Question 1

When an economist says that the demand for a product has increased,this means that:

Accepted Answer

A)   consumers are now willing to purchase more of this product at each possible price.
B)   the product has become particularly scarce for some reason.
C)   product price has fallen and as a consequence consumers are buying a larger quantity of the product.
D)   the demand curve has shifted to the left.E) None of the above
F) All of the above

Question 2

In the following question you are asked to determine,other things equal,the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for,or supply (S) of,X; (2) the equilibrium price (P) of X;and (3) the equilibrium quantity (Q) of X. An increase in the price of a product that is a complement to X will:

Accepted Answer

A)   decrease S,decrease P,and decrease Q.
B)   decrease D,decrease P,and decrease Q.
C)   increase D,increase P,and increase Q.
D)   increase D,increase P,and decrease Q.E) A) and C)
F) A) and D)

Question 3

In constructing a stable demand curve for product X:

Accepted Answer

A)   consumer preferences are allowed to vary.
B)   the prices of other goods are assumed constant.
C)   money incomes are allowed to vary.
D)   the supply curve of product X is assumed to be fixed.E) None of the above
F) B) and D)

Question 4

1 and demand D0,then: A)  at any price above 0G a shortage would occur. B)  0F represents a price that would result in a surplus of AC. C)  a surplus of GH would occur. D)  0F represents a price that would result in a shortage of AC." class="answers-bank-image d-inline" rel="preload" > Refer to the above 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 0G a shortage would occur.
B)   0F represents a price that would result in a surplus of AC.
C)   a surplus of GH would occur.
D)   0F represents a price that would result in a shortage of AC.E) B) and C)
F) A) and C)

Question 5

A binding 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) B) and C)
F) A) and B)

Question 6

A decrease in supply of X increases the equilibrium price of X,which reduces the demand for X and automatically returns the price of X to its initial level.

Accepted Answer

A) True 
 B)False

Question 7

If two goods are complements:

Accepted Answer

A)   they are consumed independently.
B)   an increase in the price of one will increase the demand for the other.
C)   a decrease in the price of one will increase the demand for the other.
D)   they are necessarily inferior goods.E) A) and C)
F) C) and D) C

Question 8

Graphically,the market demand curve is:

Accepted Answer

A)   steeper than any individual demand curve that is part of it.
B)   greater than the sum of the individual demand curves.
C)   the horizontal sum of individual demand curves.
D)   the vertical sum of individual demand curves.E) A) and C)
F) C) and D)

Question 9

Which of the above diagrams illustrate(s) the effect of an increase in automobile worker wages on the market for automobiles?

Accepted Answer

A)   A only.
B)   B only.
C)   C only.
D)   D only.E) B) and C)
F) C) and D)

Question 10

Perfectly competitive markets explained on the basis of supply and demand:

Accepted Answer

A)   assume many buyers and many sellers of a standardized product.
B)   assume market power so that buyers and sellers bargain with one another.
C)   do not exist in the real-world economy.
D)   are approximated by markets in which a single seller determines price.E) A) and B)
F) None of the above A

Question 11

If Z is an inferior good,an increase in money income will shift the:

Accepted Answer

A)   supply curve for Z to the left.
B)   supply curve for Z to the right.
C)   demand curve for Z to the left.
D)   demand curve for Z to the right.E) None of the above
F) C) and D)

Question 12

The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is _____.

Accepted Answer

A)   direct,inverse
B)   inverse,direct
C)   inverse,inverse
D)   direct,directE) A) and D)
F) All of the above

Question 13

An improvement in production technology will:

Accepted Answer

A)   increase equilibrium price.
B)   shift the supply curve to the left.
C)   shift the supply curve to the right.
D)   shift the demand curve to the left.E) A) and B)
F) A) and C) C

Question 14

Which of the following statements is true about price ceilings?

Accepted Answer

A)   Price ceilings cause goods to be rationed by prices.
B)   Price ceilings cause goods to be rationed by some other means than free market prices.
C)   Ration coupons are the only way to ration goods when price ceilings are in place.
D)   All of the above statements are correct.E) All of the above
F) None of the above

Question 15

Supply refers to the amount of a product that a producer will offer in the market at some particular price.

