Question 1

The demand for most products varies directly with changes in consumer incomes. Such products are known as

Accepted Answer

A)   complementary goods.
B)   competitive goods.
C)   inferior goods.
D)   normal goods.E) A) and B)
F) All of the above

Question 2

The market demand schedule or curve for a product shows the relationship between how much of the product buyers are willing and able to buy and the

Accepted Answer

A)   product's price.
B)   buyers' incomes.
C)   cost of producing the product.
D)   available supply of the product.E) C) and D)
F) B) and D)

Question 3

One reason that the quantity demanded of a good increases when its price falls is that the

Accepted Answer

A)   price decline shifts the supply curve to the left.
B)   lower price shifts the demand curve to the left.
C)   lower price shifts the demand curve to the right.
D)   lower price increases the real incomes of buyers, enabling them to buy more.E) A) and B)
F) A) and D)

Question 4

The law of supply indicates that, other things equal,

Accepted Answer

A)   producers will offer more of a product at high prices than at low prices.
B)   the product supply curve is downsloping.
C)   consumers will purchase less of a good at high prices than at low prices.
D)   producers will offer more of a product at low prices than at high prices.E) B) and D)
F) A) and D)

Question 5

(Advanced analysis)  The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. If demand changes from P = 10 - 0.2Q to P = 7 - 0.3Q, the new
Equilibrium price is

Accepted Answer

A)   $2.
B)   $4.
C)   $6.
D)   $7.E) All of the above
F) A) and D)

Question 6

In order to derive a market demand curve from individuals' demand curves, we add up the

Accepted Answer

A)   various individuals' quantities demanded at each price level.
B)   various prices that each buyer is willing and able to pay.
C)   incomes of all buyers, assuming that their tastes remain constant.
D)   total number of buyers in the market at each time period.E) B) and D)
F) A) and B)

Question 7

Refer to the diagram, which shows demand and supply conditions in the competitive market for product X. If supply is S1 and demand D0, then

Accepted Answer

A)   at any price above G a shortage would occur.
B)   F represents a price that would result in a surplus of AC.
C)   a surplus of GH would occur.
D)   F represents a price that would result in a shortage of AC.E) B) and C)
F) C) and D)

Question 8

According to the concept of diminishing marginal utility, consumers will purchase more of a good when the price falls because

Accepted Answer

A)   substitutes are relatively more expensive.
B)   consumers' real income has increased.
C)   the marginal beneﬁt of additional units of the good now outweigh the marginal cost.
D)   the good is now perceived as having higher quality.E) A) and D)
F) None of the above

Question 9

Quantity Demanded  Price  Quantity Supplied 5$7966875784693510241113\begin{array} { | c | c | c | } \hline 	ext { Quantity Demanded } & 	ext { Price } & 	ext { Quantity Supplied } \\hline 5 & \$ 7 & 9 \\hline 6 & 6 & 8 \\hline 7 & 5 & 7 \\hline 8 & 4 & 6 \\hline 9 & 3 & 5 \\hline 10 & 2 & 4 \\hline 11 & 1 & 3 \\hline\end{array} Quantity Demanded 567891011​ Price $7654321​ Quantity Supplied 9876543​​  Refer to the above table. If demand decreased by 4 units at each price and supply decreased by 2 units at each price, what would the new equilibrium price and quantity be?

Accepted Answer

A)   $3 and 5 units
B)   $4 and 4 units
C)   $5 and 5 units
D)   $6 and 6 units E) A) and B)
F) All of the above

Question 10

Suppose that corn prices rise signiﬁcantly. If farmers expect the price of corn to continue rising relative to other crops, then we would expect

Accepted Answer

A)   the supply of ethanol, a corn-based product, to increase.
B)   consumer demand for wheat to fall.
C)   the supply to increase as farmers plant more corn.
D)   the supply to fall as farmers plant more of other crops.E) A) and B)
F) A) and D)

Question 11

Steve went to his favorite hamburger restaurant with $3, expecting to buy a $2 hamburger and a $1 soda. When he arrived, he discovered that hamburgers were on sale for $1 each, so Steve bought
Two hamburgers and a soda. Steve's response to the decrease in the price of hamburgers is best
Explained by

Accepted Answer

A)   the substitution effect.
B)   the income effect.
C)   the price effect.
D)   a rightward shift in the demand curve for hamburgers.E) C) and D)
F) None of the above

Question 12

In a competitive market illustrated by the diagram above, a price ﬂoor of $25 per unit will result in

Accepted Answer

A)   a shortage of 200 units.
B)   a surplus of 200 units.
C)   a surplus of 250 units.
D)   a shortage of 250 units.E) B) and D)
F) C) and D)

Question 13

When economists speak of "demand" in a particular market, they refer to

Accepted Answer

A)   the whole demand curve or schedule.
B)   one point on the demand curve.
C)   one price-quantity combination on the demand schedule.
D)   how much of an item buyers want to buy at a given price.E) None of the above
F) A) and D)

Question 14

All markets involve the following elements, except

Accepted Answer

A)   demand or buyers.
B)   face-to-face negotiation.
C)   prices of goods and services.
D)   supply or sellers.E) A) and B)
F) A) and C)

Question 15

At the equilibrium price,

Accepted Answer

A)   quantity supplied may exceed quantity demanded or vice versa.
B)   there are no pressures on price to either rise or fall.
C)   there are forces that cause price to rise.
D)   there are forces that cause price to fall.E) A) and D)
F) All of the above

Question 16

Other things equal, which of the following might shift the demand curve for gasoline to the left?

