Question 1

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 2

Figure 3-4 
-Refer to Figure 3-4. If the price is $25,

Accepted Answer

A)  there would be a surplus of 300 units. 
B)  there would be a shortage of 300 units. 
C)  there would be a surplus of 200 units. 
D)  there would be a shortage of 200 units.

Question 3

Explain how it would be possible for the equilibrium price and equilibrium quantity to both increase in the market for motorcycles if consumer preference for motorcycles increases and the number of motorcycle manufacturers decreases.

Accepted Answer

The answer of Explain how it would be possible for...

Question 4

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 5

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 6

Assume that the hourly price for the services of personal trainers has risen and sales of these services have also risen. One can conclude that

Accepted Answer

A)  the law of demand has been violated. 
B)  the number of personal trainers has increased. 
C)  the demand for personal trainers has increased. 
D)  personal trainers are deliberately charging high prices because they provide services for wealthy clients.

Question 7

Figure 3-1 
-Refer to Figure 3-1. An increase in population 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 8

Table 3-2
 
-Refer to Table 3-2. The table above shows the demand schedules for caviar of two individuals (Ari and Sonia) and the rest of the market. At a price of $55, the quantity demanded in the market would be

Accepted Answer

A)  42 oz. 
B)  136 oz. 
C)  178 oz. 
D)  233 oz.

Question 9

Figure 3-7 
-Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for frozen yogurt. Which panel describes what happens in the market for frozen yogurt when the price of ice cream, a substitute product, increases?

Accepted Answer

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

Question 10

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

Accepted Answer

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

Question 11

As the number of firms in a market decreases, the supply curve will shift to the left and the equilibrium price will rise.

Accepted Answer

A) True 
 B)False

Question 12

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 13

An increase in the equilibrium price for a product will result

Accepted Answer

A)  when the quantity demanded for the product exceeds the quantity supplied. 
B)  when there is a decrease in supply and an increase in demand for the product. 
C)  when there is a decrease in supply and a decrease in demand for the product. 
D)  when there is an increase in demand and an increase in the number of firms producing the product.

Question 14

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 15

A decrease in input costs in the production of LCD televisions caused the price of LCD televisions to decrease. Holding everything else constant, how would this affect the market for video game consoles (a complement to LCD televisions)?

Accepted Answer

A)  The supply of video game consoles would increase, and the equilibrium price of video game consoles would decrease. 
B)  The demand for video game consoles would decrease, and the equilibrium price of video game consoles would decrease. 
C)  The demand for video game consoles would decrease because consumers could afford to buy fewer LCD televisions and video game consoles. 
D)  The demand for video game consoles would increase, and the equilibrium price of video game consoles would increase.

Question 16

Holding everything else constant, an increase in the price of MP3 players will result in

Accepted Answer

A)  a decrease in the quantity of MP3 players supplied. 
B)  a decrease in the demand for MP3 players. 
C)  an increase in the supply of MP3 players. 
D)  a decrease in the quantity of MP3 players demanded.

Question 17

If a firm has an incentive to increase supply now and decrease supply in the future, the firm expects that the

Accepted Answer

A)  price of its product will be lower in the future than it is today. 
B)  price of its product will be higher in the future than it is today. 
C)  price of inputs will be lower in the future than they are today. 
D)  demand for the product will be lower in the future than it is today.

Question 18

Which of the following would cause both the equilibrium price and equilibrium quantity of cotton (assume that cotton is a normal good) to increase?

Accepted Answer

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

Question 19

Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall. Holding everything else constant, how would this affect the market for Blu-ray players (a complement to LCD televisions)?

Accepted Answer

A)  The supply of Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease. 
B)  The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would increase. 
C)  The demand for Blu-ray players would decrease because consumers could afford to buy fewer LCD televisions and Blu-ray players. 
D)  The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease.

Question 20

Would a change in the price of in-line skates cause a change in the supply of in-line skates? Why or why not?

Accepted Answer

The answer of Would a change in the price of...

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

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

Figure 3-4 -Refer to Figure 3-4. If the price is $25,

Explain how it would be possible for the equilibrium price and equilibrium quantity to both increase in the market for motorcycles if consumer preference for motorcycles increases and the number of motorcycle manufacturers decreases.

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

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

Assume that the hourly price for the services of personal trainers has risen and sales of these services have also risen. One can conclude that

Figure 3-1 -Refer to Figure 3-1. An increase in population would be represented by a movement from

Table 3-2 -Refer to Table 3-2. The table above shows the demand schedules for caviar of two individuals (Ari and Sonia) and the rest of the market. At a price of $55, the quantity demanded in the market would be

Figure 3-7 -Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for frozen yogurt. Which panel describes what happens in the market for frozen yogurt when the price of ice cream, a substitute product, increases?

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

As the number of firms in a market decreases, the supply curve will shift to the left and the equilibrium price will rise.

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

An increase in the equilibrium price for a product will result

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

A decrease in input costs in the production of LCD televisions caused the price of LCD televisions to decrease. Holding everything else constant, how would this affect the market for video game consoles (a complement to LCD televisions) ?

Holding everything else constant, an increase in the price of MP3 players will result in

If a firm has an incentive to increase supply now and decrease supply in the future, the firm expects that the

Which of the following would cause both the equilibrium price and equilibrium quantity of cotton (assume that cotton is a normal good) to increase?

Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall. Holding everything else constant, how would this affect the market for Blu-ray players (a complement to LCD televisions) ?

Would a change in the price of in-line skates cause a change in the supply of in-line skates? Why or why not?