Question 1

A ﬁrm's supply curve is upsloping because

Accepted Answer

A)   the expansion of production necessitates the use of qualitatively inferior inputs.
B)   mass production economies are associated with larger levels of output.
C)   consumers envision a positive relationship between price and quality.
D)   beyond some point, the production costs of additional units of output will rise.E) A) and B)
F) A) and C)

Question 2

Which of the following is consistent with the law of demand?

Accepted Answer

A)   A decrease in the price of tacos causes sellers to want to sell less.
B)   An increase in people's craving for pizza causes buyers to buy more pizza.
C)   An increase in the price of hamburgers causes buyers to buy fewer hamburgers.
D)   A decrease in the price of egg rolls causes a decrease in the quantity of egg rolls demanded.E) None of the above
F) A) and C)

Question 3

When the price of a product rises, consumers with a given money income shift their purchases to other products whose prices are now relatively lower. This statement describes

Accepted Answer

A)   an inferior good.
B)   the rationing function of prices.
C)   the substitution effect.
D)   the income effect.E) A) and B)
F) A) and C)

Question 4

Refer to the diagram. A decrease in supply is depicted by a

Accepted Answer

A)   move from point x to point y.
B)   Shift from S1 to S2.
C)   shift from S2 to S1.
D)   move from point y to point x.E) B) and C)
F) None of the above

Question 5

Suppose that tacos and pizza are substitutes, and that soda and pizza are complements. We would expect an increase in the price of pizza to

Accepted Answer

A)   reduce the demand for tacos and increase the demand for soda.
B)   reduce the demand for soda and increase the demand for tacos.
C)   increase the demand for both soda and tacos.
D)   reduce the demand for both soda and tacos.E) C) and D)
F) None of the above

Question 6

Refer to the diagram. A price of $60 in this market will result in

Accepted Answer

A)   equilibrium.
B)   a shortage of 50 units.
C)   a surplus of 50 units.
D)   a surplus of 100 units.E) C) and D)
F) A) and C)

Question 7

An increase in the demand for corn is more than offset by an increase in its supply. As a result, the equilibrium price will

Accepted Answer

A)   increase and the equilibrium quantity will decrease.
B)   increase and the equilibrium quantity will increase.
C)   decrease and the equilibrium quantity will decrease.
D)   decrease and the equilibrium quantity will increase.E) A) and D)
F) A) and C)

Question 8

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 D)
F) B) and C)

Question 9

"In the corn market, demand often exceeds supply and supply sometimes exceeds demand." "The price of corn rises and falls in response to changes in supply and demand." In which of these two
Statements are the terms demand and supply being used correctly?

Accepted Answer

A)   In neither statement.
B)   In the second statement, "The price of corn rises and falls in response to changes in supply and demand."
C)   In the ﬁrst statement, "In the corn market, demand often exceeds supply and supply sometimes exceeds demand."
D)   In both statements.E) C) and D)
F) A) and B)

Question 10

Producing a good in the least costly way is known as allocative eﬃciency.

Accepted Answer

A) True 
 B)False

Question 11

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.
An increase in the prices of resources used to produce X will

Accepted Answer

A)   increase S, increase P, and increase Q.
B)   increase D, increase P, and increase Q.
C)   decrease S, decrease P, and decrease Q.
D)   decrease S, increase P, and decrease Q.E) B) and C)
F) A) and B)

Question 12

Refer to the above graph with three demand curves. An "increase in quantity demanded" would be illustrated by a change from

Accepted Answer

A)   point 4 to point 6.
B)   point 5 to point 1.
C)   point 4 to point 1.
D)   point 2 to point 5.E) All of the above
F) A) and D)

Question 13

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) C) and D)
F) B) and C)

Question 14

Which of the following statements is correct? (Assume demand is interacting with an upward sloping supply curve that does not shift.)

Accepted Answer

A)   If demand increases, then price will decrease.
B)   If demand decreases, then price will decrease.
C)   If price increases, then demand will decrease.
D)   If price decreases, then demand will decrease.E) A) and B)
F) B) and D)

Question 15

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) A) and B)

Question 16

Refer to the above diagram for the milk market. There would be a shortage of milk whenever the price is

Accepted Answer

A)   higher than $1.50 per gallon.
B)   higher than $2.00 per gallon.
C)   lower than $1.50 per gallon.
D)   lower than $2.00 per gallon.E) All of the above
F) C) and D)

Question 17

Which of the following will cause the demand curve for product A to shift to the left?

