Question 1

The demand for orthodontists' services falls as the proportion of the population that obtains braces falls. It may take several years before the new long-run equilibrium for the orthodontic labor market is attained. In the meantime, the orthodontic labor market experiences a

Accepted Answer

A)   shortage.
B)   quality decrease.
C)   surplus.
D)   excess demand.

Question 2

When producers anticipate that the price of their product will increase in the future,

Accepted Answer

A)   the supply curve will shift to the right.
B)   the supply curve will shift to the left.
C)   the current production will move along on the supply curve.
D)   they will immediately lobby Congress to adjust prices now.

Question 3

The price of a new textbook increased from $60 to $75 in one year, while the price of a used textbook increased by 25 percent. What happened to the relative price of a used textbook?

Accepted Answer

A)   It increased by 25 percent.
B)   It increased by 10 percent.
C)   It remained constant.
D)   It can't be determined without knowing the nominal price of the used textbook in at least one of the years.

Question 4

-Refer to the above table. There is an excess quantity supplied of 2,000 units at a price of

Accepted Answer

A)   $450.
B)   $500.
C)   $600.
D)   $700.

Question 5

Which of the following would cause an increase in the market supply of mountain bikes?

Accepted Answer

A)   a decrease in the demand for mountain bikes
B)   an increase in taxes levied on mountain bike manufacturers
C)   an increase in the cost of components used to assemble mountain bikes
D)   an increase in the number of firms making mountain bikes

Question 6

Suppose that the price of wheat is above its equilibrium price. You would expect to see

Accepted Answer

A)   a shortage on the market that causes prices to increase further.
B)   an increase in quantity demanded because of the high price.
C)   a leftward shift of the demand curve because of the high price.
D)   sellers begin to lower their prices because of the surplus of wheat.

Question 7

Which of the following will NOT cause a shift in the demand for rewriteable DVDs?

Accepted Answer

A)   A change in taste
B)   A change in income
C)   A change in the price of rewriteable DVDs
D)   A change in the price of rewriteable CDs

Question 8

If goods X and Y are substitute goods, then an increase in the price of Y, other things being equal,

Accepted Answer

A)   results in a decrease in the amounts of both X and Y consumed.
B)   decreases the quantity demanded of Y, but has no effect on the amount of X consumed.
C)   results in a decrease in the quantity of Y consumed, but increases the demand for X.
D)   has no real effect on the quantity demanded of good Y, but increases the demand for X.

Question 9

The direct relationship between changes in price and changes in quantity supplied is

Accepted Answer

A)   a change in supply.
B)   shown by a shift in the supply curve.
C)   the law of supply.
D)   the law of relative production.

Question 10

An increase in the quantity demanded is shown by

Accepted Answer

A)   a leftward shift of the demand curve.
B)   a rightward shift of the demand curve.
C)   a movement down along a demand curve.
D)   a movement up along a demand curve.

Question 11

-According to the above figure, a shortage will occur at a price at which

Accepted Answer

A)   quantity demanded equals quantity supplied.
B)   quantity demanded exceeds quantity supplied.
C)   quantity supplied exceeds quantity demanded.
D)   government sets a price above equilibrium.

Question 12

-Refer to the above figure. At a price of two cents, the quantity of bubble gum demanded will be

Accepted Answer

A)   3.
B)   2.
C)   4.
D)   5.

Question 13

According to the law of demand, an increase in the price of a good causes

Accepted Answer

A)   a rightward shift of the demand curve for that good.
B)   a leftward shift of the demand curve for that good.
C)   an upward movement along the demand curve for that good.
D)   a downward movement along the demand curve for that good.

Question 14

When the current price of an item is greater than the item's market clearing price,

Accepted Answer

A)   supply is greater than demand.
B)   demand is greater than supply.
C)   quantity supplied is greater than quantity demanded.
D)   quantity supplied is less than quantity demanded.

Question 15

Which of the following situations could generate a shortage?

Accepted Answer

A)   Demand for a good increases, resulting in a new higher market clearing price.
B)   Demand for a good decreases, resulting in a new lower market clearing price.
C)   Demand for a good increases, but the price is not permitted to rise.
D)   Demand for a good decreases, but the price is not permitted to fall.

Question 16

The market supply curve can be derived by

Accepted Answer

A)   vertically adding the individual supplies at each quantity level.
B)   multiplying the price and quantity supplied at each price level.
C)   horizontally adding the individual supplies at each price level.
D)   looking at the capacity utilization in the largest firms in the industry.

Question 17

-According to the above figure for a gasoline market, an increase in the price from $2 to $4 will result in

Accepted Answer

A)   a shortage of 30 million gallons.
B)   an increase in quantity demanded of 10 million gallons.
C)   an increase in quantity supplied of 20 million gallons.
D)   an increase in demand of 20 million gallons.

Question 18

The price that we observe in the market is

Accepted Answer

A)   the law of demand.
B)   a substitute.
C)   the money price.
D)   the relative price.

Question 19

The effects of a per-unit tax imposed on sales of an industry's product would likely include

Accepted Answer

A)   a lower product price at any amount of the product supplied.
B)   a leftward shift of the market supply curve for the product.
C)   a leftward movement along the market supply curve for the product.
D)   none of the above.

Question 20

-Refer to the above figure. A movement from Point A to Point B is caused by

Accepted Answer

A)   an increase in income.
B)   an expectation of a decrease in the price of the good in that figure.
C)   a decrease in the price of the good in that figure.
D)   all of the above.

Exam 3: Demand and Supply

When the current price of an item is greater than the item's market clearing price,

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-According to the above figure for a gasoline market, an increase in the price from $2 to $4 will result in

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-According to the above figure, a shortage will occur at a price at which

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The price that we observe in the market is

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The market supply curve can be derived by

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According to the law of demand, an increase in the price of a good causes

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The direct relationship between changes in price and changes in quantity supplied is

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When producers anticipate that the price of their product will increase in the future,

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Which of the following would cause an increase in the market supply of mountain bikes?

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Suppose that the price of wheat is above its equilibrium price. You would expect to see

Correct AnswerverifiedShow Answer

The price of a new textbook increased from $60 to $75 in one year, while the price of a used textbook increased by 25 percent. What happened to the relative price of a used textbook?

Correct AnswerverifiedShow Answer

The effects of a per-unit tax imposed on sales of an industry's product would likely include

Correct AnswerverifiedShow Answer

The demand for orthodontists' services falls as the proportion of the population that obtains braces falls. It may take several years before the new long-run equilibrium for the orthodontic labor market is attained. In the meantime, the orthodontic labor market experiences a

Correct AnswerverifiedShow Answer

If goods X and Y are substitute goods, then an increase in the price of Y, other things being equal,

Correct AnswerverifiedShow Answer

-Refer to the above figure. A movement from Point A to Point B is caused by

Correct AnswerverifiedShow Answer

-Refer to the above figure. At a price of two cents, the quantity of bubble gum demanded will be

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Which of the following situations could generate a shortage?

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An increase in the quantity demanded is shown by

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Which of the following will NOT cause a shift in the demand for rewriteable DVDs?

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-Refer to the above table. There is an excess quantity supplied of 2,000 units at a price of

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