Question 1

If the price of refillable butane lighters was to decrease, then:

Accepted Answer

A)  the demand for butane would decrease.
B)  the demand for butane would increase.
C)  the quantity of butane demanded would increase.
D)  the quantity of butane demanded would decrease.

Question 2

If the demand for a product increases and the supply of the same product increases, the equilibrium price will increase.

Accepted Answer

A) True 
 B)False

Question 3

Figure 3.5
 
-Refer to Figure 3.5. At a price of $15, there would be a:

Accepted Answer

A)  surplus of 4 units.
B)  shortage of 2 units.
C)  surplus of 6 units.
D)  shortage of 4 units.

Question 4

What is the difference between an 'increase in supply' and an 'increase in quantity supplied'?

Accepted Answer

A)  There is no difference between the two terms; they both refer to a shift of the supply curve.
B)  There is no difference between the two terms; they both refer to a movement along a given supply curve.
C)  An 'increase in supply' means the supply curve has shifted to the right while an 'increase in quantity supplied' means at any given price supply has increased.
D)  An 'increase in supply' means the supply curve has shifted to the right while an 'increase in quantity supplied' refers to a movement along a given supply curve in response to an increase in price.

Question 5

An overcapacity of LCD fabrication plants causes the price of LCD televisions to fall. How would this affect the market for Blu-ray DVD players (a complement to LCD televisions) if everything else is held constant?

Accepted Answer

A)  The supply of Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease.
B)  The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would increase.
C)  The demand for Blu-ray players would decrease because consumers could afford to buy fewer LCD televisions and Blu-ray players.
D)  The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease.

Question 6

If more insurance companies decide to cover part of the price of elective laser eye surgery and more doctors decide to enter the field of laser eye surgery, what will happen in the market for laser eye surgery as a result of these two factors?

Accepted Answer

A)  Demand will increase and prices will rise.
B)  Supply will increase and prices will fall.
C)  Demand and supply will both increase and prices may rise or fall.
D)  Demand will increase and supply will decrease and prices will rise.

Question 7

Figure 3.4
 
-Refer to Figure 3.4. If the price is $15:

Accepted Answer

A)  there would be a surplus of 300 units.
B)  there would be a shortage of 300 units.
C)  there would be a surplus of 400 units.
D)  there would be a shortage of 400 units.

Question 8

How does the increasing use of streaming music services affect the market for compact discs?

Accepted Answer

A)  The demand curve for compact discs shifts to the right.
B)  The supply curve for compact discs shifts to the left.
C)  The supply curve for compact discs shifts to the right.
D)  The demand curve for compact discs shifts to the left.

Question 9

Figure 3.7
 
-Refer to Figure 3.7. Assume that the graphs in this figure represent the demand and supply curves for almonds. Which panel best describes what happens in this market when there is an increase in the productivity of almond harvesters?

Accepted Answer

A)  Panel (a) 
B)  Panel (b) 
C)  Panel (c) 
D)  Panel (d)

Question 10

Figure 3.6
 
-Refer to Figure 3.6. The figure above represents the market for canvas tote bags. Assume that the price of tote bags is $15. At this price:

Accepted Answer

A)  the quantity demanded exceeds the quantity supplied of tote bags by 75. The price will eventually rise to $25, where quantity demanded will equal quantity supplied.
B)  the demand exceeds the supply of tote bags by 55.
C)  there is a shortage, equal to 55 tote bags, that will be eliminated when the price rises to $25.
D)  there is a shortage equal to 55 tote bags; the price of tote bags will rise until demand is equal to supply.

Question 11

Figure 3.1
 
-Refer to Figure 3.1. If the product represented is a normal good, a decrease in income would be represented by a movement from:

Accepted Answer

A)  A to B.
B)  B to A.
C)  D₁ to D₂.
D)  D₂ to D₁.

