Question 1

With a downward sloping demand curve and an upward sloping supply curve for a product, an increase in incomes will:

Accepted Answer

A)  increase equilibrium price and quantity if the product is a normal good.
B)  decrease equilibrium price and quantity if the product is a normal good.
C)  have no effect on equilibrium price and quantity.
D)  reduce the quantity demanded, but not shift the demand curve.

Question 2

A surplus indicates that the quantity demanded is greater than the quantity supplied at that price.

Accepted Answer

A) True 
 B)False

Question 3

There is a shortage in a market for a product when:

Accepted Answer

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

Question 4

Refer to the above data.If price was initially $14, we would expect:

Accepted Answer

A)  quantity supplied to continue to exceed quantity demanded.
B)  the quantity of wheat supplied to decline as a result of the subsequent price change.
C)  the quantity of wheat demanded to fall as a result of the subsequent price change.
D)  the price of wheat to rise.

Question 5

When economists say that the demand for a product has increased, they mean that:

Accepted Answer

A)  consumers are now willing to purchase more of this product at each possible price.
B)  the product has become particularly scarce for some reason.
C)  the product price has fallen and as a consequence consumers are buying a larger quantity of the product.
D)  the demand curve has shifted to the left.

Question 6

If L and M are complementary goods, an increase in the price of L will result in:

Accepted Answer

A)  an increase in the sales of L.
B)  no change in either the price or sales of M.
C)  a decrease in the sales of M.
D)  an increase in the sales of M.

Question 7

If demand increases and supply simultaneously decreases, equilibrium price will rise.

Accepted Answer

A) True 
 B)False

Question 8

The demand for most products varies directly with changes in consumer incomes.Such products are known as:

Accepted Answer

A)  complementary goods.
B)  competitive goods.
C)  inferior goods.
D)  normal goods.

Question 9

In presenting the notion of a demand curve economists presume that the most important variable in determining the quantity demanded is:

Accepted Answer

A)  the price of the product itself.
B)  consumer income.
C)  the prices of related goods.
D)  consumer tastes.

Question 10

Compared to the normal taxi waiting lines, Uber has:

Accepted Answer

A)  shorter waiting lines.
B)  longer waiting lines.
C)  about the same waiting lines.
D)  Finite waiting lines.

Question 11

A ceiling price in a competitive market will result in persistent surpluses of a product.

Accepted Answer

A) True 
 B)False

Question 12

Which factor will increase the demand for a product?

Accepted Answer

A)  an unfavourable report on the value of the product
B)  an increase in the price of a substitute product
C)  an increase in the price of a complementary product
D)  a decrease in the number of buyers

Question 13

Refer to the graph below.The graph shows the market for a good.  Identify a correct statement about the market.

Accepted Answer

A)  The market equilibrium has shifted from point M to point K.
B)  An increase in the supply of the good is more than the increase in the demand for the good.
C)  The new market equilibrium price and quantity are both greater than the original market equilibrium price and quantity.
D)  Point M is the new market equilibrium.

Question 14

One can say with certainty that equilibrium price will decline when supply:

Accepted Answer

A)  and demand both decrease.
B)  increases and demand decreases.
C)  decreases and demand increases.
D)  and demand both increase.

Question 15

An increase in consumer incomes will:

Accepted Answer

A)  increase the demand for an inferior good.
B)  increase the supply of an inferior good.
C)  increase the demand for a normal good.
D)  decrease the supply of a normal good.

Question 16

Which diagram above illustrates the effect on the peanut butter market as a result of a technological advance which reduces the costs of harvesting peanuts?

Accepted Answer

A)  A
B)  B
C)  C
D)  D

Question 17

Productive efficiency refers to:

Accepted Answer

A)  the use of the least-cost method of production.
B)  the production of the product-mix most wanted by society.
C)  the full employment of all available resources.
D)  production at some point inside of the production possibilities curve.

Question 18

1 and D1 represent the original supply and demand curves and S2 and D2 the new curves.In this market the indicated shift in demand may have been caused by: A) a decline in the number of buyers in the market. B) a decline in the price of a substitute good. C) an increase in incomes if the product is a normal good. D) an increase in incomes if the product is an inferior good." class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves.In this market the indicated shift in demand may have been caused by:

Accepted Answer

A)  a decline in the number of buyers in the market.
B)  a decline in the price of a substitute good.
C)  an increase in incomes if the product is a normal good.
D)  an increase in incomes if the product is an inferior good.

Question 19

Suppose in each of four successive years producers sell more of their product and at lower prices.This could be explained:

Accepted Answer

A)  by small annual increases in supply accompanied by large annual increases in demand.
B)  in terms of a stable supply curve and increasing demand.
C)  in terms of a stable demand curve and increasing supply.
D)  as an exception to the law of supply.

Question 20

With a downward sloping demand curve and an upward sloping supply curve for a product, a decrease in resource prices will:

Accepted Answer

A)  increase equilibrium price and quantity.
B)  decrease equilibrium price and quantity.
C)  decrease equilibrium price and increase equilibrium quantity.
D)  increase equilibrium price and decrease equilibrium quantity.

Exam 3: B: Demand, Supply, and Market Equilibrium

Productive efficiency refers to:

Correct AnswerverifiedShow Answer

With a downward sloping demand curve and an upward sloping supply curve for a product, a decrease in resource prices will:

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A surplus indicates that the quantity demanded is greater than the quantity supplied at that price.

Correct AnswerverifiedShow Answer

Suppose in each of four successive years producers sell more of their product and at lower prices.This could be explained:

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If demand increases and supply simultaneously decreases, equilibrium price will rise.

Correct AnswerverifiedShow Answer

There is a shortage in a market for a product when:

Correct AnswerverifiedShow Answer

Compared to the normal taxi waiting lines, Uber has:

Correct AnswerverifiedShow Answer

With a downward sloping demand curve and an upward sloping supply curve for a product, an increase in incomes will:

Correct AnswerverifiedShow Answer

One can say with certainty that equilibrium price will decline when supply:

Correct AnswerverifiedShow Answer

Refer to the above data.If price was initially $14, we would expect:

Correct AnswerverifiedShow Answer

Which diagram above illustrates the effect on the peanut butter market as a result of a technological advance which reduces the costs of harvesting peanuts?

Correct AnswerverifiedShow Answer

If L and M are complementary goods, an increase in the price of L will result in:

Correct AnswerverifiedShow Answer

When economists say that the demand for a product has increased, they mean that:

Correct AnswerverifiedShow Answer

The demand for most products varies directly with changes in consumer incomes.Such products are known as:

Correct AnswerverifiedShow Answer

An increase in consumer incomes will:

Correct AnswerverifiedShow Answer

A ceiling price in a competitive market will result in persistent surpluses of a product.

Correct AnswerverifiedShow Answer

Which factor will increase the demand for a product?

Correct AnswerverifiedShow Answer

Refer to the above diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves.In this market the indicated shift in demand may have been caused by:

Correct AnswerverifiedShow Answer

Refer to the graph below.The graph shows the market for a good. Identify a correct statement about the market.

Correct AnswerverifiedShow Answer

In presenting the notion of a demand curve economists presume that the most important variable in determining the quantity demanded is:

Correct AnswerverifiedShow Answer

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Refer to the above diagram, in which S₁ and D₁ represent the original supply and demand curves and S₂ and D₂ the new curves.In this market the indicated shift in demand may have been caused by:

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