Question 1

Figure 3-7 
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for ramen noodles,an inferior good.Which panel describes what happens in this market as a result of an increase in income?

Accepted Answer

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

Question 2

If the sales of carbonated sodas continue to decline as more cities impose soda taxes on these beverages,this will likely

Accepted Answer

A) increase the demand for premium water,because premium water and carbonated sodas are considered complements. 
B) increase the demand for premium water,because premium water and carbonated sodas are considered substitutes. 
C) decrease the demand for premium water,because premium water is considered an inferior good and carbonated sodas are considered normal goods. 
D) decrease the demand for premium water,because premium water is considered a normal good and carbonated sodas are considered inferior goods.

Question 3

A decrease in the price of inputs will cause the supply curve for a product to shift to the right.

Accepted Answer

A) True 
 B)False

Question 4

When Toyota introduced its 2010 Prius,it announced that the average retail price of the 2010 model would be lower than the average retail price was for the equivalent 2009 model.Which of the following would explain the price differential?

Accepted Answer

A) The demand for the Prius had increased,and the supply of the Prius remained unchanged. 
B) The supply of the Prius had decreased,and the demand for the Prius remained unchanged. 
C) The demand for the Prius had decreased,and the supply of the Prius had increased. 
D) The demand for the Prius had increased,and the supply of the Prius had decreased.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Which of the following would cause both the equilibrium price and equilibrium quantity of barley (assume that barley is an inferior good)to increase?

Accepted Answer

A) an increase in consumer income 
B) a drought that sharply reduces barley output 
C) a decrease in consumer income 
D) unusually good weather that results in a bumper crop of barley

Question 7

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.

Question 8

If pilots and flight attendants agree to wage and benefit reductions in the wake of the financial difficulties in the airline industry,what impact would this have on the supply and demand in the market for airline service,assuming no other changes take place in this market?

Accepted Answer

The answer of If pilots and flight attendants agree to...

Question 9

Which of the following would shift the supply curve for energy drinks to the left?

Accepted Answer

A) a decrease in the expected future price of energy drinks 
B) an increase in consumer income (assuming that energy drinks are normal goods) 
C) a decrease in the number of firms that produce energy drinks 
D) a decrease in the price of an input used to produce energy drinks

Question 10

The income effect of a price change results in a

Accepted Answer

A) shift of the demand curve when income changes. 
B) movement along the demand curve due to a change in relative prices. 
C) shift of the demand curve due to a change in purchasing power brought about by the price change. 
D) movement along the demand curve due to a change in purchasing power brought about by the price change.

Question 11

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.If the price of Kona coffee rises from $4 to $5,the market quantity demanded would

Accepted Answer

A) decrease by 35 lbs. 
B) increase by 115 lbs. 
C) increase by 35 lbs. 
D) decrease by 115 lbs.

Question 12

What is the Law of Demand.

Accepted Answer

The answer of What is the Law of Demand....

Question 13

Suppose that McDonald's successfully implements self-serve kiosks in their restaurants,and this investment in technology allows the company to reduce the number of employees at each location.All else equal,this technological improvement would ________ the equilibrium price for its products and ________ the equilibrium quantity consumed.

Accepted Answer

A) increase; increase 
B) increase; decrease 
C) decrease; increase 
D) decrease; decrease

Question 14

Suppose that when the price of ice cream increases,Liza decreases her purchase of hot fudge.To Liza

Accepted Answer

A) ice cream and hot fudge are complements. 
B) ice cream and hot fudge and substitutes. 
C) ice cream and hot fudge are normal goods. 
D) ice cream is a normal good and hot fudge is an inferior good.

Question 15

Assume that the demand curve for DVD players shifts to the left and the supply curve for DVD players shifts to the right,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 decrease; the equilibrium quantity will increase.

Question 16

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.

Question 17

Figure 3-2 
-Refer to Figure 3-2.A decrease in the number of firms in the market 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 18

In July,market analysts predict that the price of gold will rise in August.What happens in the gold market in July,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 increase. 
D) The demand curve shifts to the left.

Question 19

The substitution effect explains why there is an inverse relationship between the price of a product and the quantity of the product demanded.

Accepted Answer

A) True 
 B)False

Question 20

If the price of smartphones was to increase,then

Accepted Answer

A) the demand for smartphone apps would decrease. 
B) the demand for smartphone apps would increase. 
C) the quantity of smartphone apps demanded would increase. 
D) the quantity of smartphone apps demanded would decrease.

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

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for ramen noodles,an inferior good.Which panel describes what happens in this market as a result of an increase in income?

If the sales of carbonated sodas continue to decline as more cities impose soda taxes on these beverages,this will likely

A decrease in the price of inputs will cause the supply curve for a product to shift to the right.

When Toyota introduced its 2010 Prius,it announced that the average retail price of the 2010 model would be lower than the average retail price was for the equivalent 2009 model.Which of the following would explain the price differential?

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

Which of the following would cause both the equilibrium price and equilibrium quantity of barley (assume that barley is an inferior good) to increase?

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

If pilots and flight attendants agree to wage and benefit reductions in the wake of the financial difficulties in the airline industry,what impact would this have on the supply and demand in the market for airline service,assuming no other changes take place in this market?

Which of the following would shift the supply curve for energy drinks to the left?

The income effect of a price change results in a

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.If the price of Kona coffee rises from $4 to $5,the market quantity demanded would

What is the Law of Demand.

Suppose that when the price of ice cream increases,Liza decreases her purchase of hot fudge.To Liza

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

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

Figure 3-2 -Refer to Figure 3-2.A decrease in the number of firms in the market would be represented by a movement from

In July,market analysts predict that the price of gold will rise in August.What happens in the gold market in July,holding everything else constant?

The substitution effect explains why there is an inverse relationship between the price of a product and the quantity of the product demanded.

If the price of smartphones was to increase,then