Question 1

If products A and B are complements and the price of B decreases,the:

Accepted Answer

A)   demand curves for both A and B will shift to the left.
B)   amount of B purchased will increase,but the demand curve for A will not shift.
C)   demand for A will increase and the amount of B demanded will increase.
D)   demand for A will decline and the demand for B will increase.E) B) and D)
F) A) and C)

Question 2

An increase in quantity supplied might be caused by an increase in production costs.

Accepted Answer

A) True 
 B)False

Question 3

1 and D1 represent the original supply and demand curves and S2 and D2 the new curves.In this market: A)  the equilibrium position has shifted from M to K. B)  an increase in demand has been more than offset by an increase in supply. C)  the new equilibrium price and quantity are both greater than they were originally. D)  point M shows the new equilibrium position." class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram,in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves.In this market:

Accepted Answer

A)   the equilibrium position has shifted from M to K.
B)   an increase in demand has been more than offset by an increase in supply.
C)   the new equilibrium price and quantity are both greater than they were originally.
D)   point M shows the new equilibrium position.E) A) and D)
F) All of the above

Question 4

A decrease in the price of digital cameras will:

Accepted Answer

A)   cause the demand curve for memory cards to become vertical.
B)   shift the demand curve for memory cards to the right.
C)   shift the demand curve for memory cards to the left.
D)   not affect the demand for memory cards.E) A) and B)
F) None of the above

Question 5

Suppose that at prices of $5,$4,$3,$2,and $1 for product Z,the corresponding quantities supplied are 3,4,5,6,and 7 units,respectively.Which of the following would increase the quantities supplied of Z to,say,6,8,10,12,and 14 units at these prices?

Accepted Answer

A)   improved technology for producing Z
B)   an increase in the prices of the resources used to make Z
C)   an increase in the excise tax on product Z
D)   increases in the incomes of the buyers of ZE) A) and D)
F) All of the above

Question 6

If effective,a government-set price ceiling will lower equilibrium price and quantity in a market.

Accepted Answer

A) True 
 B)False

Question 7

The law of demand states that:

Accepted Answer

A)   price and quantity demanded are inversely related.
B)   the larger the number of buyers in a market,the lower will be product price.
C)   price and quantity demanded are directly related.
D)   consumers will buy more of a product at high prices than at low prices.E) All of the above
F) A) and B)

Question 8

A surplus of a product will arise when price is:

Accepted Answer

A)   above equilibrium,with the result that quantity demanded exceeds quantity supplied.
B)   above equilibrium,with the result that quantity supplied exceeds quantity demanded.
C)   below equilibrium,with the result that quantity demanded exceeds quantity supplied.
D)   below equilibrium,with the result that quantity supplied exceeds quantity demanded.E) C) and D)
F) A) and B)

Question 9

1 to D2. C)  shift from D2 to D1. D)  move from point y to point x." class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram.A decrease in demand is depicted by a:

Accepted Answer

A)   move from point x to point y.
B)   shift from D1 to D2.
C)   shift from D2 to D1.
D)   move from point y to point x.E) B) and D)
F) A) and B)

Question 10

Assuming competitive markets with typical supply and demand curves,which of the following statements is correct?

Accepted Answer

A)   An increase in supply with a decrease in demand will result in an increase in price.
B)   An increase in supply with no change in demand will result in an increase in price.
C)   An increase in supply with no change in demand will result in a decline in sales.
D)   An increase in demand with no change in supply will result in an increase in sales.E) B) and C)
F) A) and D)

Question 11

Refer to the above table.In relation to column (3) ,a change from column (2) to column (1) would indicate a(n) :

Accepted Answer

A)   increase in demand.
B)   decrease in demand.
C)   increase in supply.
D)   decrease in supply.E) A) and D)
F) B) and D)

Question 12

Refer to the above diagram.A shortage of 160 units would be encountered if price was:

Accepted Answer

A)   $1.10,that is,$1.60 minus $.50.
B)   $1.60.
C)   $1.00.
D)   $.50.E) A) and B)
F) None of the above

Question 13

In a competitive market the equilibrium price and quantity occur where:

Accepted Answer

A)   the downsloping demand curve intersects the upsloping supply curve.
B)   the upsloping demand curve intersects the downsloping supply curve.
C)   consumers and suppliers bargain to a mutually acceptable price.
D)   quantity demanded exceeds quantity supplied or vice versa.E) A) and B)
F) A) and C)

Question 14

Surpluses drive market prices up;shortages drive them down.

