Question 1

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 2

Figure 3.1 
-Refer to Figure 3.1.Which movement reflects a decrease in the price of a substitute good?

Accepted Answer

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

Question 3

Figure 3.8 
-Refer to Figure 3.8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D2 and S1 (point C). Which of the following changes would cause the equilibrium to change to point B?

Accepted Answer

A) A positive change in the technology used to produce apples and a decrease in the price of oranges, a substitute for apples 
B) An increase in the wages of apple workers and an increase in the price of oranges, a substitute for apples 
C) An increase in the number of apple producers and a decrease in the number of apple trees as a result of disease 
D) A decrease in the wages of apple workers and an increase in the price of oranges, a substitute for apples

Question 4

A shortage occurs when the market price is lower than the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 5

If an increase in income leads to in an increase in the demand for peanut butter, then peanut butter is:

Accepted Answer

A) a neutral good. 
B) a normal good. 
C) a necessity. 
D) a complement.

Question 6

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 7

What are the two effects that explain the Law of Demand? Briefly explain each effect.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of What are the two effects that explain...

Question 8

An increase in the price of off-road vehicles will result in:

Accepted Answer

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

Question 9

If an increase in income leads to a decrease in the demand for popcorn, then popcorn is:

Accepted Answer

A) an inferior good. 
B) a neutral good. 
C) a necessity. 
D) a normal good.

Question 10

All else equal, the decrease in consumer preference predicted by Apple for its iPhone 5 would be represented by a________.

Accepted Answer

A) shift of the supply curve for iPhones to the right. 
B) shift of the supply curve for iPhones to the left. 
C) shift of the demand curve for iPhones to the right. 
D) shift of the demand curve for iPhones to the left.

Question 11

Studies have shown links between calcium consumption and a reduction in osteoporosis.How does this affect the market for calcium?

Accepted Answer

A) The calcium supply curve shifts to the right because of a change in tastes in favour of calcium. 
B) The calcium demand curve shifts to the right because of a change in tastes in favour of calcium. 
C) The calcium demand curve shifts to the left because this new information will increase the price of calcium. 
D) The calcium supply curve shifts to the left because this new information will increase the price of calcium.

Question 12

Figure 3.8 
-Refer to Figure 3.8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D1 and S1 (point A). If there is an increase in the wages of apple workers and an increase in the price of oranges, a substitute for apples, the equilibrium could move to which point?

Accepted Answer

A) None of the points shown 
B) B 
C) C 
D) E

Question 13

Figure 3.4 
-Refer to Figure 3.4.What occurs if the price is $10?

Accepted Answer

A) There would be a surplus of 600 units. 
B) There would be a shortage of 600 units. 
C) There would be a surplus of 200 units. 
D) There would be a shortage of 200 units.

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

What is the law of supply? What does this law imply about the shape of the supply curve?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of What is the law of supply? What...

Question 16

A decrease in the demand for soft drinks due to changes in consumer tastes, accompanied by an increase in the supply of soft drinks as a result of reductions in input 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 17

If, in response to a decrease in the price of grapes, the quantity of grapes demanded increases, economists would describe this as:

Accepted Answer

A) an increase in demand. 
B) an increase in quantity demanded. 
C) a change in consumer income. 
D) an increase in consumers' taste for grapes.

Question 18

Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left, but the supply curve shifts more than the demand curve.As a result,

Accepted Answer

A) both the equilibrium price and quantity of MP3 players will decrease. 
B) the equilibrium price of MP3 players will decrease; the equilibrium quantity will increase. 
C) the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will decrease. 
D) the equilibrium price of MP3 players will increase; the equilibrium quantity will decrease.

Question 19

An increase 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 20

When deciding on which new products to develop, a firm must devote people, time, and money to designing a new product.Because any firm has only limited resources, it________.

Accepted Answer

A) should wait until its competitors develop a similar product before deciding on devoting resources to its own product development. 
B) is not able to develop more than one new product at a time. 
C) must be certain that the product it chooses to develop will be successful or it will not be able to stay in business. 
D) faces a trade-off, because resources used to develop one product will not be available to develop another product.

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 rice.What happens in this market if buyers expect the price of rice to fall?

Figure 3.1 -Refer to Figure 3.1.Which movement reflects a decrease in the price of a substitute good?

Figure 3.8 -Refer to Figure 3.8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₂ and S₁ (point C) . Which of the following changes would cause the equilibrium to change to point B?

A shortage occurs when the market price is lower than the equilibrium price.

If an increase in income leads to in an increase in the demand for peanut butter, then peanut butter is:

Figure 3.2 -Refer to Figure 3.2.A decrease in productivity would be represented by a movement from:

What are the two effects that explain the Law of Demand? Briefly explain each effect. _ _

An increase in the price of off-road vehicles will result in:

If an increase in income leads to a decrease in the demand for popcorn, then popcorn is:

All else equal, the decrease in consumer preference predicted by Apple for its iPhone 5 would be represented by a________.

Studies have shown links between calcium consumption and a reduction in osteoporosis.How does this affect the market for calcium?

Figure 3.4 -Refer to Figure 3.4.What occurs if the price is $10?

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

What is the law of supply? What does this law imply about the shape of the supply curve? _ _

A decrease in the demand for soft drinks due to changes in consumer tastes, accompanied by an increase in the supply of soft drinks as a result of reductions in input prices, will result in:

If, in response to a decrease in the price of grapes, the quantity of grapes demanded increases, economists would describe this as:

Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left, but the supply curve shifts more than the demand curve.As a result,

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

When deciding on which new products to develop, a firm must devote people, time, and money to designing a new product.Because any firm has only limited resources, it________.

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 rice.What happens in this market if buyers expect the price of rice to fall?

Figure 3.1 -Refer to Figure 3.1.Which movement reflects a decrease in the price of a substitute good?

Figure 3.8 -Refer to Figure 3.8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D2 and S1 (point C) . Which of the following changes would cause the equilibrium to change to point B?

A shortage occurs when the market price is lower than the equilibrium price.

If an increase in income leads to in an increase in the demand for peanut butter, then peanut butter is:

Figure 3.2 -Refer to Figure 3.2.A decrease in productivity would be represented by a movement from:

What are the two effects that explain the Law of Demand? Briefly explain each effect. _____________________________________________________________________________________________ _____________________________________________________________________________________________

An increase in the price of off-road vehicles will result in:

If an increase in income leads to a decrease in the demand for popcorn, then popcorn is:

All else equal, the decrease in consumer preference predicted by Apple for its iPhone 5 would be represented by a________.

Studies have shown links between calcium consumption and a reduction in osteoporosis.How does this affect the market for calcium?

Figure 3.4 -Refer to Figure 3.4.What occurs if the price is $10?

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

What is the law of supply? What does this law imply about the shape of the supply curve? _____________________________________________________________________________________________ _____________________________________________________________________________________________

A decrease in the demand for soft drinks due to changes in consumer tastes, accompanied by an increase in the supply of soft drinks as a result of reductions in input prices, will result in:

If, in response to a decrease in the price of grapes, the quantity of grapes demanded increases, economists would describe this as:

Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left, but the supply curve shifts more than the demand curve.As a result,

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

When deciding on which new products to develop, a firm must devote people, time, and money to designing a new product.Because any firm has only limited resources, it________.

Figure 3.8 -Refer to Figure 3.8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₂ and S₁ (point C) . Which of the following changes would cause the equilibrium to change to point B?

What are the two effects that explain the Law of Demand? Briefly explain each effect. _ _

What is the law of supply? What does this law imply about the shape of the supply curve? _ _