Accepted Answer

A)   the discovery of vast new oil reserves in Montana
B)   the development of a low-cost electric automobile
C)   an increase in the price of train and air transportation
D)   a large decline in the price of automobilesE) A) and C)
F) None of the above

Question 17

A price ceiling means that

Accepted Answer

A)   there is currently a surplus of the relevant product.
B)   government is imposing a legal price that is typically below the equilibrium price.
C)   government wants to stop a deﬂationary spiral.
D)   government is imposing a legal price that is typically above the equilibrium price.E) C) and D)
F) All of the above

Question 18

All of the following are assumed to be constant when the supply curve for a product is drawn, except the

Accepted Answer

A)   price of the product.
B)   production technology used by the ﬁrm.
C)   number of producers.
D)   price of inputs used to make the product.E) A) and B)
F) A) and C)

Question 19

A decrease in the price of digital cameras will

Accepted Answer

A)   cause the demand curve for memory cards to become vertical.
B)   shift the demand curve for memory cards to the right.
C)   shift the demand curve for memory cards to the left.
D)   not affect the demand for memory cards.E) B) and C)
F) A) and B)

Question 20

A decrease in the demand for recreational ﬁshing boats might be caused by an increase in the

Accepted Answer

A)   income of sports ﬁshers.
B)   price of outboard motors.
C)   size and number of ﬁsh available.
D)   price of sailing boats.E) B) and C)
F) A) and D)

Exam 3: Demand, Supply, and Market Equilibrium

A price ceiling means that

Correct Answer
verified

When economists speak of "demand" in a particular market, they refer to

Correct Answer
verified

Refer to the diagram, which shows demand and supply conditions in the competitive market for product X. If supply is S1 and demand D0, then

Correct Answer
verified

All markets involve the following elements, except

Correct Answer
verified

Steve went to his favorite hamburger restaurant with $3, expecting to buy a $2 hamburger and a $1 soda. When he arrived, he discovered that hamburgers were on sale for $1 each, so Steve bought Two hamburgers and a soda. Steve's response to the decrease in the price of hamburgers is best Explained by

Correct Answer
verified

The demand for most products varies directly with changes in consumer incomes. Such products are known as

Correct Answer
verified

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. If demand changes from P = 10 - 0.2Q to P = 7 - 0.3Q, the new Equilibrium price is

Correct Answer
verified

In a competitive market illustrated by the diagram above, a price ﬂoor of $25 per unit will result in

Correct Answer
verified

One reason that the quantity demanded of a good increases when its price falls is that the

Correct Answer
verified

The market demand schedule or curve for a product shows the relationship between how much of the product buyers are willing and able to buy and the

Correct Answer
verified

Other things equal, which of the following might shift the demand curve for gasoline to the left?

Correct Answer
verified

According to the concept of diminishing marginal utility, consumers will purchase more of a good when the price falls because

Correct Answer
verified

Suppose that corn prices rise signiﬁcantly. If farmers expect the price of corn to continue rising relative to other crops, then we would expect

Correct Answer
verified

A decrease in the price of digital cameras will

Correct Answer
verified

In order to derive a market demand curve from individuals' demand curves, we add up the

Correct Answer
verified

A decrease in the demand for recreational ﬁshing boats might be caused by an increase in the

Correct Answer
verified

At the equilibrium price,

Correct Answer
verified

The law of supply indicates that, other things equal,

Correct Answer
verified

All of the following are assumed to be constant when the supply curve for a product is drawn, except the

Correct Answer
verified

Correct Answer
verified

Exam 3: Demand, Supply, and Market Equilibrium

A price ceiling means that

Correct AnswerverifiedShow Answer

When economists speak of "demand" in a particular market, they refer to

Correct AnswerverifiedShow Answer

Refer to the diagram, which shows demand and supply conditions in the competitive market for product X. If supply is S1 and demand D0, then

Correct AnswerverifiedShow Answer

All markets involve the following elements, except

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The demand for most products varies directly with changes in consumer incomes. Such products are known as

Correct AnswerverifiedShow Answer

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. If demand changes from P = 10 - 0.2Q to P = 7 - 0.3Q, the new Equilibrium price is

Correct AnswerverifiedShow Answer

In a competitive market illustrated by the diagram above, a price ﬂoor of $25 per unit will result in

Correct AnswerverifiedShow Answer

One reason that the quantity demanded of a good increases when its price falls is that the

Correct AnswerverifiedShow Answer

The market demand schedule or curve for a product shows the relationship between how much of the product buyers are willing and able to buy and the

Correct AnswerverifiedShow Answer

Other things equal, which of the following might shift the demand curve for gasoline to the left?

Correct AnswerverifiedShow Answer

According to the concept of diminishing marginal utility, consumers will purchase more of a good when the price falls because

Correct AnswerverifiedShow Answer

Suppose that corn prices rise signiﬁcantly. If farmers expect the price of corn to continue rising relative to other crops, then we would expect

Correct AnswerverifiedShow Answer

A decrease in the price of digital cameras will

Correct AnswerverifiedShow Answer

In order to derive a market demand curve from individuals' demand curves, we add up the

Correct AnswerverifiedShow Answer

A decrease in the demand for recreational ﬁshing boats might be caused by an increase in the

Correct AnswerverifiedShow Answer

At the equilibrium price,

Correct AnswerverifiedShow Answer

The law of supply indicates that, other things equal,

Correct AnswerverifiedShow Answer

All of the following are assumed to be constant when the supply curve for a product is drawn, except the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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