Question 1

A normal good is one

Accepted Answer

A)  whose amount demanded will increase as its price decreases.
B)  whose amount demanded will increase as its price increases.
C)  whose demand curve will shift leftward as incomes rise.
D)  for which the consumption varies directly with income.

Question 2

Which of the following will not cause the supply curve to shift?

Accepted Answer

A)  a change in the costs of resources needed to produce the good
B)  a technological change in the production of the good
C)  a change in the price of the good
D)  a change in the prices of other goods that producers could be producing

Question 3

Assume a drought in the Great Plains reduces the supply of wheat.Noting that wheat is a basic ingredient in the production of bread, and potatoes are a consumer substitute for bread, we would expect the price of wheat to

Accepted Answer

A)  rise, the supply of bread to increase, and the demand for potatoes to increase.
B)  rise, the supply of bread to decrease, and the demand for potatoes to increase.
C)  rise, the supply of bread to decrease, and the demand for potatoes to decrease.
D)  fall, the supply of bread to increase, and the demand for potatoes to increase.Topic: Demand

Question 4

(Consider This)  Suppose that coffee growers sell 200 million pounds of coffee beans at $2 per pound in 2015 and 240 million pounds for $3 per pound in 2016.Based on this information, we can conclude that the

Accepted Answer

A)  law of supply has been violated.
B)  law of demand has been violated.
C)  demand for coffee beans has increased.
D)  supply of coffee beans has increased.

Question 5

Test Bank: I Topic: Changes in Supply, Demand, and Equilibrium 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.If X is an inferior good, a decrease in income will

Accepted Answer

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

Question 6

Surpluses drive market prices up; shortages drive them down.

Accepted Answer

A) True 
 B)False

Question 7

(Advanced analysis)  The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q.If demand changed from P = 100 - 2Q to P = 130 - Q, the new equilibrium price is

Accepted Answer

A)  $90.
B)  $110.
C)  $96.
D)  $106.

Question 8

Which is most likely to be observed in a community where legal ceilings are imposed on residential rents?

Accepted Answer

A)  Poor people will be able to find adequate housing.
B)  Homeowners will reduce their own use of housing space, making more available to others.
C)  Those whose needs for housing are most urgent will be able to obtain the space they want.
D)  People moving into the community will have difficulty locating residential space to rent.

Question 9

All of the following would affect the position of the supply curve for cranberries, except the

Accepted Answer

A)  popularity of cranberry drinks.
B)  price of agricultural land for cranberries.
C)  cost of fertilizers for cranberry production.
D)  development of a new pest control for cranberries.

Question 10

(Advanced analysis)  The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q.The equilibrium price for X is

Accepted Answer

A)  $2.
B)  $4.
C)  $6.
D)  $7.

Question 11

Other things equal, an excise tax on a product will

Accepted Answer

A)  increase its supply.
B)  increase its price.
C)  increase the quantity sold.
D)  increase its demand.

Question 12

When the price of Nike soccer balls fell, Ronaldo purchased more Nike soccer balls and fewer adidas soccer balls.Which of the following best explains Ronaldo's decision to buy more Nike soccer balls?

Accepted Answer

A)  the substitution effect
B)  the income effect
C)  an increase in the demand for Nike soccer balls
D)  the price effect

Question 13

In the past few years, the demand for donuts has greatly increased.This increase in demand might best be explained by

Accepted Answer

A)  an increase in the cost of making donuts.
B)  an increase in the price of coffee.
C)  consumers expecting donut prices to fall.
D)  a change in buyer tastes.

Question 14

When the price of a product falls, the purchasing power of our money income rises and thus permits consumers to purchase more of the product.This statement describes

Accepted Answer

A)  an inferior good.
B)  the rationing function of prices.
C)  the substitution effect.
D)  the income effect.

Question 15

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 prices of resources used to produce X will

Accepted Answer

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

Question 16

A market for a product reaches equilibrium when

Accepted Answer

A)  the actual quantity bought by buyers equals actual quantity sold by sellers.
B)  the price rises further after there is a surplus.
C)  buyers intend to buy a quantity equal to the quantity that sellers intend to sell.
D)  price falls further after there is a shortage.

Question 17

Assume in a competitive market that price is initially above the equilibrium level.We can predict that price will

Accepted Answer

A)  decrease, quantity demanded will decrease, and quantity supplied will increase.
B)  decrease and quantity demanded and quantity supplied will both decrease.
C)  decrease, quantity demanded will increase, and quantity supplied will decrease.
D)  increase, quantity demanded will decrease, and quantity supplied will increase.

Question 18

Which statement is true about supply?

Accepted Answer

A)  There is an inverse relationship between price and quantity supplied.
B)  Supply refers to the amount of inventory that sellers have in their warehouses.
C)  As price decreases, producers are willing to put more of the good on the market for sale.
D)  To entice producers to offer more of a good on the market for sale, price must rise.

