Question 1

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 2

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

Accepted Answer

A)  the quantity demanded exceeds the quantity supplied. The market will then be in equilibrium. 
B)  quantity demanded equals quantity supplied. The equilibrium price will then be lower than the market price. 
C)  all consumers will be able to afford the product. 
D)  quantity demanded equals quantity supplied. The market price will then equal the equilibrium price.

Question 3

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 less than the demand curve. As a result,

Accepted Answer

A)  both the equilibrium price and quantity of MP3 players will decrease. 
B)  both the equilibrium price and quantity of MP3 players 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 4

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

Accepted Answer

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

Question 5

Which of the following will shift the demand curve for a good?

Accepted Answer

A)  a change in the technology used to produce the good 
B)  an increase in the price of the good 
C)  a decrease in the price of a complementary good 
D)  a decrease in the price of the good

Question 6

Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for sugar at the intersection of D1 and S2 (point B). If there is a decrease in the price of fertilizer used on sugar cane and there is a decrease in tastes for sugar-sweetened soft drinks, how will the equilibrium point change?

Accepted Answer

A)  The equilibrium point will move from B to A. 
B)  The equilibrium point will move from B to C. 
C)  There will be no change in the equilibrium point. 
D)  The equilibrium point will move from B to E.

Question 7

An increase in the quantity of a product supplied is caused by an increase in the price of the product.

Accepted Answer

A) True 
 B)False

Question 8

A surplus occurs when the actual selling price is above the market equilibrium price.

Accepted Answer

A) True 
 B)False

Question 9

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 10

Suppose that when the price of hamburgers decreases, the Landry family decreases their purchases of chicken nuggets. To the Landry family

Accepted Answer

A)  hamburgers and chicken nuggets are complements. 
B)  hamburgers and chicken nuggets are inferior goods. 
C)  hamburgers and chicken nuggets are normal goods. 
D)  hamburgers and chicken nuggets are substitutes.

Question 11

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

Question 12

-Refer to Figure 3-1. A decrease 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

-Refer to Figure 3-4. If the current market price is $15, the market will achieve equilibrium by

Accepted Answer

A)  a price increase, increasing the supply and decreasing the demand. 
B)  a price decrease, decreasing the supply and increasing the demand. 
C)  a price decrease, decreasing the quantity supplied and increasing the quantity demanded. 
D)  a price increase, increasing the quantity supplied and decreasing the quantity demanded.

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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 17

Draw a supply and demand graph showing an equilibrium price of $50 and an equilibrium quantity of 200 units. Explain what would happen if the selling price was $75, and illustrate this on the graph. Explain what would happen if the selling price was $25, and illustrate this on the graph. Be sure to label each axis and curve on the graph.

Accepted Answer

The answer of Draw a supply and demand graph showing...

Question 18

Suppose that when the price of strawberries decreases, Simone increases her purchase of whipped cream. To Simone

Accepted Answer

A)  strawberries and whipped cream are complements. 
B)  strawberries and whipped cream and substitutes. 
C)  strawberries and whipped cream are normal goods. 
D)  strawberries are a normal good and whipped cream is an inferior good.

Question 19

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 20

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

Accepted Answer

A) True 
 B)False

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

If a demand curve shifts to the right, then

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

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 less than the demand curve. As a result,

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

Which of the following will shift the demand curve for a good?

An increase in the quantity of a product supplied is caused by an increase in the price of the product.

A surplus occurs when the actual selling price is above the market equilibrium price.

Suppose that when the price of hamburgers decreases, the Landry family decreases their purchases of chicken nuggets. To the Landry family

In February, market analysts predict that the price of titanium will rise in March. What happens in the titanium market in February, holding everything else constant?

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

-Refer to Figure 3-4. If the current market price is $15, the market will achieve equilibrium by

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

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

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?

Suppose that when the price of strawberries decreases, Simone increases her purchase of whipped cream. To Simone

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

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

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

If a demand curve shifts to the right, then

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

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 less than the demand curve. As a result,

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

Which of the following will shift the demand curve for a good?

An increase in the quantity of a product supplied is caused by an increase in the price of the product.

A surplus occurs when the actual selling price is above the market equilibrium price.

Suppose that when the price of hamburgers decreases, the Landry family decreases their purchases of chicken nuggets. To the Landry family

In February, market analysts predict that the price of titanium will rise in March. What happens in the titanium market in February, holding everything else constant?

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

-Refer to Figure 3-4. If the current market price is $15, the market will achieve equilibrium by

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

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

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?

Suppose that when the price of strawberries decreases, Simone increases her purchase of whipped cream. To Simone

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

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

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?