Question 1

When the price of automobile insurance increases sharply, what is the likely impact on the market for automobiles?

Accepted Answer

A)   an increase in quantity demanded
B)   an increase in demand
C)   a decrease in quantity demanded
D)   a decrease in demand

Question 2

Which of the following will NOT increase the demand for iced tea?

Accepted Answer

A)   an increase in advertising that makes drinking iced tea more appealing
B)   a decrease in the price of iced tea
C)   an increase in the income of consumers (assume that iced tea is a normal good) 
D)   an increase in the price of iced coffee, a substitute product

Question 3

Define what a market is and provide three examples of where a market can be found.

Accepted Answer

A market is the process of buyers and se...

Question 4

If hot dogs are inferior goods, the demand for hot dogs will rise as consumer income falls.

Accepted Answer

A) True 
 B)False

Question 5

If the "nominal price" of a good has risen by 10 percent over a period of time, its relative price must also have risen.

Accepted Answer

A) True 
 B)False

Question 6

How is the market demand curve determined?

Accepted Answer

A)   by subtracting the individual demands curves from the supply curve
B)   by horizontally summing the individual demand curves
C)   by vertically summing the individual demand curves
D)   by averaging all the individual demand curves

Question 7

Ceteris paribus, if new manufacturers enter the computer industry, which of the following will occur?

Accepted Answer

A)   The supply curve shifts to the right.
B)   The supply curve shifts to the left.
C)   The demand curve shifts to the right.
D)   The demand curve shifts to the left.

Question 8

Wheat and oats are both used to make cereal and grown in the prairies. What would happen to the supply and demand of oats if the price of wheat were to rise?

Accepted Answer

An increase in the price of wheat would ...

Question 9

Which of the following statements about the demand schedule for a good is the most accurate?

Accepted Answer

A)   It indicates the quantities that will be purchased at alternative market prices.
B)   It indicates the quantity that will be produced at various costs.
C)   It indicates the quantities that suppliers will sell at various market prices.
D)   It indicates the quantity that people will buy at the prevailing price.

Question 10

What does a supply curve illustrate a direct relationship between?

Accepted Answer

A)   price and quantity demanded
B)   price and demand
C)   price and quantity supplied
D)   price and supply

Question 11

What two effects support the law of demand?

Accepted Answer

The income effect suggests that an incre...

Question 12

Which of the following would increase the demand for 35mm film?

Accepted Answer

A)   a reduction in the price of 35mm film cameras
B)   a reduction in the price of digital cameras (that do not use film) 
C)   an increase in the price of 35 mm film
D)   an increase in the price of vacation packages

Question 13

The income effect explains why people tend to purchase more of a good when their nominal income increases.

Accepted Answer

A) True 
 B)False

Question 14

According to the law of demand, what happens as the price of a good increases?

Accepted Answer

A)   More of it is produced.
B)   Buyers desire to purchase less of it.
C)   More of it is desired.
D)   Suppliers wish to sell less of it.

Question 15

Which of the following would NOT cause an increase in the demand for cheese?

Accepted Answer

A)   a decrease in the price of crackers, which are consumed with cheese
B)   an increase in the population of cheese lovers
C)   an increase in the income of cheese consumers, assuming that cheese is a normal good
D)   a technological advance that makes it cheaper to produce cheese

Question 16

Which of the following would NOT shift the supply curve for salmon?

Accepted Answer

A)   an increase in the price of salmon
B)   unusually stormy weather during fishing season
C)   a reduction in the number of available fishing boats
D)   the development of innovative new fishing equipment that makes it easier to catch salmon

Question 17

The substitution effect helps to explain why demand curves are downward sloping.

Accepted Answer

A) True 
 B)False

Question 18

What are five things that will shift a supply curve to the right?

Accepted Answer

(any five of)
• A decrease in the price ...

Question 19

What would happen to demand if consumers expect the price of computers to fall in the near future?

Accepted Answer

A)   The demand for computers rises today.
B)   The demand for computers falls today.
C)   The quantity demanded of computers rises today.
D)   The demand for computers will rise in the future.

Question 20

Which of the following would reduce the supply of microcomputers?

Accepted Answer

A)   higher wage rates for the workers that assemble the computers
B)   a reduction in the price of computers
C)   a technological improvement that lowers the cost of producing the computers
D)   a reduction in the price of computer chips used to produce the computers

Exam 3: Supply and Demand

Which of the following statements about the demand schedule for a good is the most accurate?

Correct AnswerverifiedShow Answer

Ceteris paribus, if new manufacturers enter the computer industry, which of the following will occur?

Correct AnswerverifiedShow Answer

When the price of automobile insurance increases sharply, what is the likely impact on the market for automobiles?

Correct AnswerverifiedShow Answer

What does a supply curve illustrate a direct relationship between?

Correct AnswerverifiedShow Answer

What are five things that will shift a supply curve to the right?

Correct Answerverified(any five of)• A decrease in the price ...View AnswerShow Answer

Which of the following will NOT increase the demand for iced tea?

Correct AnswerverifiedShow Answer

Which of the following would increase the demand for 35mm film?

Correct AnswerverifiedShow Answer

If hot dogs are inferior goods, the demand for hot dogs will rise as consumer income falls.

Correct AnswerverifiedShow Answer

The substitution effect helps to explain why demand curves are downward sloping.

Correct AnswerverifiedShow Answer

Which of the following would NOT shift the supply curve for salmon?

Correct AnswerverifiedShow Answer

Wheat and oats are both used to make cereal and grown in the prairies. What would happen to the supply and demand of oats if the price of wheat were to rise?

Correct AnswerverifiedAn increase in the price of wheat would ...View AnswerShow Answer

What two effects support the law of demand?

Correct AnswerverifiedThe income effect suggests that an incre...View AnswerShow Answer

How is the market demand curve determined?

Correct AnswerverifiedShow Answer

Which of the following would NOT cause an increase in the demand for cheese?

Correct AnswerverifiedShow Answer

The income effect explains why people tend to purchase more of a good when their nominal income increases.

Correct AnswerverifiedShow Answer

Define what a market is and provide three examples of where a market can be found.

Correct AnswerverifiedA market is the process of buyers and se...View AnswerShow Answer

Which of the following would reduce the supply of microcomputers?

Correct AnswerverifiedShow Answer

According to the law of demand, what happens as the price of a good increases?

Correct AnswerverifiedShow Answer

If the "nominal price" of a good has risen by 10 percent over a period of time, its relative price must also have risen.

Correct AnswerverifiedShow Answer

What would happen to demand if consumers expect the price of computers to fall in the near future?

Correct AnswerverifiedShow Answer

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(any five of)
• A decrease in the price ...
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An increase in the price of wheat would ...
View Answer

Correct Answer
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The income effect suggests that an incre...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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A market is the process of buyers and se...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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