Question 1

(Advanced analysis)  The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. The equilibrium quantity is

Accepted Answer

A)   10.
B)   20.
C)   15.
D)   30.E) A) and B)
F) A) and C)

Question 2

An effective price ceiling will lower the equilibrium price and cause a surplus.

Accepted Answer

A) True 
 B)False

Question 3

A normal good is one

Accepted Answer

A)   whose amount demanded will increase as its price decreases.
B)   whose amount demanded will increase as its price increases.
C)   whose demand curve will shift leftward as incomes rise.
D)   for which the consumption varies directly with income.E) A) and B)
F) None of the above

Question 4

If the price of Pepsi decreases, other factors constant, then we'd expect to see a consequent shift of the demand curve for

Accepted Answer

A)   Coke to the left.
B)   Coke to the right.
C)   Pepsi to the left.
D)   Pepsi to the right.E) All of the above
F) B) and D)

Question 5

In 2007, the price of oil increased, which in turn caused the price of natural gas to rise. This can best be explained by saying that oil and natural gas are

Accepted Answer

A)   complementary goods, and the higher price for oil increased the demand for natural gas.
B)   substitute goods, and the higher price for oil increased the demand for natural gas.
C)   complementary goods, and the higher price for oil decreased the supply of natural gas.
D)   substitute goods, and the higher price for oil decreased the supply of natural gas.E) A) and D)
F) None of the above

Question 6

At the current price, there is a shortage of a product. We would expect price to

Accepted Answer

A)   increase, quantity demanded to increase, and quantity supplied to decrease.
B)   increase, quantity demanded to decrease, and quantity supplied to increase.
C)   increase, quantity demanded to increase, and quantity supplied to increase.
D)   decrease, quantity demanded to increase, and quantity supplied to decrease.E) B) and D)
F) A) and C)

Question 7

The presence of ticket scalpers in popular events like concerts will hurt consumers who buy from the scalpers.

Accepted Answer

A) True 
 B)False

Question 8

If the demand for electronic readers and tablets increases, then their supply will increase as price rises.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Consumers buy more of normal goods as their incomes rise.

Accepted Answer

A) True 
 B)False

Question 11

A fall in the price of milk, used in the production of ice cream, will

Accepted Answer

A)   decrease the supply of ice cream.
B)   increase the supply of ice cream.
C)   cause a movement along the supply curve of ice cream.
D)   have no effect on the supply of ice cream.E) A) and B)
F) A) and C)

Question 12

Price floors and ceiling prices both

Accepted Answer

A)   cause shortages.
B)   cause surpluses.
C)   cause the supply and demand curves to shift until equilibrium is established.
D)   interfere with the rationing function of prices.E) B) and C)
F) A) and D)

Question 13

A price floor means that

Accepted Answer

A)   inflation is severe in this particular market.
B)   sellers are artificially restricting supply to raise price.
C)   government is imposing a maximum legal price that is typically below the equilibrium price.
D)   government is imposing a minimum legal price that is typically above the equilibrium price.E) A) and D)
F) All of the above

Question 14

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

Accepted Answer

A)   the number of firms producing this good
B)   expectations about the future price of the product
C)   techniques used in producing this product
D)   the price of the product itself.E) All of the above
F) None of the above

Question 15

Camille's Creations and Julia's Jewels both sell beads in a competitive market. If at the market price of $5 both are running out of beads to sell (they can't keep up with the quantity demanded at that price) , then we would expect both Camille's and Julia's to

Accepted Answer

A)   raise their price and reduce their quantity supplied.
B)   raise their price and increase their quantity supplied.
C)   lower their price and reduce their quantity supplied.
D)   lower their price and increase their quantity supplied.E) C) and D)
F) B) and D)

Question 16

Assume that the graphs show a competitive market for the product stated in the question.   Select the graph above that best shows the change in the market specified in the following situation: the market for leather coats, when leather coats become more fashionable among young consumers.

Accepted Answer

A)   Graph A
B)   Graph B
C)   Graph C
D)   Graph DE) None of the above
F) A) and B)

Question 17

An increase in demand for oil along with a simultaneous increase in supply of oil will

Accepted Answer

A)   decrease price and increase quantity.
B)   increase price and decrease quantity.
C)   increase quantity, but whether it increases price depends on how much each curve shifts.
D)   increase price, but whether it increases quantity depends on how much each curve shifts.E) A) and C)
F) C) and D)

Question 18

In a competitive market, every consumer willing to pay the market price can buy a product and every producer willing to sell the product at that price can sell it.

