Question 1

What is the likely effect on the market for wine of a simultaneous increase in both consumer incomes and producer taxes on wine?

Accepted Answer

A)   an increase in both price and quantity
B)   an increase in price and a decrease in output
C)   a decrease in price and an indeterminate effect on quantity
D)   an increase in price and an indeterminate effect on quantityE) None of the above
F) C) and D)

Question 2

A leftward shift of a product supply curve might be caused by

Accepted Answer

A)   an improvement in the relevant technique of production.
B)   a decline in the prices of needed inputs.
C)   an increase in consumer incomes.
D)   some firms leaving an industry.E) C) and D)
F) None of the above

Question 3

A shift to the right in the demand curve for product A can be most reasonably explained by saying that

Accepted Answer

A)   consumer incomes have declined, and consumers now want to buy less of A at each possible price.
B)   the price of A has increased and, as a result, consumers want to purchase less of it.
C)   consumer preferences have changed in favor of A so that they now want to buy more at each possible price.
D)   the price of A has declined and, as a result, consumers want to purchase more of it.E) A) and D)
F) B) and C)

Question 4

Other things being equal, the law of demand suggests that as

Accepted Answer

A)   the demand for iPads increases, this will cause the price to increase.
B)   income increases, the quantity of iPads demanded will increase.
C)   the price of iPads decreases, the quantity demanded will increase.
D)   the price of iPads decreases, the quantity demanded will decrease.E) B) and C)
F) B) and D)

Question 5

In which of the following statements are the terms "demand" and "quantity demanded" used correctly?

Accepted Answer

A)   When the price of ice cream rose, the demand for both ice cream and ice cream toppings fell.
B)   When the price of ice cream rose, the quantity demanded of ice cream fell, and the demand for ice cream toppings fell.
C)   When the price of ice cream rose, the demand for ice cream fell, and the quantity demanded of ice cream toppings fell.
D)   None of these statements use the terms correctly.E) C) and D)
F) A) and B)

Question 6

A decrease in supply, holding demand constant, will cause

Accepted Answer

A)   higher prices and a larger quantity sold.
B)   higher prices and a smaller quantity sold.
C)   lower prices and a smaller quantity sold.
D)   lower prices and a larger quantity sold.E) A) and C)
F) C) and D)

Question 7

The supply curve in a market is vertical instead of upsloping whenever

Accepted Answer

A)   all buyers are willing to pay only one price for the item.
B)   sellers have no flexibility in setting the price of the item.
C)   buyers want to buy a fixed quantity regardless of price.
D)   sellers have a fixed quantity of the item for sale.E) None of the above
F) A) and B)

Question 8

What will happen to the equilibrium quantity and price of salmon in a competitive market when there is an equal decrease in demand and supply?

Accepted Answer

A)   Equilibrium quantity and price will both increase.
B)   Equilibrium quantity and price will both decrease.
C)   Equilibrium quantity will decrease and equilibrium price will stay the same.
D)   Equilibrium quantity will stay the same and equilibrium price will increase.E) A) and B)
F) A) and C)

Question 9

As a result of a decrease in the price of online streaming movies, consumers download more movies online and buy fewer DVDs. This is an illustration of

Accepted Answer

A)   consumer sovereignty.
B)   the income effect.
C)   the substitution effect.
D)   diminishing marginal utility.E) A) and B)
F) A) and C)

Question 10

Which of the following would not shift the demand curve for beef?

Accepted Answer

A)   a widely publicized study that indicates beef consumption increases one's cholesterol
B)   a reduction in the price of cattle feed
C)   an effective advertising campaign by pork producers
D)   a change in the incomes of beef consumersE) B) and D)
F) B) and C)

Question 11

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.E) A) and C)
F) C) and D)

Question 12

A government will create a surplus in a market when it

Accepted Answer

A)   sets a price ceiling above the equilibrium price.
B)   sets a price floor above the equilibrium price.
C)   sets a price floor below the equilibrium price.
D)   sets a price ceiling below the equilibrium price.E) B) and D)
F) B) and C)

Question 13

If the market price is above the equilibrium price,

Accepted Answer

A)   a shortage will occur and producers will produce more and lower prices.
B)   a surplus will occur and producers will produce less and lower prices.
C)   a surplus will result and consumers will bid prices up.
D)   producers will make extremely high profits.E) C) and D)
F) A) and B)

Question 14

An increase in the equilibrium quantity of hybrid cars would be caused by which of the following?

Accepted Answer

A)   an increase in the demand for hybrid cars
B)   a decrease in the demand for hybrid cars
C)   higher prices of car batteries
D)   lower prices for gasolineE) All of the above
F) A) and B)

Question 15

In which of the following instances is the effect on equilibrium price (whether it rises, falls, or remains unchanged)  dependent on the magnitude of the shifts in supply and demand?

