Question 1

The supply curve represents the relationship between _____, all else held constant.

Accepted Answer

A)  price and quantity supplied
B)  income and quantity supplied
C)  consumer preferences and quantity
D)  income and price suppliedE) A) and B)
F) B) and D)

Question 2

A decrease in the price of ice cream is likely to cause a(n) _____ in the demand for ice cream cones, due to a change in _____.

Accepted Answer

A)  increase; the price of a complementary good
B)  increase; the price of a substitute good
C)  increase; consumer preferences
D)  decrease; the price of a related goodE) B) and C)
F) A) and D)

Question 3

The amount of a particular good that sellers in a market will sell at a given price during a specified period is called:

Accepted Answer

A)  quantity demanded.
B)  quantity supplied.
C)  demand.
D)  supply.E) A) and C)
F) C) and D)

Question 4

Bob just got laid off from his job and now has no income. What can we assume about his demand?

Accepted Answer

A)  His demand for normal goods will increase.
B)  His demand for inferior goods will increase.
C)  His demand for inferior goods will decrease.
D)  His demand for normal goods will stay the same.E) A) and B)
F) A) and C)

Question 5

The graph shown depicts the market for a good. What state is this market in if the price of the good is $5?

Accepted Answer

A)  There is a shortage (excess demand) , signaling that sellers should leave the market.
B)  There is a shortage (excess demand) , signaling that buyers should bid up the price.
C)  There is a surplus (excess supply) , signaling that sellers should drop their price.
D)  There is a surplus (excess supply) , signaling that buyers should bid up the price.E) A) and C)
F) B) and D)

Question 6

The most likely complementary good for hot dogs would be:

Accepted Answer

A)  ketchup.
B)  burgers.
C)  tacos.
D)  pizza.E) A) and C)
F) C) and D)

Question 7

Yang just got a big promotion at work, which includes a sizable pay increase. Yang's demand for ramen noodles, an inferior good, will likely _____ and his demand curve will _____.

Accepted Answer

A)  decrease; shift to the right
B)  decrease; shift to the left
C)  increase; shift to the right
D)  decrease; not move, although there will be movement along the curveE) A) and D)
F) A) and C)

Question 8

When does a surplus occur?

Accepted Answer

A)  When the quantity supplied is less than the quantity demanded
B)  When the quantity demanded is less than the quantity supplied
C)  When a market only sells secondary goods
D)  When producers see a need to increase the price of the goodE) A) and D)
F) B) and C)

Question 9

The table shown depicts the demand and supply schedules of a good. At a price of $2.00, quantity demanded:

Accepted Answer

A)  exceeds quantity supplied, and a shortage (excess demand) exists.
B)  is less than quantity supplied, and a shortage (excess demand) exists.
C)  exceeds quantity supplied, and a surplus (excess supply) exists.
D)  is less than quantity supplied, and a surplus (excess supply) exists.E) B) and C)
F) B) and D)

Question 10

A decrease in the price of spaghetti is likely to cause:

Accepted Answer

A)  a movement to the right along the demand curve for spaghetti.
B)  an inward shift of the demand curve for spaghetti.
C)  an outward shift of the demand curve for spaghetti.
D)  a movement to the left along the demand curve for spaghetti.E) A) and D)
F) C) and D)

Question 11

The table shown depicts the demand and supply schedules of a good. At a price of $0.50, quantity demanded:

Accepted Answer

A)  exceeds quantity supplied, and a shortage (excess demand) exists.
B)  is less than quantity supplied, and a shortage (excess demand) exists.
C)  exceeds quantity supplied, and a surplus (excess supply) exists.
D)  is less than quantity supplied, and a surplus (excess supply) exists.E) All of the above
F) B) and C)

Question 12

As part of recent cutbacks at his company, Paul just accepted a 10percent cut in pay. Now he brews coffee at home instead of stopping at Starbucks every day. Based on this behavior, what can we assume about these goods for Paul?

Accepted Answer

A)  Home-brewed coffee is a normal good and Starbucks coffee is an inferior good.
B)  Home-brewed coffee and Starbucks coffee are normal goods.
C)  Home-brewed coffee will become a normal good over time.
D)  Home-brewed coffee is an inferior good and Starbucks coffee is a normal good.E) None of the above
F) B) and C)

Question 13

Which of the following statements describes a standardized good or service?

Accepted Answer

A)  Any two units have the same features and are interchangeable.
B)  Any two units have similar features and could be considered close substitutes.
C)  Any two units have different, unique features.
D)  Any two units are economically unique with distinguishable characteristics.E) C) and D)
F) All of the above

Question 14

A news report states that the housing market is making a comeback and that house prices are on the rise. This information is likely to:

Accepted Answer

A)  increase the demand for houses due to a change in expectations of future prices.
B)  decrease the demand for houses due to a change in expectations of future prices.
C)  have no effect on the current housing market, but will increase the demand for houses in the future.
D)  have no effect on the demand for houses, but it will decrease the supply.E) C) and D)
F) A) and C)

Question 15

An increase in the price of butter is likely to cause the demand for:

Accepted Answer

A)  olive oil to increase.
B)  olive oil to decrease.
C)  butter to increase.
D)  butter to decrease.E) A) and C)
F) C) and D)

Question 16

A paper mill discovers a cheaper way to get power, and they adopt the new technology. Which of the following will likely happen in the market for paper?