Question 12

An increase in the price of pineapples will result in:

Accepted Answer

A)  a smaller quantity of pineapples supplied.
B)  a larger quantity of pineapples supplied.
C)  a decrease in the demand for pineapples.
D)  an increase in the supply of pineapples.

Question 13

An increase in the quantity of a product supplied is caused by an increase in the price of the product.

Accepted Answer

A) True 
 B)False

Question 14

The demand curve for a good will shift leftward if there is:

Accepted Answer

A)  a change in the technology used to produce the good.
B)  an increase in the price of the good.
C)  an increase in the price of a complementary good.
D)  a decrease in the price of the good.

Question 15

A movement along the demand curve for toothpaste would be caused by a change in:

Accepted Answer

A)  the price of toothbrushes.
B)  consumer income.
C)  the price of toothpaste.
D)  population.

Question 16

In June, buyers of titanium expect that the price of titanium will fall in July. What happens in the titanium market in June, holding everything else constant?

Accepted Answer

A)  The demand curve shifts to the right.
B)  The quantity demanded increases.
C)  The quantity demanded decreases
D)  The demand curve shifts to the left.

Question 17

An inferior good is a good for which the quantity demanded decreases as the price increases, holding everything else constant.

Accepted Answer

A) True 
 B)False

Question 18

In a perfectly competitive market, there are ________ buyers and ________ sellers.

Accepted Answer

A)  many; few
B)  few; many
C)  many; many
D)  few; few

Question 19

The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in purchasing power as a result of the price change.

Accepted Answer

A) True 
 B)False

Question 20

Figure 3.1
 
-Refer to Figure 3.1. A decrease in the price of a substitute good would be represented by a movement from:

Accepted Answer

A)  A to B.
B)  B to A.
C)  D₁ to D₂.
D)  D₂ to D₁.

Exam 3: Where Prices Come From: the Interaction of Demand and Supply

The demand curve for a good will shift leftward if there is:

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Figure 3.5 -Refer to Figure 3.5. At a price of $15, there would be a:

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Figure 3.1 -Refer to Figure 3.1. A decrease in the price of a substitute good would be represented by a movement from:

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What is the difference between an 'increase in supply' and an 'increase in quantity supplied'?

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The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in purchasing power as a result of the price change.

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An inferior good is a good for which the quantity demanded decreases as the price increases, holding everything else constant.

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How does the increasing use of streaming music services affect the market for compact discs?

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A movement along the demand curve for toothpaste would be caused by a change in:

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If the price of refillable butane lighters was to decrease, then:

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An increase in the price of pineapples will result in:

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If the demand for a product increases and the supply of the same product increases, the equilibrium price will increase.

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Figure 3.1 -Refer to Figure 3.1. If the product represented is a normal good, a decrease in income would be represented by a movement from:

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In a perfectly competitive market, there are ________ buyers and ________ sellers.

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An increase in the quantity of a product supplied is caused by an increase in the price of the product.

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An overcapacity of LCD fabrication plants causes the price of LCD televisions to fall. How would this affect the market for Blu-ray DVD players (a complement to LCD televisions) if everything else is held constant?

Correct AnswerverifiedShow Answer

In June, buyers of titanium expect that the price of titanium will fall in July. What happens in the titanium market in June, holding everything else constant?

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If more insurance companies decide to cover part of the price of elective laser eye surgery and more doctors decide to enter the field of laser eye surgery, what will happen in the market for laser eye surgery as a result of these two factors?

Correct AnswerverifiedShow Answer

Figure 3.7 -Refer to Figure 3.7. Assume that the graphs in this figure represent the demand and supply curves for almonds. Which panel best describes what happens in this market when there is an increase in the productivity of almond harvesters?

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Figure 3.4 -Refer to Figure 3.4. If the price is $15:

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Figure 3.6 -Refer to Figure 3.6. The figure above represents the market for canvas tote bags. Assume that the price of tote bags is $15. At this price:

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In a perfectly competitive market, there are buyers and sellers.

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