Accepted Answer

A)   population growth that causes an expansion in the number of persons consuming A
B)   an increase in money income if A is a normal good
C)   a decrease in the price of complementary product C
D)   an increase in money income if A is an inferior goodE) A) and B)
F) A) and C)

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.E) A) and B)
F) B) and C)

Question 19

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.
If X is an inferior good, a decrease in income will

Accepted Answer

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

Question 20

The horizontal axis of a graph that shows a market demand curve indicates the

Accepted Answer

A)   different prices at which various levels of output can be sold.
B)   number of consumers who are in the market for this product.
C)   various quantities of output at which the market will be cleared.
D)   quantities which consumers will be willing and able to buy at various prices.E) A) and B)
F) A) and C)

Exam 3: Demand, Supply, and Market Equilibrium

Which of the following will cause the demand curve for product A to shift to the left?

Correct Answer
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A market

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A ﬁrm's supply curve is upsloping because

Correct Answer
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Refer to the above diagram for the milk market. There would be a shortage of milk whenever the price is

Correct Answer
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A decrease in supply, holding demand constant, will cause

Correct Answer
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The horizontal axis of a graph that shows a market demand curve indicates the

Correct Answer
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Refer to the diagram. A price of $60 in this market will result in

Correct Answer
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"In the corn market, demand often exceeds supply and supply sometimes exceeds demand." "The price of corn rises and falls in response to changes in supply and demand." In which of these two Statements are the terms demand and supply being used correctly?

Correct Answer
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Producing a good in the least costly way is known as allocative eﬃciency.

Correct Answer
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An increase in the demand for corn is more than offset by an increase in its supply. As a result, the equilibrium price will

Correct Answer
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Which of the following statements is correct? (Assume demand is interacting with an upward sloping supply curve that does not shift.)

Correct Answer
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Which of the following is consistent with the law of demand?

Correct Answer
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Suppose that tacos and pizza are substitutes, and that soda and pizza are complements. We would expect an increase in the price of pizza to

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

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

Correct Answer
verified

Refer to the above graph with three demand curves. An "increase in quantity demanded" would be illustrated by a change from

Correct Answer
verified

Refer to the diagram. A decrease in supply is depicted by a

Correct Answer
verified

When the price of a product rises, consumers with a given money income shift their purchases to other products whose prices are now relatively lower. This statement describes

Correct Answer
verified

Exam 3: Demand, Supply, and Market Equilibrium

Which of the following will cause the demand curve for product A to shift to the left?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A market

Correct AnswerverifiedShow Answer

A ﬁrm's supply curve is upsloping because

Correct AnswerverifiedShow Answer

Refer to the above diagram for the milk market. There would be a shortage of milk whenever the price is

Correct AnswerverifiedShow Answer

A decrease in supply, holding demand constant, will cause

Correct AnswerverifiedShow Answer

The horizontal axis of a graph that shows a market demand curve indicates the

Correct AnswerverifiedShow Answer

Refer to the diagram. A price of $60 in this market will result in

Correct AnswerverifiedShow Answer

"In the corn market, demand often exceeds supply and supply sometimes exceeds demand." "The price of corn rises and falls in response to changes in supply and demand." In which of these two Statements are the terms demand and supply being used correctly?

Correct AnswerverifiedShow Answer

Producing a good in the least costly way is known as allocative eﬃciency.

Correct AnswerverifiedShow Answer

An increase in the demand for corn is more than offset by an increase in its supply. As a result, the equilibrium price will

Correct AnswerverifiedShow Answer

Which of the following statements is correct? (Assume demand is interacting with an upward sloping supply curve that does not shift.)

Correct AnswerverifiedShow Answer

Which of the following is consistent with the law of demand?

Correct AnswerverifiedShow Answer

Suppose that tacos and pizza are substitutes, and that soda and pizza are complements. We would expect an increase in the price of pizza to

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

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

Correct AnswerverifiedShow Answer

Refer to the above graph with three demand curves. An "increase in quantity demanded" would be illustrated by a change from

Correct AnswerverifiedShow Answer

Refer to the diagram. A decrease in supply is depicted by a

Correct AnswerverifiedShow Answer

When the price of a product rises, consumers with a given money income shift their purchases to other products whose prices are now relatively lower. This statement describes

Correct AnswerverifiedShow Answer

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