Question 1

A decrease in the price of pizza will lead to a(n) :

Accepted Answer

A)  increase in the demand for pizza.
B)  increase in the quantity of pizza demanded.
C)  decrease in the quantity of pizza demanded.
D)  decrease in the number of consumers.

Question 2

Refer to the accompanying figure. Suppose all the sellers in this market started out charging a price of $45 per unit. What is the most likely result?

Accepted Answer

A)  They would all make a large profit because $45 is more than the equilibrium price.
B)  They would all just break even because $45 is their reservation price.
C)  They would lower their prices because at $45 there would be excess supply.
D)  They would lower their prices because at $45 there would be excess demand.

Question 3

Suppose we observe a decrease in the equilibrium price of tuna and an increase in the equilibrium quantity of tuna. This is best explained by:

Accepted Answer

A)  a decrease in the cost of fuel used by tuna fishing boats.
B)  a decrease in the tuna population in the oceans.
C)  a decrease in the expected future price of tuna.
D)  an increase in the price of salmon, a substitute for tuna.

Question 4

The entire group of buyers and sellers of a particular good or service makes up:

Accepted Answer

A)  the demand curve.
B)  the supply curve.
C)  a market.
D)  the equilibrium price and quantity.

Question 5

When a slice of pizza at the student union sold for $2, Moe did not purchase any. When the price fell to $1.75, Moe purchased a slice each day for lunch. Thus, we can infer that Moe's reservation price for a slice of pizza is:

Accepted Answer

A)  less than $1.75.
B)  at least $1.75 but less than $2.
C)  exactly $1.75.
D)  exactly $2.00.

Question 6

Suppose one observes that when the price of peanut butter increases, the demand for jelly increases. One should conclude that:

Accepted Answer

A)  peanut butter and jelly are complements.
B)  peanut butter and jelly are substitutes.
C)  peanut butter and jelly are normal goods.
D)  peanut butter and jelly are inferior goods.

Question 7

If the demand for steak increases as income increases, then steak is a(n) :

Accepted Answer

A)  complementary good.
B)  normal good.
C)  inferior good.
D)  substitute good.

Question 8

The demand curve illustrates the fact that consumers tend to purchase:

Accepted Answer

A)  more of a good as it becomes more popular.
B)  name-brand products more frequently than generic products.
C)  more of a good as its price falls.
D)  more of a good as their incomes rise.

Question 9

If an increase in the price of good X leads to a decrease in the demand for good Y, then:

Accepted Answer

A)  good X and good Y are complements.
B)  good X and good Y are normal goods.
C)  good X and good Y are substitutes.
D)  good X is a normal good and good Y is an inferior good.

Question 10

One reason the demand curve slopes ________ is that as prices fall ________.

Accepted Answer

A)  upward; more people find that the price is now less than their reservation price
B)  upward; fewer people find that the price is now less than their reservation price
C)  downward; more people find that the price is now less than their reservation price
D)  downward; fewer people find that the price is now less than their reservation price

Question 11

Refer to the accompanying figure. Assume demand remains unchanged at D1. If supply shifts from S2 to S1, then the equilibrium price will ________ and the equilibrium quantity will ________.

Accepted Answer

A)  rise; fall
B)  rise; rise
C)  fall; fall
D)  fall; rise

Question 12

Refer to the accompanying figure. At a price of $3, there will be:

Accepted Answer

A)  an excess demand of 5 units.
B)  an excess demand of 7 units.
C)  an excess supply of 7 units.
D)  an excess supply of 2 units.

Question 13

Suppose Bianca buys a used a textbook from Sebastian for $55. If Bianca's surplus from this transaction was $10, we can infer that:

Accepted Answer

A)  Bianca's reservation price was $45.
B)  Bianca's reservation price was $60, and Sebastian's reservation price was $50.
C)  Bianca's reservation price was $65.
D)  Sebastian's reservation price was $45.

Question 14

Suppose you camped out in front of an electronics store to be one of the 200 lucky people able to purchase the latest gaming system. You bought the system for $350. Two weeks later you see that the same system can be sold on e-Bay for $600, so you sell your system. Your market role was as a:

Accepted Answer

A)  consumer in both markets.
B)  consumer at the electronics store and a seller on e-Bay.
C)  consumer at the electronics store; the e-Bay transaction did not occur in a market.
D)  seller in both markets.

Question 15

Suppose quantity demanded is given by Qᵈ = 100 - P, and quantity supplied is given by Qˢ = 20 + 3P. In this case, equilibrium price, P*, and equilibrium quantity, Q*, are as follows:

Accepted Answer

A)  P*= 80, Q*= 20
B)  P*= 10, Q*= 90
C)  P*= 40, Q*= 140
D)  P*= 20, Q*= 80

Question 16

Refer to the accompanying figure. Assume demand remains unchanged at D1. If supply shifts from S1 to S2, then the equilibrium price will ________ and the equilibrium quantity will ________.

