Question 1

-Refer to the above graph.X and Y are unrelated products.Which one of the lines in the graph best illustrates this relationship?

Accepted Answer

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

Question 2

Which of the following will not cause the demand for product K to change?

Accepted Answer

A)   a change in the price of close-substitute product J
B)   an increase in consumer incomes
C)   a change in the price of K
D)   a change in consumer tastes

Question 3

If the supply schedule for a product is upward sloping and the price of that product declines from $100 to $75,the:

Accepted Answer

A)   supply of the product will shift to the left.
B)   supply of the product will shift to the right.
C)   quantity supplied of the product will decline.
D)   quantity supplied of the product will increase.

Question 4

When the price of a product increases,a consumer is able to buy less of it with a given money income.This describes:

Accepted Answer

A)   the cost effect.
B)   the inflationary effect.
C)   the income effect.
D)   the substitution effect.

Question 5

Price ceilings and price floors:

Accepted Answer

A)   cause surpluses and shortages respectively.
B)   make the rationing function of free markets more efficient.
C)   interfere with the rationing function of prices.
D)   shift demand and supply curves and therefore have no effect on the rationing function of prices.

Question 6

Refer to the diagram.A price of $2.00 in this market will result in:

Accepted Answer

A)   a shortage of 10 million gallons of milk per week.
B)   a surplus of 8 million gallons of milk per week.
C)   a surplus of 10 million gallons of milk per week.
D)   a shortage of 8 million gallons of milk per week.

Question 7

A decrease in demand and an increase in supply will:

Accepted Answer

A)   increase the equilibrium quantity and decrease price.
B)   decrease the equilibrium quantity and affect price in an indeterminate way.
C)   decrease price and affect the equilibrium quantity in an indeterminate way.
D)   increase price and affect the equilibrium quantity in an indeterminate way. C

Question 8

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 9

Assume a drought in the Great Plains reduces the supply of wheat.Noting that wheat is a basic ingredient in the production of bread and that potatoes are a consumer substitute for bread,we would expect the price of wheat to:

Accepted Answer

A)   rise,the supply of bread to increase,and the demand for potatoes to increase.
B)   rise,the supply of bread to decrease,and the demand for potatoes to increase.
C)   rise,the supply of bread to decrease,and the demand for potatoes to decrease.
D)   fall,the supply of bread to increase,and the demand for potatoes to increase.

Question 10

As a result of a decrease in the price of a hamburger,consumers buy more hamburgers and fewer frankfurters.This is an illustration of:

Accepted Answer

A)   consumer sovereignty.
B)   the income effect.
C)   the substitution effect.
D)   changing tastes and preferences.

Question 11

0,if the supply curve moved from S0 to S1,then: A)  supply has increased and equilibrium quantity has decreased. B)  supply has decreased and equilibrium quantity has decreased. C)  there has been an increase in the quantity supplied. D)  supply has increased and price has risen to 0G." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above diagram,which shows demand and supply conditions in the competitive market for product X.Given D0,if the supply curve moved from S0 to S1,then:

Accepted Answer

A)   supply has increased and equilibrium quantity has decreased.
B)   supply has decreased and equilibrium quantity has decreased.
C)   there has been an increase in the quantity supplied.
D)   supply has increased and price has risen to 0G.

Question 12

-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 13

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.

Question 14

A headline reads "Soccer is the new popular sport among youth." In a competitive market,this situation would lead to a(n) :

Accepted Answer

A)   increase in the price of soccer shoes and quantity sold.
B)   decrease in the price of soccer shoes and quantity sold.
C)   increase in the price of soccer shoes and decrease in quantity sold.
D)   decrease in the price of soccer shoes and increase in quantity sold.

Question 15

The income and substitution effects account for:

Accepted Answer

A)   the upward sloping supply curve.
B)   the downward sloping demand curve.
C)   movements along a given supply curve.
D)   the "other things equal" assumption.

Question 16

An "increase in the quantity supplied" suggests a:

Accepted Answer

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

Question 17

The law of supply:

Accepted Answer

A)   reflects the amounts which producers will want to offer at each price in a series of prices.
B)   is reflected in an upsloping supply curve.
C)   shows that the relationship between price and quantity supplied is positive.
D)   is reflected in all of the above. D

Question 18

If price is above the equilibrium level,competition among sellers to reduce the resulting:

Accepted Answer

A)   surplus will increase quantity demanded and decrease quantity supplied.
B)   shortage will decrease quantity demanded and increase quantity supplied.
C)   surplus will decrease quantity demanded and increase quantity supplied.
D)   shortage will increase quantity demanded and decrease quantity supplied.

Question 19

If an effective ceiling price is placed on gasoline then:

Accepted Answer

A)   the quantity demanded will exceed the quantity supplied.
B)   the ceiling price will be below the equilibrium price.
C)   the federal government must establish some formal system for rationing it to consumers.
D)   all of the above are likely outcomes.

Question 20

The law of supply states that,ceteris paribus,there is an inverse relationship between the price of a good and the quantity supplied of the good.

Accepted Answer

A) True 
 B)False

Exam 3: Demand, Supply, and Market Equilibrium

-Refer to the above graph.X and Y are unrelated products.Which one of the lines in the graph best illustrates this relationship?

Correct AnswerverifiedShow Answer

Which of the following will not cause the demand for product K to change?

Correct AnswerverifiedShow Answer

If the supply schedule for a product is upward sloping and the price of that product declines from $100 to $75,the:

Correct AnswerverifiedShow Answer

When the price of a product increases,a consumer is able to buy less of it with a given money income.This describes:

Correct AnswerverifiedShow Answer

Price ceilings and price floors:

Correct AnswerverifiedShow Answer

Refer to the diagram.A price of $2.00 in this market will result in:

Correct AnswerverifiedShow Answer

A decrease in demand and an increase in supply will:

Correct AnswerverifiedC

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

Correct AnswerverifiedShow Answer

Assume a drought in the Great Plains reduces the supply of wheat.Noting that wheat is a basic ingredient in the production of bread and that potatoes are a consumer substitute for bread,we would expect the price of wheat to:

Correct AnswerverifiedShow Answer

As a result of a decrease in the price of a hamburger,consumers buy more hamburgers and fewer frankfurters.This is an illustration of:

Correct AnswerverifiedShow Answer

-Refer to the above diagram,which shows demand and supply conditions in the competitive market for product X.Given D0,if the supply curve moved from S0 to S1,then:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A headline reads "Soccer is the new popular sport among youth." In a competitive market,this situation would lead to a(n) :

Correct AnswerverifiedShow Answer

The income and substitution effects account for:

Correct AnswerverifiedShow Answer

An "increase in the quantity supplied" suggests a:

Correct AnswerverifiedB

The law of supply:

Correct AnswerverifiedD

If price is above the equilibrium level,competition among sellers to reduce the resulting:

Correct AnswerverifiedShow Answer

If an effective ceiling price is placed on gasoline then:

Correct AnswerverifiedShow Answer

The law of supply states that,ceteris paribus,there is an inverse relationship between the price of a good and the quantity supplied of the good.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
C

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

-Refer to the above diagram,which shows demand and supply conditions in the competitive market for product X.Given D₀,if the supply curve moved from S₀ to S₁,then:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified
D

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified