Question 1

Which of the following statements about the supply curve is TRUE?

Accepted Answer

A)   As the price of a good rises, it becomes profitable to sell the higher-cost good.
B)   As the price of a good rises, it becomes profitable to sell only the lower-cost good.
C)   All sellers are willing to sell a good only when the price is very high.
D)   All sellers are able to sell a good only when the price is very low.

Question 2

What does the law of demand state?

Accepted Answer

A)   As incomes increase, people consume more of all goods.
B)   The demand for a good increases with the number of consumers in the market.
C)   As the price of a good increases, consumers purchase less of that good.
D)   The supply of a good increases in proportion to the demand for it.

Question 3

Weather forecasters predict that a major winter storm will strike your town within the next few days. Which would occur today based upon the expected storm?

Accepted Answer

A)   a decrease in peoples' willingness to pay for bottled water
B)   a decrease in demand for batteries
C)   an increase in people's willingness to pay for electric generators
D)   a shift to the left of the demand curve for snow tires

Question 4

In the oil market, an increase in the wage of oil workers will shift the:

Accepted Answer

A)   supply curve of oil to the right.
B)   supply curve of oil to the left.
C)   demand curve for oil to the left.
D)   demand curve for oil to the right.

Question 5

The average age in the United States is _____, causing the demand for prescription drugs to _____.

Accepted Answer

A)   increasing; decrease
B)   increasing; increase
C)   decreasing; increase
D)   decreasing; decrease

Question 6

Suppose that the market price for MP3 players is $90 and MP3 players can be produced by firm X for $40 each. Producer surplus for this firm is $50 per MP3 player.

Accepted Answer

A) True 
 B)False

Question 7

An increase in a per unit production subsidy ______ supply.

Accepted Answer

A)   increases
B)   decreases
C)   does not change
D)   changes in an indeterminate direction

Question 8

A change in price is reflected by a movement along the same demand curve while a change in demand refers to a shift of the entire demand curve.

Accepted Answer

A) True 
 B)False

Question 9

A farmer can grow soy or sorghum. If the price of soy increases, the opportunity cost of growing sorghum ______, shifting the supply curve of sorghum ______.

Accepted Answer

A)   decreases; up and to the left
B)   increases; up and to the left
C)   decreases; down and to the right
D)   increases; down and to the right

Question 10

Firms are willing and able to sell 100 guitars per day at a price of $250 per guitar. What price will firms require to sell 100 guitars per day if there is a tax of $15 per guitar?

Accepted Answer

A)   $235
B)   $250
C)   between $235 and $250
D)   $265

Question 11

If, for a given amount of a good or service, willingness to pay decreases, then:

Accepted Answer

A)   supply has increased.
B)   supply has decreased.
C)   demand has increased.
D)   demand has decreased.

Question 12

Figure: Demand Curve  Which statement is TRUE regarding the figure?

Accepted Answer

A)   At a price of $6 per unit, consumers are willing and able to buy 10 units.
B)   The maximum price demanders are willing to pay for 15 units is $6 per unit.
C)   The higher the price, the greater the quantity demanded.
D)   At a price of $3.75 per unit, consumers are indifferent between buying 10 and 15 units.

Question 13

The quantity supplied:

Accepted Answer

A)   shows how much buyers are willing and able to buy at different prices.
B)   is the amount that buyers are willing and able to buy at a particular price.
C)   shows how much sellers are willing and able to sell at different prices.
D)   is the amount that sellers are willing and able to sell at a particular price.

Question 14

Consider the (world)  market supply curve for oil. Saudi oil production inhabits the _____ part of the curve, and Canadian oil production inhabits the _____ part of the curve.

Accepted Answer

A)   upper; upper
B)   lower; lower
C)   upper; lower
D)   lower; upper

Question 15

Figure A: Supply Right Shift
Figure B: Supply Left Shift 
Refer to the two figures. Which statement is TRUE?

Accepted Answer

A)   Figure A depicts the expectation that the future price will decrease.
B)   Figure A depicts an increase in taxes.
C)   Figure B depicts falling input prices.
D)   Figure B depicts technological innovations.