Accepted Answer

A) True 
 B)False

Question 15

1 and D1 represent the original supply and demand curves and S2 and D2 the new curves.In this market the indicated shift in supply may have been caused by: A)  an increase in the wages paid to workers producing this good. B)  the development of more efficient machinery for producing this good. C)  this product becoming less fashionable. D)  an increase in consumer incomes." class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram,in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves.In this market the indicated shift in supply may have been caused by:

Accepted Answer

A)   an increase in the wages paid to workers producing this good.
B)   the development of more efficient machinery for producing this good.
C)   this product becoming less fashionable.
D)   an increase in consumer incomes.E) A) and D)
F) None of the above

Question 16

1 and D1 represent the original supply and demand curves and S2 and D2 the new curves.In this market the indicated shift in demand may have been caused by: A)  a decline in the number of buyers in the market. B)  a decline in the price of a substitute good. C)  an increase in incomes if the product is a normal good. D)  an increase in incomes if the product is an inferior good." class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram,in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves.In this market the indicated shift in demand may have been caused by:

Accepted Answer

A)   a decline in the number of buyers in the market.
B)   a decline in the price of a substitute good.
C)   an increase in incomes if the product is a normal good.
D)   an increase in incomes if the product is an inferior good.E) All of the above
F) A) and B)

Question 17

A binding 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) All of the above
F) B) and D)

Question 18

If the government presets a price that turns out to be above the actual equilibrium price,a surplus will develop in the market.

Accepted Answer

A) True 
 B)False

Question 19

There will be a surplus of a product when:

Accepted Answer

A)   price is below the equilibrium level.
B)   the supply curve is downward sloping and the demand curve is upward sloping.
C)   the demand and supply curves fail to intersect.
D)   consumers want to buy less than producers offer for sale.E) C) and D)
F) None of the above

Question 20

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 tastesE) B) and C)
F) All of the above

Exam 3: Demand, Supply, and Market Equilibrium

If effective,a government-set price ceiling will lower equilibrium price and quantity in a market.

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If products A and B are complements and the price of B decreases,the:

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There will be a surplus of a product when:

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An increase in quantity supplied might be caused by an increase in production costs.

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In a competitive market the equilibrium price and quantity occur where:

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A surplus of a product will arise when price is:

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Suppose that at prices of $5,$4,$3,$2,and $1 for product Z,the corresponding quantities supplied are 3,4,5,6,and 7 units,respectively.Which of the following would increase the quantities supplied of Z to,say,6,8,10,12,and 14 units at these prices?

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Refer to the above diagram.A shortage of 160 units would be encountered if price was:

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A binding price floor means that:

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Assuming competitive markets with typical supply and demand curves,which of the following statements is correct?

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Surpluses drive market prices up;shortages drive them down.

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Refer to the above diagram,in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves.In this market:

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

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Refer to the above diagram.A decrease in demand is depicted by a:

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Refer to the above diagram,in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves.In this market the indicated shift in supply may have been caused by:

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Refer to the above table.In relation to column (3) ,a change from column (2) to column (1) would indicate a(n) :

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The law of demand states that:

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Refer to the above diagram,in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves.In this market the indicated shift in demand may have been caused by:

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A decrease in the price of digital cameras will:

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If the government presets a price that turns out to be above the actual equilibrium price,a surplus will develop in the market.

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Refer to the above diagram,in which S₁ and D₁ represent the original supply and demand curves and S₂ and D₂ the new curves.In this market:

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Refer to the above diagram,in which S₁ and D₁ represent the original supply and demand curves and S₂ and D₂ the new curves.In this market the indicated shift in supply may have been caused by:

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Refer to the above diagram,in which S₁ and D₁ represent the original supply and demand curves and S₂ and D₂ the new curves.In this market the indicated shift in demand may have been caused by:

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