Question 1

The "law of supply" states that, other things remaining the same, firms produce

Accepted Answer

A)   less of a good the more it costs to produce it.
B)   more of a good the higher its price.
C)   less of a good as the required resources become scarcer.
D)   more of a good the less it costs to produce it.E) A) and B)
F) B) and D)

Question 2

There is a technological advance in the production of a good and simultaneously also an increase in the expected future price. Which of the following will happen?

Accepted Answer

A)   The equilibrium price will rise because the supply curve shifts rightward.
B)   The technological improvement shifts the supply curve rightward while the increase in the expected future price shifts the supply curve leftward. The net effect is not known.
C)   The equilibrium price falls because the supply curve shifts leftward.
D)   The demand curve shifts rightward and the supply curve does not shift.E) A) and B)
F) None of the above

Question 3

-The above figure shows the market for pizza. Which figure shows the effect of an increase in the price of the tomato sauce used to produce pizza?

Accepted Answer

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

Question 4

Which of the following influences people's buying plans and does NOT shift the demand curve?

Accepted Answer

A)   The price of the good
B)   The prices of related goods
C)   Preferences
D)   IncomeE) A) and B)
F) All of the above

Question 5

The price of the steel used to produce car engines increases. How does this price hike affect the demand curve for cars?

Accepted Answer

A)   The demand curve does not shift.
B)   The demand curve shifts rightward.
C)   The demand curve shifts leftward.
D)   There is not enough information to tell how the change shifts the demand curve for carsE) A) and D)
F) A) and C)

Question 6

Changes in which of the following shifts the supply curve of hamburgers?

Accepted Answer

A)   New research that establishes a link between hamburgers and heart problems
B)   An increase in the price of meat used to produce hamburgers
C)   An economy- wide decrease in income because of a long recession
D)   A rise in the price of cola, a complement for hamburgersE) C) and D)
F) A) and B)

Question 7

The "law of supply" refers to the fact that, all other things remaining the same, when the price of a good rises

Accepted Answer

A)   there is a movement up along the supply curve to a larger quantity supplied.
B)   the supply curve shifts leftward.
C)   there is a movement down along the supply curve to a smaller quantity supplied.
D)   the supply curve shifts rightward.E) C) and D)
F) A) and D)

Question 8

Auto workers negotiate a wage increase. How does this wage hike affect the supply of cars?

Accepted Answer

A)   It increases the supply.
B)   It has no effect.
C)   It decreases the supply.
D)   There is not enough information to tell if the change increases, decreases, or has no effect on the supply of cars.E) All of the above
F) B) and C)

Question 9

Bicycles are made out of steel. If the price of steel increases, there is a shift in the supply curve of bicycles that leads to

Accepted Answer

A)   an increase in the price of a bicycle.
B)   a permanent surplus of bicycles.
C)   a temporary surplus of bicycles.
D)   a shift in the demand curve for bicycles.E) B) and C)
F) A) and B)

Question 10

Which of the following raises the equilibrium price and increases the equilibrium quantity of used cars?

Accepted Answer

A)   An increase in the wage rate paid to used car salespeople
B)   A fall in income if used cars are an inferior good
C)   Neither A nor B because the question suggests a violation of the "law of demand."
D)   Neither A nor B because the question suggests a violation of the "law of supply."E) B) and C)
F) A) and C)

Question 11

If the price of a movie download falls, the rental rate of DVDs _______ and the equilibrium quantity of DVDs rented _______.

Accepted Answer

A)   rises; decreases
B)   rises; increases
C)   falls; increases
D)   falls; decreasesE) A) and C)
F) All of the above

Question 12

Which of the following correctly describes how price adjustments eliminate a shortage?

Accepted Answer

A)   As the price rises, the quantity demanded decreases while the quantity supplied increases.
B)   As the price falls, demand increases while supply decreases.
C)   As the price falls, the quantity demanded decreases while the quantity supplied increases.
D)   As the price rises, the quantity demanded increases while the quantity supplied decreases.E) A) and B)
F) None of the above

Question 13

The equilibrium quantity will decrease and the price might rise, fall or stay the same when the

Accepted Answer

A)   demand for a good increases and the supply of it decreases.
B)   demand and the supply of a good both increase.
C)   demand and the supply of a good both decrease.
D)   demand for a good decreases and the supply of it increases.E) None of the above
F) A) and B)

Question 14

-In the above figure, the equilibrium price is _______ and the equilibrium quantity is _______.

Accepted Answer

A)   $8; 400 units
B)   $6; 300 units
C)   $4; 200 units
D)   $2; 500 unitsE) B) and C)
F) B) and D)

Question 15

Which of the following statements is true?

