding all else constant?

Accepted Answer

A) The supply curve shifts to the right. 
B) The demand curve shifts to the left. 
C) The demand curve shifts to the right. 
D) The quantity demanded increases.

Question 12

What is the difference between a 'supply schedule' and a 'supply curve'?
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Accepted Answer

The answer of What is the difference between a 'supply...

Question 13

Which of the following would cause both the equilibrium price and equilibrium quantity of potatoes (assume that potatoes are an inferior good)to decrease?

Accepted Answer

A) An increase in consumer income. 
B) A freeze that sharply reduces potato output. 
C) A decrease in consumer income. 
D) A technological advancement that results in a bumper crop of potatoes.

Question 14

A positive technological change will cause the supply of a good to increase.

Accepted Answer

A) True 
 B)False

Question 15

'Because apples and oranges are substitutes, an increase in the price of oranges will cause the demand for apples to increase. This initial shift in demand for apples results in a higher price for apples; this higher price will cause the demand curve for apples to shift to the right.' Which of the following correctly comments on this statement?

Accepted Answer

A) The statement will be true if consumer tastes for apples and oranges do not change. 
B) The statement is false because a change in the price of apples would not change the demand for apples. 
C) The statement is false because oranges are inferior goods; apples are normal goods. 
D) The statement is false because one cannot assume that apples and oranges are substitutes for all consumers.

Question 16

Figure 3.5
 
-Refer to Figure 3.5. At a price of $10, the quantity sold is:

Accepted Answer

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

Question 17

Figure 3.7
 
-Refer to Figure 3.7. Assume that the graphs in this figure represent the demand and supply curves for rice. What happens in this market if buyers expect the price of rice to fall?

Accepted Answer

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

Question 18

The law of demand implies, holding everything else constant, that as the price of ice cream:

Accepted Answer

A) increases, the demand for ice cream will increase. 
B) increases, the quantity of ice cream demanded will increase. 
C) decreases, the quantity of ice cream demanded will increase. 
D) decreases, the demand for ice cream will 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 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 20

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.

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

If some consumers are 'first adopters', that is, they value having the latest technology products, a firm introduces new products because:

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

An increase in consumer income causes a decrease in the demand for soft drinks (an inferior good here) , accompanied by an increase in the supply of soft drinks as a result of falling sweetener prices, will result in:

If the population increases and input prices decrease, the equilibrium quantity of a product will definitely increase.

If a demand curve shifts to the right, then:

If the quantity of chocolate demanded decreases as the price of chocolate increases, economists would describe this as:

Assume that the price for swimming pool maintenance services has risen and sales of these services have fallen. One can conclude that:

If an increase in leather prices caused a decrease in the supply of baseball gloves, ________.

Figure 3.1 -Refer to Figure 3.1. An increase in the expected future price of the product would be represented by a movement from:

Which of the following is evidence of a shortage of macadamias?

In January, buyers of gold expect that the price of gold will rise in February. What happens in the gold market in January, holding all else constant?

What is the difference between a 'supply schedule' and a 'supply curve'? _ _

Which of the following would cause both the equilibrium price and equilibrium quantity of potatoes (assume that potatoes are an inferior good) to decrease?

A positive technological change will cause the supply of a good to increase.

Figure 3.5 -Refer to Figure 3.5. At a price of $10, the quantity sold is:

Figure 3.7 -Refer to Figure 3.7. Assume that the graphs in this figure represent the demand and supply curves for rice. What happens in this market if buyers expect the price of rice to fall?

The law of demand implies, holding everything else constant, that as the price of ice cream:

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?

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

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

If some consumers are 'first adopters', that is, they value having the latest technology products, a firm introduces new products because:

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

An increase in consumer income causes a decrease in the demand for soft drinks (an inferior good here) , accompanied by an increase in the supply of soft drinks as a result of falling sweetener prices, will result in:

If the population increases and input prices decrease, the equilibrium quantity of a product will definitely increase.

If a demand curve shifts to the right, then:

If the quantity of chocolate demanded decreases as the price of chocolate increases, economists would describe this as:

Assume that the price for swimming pool maintenance services has risen and sales of these services have fallen. One can conclude that:

If an increase in leather prices caused a decrease in the supply of baseball gloves, ________.

Figure 3.1 -Refer to Figure 3.1. An increase in the expected future price of the product would be represented by a movement from:

Which of the following is evidence of a shortage of macadamias?

In January, buyers of gold expect that the price of gold will rise in February. What happens in the gold market in January, holding all else constant?

What is the difference between a 'supply schedule' and a 'supply curve'? _____________________________________________________________________________________________ _____________________________________________________________________________________________

Which of the following would cause both the equilibrium price and equilibrium quantity of potatoes (assume that potatoes are an inferior good) to decrease?

A positive technological change will cause the supply of a good to increase.

Figure 3.5 -Refer to Figure 3.5. At a price of $10, the quantity sold is:

Figure 3.7 -Refer to Figure 3.7. Assume that the graphs in this figure represent the demand and supply curves for rice. What happens in this market if buyers expect the price of rice to fall?

The law of demand implies, holding everything else constant, that as the price of ice cream:

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?

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

What is the difference between a 'supply schedule' and a 'supply curve'? _ _