Exam 3: Demand, Supply, and Market Equilibrium

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

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A) both A and B are inferior goods.
B) A is a superior good and B is an inferior good.
C) A is an inferior good and B is a superior good.
D) A and B are complementary goods.

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A) quantity demanded exceeds quantity supplied.
B) the equilibrium price is above the current price.
C) quantity supplied exceeds quantity demanded.
D) the price of the good is likely to rise.

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A) the higher price will signal to consumers that the good is of low quality.
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.

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A) Less rental housing is available, as prospective landlords find it unprofitable to rent at restricted prices.
B) The quality of rental housing declines as landlords lack the funds and incentive to maintain properties.
C) Apartment buildings are torn down in favor of office buildings, shopping malls, and other buildings where rents are not controlled.
D) All of these are consequences of rent controls.

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A) the dollar amount necessary to induce a change in the quantity of a good supplied to the market.
B) the cost of producing each unit of the product.
C) the total revenues that sellers receive for selling a given quantity of the product.
D) the total amount that buyers pay in order to acquire a given quantity of the product.

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A) decrease in demand.
B) increase in demand.
C) decrease in supply.
D) increase in supply.

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A) substitute goods.
B) complementary goods.
C) independent goods.
D) inferior goods.

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A) consumer sovereignty.
B) the income effect.
C) the substitution effect.
D) diminishing marginal utility.

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A) the law of demand.
B) the income effect.
C) why the supply curve is upsloping.
D) why the demand curve is downsloping.

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A) the use of the least-cost method of production.
B) the production of the product mix most wanted by society.
C) the full employment of all available resources.
D) production at some point inside of the production possibilities curve.

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A) supply curve of product X will shift to the right.
B) demand curve of product X will shift to the right.
C) supply curve of product X will shift to the left.
D) supply curve of product X will not shift.

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A) demand rises and supply rises
B) supply falls and demand remains constant
C) demand rises and supply falls
D) supply rises and demand falls

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A) direct; inverse
B) inverse; direct
C) inverse; inverse
D) direct; direct

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A) producing the combination of goods most desired by society.
B) achieving the full employment of all available resources.
C) producing every good with the least-cost combination of inputs.
D) reducing the concavity of the production possibilities curve.

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A) demand will not cause the equilibrium price to change.
B) supply will not cause the equilibrium price to change.
C) demand will not cause the equilibrium quantity to change.
D) supply will not cause the equilibrium quantity to change.

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A) there are many goods that are substitutes for bicycles.
B) there are many goods that are complementary to bicycles.
C) there are few goods that are substitutes for bicycles.
D) bicycles are normal goods.

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