Accepted Answer

A)   An increase in the price of petrol will increase the quantity supplied of petrol.
B)   An increase in the price of petrol will decrease the demand for petrol.
C)   An increase in the price of petrol will increase the quantity demanded of petrol.
D)   An increase in the price of petrol will increase the supply of petrol.E) B) and C)
F) A) and B)

Question 16

Each point on a supply curve represents

Accepted Answer

A)   the lowest price for which a supplier can profitably sell another unit.
B)   the highest price buyers will pay for the good.
C)   the lowest price buyers will accept per unit of the good.
D)   the highest price sellers can get for each unit over time.E) All of the above
F) B) and C)

Question 17

A change in which of the following alters buying plans for cars but does NOT shift the demand curve for cars?

Accepted Answer

A)   A 20 per cent increase in the price of a car
B)   An increased preference for walking rather than driving
C)   A 5 per cent increase in people's income
D)   A 10 per cent decrease in the price of car insuranceE) A) and B)
F) A) and C)

Question 18

If good growing conditions increase the supply of strawberries and hot weather increases the demand for strawberries, the quantity of strawberries bought

Accepted Answer

A)   increases and the price rises.
B)   increases and the price might rise, fall or not change.
C)   doesn't change and the price falls.
D)   doesn't change and the price rises.E) A) and C)
F) B) and C)

Question 19

The quantity demanded is

Accepted Answer

A)   the amount of a good that consumers plan to purchase at a particular price.
B)   always equal to the equilibrium quantity.
C)   independent of consumers' buying plans.
D)   independent of the price of the good.E) B) and D)
F) A) and D)

Question 20

-The figure above shows the demand for fruit snacks. Which movement reflects an increase in the price of a substitute for fruit snacks?

Accepted Answer

A)   From point a to point c
B)   From point a to point e
C)   From point a to point b
D)   From point a to point dE) B) and D)
F) C) and D)

Exam 3: Demand and Supply

-In the above figure, the equilibrium price is _______ and the equilibrium quantity is _______.

Correct AnswerverifiedShow Answer

There is a technological advance in the production of a good and simultaneously also an increase in the expected future price. Which of the following will happen?

Correct AnswerverifiedShow Answer

-The figure above shows the demand for fruit snacks. Which movement reflects an increase in the price of a substitute for fruit snacks?

Correct AnswerverifiedShow Answer

The price of the steel used to produce car engines increases. How does this price hike affect the demand curve for cars?

Correct AnswerverifiedShow Answer

Bicycles are made out of steel. If the price of steel increases, there is a shift in the supply curve of bicycles that leads to

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

Each point on a supply curve represents

Correct AnswerverifiedShow Answer

The quantity demanded is

Correct AnswerverifiedShow Answer

Auto workers negotiate a wage increase. How does this wage hike affect the supply of cars?

Correct AnswerverifiedShow Answer

-The above figure shows the market for pizza. Which figure shows the effect of an increase in the price of the tomato sauce used to produce pizza?

Correct AnswerverifiedShow Answer

The equilibrium quantity will decrease and the price might rise, fall or stay the same when the

Correct AnswerverifiedShow Answer

Changes in which of the following shifts the supply curve of hamburgers?

Correct AnswerverifiedShow Answer

A change in which of the following alters buying plans for cars but does NOT shift the demand curve for cars?

Correct AnswerverifiedShow Answer

Which of the following influences people's buying plans and does NOT shift the demand curve?

Correct AnswerverifiedShow Answer

Which of the following correctly describes how price adjustments eliminate a shortage?

Correct AnswerverifiedShow Answer

If the price of a movie download falls, the rental rate of DVDs _______ and the equilibrium quantity of DVDs rented _______.

Correct AnswerverifiedShow Answer

The "law of supply" states that, other things remaining the same, firms produce

Correct AnswerverifiedShow Answer

If good growing conditions increase the supply of strawberries and hot weather increases the demand for strawberries, the quantity of strawberries bought

Correct AnswerverifiedShow Answer

The "law of supply" refers to the fact that, all other things remaining the same, when the price of a good rises

Correct AnswerverifiedShow Answer

Which of the following raises the equilibrium price and increases the equilibrium quantity of used cars?

Correct AnswerverifiedShow Answer

-In the above figure, the equilibrium price is _ and the equilibrium quantity is _.

Correct Answer
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If the price of a movie download falls, the rental rate of DVDs _ and the equilibrium quantity of DVDs rented _.

Correct Answer
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