Question 1

If products C and D are close substitutes,an increase in the price of C will:

Accepted Answer

A)   tend to cause the price of D to fall.
B)   shift the demand curve of C to the left and the demand curve of D to the right.
C)   shift the demand curve of D to the right.
D)   shift the demand curves of both products to the right.E) A) and B)
F) None of the above

Question 2

What combination of changes in supply and demand would most likely increase the equilibrium price?

Accepted Answer

A)   when supply increases and demand decreases
B)   when supply decreases and demand increases
C)   when supply decreases and demand decreases
D)   when supply increases and demand increasesE) B) and D)
F) C) and D)

Question 3

One can say with certainty that equilibrium price will decline when supply:

Accepted Answer

A)   and demand both decrease.
B)   increases and demand decreases.
C)   decreases and demand increases.
D)   and demand both increase.E) A) and C)
F) A) and B)

Question 4

Assuming conventional supply and demand curves,changes in the determinants of supply and demand will:

Accepted Answer

A)   in all likelihood alter both equilibrium price and quantity.
B)   alter equilibrium quantity,but not equilibrium price.
C)   alter equilibrium price,but not equilibrium quantity.
D)   have no effect upon equilibrium price or quantity.E) A) and D)
F) All of the above

Question 5

If an effective legal ceiling is imposed on credit card interest rates:

Accepted Answer

A)   such credit would be less readily available.
B)   annual credit card fees would fall.
C)   the product prices charged by merchants who issue credit cards would fall.
D)   more credit cards will be issued.E) C) and D)
F) B) and C)

Question 6

If an increase in consumer incomes causes the demand curve for product Z to shift to the left,then it can be said that product Z is a(n) :

Accepted Answer

A)   normal good.
B)   luxury good.
C)   inferior good.
D)   inexpensive good.E) A) and C)
F) None of the above

Question 7

A decrease in the price of gasoline will:

Accepted Answer

A)   cause the demand curve for gas powered cars to become vertical.
B)   shift the demand curve for gas powered cars to the right.
C)   shift the demand curve for gas powered cars to the left.
D)   not affect the demand for gas powered cars.E) C) and D)
F) All of the above

Question 8

The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q.
-Refer to the above information.The equilibrium quantity is:

Accepted Answer

A)   10
B)   20
C)   15
D)   30E) C) and D)
F) A) and D)

Question 9

1 to S3? A)  a decrease in the price of fertilizer B)  an increase in the price of irrigation equipment C)  an increase in consumer incomes D)  a change in consumer tastes in favour of cornbread" class="answers-bank-image d-inline" rel="preload" >
-Refer to the above diagram,which shows three supply curves for corn.Which of the following would cause the change in the supply of corn illustrated by the shift from S1 to S3?

Accepted Answer

A)   a decrease in the price of fertilizer
B)   an increase in the price of irrigation equipment
C)   an increase in consumer incomes
D)   a change in consumer tastes in favour of cornbreadE) None of the above
F) A) and B)

Question 10

If product Y is an inferior good,an increase in consumer incomes will:

Accepted Answer

A)   result in a surplus of product Y.
B)   not affect the sales of product Y.
C)   shift the demand curve for product Y to the left.
D)   shift the demand curve for product Y to the right.E) C) and D)
F) All of the above

Question 11

If demand for a good decreases and supply remains constant,equilibrium price:

Accepted Answer

A)   and quantity will both increase.
B)   will increase,and equilibrium quantity will decrease.
C)   will decrease,and equilibrium quantity will increase.
D)   and quantity will both decrease.E) A) and B)
F) A) and C)

Question 12

A firm's supply curve is upward sloping because:

Accepted Answer

A)   the expansion of production necessitates the use of qualitatively inferior techniques.
B)   mass production economies are associated with larger levels of output.
C)   consumers envision a positive relationship between price and quality.
D)   beyond some point the production costs of additional units of output will rise.E) All of the above
F) A) and D)

Question 13

If consumer incomes increase,the demand for product X:

Accepted Answer

A)   will necessarily remain unchanged.
B)   may shift either to the right or left.
C)   will necessarily shift to the right.
D)   will necessarily shift to the left.E) A) and B)
F) A) and C)

Question 14

Given a downward sloping demand curve and an upward sloping supply curve for product X,an increase in the price of a substitute good (in consumption) will:

Accepted Answer

A)   increase equilibrium price and quantity of X.
B)   decrease equilibrium price and quantity of X.
C)   increase equilibrium price and decrease equilibrium quantity of X.
D)   decrease equilibrium price and increase equilibrium quantity of X.E) B) and C)
F) All of the above

Question 15

1 and the supply S1 for rental housing,if the government established rent controls in the city at below the equilibrium,then the price of housing would most likely be at: A)  P1 and there would be a shortage of rental housing. B)  P2 and there would be a shortage of rental housing. C)  P3 and there would be a surplus of rental housing. D)  P4 and there would be a surplus of rental housing." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above graph,which shows the supply and demand for rental housing in a city.Given the demand D1 and the supply S1 for rental housing,if the government established rent controls in the city at below the equilibrium,then the price of housing would most likely be at:

