Question 1

If the price of a product is expected to increase in the future,the supply today will increase.

Accepted Answer

A) True 
 B)False

Question 2

Table 3-2
 $\begin{array}{|c|c|c|c|c|}
\hline&&&\text { Rest of }\
\text { Caviar } & \text { Ari's } & \text { Sonia's }&\text { Market }&\text { Market }\
\text { Tea } & \text { Quantity } & \text { Quantity }& \text { Quantity }& \text { Quantity }\
\text { Price per lb. }&\text { Demanded } &\text { Demanded } &\text { Demanded } &\text { Demanded }   \
\text { (dollars) } & \text {  (oz.) }& \text {  (oz.)) }& \text {  (oz.) }& \text {  (oz.) } \
\hline \$ 75 & 6 & 0 & 46 & \
\hline 65 & 18 & 6 & 64 & \
\hline 55 & 28 & 14 & 136 & \
\hline 45 & 36 & 24 & 170 & \
\hline 35 & 44 & 36 & 220 & \
\hline
\end{array}$
-Refer to Table 3-2.The table above shows the demand schedules for caviar of two individuals (Ari and Sonia)and the rest of the market.If the price of caviar rises from $65 to $75,the market quantity demanded would

Accepted Answer

A)  decrease by 36 oz. 
B)  increase by 52 oz. 
C)  increase by 36 oz. 
D)  decrease by 52 oz.

Question 3

Assume that microbrewery beer is a normal good.Prices of microbrewery beer have risen steadily in recent years.Over this same period,prices for fermenting vats used in beer making have also risen and consumer incomes have fallen.Which of the following best explains the rising prices of microbrewery beer?

Accepted Answer

A)  The supply curve for microbrewery beer has shifted to the left while the demand curve for microbrewery beer has shifted to the right. 
B)  The demand curve for microbrewery beer has shifted to the left more than the supply curve has shifted to the left. 
C)  The demand curve and the supply curve for microbrewery beer have both shifted to the right. 
D)  The supply curve for microbrewery beer has shifted to the left more than the demand curve has shifted to the left.

Question 4

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.

Question 5

In 2004,hurricanes destroyed a large portion of Florida's grapefruit crop.How did this affect the market price and market quantity of grapefruit?

Accepted Answer

The answer of In 2004,hurricanes destroyed a large portion of...

Question 6

Which of the following would cause an increase in the supply of cheese?

Accepted Answer

A)  a decrease in the price of wine (assuming that cheese and wine are complements) 
B)  an increase in the price of cheese 
C)  an increase the price of a product that producers sell instead of cheese 
D)  an increase in the number of firms that produce cheese

Question 7

An increase in the demand for LED light bulbs due to changes in consumer tastes,accompanied by an increase in the supply of LED light bulbs as a result of government subsidies,will result in

Accepted Answer

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

Question 8

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 9

Figure 3-2
 
-Refer to Figure 3-2.A technological advancement 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.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

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 increases and productivity increases.
b.Income increases and the price of inputs decrease.
c.The number of firms in the market decreases and income increases.
d.Consumer preference increases and the price of a complement decreases.
e.The price of a substitute in consumption decreases and the price of a substitute in production decreases.

Accepted Answer

The answer of In each of the following situations,list what...

Question 12

Figure 3-1
 
-Refer to Figure 3-1.An increase in taste or preference 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 13

A competitive market equilibrium is a market equilibrium with many buyers and sellers.

Accepted Answer

A) True 
 B)False

Question 14

As the number of firms in a market increases,the supply curve will shift to the left and the equilibrium price will rise.

Accepted Answer

A) True 
 B)False

Question 15

An increase in the price of pineapples will result in

Accepted Answer

A)  a smaller quantity of pineapples supplied. 
B)  a larger quantity of pineapples supplied. 
C)  a decrease in the demand for pineapples. 
D)  an increase in the supply of pineapples.

Question 16

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 17

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

Question 18

Figure 3-2
 
-Refer to Figure 3-2.A decrease in productivity 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.

Question 19

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

Accepted Answer

A)  the quantity demanded equals the quantity supplied. The product will then no longer be scarce. 
B)  quantity demanded equals quantity supplied. The equilibrium price will then be greater than the market price. 
C)  only wealthy consumers will be able to afford the product. 
D)  quantity demanded equals quantity supplied. The market price will then equal the equilibrium price.

Question 20

In recent years,the demand for orange juice in the United States has fallen and the supply of orange juice has also fallen,with the decrease in supply being larger than the decrease in demand.In this situation,the equilibrium price of orange juice will have ________ and the equilibrium quantity of orange juice will have ________.

Accepted Answer

A)  decreased; increased 
B)  decreased; decreased 
C)  increased; decreased 
D)  increased; increased

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

If the price of a product is expected to increase in the future,the supply today will increase.

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

In 2004,hurricanes destroyed a large portion of Florida's grapefruit crop.How did this affect the market price and market quantity of grapefruit?

Which of the following would cause an increase in the supply of cheese?

An increase in the demand for LED light bulbs due to changes in consumer tastes,accompanied by an increase in the supply of LED light bulbs as a result of government subsidies,will result in

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

Figure 3-2 -Refer to Figure 3-2.A technological advancement would be represented by a movement from

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

Figure 3-1 -Refer to Figure 3-1.An increase in taste or preference would be represented by a movement from

A competitive market equilibrium is a market equilibrium with many buyers and sellers.

As the number of firms in a market increases,the supply curve will shift to the left and the equilibrium price will rise.

An increase in the price of pineapples will result in

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.

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

Figure 3-2 -Refer to Figure 3-2.A decrease in productivity would be represented by a movement from

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