Accepted Answer

A)  The demand for paper will increase.
B)  The supply of paper will increase.
C)  The supply of paper will remain constant.
D)  The supply of paper will decrease.E) All of the above
F) B) and C)

Question 17

Which of the following statements about the supply curve is not true?

Accepted Answer

A)  A supply curve represents a producer's willingness and ability to sell.
B)  A supply curve shows the minimum price a producer will accept for any given quantity.
C)  A supply curve visually displays the supply schedule.
D)  A supply curve illustrates how many consumers want to purchase goods and services.E) None of the above
F) A) and C)

Question 18

We say that goods are substitutes when they:

Accepted Answer

A)  serve similar-enough purposes that a consumer might purchase one in place of the other.
B)  are consumed together, so that purchasing one will make a consumer more likely to purchase the other.
C)  can replace something consumers typically purchase at a significantly lower price.
D)  change a consumer's preferences for a good or service.E) None of the above
F) C) and D)

Question 19

How should you plot a supply curve on a coordinate system diagram?

Accepted Answer

A)  Quantity goes on the horizontal axis and price goes on the vertical axis.
B)  Quantity goes on the vertical axis and price goes on the horizontal axis.
C)  Both quantity and price go on the horizontal axis.
D)  It doesn't matter which axis price and quantity are placed on.E) A) and B)
F) All of the above

Question 20

What is likely to happen if a producer incorrectly sets the price of its product too high?

Accepted Answer

A)  A shortage (excess demand) will result, and consumers will bid the price down to equilibrium.
B)  A surplus (excess supply) will result, and the additional goods in inventory will prompt the producer to lower the price.
C)  A shortage (excess demand) will result, and consumers will bid the price up to equilibrium.
D)  A surplus (excess supply) will result, and the additional goods in inventory will prompt the producer to restrict output until sales increase.E) C) and D)
F) B) and C)

Exam 3: Markets

A paper mill discovers a cheaper way to get power, and they adopt the new technology. Which of the following will likely happen in the market for paper?

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Bob just got laid off from his job and now has no income. What can we assume about his demand?

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The amount of a particular good that sellers in a market will sell at a given price during a specified period is called:

Correct AnswerverifiedShow Answer

When does a surplus occur?

Correct AnswerverifiedShow Answer

The supply curve represents the relationship between _____, all else held constant.

Correct AnswerverifiedShow Answer

How should you plot a supply curve on a coordinate system diagram?

Correct AnswerverifiedShow Answer

What is likely to happen if a producer incorrectly sets the price of its product too high?

Correct AnswerverifiedShow Answer

The graph shown depicts the market for a good. What state is this market in if the price of the good is $5?

Correct AnswerverifiedShow Answer

As part of recent cutbacks at his company, Paul just accepted a 10percent cut in pay. Now he brews coffee at home instead of stopping at Starbucks every day. Based on this behavior, what can we assume about these goods for Paul?

Correct AnswerverifiedShow Answer

A decrease in the price of spaghetti is likely to cause:

Correct AnswerverifiedShow Answer

A news report states that the housing market is making a comeback and that house prices are on the rise. This information is likely to:

Correct AnswerverifiedShow Answer

We say that goods are substitutes when they:

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An increase in the price of butter is likely to cause the demand for:

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The table shown depicts the demand and supply schedules of a good. At a price of $2.00, quantity demanded:

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Which of the following statements about the supply curve is not true?

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A decrease in the price of ice cream is likely to cause a(n) _____ in the demand for ice cream cones, due to a change in _____.

Correct AnswerverifiedShow Answer

The most likely complementary good for hot dogs would be:

Correct AnswerverifiedShow Answer

Which of the following statements describes a standardized good or service?

Correct AnswerverifiedShow Answer

Yang just got a big promotion at work, which includes a sizable pay increase. Yang's demand for ramen noodles, an inferior good, will likely _____ and his demand curve will _____.

Correct AnswerverifiedShow Answer

The table shown depicts the demand and supply schedules of a good. At a price of $0.50, quantity demanded:

Correct AnswerverifiedShow Answer

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A decrease in the price of ice cream is likely to cause a(n) _ in the demand for ice cream cones, due to a change in _.

Correct Answer
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Correct Answer
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Yang just got a big promotion at work, which includes a sizable pay increase. Yang's demand for ramen noodles, an inferior good, will likely _ and his demand curve will _.

Correct Answer
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Correct Answer
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