Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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 3

An inferior good is a good for which the quantity demanded decreases as the price increases, holding everything else constant.

Accepted Answer

A) True 
 B)False

Question 4

Technological advances have resulted in lower prices for digital cameras. What is the impact of this on the market for traditional (non-digital) cameras?

Accepted Answer

A)  The demand curve for traditional cameras shifts to the right. 
B)  The supply curve for traditional cameras shifts to the right. 
C)  The demand curve for traditional cameras shifts to the left. 
D)  The supply curve for traditional cameras shifts to the left.

Question 5

-Refer to Figure 3-2. A decrease in the price of the product 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 6

What is the ceteris paribus condition?

Accepted Answer

The answer of What is the ceteris paribus condition?...

Question 7

Explain the differences between a change in supply and a change in quantity supplied.

Accepted Answer

The answer of Explain the differences between a change in...

Question 8

A decrease in quantity supplied is represented by a leftward shift of the supply curve.

Accepted Answer

A) True 
 B)False

Question 9

Use the following supply schedule for cherries to draw a graph of the supply curve. Be sure to label the supply curve and each axis, and show each point on the supply curve.

Accepted Answer

The answer of Use the following supply schedule for cherries...

Question 10

Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity. What happens in the market for electric vehicles if the government offers incentives to manufacturers to produce more electric vehicles?

Accepted Answer

A)  D increases, S no change, P and Q increase 
B)  S increases, D no change, P decreases, Q increases 
C)  D and S increase, P and Q decrease 
D)  D no change, S increases, P decreases, Q decreases

Question 11

The Internet has created a new category in the book selling market, namely, the 'barely used' book. How does the availability of barely used books affect the market for new books?

Accepted Answer

A)  The demand curve for new books shifts to the right. 
B)  The demand curve for new books shifts to the left. 
C)  The supply curve for new books shifts to the right. 
D)  The supply curve for new books shifts to the left.

Question 12

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 13

In June, buyers of titanium expect that the price of titanium will fall in July. What happens in the titanium market in June, holding everything else constant?

Accepted Answer

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

Question 14

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 15

In each of the following situations, list what will happen to the equilibrium price and the equilibrium quantity for a particular product, which is a normal good.
a. The population increases and the price of inputs increase.
b. The price of a complement increases and technology advances.
c. The number of firms in the market increases and income increases.
d. Price is expected to increase in the future.
e. Consumer preference increases and the price of a substitute in production decreases.

Accepted Answer

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

Question 16

A(n) ________ is represented by a leftward shift of the demand curve while a(n) ________ is represented by a movement along a given demand curve.

Accepted Answer

A)  decrease in demand; increase in demand 
B)  decrease in demand; increase in quantity demanded 
C)  increase in demand; decrease in quantity demanded 
D)  decrease in quantity demanded; decrease in demand

Question 17

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 18

If the price of peaches, a substitute for plums, decreases the demand for plums will increase.

Accepted Answer

A) True 
 B)False

Question 19

If a demand curve shifts to the left, then

Accepted Answer

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

Question 20

Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for potatoes and that steak and potatoes are complements. What panel describes what happens in this market when the price of steak rises?

Accepted Answer

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

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

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

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

An inferior good is a good for which the quantity demanded decreases as the price increases, holding everything else constant.

Technological advances have resulted in lower prices for digital cameras. What is the impact of this on the market for traditional (non-digital) cameras?

-Refer to Figure 3-2. A decrease in the price of the product would be represented by a movement from

What is the ceteris paribus condition?

Explain the differences between a change in supply and a change in quantity supplied.

A decrease in quantity supplied is represented by a leftward shift of the supply curve.

Use the following supply schedule for cherries to draw a graph of the supply curve. Be sure to label the supply curve and each axis, and show each point on the supply curve.

Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity. What happens in the market for electric vehicles if the government offers incentives to manufacturers to produce more electric vehicles?

The Internet has created a new category in the book selling market, namely, the 'barely used' book. How does the availability of barely used books affect the market for new books?

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?

In June, buyers of titanium expect that the price of titanium will fall in July. What happens in the titanium market in June, holding everything else constant?

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

A(n) is represented by a leftward shift of the demand curve while a(n) is represented by a movement along a given demand curve.

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

If the price of peaches, a substitute for plums, decreases the demand for plums will increase.

If a demand curve shifts to the left, then

Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for potatoes and that steak and potatoes are complements. What panel describes what happens in this market when the price of steak rises?