Accepted Answer

A) True 
 B)False

Question 16

An increase in the price of a product will reduce the amount of it purchased because:

Accepted Answer

A)   supply curves are upsloping.
B)   the higher price means that real incomes have risen.
C)   consumers will substitute other products for the one whose price has risen.
D)   consumers substitute relatively high-priced for relatively low-priced products.E) C) and D)
F) None of the above

Question 17

The location of the supply curve of a product depends on:

Accepted Answer

A)   the technology used to produce it.
B)   the prices of resources used in its production.
C)   the number of sellers in the market.
D)   all of these.E) All of the above
F) C) and D)

Question 18

Refer to the above data.Equilibrium price is:

Accepted Answer

A)   $4.
B)   $3.
C)   $2.
D)   $1.E) A) and B)
F) All of the above

Question 19

Refer to the above diagram.The equilibrium price and quantity in this market will be:

Accepted Answer

A)   $1.00 and 200.
B)   $1.60 and 130.
C)   $.50 and 130.
D)   $1.60 and 290.E) A) and B)
F) None of the above

Question 20

If X is a normal good,a rise in money income will shift the:

Accepted Answer

A)   supply curve for X to the left.
B)   supply curve for X to the right.
C)   demand curve for X to the left.
D)   demand curve for X to the right.E) None of the above
F) A) and D)

Exam 3: Demand, Supply, and Market Equilibrium

When an economist says that the demand for a product has increased,this means that:

Correct Answer
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Correct Answer
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In constructing a stable demand curve for product X:

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

Correct Answer
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A binding price ceiling means that:

Correct Answer
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A decrease in supply of X increases the equilibrium price of X,which reduces the demand for X and automatically returns the price of X to its initial level.

Correct Answer
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If two goods are complements:

Correct Answer
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C

Graphically,the market demand curve is:

Correct Answer
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Which of the above diagrams illustrate(s) the effect of an increase in automobile worker wages on the market for automobiles?

Correct Answer
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Perfectly competitive markets explained on the basis of supply and demand:

Correct Answer
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A

If Z is an inferior good,an increase in money income will shift the:

Correct Answer
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The relationship between quantity supplied and price is _ and the relationship between quantity demanded and price is _.

Correct Answer
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An improvement in production technology will:

Correct Answer
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C

Which of the following statements is true about price ceilings?

Correct Answer
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Supply refers to the amount of a product that a producer will offer in the market at some particular price.

Correct Answer
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An increase in the price of a product will reduce the amount of it purchased because:

Correct Answer
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The location of the supply curve of a product depends on:

Correct Answer
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Refer to the above data.Equilibrium price is:

Correct Answer
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Refer to the above diagram.The equilibrium price and quantity in this market will be:

Correct Answer
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If X is a normal good,a rise in money income will shift the:

Correct Answer
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Exam 3: Demand, Supply, and Market Equilibrium

When an economist says that the demand for a product has increased,this means that:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In constructing a stable demand curve for product X:

Correct AnswerverifiedShow Answer

Refer to the above 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

A binding price ceiling means that:

Correct AnswerverifiedShow Answer

A decrease in supply of X increases the equilibrium price of X,which reduces the demand for X and automatically returns the price of X to its initial level.

Correct AnswerverifiedShow Answer

If two goods are complements:

Correct AnswerverifiedC

Graphically,the market demand curve is:

Correct AnswerverifiedShow Answer

Which of the above diagrams illustrate(s) the effect of an increase in automobile worker wages on the market for automobiles?

Correct AnswerverifiedShow Answer

Perfectly competitive markets explained on the basis of supply and demand:

Correct AnswerverifiedA

If Z is an inferior good,an increase in money income will shift the:

Correct AnswerverifiedShow Answer

The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is _____.

Correct AnswerverifiedShow Answer

An improvement in production technology will:

Correct AnswerverifiedC

Which of the following statements is true about price ceilings?

Correct AnswerverifiedShow Answer

Supply refers to the amount of a product that a producer will offer in the market at some particular price.

Correct AnswerverifiedShow Answer

An increase in the price of a product will reduce the amount of it purchased because:

Correct AnswerverifiedShow Answer

The location of the supply curve of a product depends on:

Correct AnswerverifiedShow Answer

Refer to the above data.Equilibrium price is:

Correct AnswerverifiedShow Answer

Refer to the above diagram.The equilibrium price and quantity in this market will be:

Correct AnswerverifiedShow Answer

If X is a normal good,a rise in money income will shift the:

Correct AnswerverifiedShow Answer

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

Correct Answer
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C

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A

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The relationship between quantity supplied and price is _ and the relationship between quantity demanded and price is _.

Correct Answer
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C

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