Accepted Answer

A) True 
 B)False

Question 19

A decrease in the price of multi-touch screens for electronic tablets will increase the supply of electronic tablets.

Accepted Answer

A) True 
 B)False

Exam 3: Demand, Supply, and Market Equilibrium

A decrease in the price of multi-touch screens for electronic tablets will increase the supply of electronic tablets.

Correct Answer
verified

Assume that the graphs show a competitive market for the product stated in the question. Select the graph above that best shows the change in the market specified in the following situation: the market for leather coats, when leather coats become more fashionable among young consumers.

Correct Answer
verified

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. The equilibrium quantity is

Correct Answer
verified

An effective price ceiling will lower the equilibrium price and cause a surplus.

Correct Answer
verified

A normal good is one

Correct Answer
verified

An increase in demand for oil along with a simultaneous increase in supply of oil will

Correct Answer
verified

Camille's Creations and Julia's Jewels both sell beads in a competitive market. If at the market price of $5 both are running out of beads to sell (they can't keep up with the quantity demanded at that price) , then we would expect both Camille's and Julia's to

Correct Answer
verified

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

Correct Answer
verified

If the price of Pepsi decreases, other factors constant, then we'd expect to see a consequent shift of the demand curve for

Correct Answer
verified

In 2007, the price of oil increased, which in turn caused the price of natural gas to rise. This can best be explained by saying that oil and natural gas are

Correct Answer
verified

A price floor means that

Correct Answer
verified

At the current price, there is a shortage of a product. We would expect price to

Correct Answer
verified

Price floors and ceiling prices both

Correct Answer
verified

If the demand for electronic readers and tablets increases, then their supply will increase as price rises.

Correct Answer
verified

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

Correct Answer
verified

The presence of ticket scalpers in popular events like concerts will hurt consumers who buy from the scalpers.

Correct Answer
verified

In a competitive market, every consumer willing to pay the market price can buy a product and every producer willing to sell the product at that price can sell it.

Correct Answer
verified

A fall in the price of milk, used in the production of ice cream, will

Correct Answer
verified

Consumers buy more of normal goods as their incomes rise.

Correct Answer
verified

Exam 3: Demand, Supply, and Market Equilibrium

A decrease in the price of multi-touch screens for electronic tablets will increase the supply of electronic tablets.

Correct AnswerverifiedShow Answer

Assume that the graphs show a competitive market for the product stated in the question. Select the graph above that best shows the change in the market specified in the following situation: the market for leather coats, when leather coats become more fashionable among young consumers.

Correct AnswerverifiedShow Answer

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. The equilibrium quantity is

Correct AnswerverifiedShow Answer

An effective price ceiling will lower the equilibrium price and cause a surplus.

Correct AnswerverifiedShow Answer

A normal good is one

Correct AnswerverifiedShow Answer

An increase in demand for oil along with a simultaneous increase in supply of oil will

Correct AnswerverifiedShow Answer

Camille's Creations and Julia's Jewels both sell beads in a competitive market. If at the market price of $5 both are running out of beads to sell (they can't keep up with the quantity demanded at that price) , then we would expect both Camille's and Julia's to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the price of Pepsi decreases, other factors constant, then we'd expect to see a consequent shift of the demand curve for

Correct AnswerverifiedShow Answer

In 2007, the price of oil increased, which in turn caused the price of natural gas to rise. This can best be explained by saying that oil and natural gas are

Correct AnswerverifiedShow Answer

A price floor means that

Correct AnswerverifiedShow Answer

At the current price, there is a shortage of a product. We would expect price to

Correct AnswerverifiedShow Answer

Price floors and ceiling prices both

Correct AnswerverifiedShow Answer

If the demand for electronic readers and tablets increases, then their supply will increase as price rises.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The presence of ticket scalpers in popular events like concerts will hurt consumers who buy from the scalpers.

Correct AnswerverifiedShow Answer

In a competitive market, every consumer willing to pay the market price can buy a product and every producer willing to sell the product at that price can sell it.

Correct AnswerverifiedShow Answer

A fall in the price of milk, used in the production of ice cream, will

Correct AnswerverifiedShow Answer

Consumers buy more of normal goods as their incomes rise.

Correct AnswerverifiedShow Answer

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