Question 16

The quantity supplied of oil is the amount that:

Accepted Answer

A)   producers plan to sell during a given time period at a given price.
B)   is actually bought during a given time period at a given price.
C)   producers wish they could sell at a higher price.
D)   people are willing to buy during a given time period at a given price.

Question 17

If romaine lettuce and iceberg lettuce are substitutes, a(n)  _____ in the price of romaine lettuce will ______ the demand for iceberg lettuce.

Accepted Answer

A)   increase; decrease
B)   increase; increase
C)   decrease; increase
D)   decrease; not change

Question 18

Other things being equal, total consumer surplus falls when the market price rises.

Accepted Answer

A) True 
 B)False

Question 19

A decrease in income causes demand for a normal good to ________, and an increase in income causes demand for an inferior good to ________.

Accepted Answer

A)   decrease; decrease
B)   increase; increase
C)   decrease; increase
D)   increase; decrease

Question 20

In 2011, the United States Senate voted to end ethanol subsidies. What will be the effect of this bill in the market for ethanol?

Accepted Answer

A)   Demand will increase
B)   Demand will decrease
C)   Supply will decrease
D)   Supply will increase

Exam 3: Supply and Demand

What does the law of demand state?

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A farmer can grow soy or sorghum. If the price of soy increases, the opportunity cost of growing sorghum ______, shifting the supply curve of sorghum ______.

Correct AnswerverifiedShow Answer

The quantity supplied of oil is the amount that:

Correct AnswerverifiedShow Answer

A change in price is reflected by a movement along the same demand curve while a change in demand refers to a shift of the entire demand curve.

Correct AnswerverifiedShow Answer

If romaine lettuce and iceberg lettuce are substitutes, a(n) _____ in the price of romaine lettuce will ______ the demand for iceberg lettuce.

Correct AnswerverifiedShow Answer

Firms are willing and able to sell 100 guitars per day at a price of $250 per guitar. What price will firms require to sell 100 guitars per day if there is a tax of $15 per guitar?

Correct AnswerverifiedShow Answer

Weather forecasters predict that a major winter storm will strike your town within the next few days. Which would occur today based upon the expected storm?

Correct AnswerverifiedShow Answer

Which of the following statements about the supply curve is TRUE?

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The quantity supplied:

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Figure A: Supply Right Shift Figure B: Supply Left Shift Refer to the two figures. Which statement is TRUE?

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An increase in a per unit production subsidy ______ supply.

Correct AnswerverifiedShow Answer

Suppose that the market price for MP3 players is $90 and MP3 players can be produced by firm X for $40 each. Producer surplus for this firm is $50 per MP3 player.

Correct AnswerverifiedShow Answer

A decrease in income causes demand for a normal good to ________, and an increase in income causes demand for an inferior good to ________.

Correct AnswerverifiedShow Answer

Figure: Demand Curve Which statement is TRUE regarding the figure?

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The average age in the United States is _____, causing the demand for prescription drugs to _____.

Correct AnswerverifiedShow Answer

If, for a given amount of a good or service, willingness to pay decreases, then:

Correct AnswerverifiedShow Answer

Other things being equal, total consumer surplus falls when the market price rises.

Correct AnswerverifiedShow Answer

In the oil market, an increase in the wage of oil workers will shift the:

Correct AnswerverifiedShow Answer

In 2011, the United States Senate voted to end ethanol subsidies. What will be the effect of this bill in the market for ethanol?

Correct AnswerverifiedShow Answer

Consider the (world) market supply curve for oil. Saudi oil production inhabits the _____ part of the curve, and Canadian oil production inhabits the _____ part of the curve.

Correct AnswerverifiedShow Answer

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A farmer can grow soy or sorghum. If the price of soy increases, the opportunity cost of growing sorghum , shifting the supply curve of sorghum .

Correct Answer
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If romaine lettuce and iceberg lettuce are substitutes, a(n) _ in the price of romaine lettuce will __ the demand for iceberg lettuce.

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A decrease in income causes demand for a normal good to , and an increase in income causes demand for an inferior good to .

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The average age in the United States is _, causing the demand for prescription drugs to _.

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Consider the (world) market supply curve for oil. Saudi oil production inhabits the _ part of the curve, and Canadian oil production inhabits the _ part of the curve.

Correct Answer
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