Accepted Answer

A)   demand rises and supply rises
B)   supply falls and demand remains constant
C)   demand rises and supply falls
D)   supply rises and demand fallsE) A) and B)
F) A) and C)

Question 16

If there was initially a shortage in the market for a product, then

Accepted Answer

A)   sellers will drive the price down.
B)   sellers will drive the price up.
C)   buyers will drive the price down.
D)   buyers will drive the price up.E) A) and D)
F) B) and C)

Question 17

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. A reduction in the number of firms producing X will

Accepted Answer

A)   increase D, increase P, and increase Q.
B)   increase S, decrease P, and increase Q.
C)   decrease S, increase P, and decrease Q.
D)   decrease S, decrease P, and increase Q.E) None of the above
F) A) and D)

Question 18

A market

Accepted Answer

A)   reflects upsloping demand and downsloping supply curves.
B)   entails the exchange of goods, but not services.
C)   is an institution that brings together buyers and sellers.
D)   always requires face-to-face contact between buyer and seller.E) B) and C)
F) A) and B)

Question 19

A price ceiling means that

Accepted Answer

A)   there is currently a surplus of the relevant product.
B)   government is imposing a legal price that is typically below the equilibrium price.
C)   government wants to stop a deflationary spiral.
D)   government is imposing a legal price that is typically above the equilibrium price.E) A) and B)
F) A) and C)

Question 20

In moving along a demand curve, which of the following is not held constant?

Accepted Answer

A)   the price of the product itself.
B)   price expectations
C)   consumer incomes
D)   prices of complementary goodsE) B) and C)
F) A) and D)

Exam 3: Demand, Supply, and Market Equilibrium

If there was initially a shortage in the market for a product, then

Correct Answer
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A market

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

Correct Answer
verified

In which of the following statements are the terms "demand" and "quantity demanded" used correctly?

Correct Answer
verified

What is the likely effect on the market for wine of a simultaneous increase in both consumer incomes and producer taxes on wine?

Correct Answer
verified

Other things being equal, the law of demand suggests that as

Correct Answer
verified

An increase in the equilibrium quantity of hybrid cars would be caused by which of the following?

Correct Answer
verified

The supply curve in a market is vertical instead of upsloping whenever

Correct Answer
verified

A shift to the right in the demand curve for product A can be most reasonably explained by saying that

Correct Answer
verified

A government will create a surplus in a market when it

Correct Answer
verified

Which of the following would not shift the demand curve for beef?

Correct Answer
verified

A leftward shift of a product supply curve might be caused by

Correct Answer
verified

A decrease in supply, holding demand constant, will cause

Correct Answer
verified

A price ceiling means that

Correct Answer
verified

Correct Answer
verified

As a result of a decrease in the price of online streaming movies, consumers download more movies online and buy fewer DVDs. This is an illustration of

Correct Answer
verified

What will happen to the equilibrium quantity and price of salmon in a competitive market when there is an equal decrease in demand and supply?

Correct Answer
verified

In which of the following instances is the effect on equilibrium price (whether it rises, falls, or remains unchanged) dependent on the magnitude of the shifts in supply and demand?

Correct Answer
verified

In moving along a demand curve, which of the following is not held constant?

Correct Answer
verified

If the market price is above the equilibrium price,

Correct Answer
verified

Exam 3: Demand, Supply, and Market Equilibrium

If there was initially a shortage in the market for a product, then

Correct AnswerverifiedShow Answer

A market

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

In which of the following statements are the terms "demand" and "quantity demanded" used correctly?

Correct AnswerverifiedShow Answer

What is the likely effect on the market for wine of a simultaneous increase in both consumer incomes and producer taxes on wine?

Correct AnswerverifiedShow Answer

Other things being equal, the law of demand suggests that as

Correct AnswerverifiedShow Answer

An increase in the equilibrium quantity of hybrid cars would be caused by which of the following?

Correct AnswerverifiedShow Answer

The supply curve in a market is vertical instead of upsloping whenever

Correct AnswerverifiedShow Answer

A shift to the right in the demand curve for product A can be most reasonably explained by saying that

Correct AnswerverifiedShow Answer

A government will create a surplus in a market when it

Correct AnswerverifiedShow Answer

Which of the following would not shift the demand curve for beef?

Correct AnswerverifiedShow Answer

A leftward shift of a product supply curve might be caused by

Correct AnswerverifiedShow Answer

A decrease in supply, holding demand constant, will cause

Correct AnswerverifiedShow Answer

A price ceiling means that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

As a result of a decrease in the price of online streaming movies, consumers download more movies online and buy fewer DVDs. This is an illustration of

Correct AnswerverifiedShow Answer

What will happen to the equilibrium quantity and price of salmon in a competitive market when there is an equal decrease in demand and supply?

Correct AnswerverifiedShow Answer

In which of the following instances is the effect on equilibrium price (whether it rises, falls, or remains unchanged) dependent on the magnitude of the shifts in supply and demand?

Correct AnswerverifiedShow Answer

In moving along a demand curve, which of the following is not held constant?

Correct AnswerverifiedShow Answer

If the market price is above the equilibrium price,

Correct AnswerverifiedShow Answer

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