Accepted Answer

A)  rise; fall
B)  rise; rise
C)  fall; fall
D)  fall; rise

Question 17

Refer to the accompanying figure. A decrease in demand is represented by a shift from:

Accepted Answer

A)  curve A to curve B.
B)  curve B to curve A.
C)  curve C to curve D.
D)  curve D to curve C.

Question 18

If pencils and paper are complements for most consumers, then if the price of paper increases, you would expect:

Accepted Answer

A)  the equilibrium price and quantity of pencils to fall.
B)  the equilibrium price and quantity of pencils to rise.
C)  the equilibrium price of pencils to fall and the equilibrium quantity of pencils to rise.
D)  the equilibrium price of pencils to rise and the equilibrium quantity of pencils to fall.

Question 19

Refer to the accompanying figure. The equilibrium price is ________, and the equilibrium quantity is ________.

Accepted Answer

A)  $30; 15
B)  $25; 20
C)  $25; 5
D)  $35; 20

Question 20

Everyone in the neighborhood has been complaining about the deteriorating condition of the park, but nobody has cleaned it up. Why not?

Accepted Answer

A)  There is an excess demand for parks in the neighborhood.
B)  There is an excess supply of parks in the neighborhood.
C)  The social benefit of cleaning the park exceeds the social cost of cleaning it.
D)  No single person's benefit from cleaning the park exceeds that person's cost of cleaning it.

Exam 3: Supply and Demand

Refer to the accompanying figure. A decrease in demand is represented by a shift from:

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Refer to the accompanying figure. Suppose all the sellers in this market started out charging a price of $45 per unit. What is the most likely result?

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If an increase in the price of good X leads to a decrease in the demand for good Y, then:

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Suppose you camped out in front of an electronics store to be one of the 200 lucky people able to purchase the latest gaming system. You bought the system for $350. Two weeks later you see that the same system can be sold on e-Bay for $600, so you sell your system. Your market role was as a:

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Suppose one observes that when the price of peanut butter increases, the demand for jelly increases. One should conclude that:

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Refer to the accompanying figure. At a price of $3, there will be:

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One reason the demand curve slopes ________ is that as prices fall ________.

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If pencils and paper are complements for most consumers, then if the price of paper increases, you would expect:

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The entire group of buyers and sellers of a particular good or service makes up:

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A decrease in the price of pizza will lead to a(n) :

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Refer to the accompanying figure. The equilibrium price is ________, and the equilibrium quantity is ________.

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Refer to the accompanying figure. Assume demand remains unchanged at D1. If supply shifts from S2 to S1, then the equilibrium price will ________ and the equilibrium quantity will ________.

Correct AnswerverifiedShow Answer

Suppose Bianca buys a used a textbook from Sebastian for $55. If Bianca's surplus from this transaction was $10, we can infer that:

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Suppose we observe a decrease in the equilibrium price of tuna and an increase in the equilibrium quantity of tuna. This is best explained by:

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If the demand for steak increases as income increases, then steak is a(n) :

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The demand curve illustrates the fact that consumers tend to purchase:

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Everyone in the neighborhood has been complaining about the deteriorating condition of the park, but nobody has cleaned it up. Why not?

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Suppose quantity demanded is given by Qᵈ = 100 - P, and quantity supplied is given by Qˢ = 20 + 3P. In this case, equilibrium price, P*, and equilibrium quantity, Q*, are as follows:

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Refer to the accompanying figure. Assume demand remains unchanged at D1. If supply shifts from S1 to S2, then the equilibrium price will ________ and the equilibrium quantity will ________.

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When a slice of pizza at the student union sold for $2, Moe did not purchase any. When the price fell to $1.75, Moe purchased a slice each day for lunch. Thus, we can infer that Moe's reservation price for a slice of pizza is:

Correct AnswerverifiedShow Answer

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One reason the demand curve slopes is that as prices fall .

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Refer to the accompanying figure. The equilibrium price is , and the equilibrium quantity is .

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Refer to the accompanying figure. Assume demand remains unchanged at D1. If supply shifts from S2 to S1, then the equilibrium price will and the equilibrium quantity will .

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Suppose quantity demanded is given by Qᵈ = 100 - P, and quantity supplied is given by Qˢ = 20 + 3P. In this case, equilibrium price, P, and equilibrium quantity, Q, are as follows:

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Refer to the accompanying figure. Assume demand remains unchanged at D1. If supply shifts from S1 to S2, then the equilibrium price will and the equilibrium quantity will .

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