Question 1

When there is a shortage I. there is a tendency for price to increase.
II. there is an excess quantity demanded.

Accepted Answer

A)  I only
B)  II only
C)  Both I and II
D)  Neither I nor II

Question 2

Other things being equal, an increase in the price of a good leads to a decrease in the amount people purchase. This is known as

Accepted Answer

A)  the law of demand.
B)  the law of supply.
C)  ceteris paribus.
D)  equilibrium.

Question 3

-Refer to the above figure for a particular good. The rightward shift of the curve could have been caused by

Accepted Answer

A)  a decrease in the price of an input.
B)  a decrease in the price of that good.
C)  an increase in the price of a complementary good.
D)  an increase in the price of a substitute good.

Question 4

An increase in demand for a good can be caused by

Accepted Answer

A)  a decrease in the price of a substitute good.
B)  a reduction in income if the good is a normal good.
C)  a decrease in the price of a complementary good.
D)  an increase in price of a complementary good.

Question 5

A shortage creates a situation that forces prices to ________ while a surplus creates a situation that forces prices to ________.

Accepted Answer

A)  decrease; increase
B)  decrease; decrease
C)  increase; decrease
D)  increase; increase

Question 6

-Refer to the above figure. A movement from point A to point B for a good is most likely a result of

Accepted Answer

A)  an increase in the price of that good.
B)  a decrease in the price of that good.
C)  an expectation of an increase in the relative price of that good.
D)  an expectation of a decrease in the relative price of that good.

Question 7

Demand applies to which of the following?

Accepted Answer

A)  fast food
B)  criminal activity
C)  labor market
D)  all of the above

Question 8

If the price of oil rises, producers of oil will

Accepted Answer

A)  increase the quantity of oil supplied.
B)  supply less oil.
C)  leave the amount of oil supplied unchanged.
D)  cut the price.

Question 9

Which of the following illustrates the law of demand?

Accepted Answer

A)  More people watch college basketball in March than in November.
B)  The number of long distance calls in the United States is greater on Christmas than on Valentine's Day.
C)  College enrollment increases when federal tuition grants are readily available to students.
D)  The prevailing wage rate in an industry determines how many people choose to work in the industry.

Question 10

-In the above figure, when the price of Good B increases, the result can be shown by

Accepted Answer

A)  the movement from D₁ to D₂ in Graph A.
B)  the movement from D₂ to D₁ in Graph A.
C)  the movement along D₀ from P₁ to P₂.
D)  the movement along D₀ from P₂ to P₁.

Question 11

If the price of apples goes down, then the demand for pears will

Accepted Answer

A)  increase, assuming apples and pears are substitutes.
B)  decrease, assuming apples and pears are substitutes.
C)  decrease, assuming apples and pears are complements.
D)  remain constant, assuming apples and pears are related goods.

Question 12

Which of the following statements is FALSE?

Accepted Answer

A)  If there is an increase in the demand for a product, consumers want to buy more of the product at each and every possible price.
B)  A decrease in demand shifts the demand curve leftward toward the origin, while a decrease in quantity demanded involves a movement upward along a particular demand curve.
C)  If the price of a good rises, quantity demanded of the good decreases and the demand curve shifts toward the origin as long as supply is static.
D)  A change in the demand for a product is caused by factors other than changes in the product's price.

Question 13

All of the following cause a shift in the demand curve EXCEPT a change in the

Accepted Answer

A)  price of related goods.
B)  price of the good or service.
C)  consumer income.
D)  number of consumers.

Question 14

Four points on a demand schedule are given: $12, 2 units; $10, 1 unit; $15, 1.5 units; and $2, 4 units. Which combination is inconsistent with the law of demand?

Accepted Answer

A)  $12 and 2 units
B)  $10 and 1 unit
C)  $15 and 1.5 units
D)  $2 and 4 units

Question 15

Which one of the following statements is TRUE?

Accepted Answer

A)  If the money price of a good increases, its relative price necessarily increases.
B)  If the money price of a good increases, its relative price necessarily decreases.
C)  The relative price of a good refers to the opportunity cost of purchasing it.
D)  Rational consumers always ignore the monetary price of a good when deciding whether to buy it.

Question 16

The price of a new textbook increases from $120 to $160, while the price of used copies of the textbook increased from $80 to $100. Other things being equal, we would expect

Accepted Answer

A)  the quantity demanded of the used textbook to increase and the quantity demanded of the new textbook to decrease.
B)  the quantity demanded of both to fall.
C)  the demand for the new textbook to increase and the demand for the used textbook to decrease.
D)  the quantity demanded of the used textbook to decrease and the quantity demanded of the new textbook to increase.

Question 17

Which of the following would likely cause an increase in the supply of single-serve coffee makers?

Accepted Answer

A)  a decrease in the number of consumers demanding single-serve coffee makers
B)  an increase in the price of single-serve coffee makers
C)  a decrease in the cost of manufacturing single-serve coffee makers
D)  a widespread expectation that the price of single-serve coffee makers will rise in the future

Question 18

The market demand curve for a particular good

Accepted Answer

A)  is the horizontal sum of all individual demand curves for the good.
B)  may be less than an individual demand curve for the good.
C)  may or may not show a direct relationship between price and quantity demanded.
D)  will not be affected by any of the determinants of individual demand.

Question 19

If two goods are substitutes, then

Accepted Answer

A)  an increase in the price of one causes the demand for the other to fall.
B)  there is an inverse relationship between changes in the price of one good and changes in the demand for the other.
C)  if the price of one good falls, the demand for the other good falls also.
D)  changes in the quantity demanded of one good will not affect the demand for the other.

Question 20

Which one of the following would cause an increase in the supply of cardboard?

Accepted Answer

A)  a decrease in the demand for cardboard
B)  an increase in the price of cardboard
C)  an increase in taxes applied to cardboard producers
D)  an improvement in the technology used to produce cardboard

Exam 3: Demand and Supply

If the price of oil rises, producers of oil will

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Which one of the following would cause an increase in the supply of cardboard?

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The price of a new textbook increases from $120 to $160, while the price of used copies of the textbook increased from $80 to $100. Other things being equal, we would expect

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If the price of apples goes down, then the demand for pears will

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-In the above figure, when the price of Good B increases, the result can be shown by

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All of the following cause a shift in the demand curve EXCEPT a change in the

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Other things being equal, an increase in the price of a good leads to a decrease in the amount people purchase. This is known as

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An increase in demand for a good can be caused by

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When there is a shortage I. there is a tendency for price to increase. II. there is an excess quantity demanded.

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Which of the following illustrates the law of demand?

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Which of the following would likely cause an increase in the supply of single-serve coffee makers?

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Demand applies to which of the following?

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-Refer to the above figure. A movement from point A to point B for a good is most likely a result of

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Which one of the following statements is TRUE?

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Four points on a demand schedule are given: $12, 2 units; $10, 1 unit; $15, 1.5 units; and $2, 4 units. Which combination is inconsistent with the law of demand?

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Which of the following statements is FALSE?

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The market demand curve for a particular good

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A shortage creates a situation that forces prices to ________ while a surplus creates a situation that forces prices to ________.

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If two goods are substitutes, then

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-Refer to the above figure for a particular good. The rightward shift of the curve could have been caused by

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A shortage creates a situation that forces prices to while a surplus creates a situation that forces prices to .

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