Question 1

After the price of milk increases, Susan buys more eggs and less hotdogs. For Susan

Accepted Answer

A)   milk, eggs, and hotdogs are all complements.
B)   milk and eggs are complements, and milk and hotdogs are substitutes.
C)   milk and eggs are substitutes, and milk and hotdogs are complements.
D)   milk, eggs, and hotdogs are all substitutes.

Question 2

When income increases, the demand curve for an inferior good

Accepted Answer

A)   shifts to the right.
B)   shifts to the left.
C)   moves up along the demand curve for the product.
D)   remains constant.

Question 3

Which one of the following statements is FALSE?

Accepted Answer

A)   Generally, what matters most to consumers is what a good costs in dollars.
B)   The relative price of a good is its price measured relative to the price of other goods.
C)   The nominal price of a good is its price measured in current dollars.
D)   When the price of beer goes up by the same proportion as the prices of all other goods, the relative price of beer does not change. A

Question 4

Suppose a change takes place and the new equilibrium is at point A in the above figure. This change could have been caused by

Accepted Answer

A)   an increase in the per-unit tax on DVDs.
B)   a decrease in the income of consumers.
C)   a reduction in the wages paid to workers in the DVD industry.
D)   a reduction in the price of DVD players.

Question 5

-Which of the following statements is correct?

Accepted Answer

A)   A shortage and scarcity are the same thing.
B)   A shortage occurs when the quantity demanded is less than the quantity supplied at a price below the market clearing price.
C)   A shortage occurs when the quantity demanded is greater than the quantity supplied at a price below the market clearing price.
D)   A shortage occurs when the quantity demanded is less than the quantity supplied at a price above the market clearing price.

Question 6

The law of supply includes the statement "other things being equal." These other things include all of the following EXCEPT

Accepted Answer

A)   resource prices.
B)   technology.
C)   producers' expectations.
D)   consumer's income.

Question 7

A market requires

Accepted Answer

A)   sellers only.
B)   buyers and sellers.
C)   government intervention.
D)   buyers only.

Question 8

We know that products A and B are related goods, because when the price of A increases

Accepted Answer

A)   the demand curve for B will shift to the right, because A and B are complementary goods.
B)   the quantity of B demanded will shift along its demand curve, because A and B are complementary goods.
C)   the demand curve for B will shift to the left, because A and B are complementary goods.
D)   the demand curve for B will remain unchanged because A and B are substitute goods.

Question 9

A change in any of the ceteris paribus conditions for demand leads to a

Accepted Answer

A)   a good going from an inferior good to a normal good.
B)   movement along the demand curve.
C)   shift of the demand curve.
D)   change in supply.

Question 10

-Refer to the above figure. A surplus will exist when

Accepted Answer

A)   the price is between $0 and $6.
B)   the price equals $6.
C)   the price equals $10.
D)   quantity demanded equals 15.

Question 11

Matt graduates from college and gets a job paying $70,000 a year. While in school, he consumed 5 pounds of chicken and 10 pounds of shrimp a month. After he starts working, he consumes 4 pounds of chicken and 12 pounds of shrimp a month. If everything else is held constant, we know that

Accepted Answer

A)   chicken and shrimp are normal goods for Matt.
B)   chicken is an inferior good and shrimp is a normal good for Matt.
C)   chicken is an inferior good for Matt.
D)   shrimp is a normal good for Matt.

Question 12

Other things being equal, an increase in the price of a good leads to an increase in the amount produced. This is known as

Accepted Answer

A)   the law of demand.
B)   the law of supply.
C)   ceteris paribus.
D)   equilibrium.

Question 13

Suppose that the price of wheat is above its equilibrium price. You would expect to see

Accepted Answer

A)   a shortage on the market that causes prices to increase further.
B)   an increase in quantity demanded because of the high price.
C)   a leftward shift of the demand curve because of the high price.
D)   sellers begin to lower their prices because of the surplus of wheat.

Question 14

The fact that when the price of a good goes down, people buy more of it is called

Accepted Answer

A)   the law of supply.
B)   the law of demand.
C)   market equilibrium.
D)   ceteris paribus.

Question 15

Which one of the following is NOT a determinant of demand?

Accepted Answer

A)   prices of related goods
B)   cost of inputs in production
C)   income
D)   future price expectations

Question 16

Which one of the following would cause a rightward shift in the demand curve of digital cameras?

Accepted Answer

A)   Digital cameras become easier to use.
B)   The price of digital cameras decreases.
C)   Production methods are modified to make production of digital cameras more efficient.
D)   Government regulations are imposed to limit the number of digital cameras imported.

Question 17

Which of the following will cause a rightward shift of the demand curve?

Accepted Answer

A)   a decrease in the cost of production
B)   a decrease in the price of the good
C)   an increase in the expected future price of the good
D)   all of the above

Question 18

An expected increase in the future price of automobiles will lead to

Accepted Answer

A)   an outward shift in demand for automobiles today.
B)   a reduction in the demand for gasoline today.
C)   a movement down the demand schedule for automobiles.
D)   no predictable impact on today's demand for automobiles. A

Question 19

The law of demand shows that there is

Accepted Answer

A)   an inverse relationship between price and profit.
B)   an inverse relationship between price and resource cost.
C)   an inverse relationship between price and quantity demanded.
D)   a direct relationship between price and quantity demanded.

Question 20

If Apple's iTunes Music Store increases its "fee" for its music downloads, the law of demand predicts that

Accepted Answer

A)   the number of iTunes music downloads would increase.
B)   there would be no change in the demand for iTunes music downloads.
C)   the number of iTunes music downloads would decrease.
D)   iTunes music supply would change but demand would not. C

Exam 3: Demand and Supply

After the price of milk increases, Susan buys more eggs and less hotdogs. For Susan

Correct AnswerverifiedShow Answer

When income increases, the demand curve for an inferior good

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Which one of the following statements is FALSE?

Correct AnswerverifiedA

Suppose a change takes place and the new equilibrium is at point A in the above figure. This change could have been caused by

Correct AnswerverifiedShow Answer

-Which of the following statements is correct?

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The law of supply includes the statement "other things being equal." These other things include all of the following EXCEPT

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A market requires

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We know that products A and B are related goods, because when the price of A increases

Correct AnswerverifiedShow Answer

A change in any of the ceteris paribus conditions for demand leads to a

Correct AnswerverifiedShow Answer

-Refer to the above figure. A surplus will exist when

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Matt graduates from college and gets a job paying $70,000 a year. While in school, he consumed 5 pounds of chicken and 10 pounds of shrimp a month. After he starts working, he consumes 4 pounds of chicken and 12 pounds of shrimp a month. If everything else is held constant, we know that

Correct AnswerverifiedShow Answer

Other things being equal, an increase in the price of a good leads to an increase in the amount produced. This is known as

Correct AnswerverifiedShow Answer

Suppose that the price of wheat is above its equilibrium price. You would expect to see

Correct AnswerverifiedShow Answer

The fact that when the price of a good goes down, people buy more of it is called

Correct AnswerverifiedShow Answer

Which one of the following is NOT a determinant of demand?

Correct AnswerverifiedShow Answer

Which one of the following would cause a rightward shift in the demand curve of digital cameras?

Correct AnswerverifiedShow Answer

Which of the following will cause a rightward shift of the demand curve?

Correct AnswerverifiedShow Answer

An expected increase in the future price of automobiles will lead to

Correct AnswerverifiedA

The law of demand shows that there is

Correct AnswerverifiedShow Answer

If Apple's iTunes Music Store increases its "fee" for its music downloads, the law of demand predicts that

Correct AnswerverifiedC

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