Question 1

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 2

The demand by all the consumers of a given good or service is the ________ for the good or service.

Accepted Answer

A) market demand 
B) quantity demanded 
C) law of demand 
D) scheduled demand

Question 3

If the demand for a product decreases and the supply of the same product decreases,the equilibrium price will decrease.

Accepted Answer

A) True 
 B)False

Question 4

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 5

Which of the following is the correct way to describe equilibrium in a market?

Accepted Answer

A) At equilibrium,demand equals supply. 
B) At equilibrium,quantity demanded equals quantity supplied. 
C) At equilibrium,market forces no longer apply. 
D) At equilibrium,scarcity is eliminated.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Suppose that when the price of hamburgers decreases,the Ruiz family increases their purchases of ketchup.To the Ruiz family,

Accepted Answer

A) hamburgers and ketchup are complements. 
B) hamburgers and ketchup and substitutes. 
C) hamburgers and ketchup are normal goods. 
D) hamburgers are normal goods and hot dogs are inferior goods.

Question 8

Figure 3-2 
-Refer to Figure 3-2.An increase in the price of substitutes in production 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 9

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

Accepted Answer

A) True 
 B)False

Question 10

Figure 3-7 
-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)

Question 11

If the demand for a product increases and the supply of the product does not change,equilibrium price and equilibrium quantity will both increase.

Accepted Answer

A) True 
 B)False

Question 12

If tablet computers are considered substitutes for e-readers,the decline in the price of tablet computers would,all else equal,

Accepted Answer

A) increase the demand for e-readers. 
B) decrease the demand for e-readers. 
C) increase the quantity demanded for e-readers. 
D) decrease the quantity demanded for e-readers.

Question 13

'Because apples and oranges are substitutes,an increase in the price of oranges will cause the demand for apples to increase.This initial shift in demand for apples results in a higher price for apples;this higher price will cause the demand curve for apples to shift to the right.' Which of the following correctly comments on this statement?

Accepted Answer

A) The statement will be true if consumer tastes for apples and oranges do not change. 
B) The statement is false because a change in the price of apples would not change the demand for apples. 
C) The statement is false because oranges are inferior goods;apples are normal goods. 
D) The statement is false because one cannot assume that apples and oranges are substitutes for all consumers.

Question 14

If the price of grapefruit rises,the substitution effect due to the price change will cause

Accepted Answer

A) a decrease in the demand for grapefruit. 
B) a decrease in the demand for oranges,a substitute for grapefruit. 
C) a decrease in the quantity demanded of grapefruit. 
D) a decrease in the quantity supplied of grapefruit.

Question 15

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 16

A change in supply is represented by a shift of the supply curve.

Accepted Answer

A) True 
 B)False

Question 17

Figure 3-6 
-Refer to Figure 3-6.The figure above represents the market for canvas tote bags.Assume that the market price is $35.Which of the following statements is true?

Accepted Answer

A) There is a surplus that will cause the price to decrease;quantity demanded will then increase and quantity supplied will decrease until the price equals $25. 
B) There is a surplus that will cause the price to decrease;quantity supplied will then increase and quantity demanded will decrease until the price equals $25. 
C) There will be a surplus that will cause the price to decrease;demand will then increase and supply will decrease until the price equals $25. 
D) There is a surplus that will cause the price to increase;quantity demanded will then decrease and quantity supplied will increase until the price equals $25.

Question 18

One would speak of a change in the quantity of a good supplied,rather than a change in supply,if

Accepted Answer

A) supplier expectations about future prices change. 
B) the price of the good changes. 
C) the cost of producing the good changes. 
D) prices of substitutes in production change.

Question 19

If a decrease in income leads to an increase in the demand for sardines,then sardines are

Accepted Answer

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

Question 20

Draw a demand curve and label it D₁.On the graph,illustrate an increase in demand and a decrease in demand,and label the curves D₂ and D₃,respectively.Starting on demand curve D₁,explain the shift that would result from each of the following events: a.an increase in income and the good is a normal good b.an increase in income and the good is an inferior good c.a decrease in the price of a substitute good d.a decrease in the price of a complementary good e.an increase in the taste for the good f.a decrease in population g.an increase in the expected future price of the good

Accepted Answer

The answer of Draw a demand curve and label it...

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

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 demand by all the consumers of a given good or service is the ________ for the good or service.

If the demand for a product decreases and the supply of the same product decreases,the equilibrium price will decrease.

If a demand curve shifts to the right,then

Which of the following is the correct way to describe equilibrium in a market?

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

Suppose that when the price of hamburgers decreases,the Ruiz family increases their purchases of ketchup.To the Ruiz family,

Figure 3-2 -Refer to Figure 3-2.An increase in the price of substitutes in production would be represented by a movement from

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

Figure 3-7 -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?

If the demand for a product increases and the supply of the product does not change,equilibrium price and equilibrium quantity will both increase.

If tablet computers are considered substitutes for e-readers,the decline in the price of tablet computers would,all else equal,

If the price of grapefruit rises,the substitution effect due to the price change will cause

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

A change in supply is represented by a shift of the supply curve.

Figure 3-6 -Refer to Figure 3-6.The figure above represents the market for canvas tote bags.Assume that the market price is $35.Which of the following statements is true?

One would speak of a change in the quantity of a good supplied,rather than a change in supply,if

If a decrease in income leads to an increase in the demand for sardines,then sardines are