Question 19

One reason that the quantity demanded of a good increases when its price falls is that the

Accepted Answer

A)  price decline shifts the supply curve to the left.
B)  lower price shifts the demand curve to the left.
C)  lower price shifts the demand curve to the right.
D)  lower price increases the real incomes of buyers, enabling them to buy more.

Question 20

At the point where the demand and supply curves for a product intersect,

Accepted Answer

A)  the selling price and the buying price need not be equal.
B)  the market may, or may not, be in equilibrium.
C)  either a shortage or a surplus of the product might exist, depending on the degree of competition.
D)  the quantity that consumers want to purchase and the amount producers choose to sell are the same.

Exam 3: Demand, Supply, and Market Equilibrium

(Consider This) Suppose that coffee growers sell 200 million pounds of coffee beans at $2 per pound in 2015 and 240 million pounds for $3 per pound in 2016.Based on this information, we can conclude that the

Correct Answer
verified

One reason that the quantity demanded of a good increases when its price falls is that the

Correct Answer
verified

A market for a product reaches equilibrium when

Correct Answer
verified

Surpluses drive market prices up; shortages drive them down.

Correct Answer
verified

Other things equal, an excise tax on a product will

Correct Answer
verified

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q.The equilibrium price for X is

Correct Answer
verified

When the price of a product falls, the purchasing power of our money income rises and thus permits consumers to purchase more of the product.This statement describes

Correct Answer
verified

When the price of Nike soccer balls fell, Ronaldo purchased more Nike soccer balls and fewer adidas soccer balls.Which of the following best explains Ronaldo's decision to buy more Nike soccer balls?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

All of the following would affect the position of the supply curve for cranberries, except the

Correct Answer
verified

(Advanced analysis) The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q.If demand changed from P = 100 - 2Q to P = 130 - Q, the new equilibrium price is

Correct Answer
verified

Assume in a competitive market that price is initially above the equilibrium level.We can predict that price will

Correct Answer
verified

Which statement is true about supply?

Correct Answer
verified

Which of the following will not cause the supply curve to shift?

Correct Answer
verified

Assume a drought in the Great Plains reduces the supply of wheat.Noting that wheat is a basic ingredient in the production of bread, and potatoes are a consumer substitute for bread, we would expect the price of wheat to

Correct Answer
verified

Which is most likely to be observed in a community where legal ceilings are imposed on residential rents?

Correct Answer
verified

At the point where the demand and supply curves for a product intersect,

Correct Answer
verified

In the past few years, the demand for donuts has greatly increased.This increase in demand might best be explained by

Correct Answer
verified

A normal good is one

Correct Answer
verified

Exam 3: Demand, Supply, and Market Equilibrium

(Consider This) Suppose that coffee growers sell 200 million pounds of coffee beans at $2 per pound in 2015 and 240 million pounds for $3 per pound in 2016.Based on this information, we can conclude that the

Correct AnswerverifiedShow Answer

One reason that the quantity demanded of a good increases when its price falls is that the

Correct AnswerverifiedShow Answer

A market for a product reaches equilibrium when

Correct AnswerverifiedShow Answer

Surpluses drive market prices up; shortages drive them down.

Correct AnswerverifiedShow Answer

Other things equal, an excise tax on a product will

Correct AnswerverifiedShow Answer

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q.The equilibrium price for X is

Correct AnswerverifiedShow Answer

When the price of a product falls, the purchasing power of our money income rises and thus permits consumers to purchase more of the product.This statement describes

Correct AnswerverifiedShow Answer

When the price of Nike soccer balls fell, Ronaldo purchased more Nike soccer balls and fewer adidas soccer balls.Which of the following best explains Ronaldo's decision to buy more Nike soccer balls?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

All of the following would affect the position of the supply curve for cranberries, except the

Correct AnswerverifiedShow Answer

(Advanced analysis) The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q.If demand changed from P = 100 - 2Q to P = 130 - Q, the new equilibrium price is

Correct AnswerverifiedShow Answer

Assume in a competitive market that price is initially above the equilibrium level.We can predict that price will

Correct AnswerverifiedShow Answer

Which statement is true about supply?

Correct AnswerverifiedShow Answer

Which of the following will not cause the supply curve to shift?

Correct AnswerverifiedShow Answer

Assume a drought in the Great Plains reduces the supply of wheat.Noting that wheat is a basic ingredient in the production of bread, and potatoes are a consumer substitute for bread, we would expect the price of wheat to

Correct AnswerverifiedShow Answer

Which is most likely to be observed in a community where legal ceilings are imposed on residential rents?

Correct AnswerverifiedShow Answer

At the point where the demand and supply curves for a product intersect,

Correct AnswerverifiedShow Answer

In the past few years, the demand for donuts has greatly increased.This increase in demand might best be explained by

Correct AnswerverifiedShow Answer

A normal good is one

Correct AnswerverifiedShow Answer

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