Accepted Answer

A)   P1 and there would be a shortage of rental housing.
B)   P2 and there would be a shortage of rental housing.
C)   P3 and there would be a surplus of rental housing.
D)   P4 and there would be a surplus of rental housing.E) B) and C)
F) None of the above

Question 16

Economists use the term "demand" as:

Accepted Answer

A)   a particular price-quantity combination on a stable demand curve.
B)   the total amount spent on a particular commodity over a stipulated time period.
C)   an upsloping line on a graph which relates consumer purchases and product price.
D)   a schedule of various combinations of market prices and amounts demanded.E) A) and D)
F) B) and C)

Question 17

An increase in the supply of product X,with demand held constant,will increase the price of product X.

Accepted Answer

A) True 
 B)False

Question 18

1/3Q. B)  is P = 5 + 2Q. C)  is P = 5 + 3Q. D)  is P = 5 - 3Q." class="answers-bank-image d-inline" rel="preload" >
-The equation for the supply curve in the above diagram:

Accepted Answer

A)   is P = 5 + 1/3Q.
B)   is P = 5 + 2Q.
C)   is P = 5 + 3Q.
D)   is P = 5 - 3Q.E) B) and D)
F) A) and B)

Question 19

The horizontal axis of a graph which shows a market demand curve indicates the:

Accepted Answer

A)   prices at which various levels of output can be sold.
B)   number of consumers who are in the market for this product.
C)   various quantities of output at which the market will be cleared.
D)   quantities which consumers will be willing and able to buy at various prices.E) A) and D)
F) None of the above

Question 20

0 and S0,equilibrium price and quantity will be: A)  0F and 0C respectively. B)  0G and 0B respectively. C)  0F and 0A respectively. D)  0E and 0B respectively." 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 the initial demand and supply curves are D0 and S0,equilibrium price and quantity will be:

Accepted Answer

A)   0F and 0C respectively.
B)   0G and 0B respectively.
C)   0F and 0A respectively.
D)   0E and 0B respectively.E) A) and B)
F) A) and C)

Exam 3: Demand, Supply, and Market Equilibrium

-Refer to the above diagram,which shows three supply curves for corn.Which of the following would cause the change in the supply of corn illustrated by the shift from S1 to S3?

Correct AnswerverifiedShow Answer

If products C and D are close substitutes,an increase in the price of C will:

Correct AnswerverifiedShow Answer

What combination of changes in supply and demand would most likely increase the equilibrium price?

Correct AnswerverifiedShow Answer

If consumer incomes increase,the demand for product X:

Correct AnswerverifiedShow Answer

An increase in the supply of product X,with demand held constant,will increase the price of product X.

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-The equation for the supply curve in the above diagram:

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If an effective legal ceiling is imposed on credit card interest rates:

Correct AnswerverifiedShow Answer

One can say with certainty that equilibrium price will decline when supply:

Correct AnswerverifiedShow Answer

If demand for a good decreases and supply remains constant,equilibrium price:

Correct AnswerverifiedShow Answer

-Refer to the above graph,which shows the supply and demand for rental housing in a city.Given the demand D1 and the supply S1 for rental housing,if the government established rent controls in the city at below the equilibrium,then the price of housing would most likely be at:

Correct AnswerverifiedShow Answer

-Refer to the above diagram,which shows demand and supply conditions in the competitive market for product X.If the initial demand and supply curves are D0 and S0,equilibrium price and quantity will be:

Correct AnswerverifiedShow Answer

The horizontal axis of a graph which shows a market demand curve indicates the:

Correct AnswerverifiedShow Answer

A firm's supply curve is upward sloping because:

Correct AnswerverifiedShow Answer

If product Y is an inferior good,an increase in consumer incomes will:

Correct AnswerverifiedShow Answer

Economists use the term "demand" as:

Correct AnswerverifiedShow Answer

Assuming conventional supply and demand curves,changes in the determinants of supply and demand will:

Correct AnswerverifiedShow Answer

A decrease in the price of gasoline will:

Correct AnswerverifiedShow Answer

Given a downward sloping demand curve and an upward sloping supply curve for product X,an increase in the price of a substitute good (in consumption) will:

Correct AnswerverifiedShow Answer

If an increase in consumer incomes causes the demand curve for product Z to shift to the left,then it can be said that product Z is a(n) :

Correct AnswerverifiedShow Answer

The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. -Refer to the above information.The equilibrium quantity is:

Correct AnswerverifiedShow Answer

-Refer to the above diagram,which shows three supply curves for corn.Which of the following would cause the change in the supply of corn illustrated by the shift from S₁ to S₃?

Correct Answer
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-Refer to the above graph,which shows the supply and demand for rental housing in a city.Given the demand D₁ and the supply S₁ for rental housing,if the government established rent controls in the city at below the equilibrium,then the price of housing would most likely be at:

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 the initial demand and supply curves are D₀ and S₀,equilibrium price and quantity will be:

Correct Answer
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