Question 1

A market is in equilibrium when

Accepted Answer

A)  the quantity demanded equals the quantity supplied at the market clearing price.
B)  the horizontal axis crosses the vertical axis.
C)  buyers do not desire for the price to be any lower.
D)  the equilibrium price is below the market price.

Question 2

When the current price of an item is greater than the item's market clearing price

Accepted Answer

A)  supply is greater than demand.
B)  demand is greater than supply.
C)  quantity supplied is greater than quantity demanded.
D)  quantity supplied is less than quantity demanded.

Question 3

Which of the following products are likely to be complementary goods?

Accepted Answer

A)  Coke and Pepsi
B)  portable MP3 players and batteries
C)  HD-DVDs and Blu-Ray DVDs
D)  Domino's pizza and Papa John's pizza

Question 4

-Refer to the above figure. At a price of three cents, a(n) ________ of bubble gum will exist in the market.

Accepted Answer

A)  surplus
B)  shortage
C)  equilibrium quantity
D)  excess quantity supplied

Question 5

Suppose the price of cement goes up in the United States. What happens in the market for new homes?

Accepted Answer

A)  Supply shifts upward and to the left.
B)  Demand shifts left.
C)  Supply shifts downward and to the right.
D)  Demand shifts to the right.

Question 6

Explain why there is a direct relationship between price and quantity supplied.

Accepted Answer

For firms to produce more of a good per ...

Question 7

Which of the following is NOT a determinant of demand?

Accepted Answer

A)  consumers' incomes
B)  prices of other goods
C)  consumers' tastes
D)  production technology

Question 8

Which of the following is an example of the law of demand?

Accepted Answer

A)  An increase in the price of magnetic optical disks is followed by a reduction in the amount of magnetic optical disks purchased.
B)  An increase in the price of tablets is followed by an increase in the sale of tablets.
C)  A decrease in the price of milk has no effect on the amount of milk consumed.
D)  The amount of smartphones sold increases while the price of smartphones is constant.

Question 9

Which of the following will cause a movement along the demand curve instead of a shift of the demand curve?

Accepted Answer

A)  income
B)  tastes and preferences
C)  Expectations e the future price of a good
D)  none of the above

Question 10

In economic terminology, an inferior good is a good

Accepted Answer

A)  that no one will purchase.
B)  that doesn't work properly.
C)  that has no monetary value.
D)  for which demand increases as income decreases.

Question 11

-Refer to the above figure. Which panel best demonstrates the demand curve?

Accepted Answer

A)  Panel A
B)  Panel B
C)  Panel C
D)  Panel D

Question 12

A given supply curve illustrates

Accepted Answer

A)  the relationship between price and quantity supplied.
B)  the effect of a change in resource costs on quantity supplied.
C)  the effect of a change in technology on quantity supplied.
D)  the relationship between expected future prices and quantity supplied.

Question 13

A demand schedule

Accepted Answer

A)  holds all prices constant.
B)  is only for a given time period.
C)  holds quantity constant.
D)  is for a given variety of goods.

Question 14

-Refer to the above figure. A surplus will exist when

Accepted Answer

A)  the price is between $0 and $6.
B)  the price equals $6.
C)  the price equals $10.
D)  quantity demanded equals 15.

Question 15

Pam graduates from law school and gets a position in a law firm. At the same time the price of hamburger falls while other food prices have stayed the same. She notices that she buys less hamburger than she did before. Is she violating the law of demand?

Accepted Answer

A)  Yes, since she is buying less hamburger at a lower price.
B)  Yes, since she is buying less hamburger in a relatively short period of time and we wouldn't expect her tastes to have changed.
C)  No, since the law of demand refers to relative price changes and the price of hamburger falling is an absolute price change.
D)  No, since other things are not held constant, such as her income.

Question 16

Another name for a surplus is

Accepted Answer

A)  excess quantity supplied.
B)  excess quantity demanded.
C)  equilibrium.
D)  market clearing.

Question 17

Suppose that goods X and Y are substitutes and the price of good Y falls. We would then expect

Accepted Answer

A)  the quantity of good Y demanded to increase and the demand for good X to increase also.
B)  an increase in the demand for good X and a decrease in the quantity of good Y demanded.
C)  an increase in the quantity demanded of good Y and a decrease in the demand for good X.
D)  an increase in the demand for both good X and good Y.

Question 18

The market clearing price is

Accepted Answer

A)  the price which eliminates excess quantity supplied or excess quantity demanded.
B)  the price which leaves an excess quantity demanded.
C)  the price which leaves an excess quantity supplied.
D)  the lowest price at which a positive quantity supplied exists.

Question 19

How does a change in quantity supplied differ from a change in supply?

Accepted Answer

A)  A change in quantity supplied shifts the supply curve; a change in supply is a movement along the curve.
B)  A change in one of the ceteris paribus conditions affects quantity supplied, not supply.
C)  A change in the price affects quantity supplied, not supply.
D)  There is no difference.

Question 20

Which of the following is NOT a non-price determinant of demand?

Accepted Answer

A)  the price of the good or service
B)  tastes and preferences
C)  expectations of future prices
D)  prices of related goods and services

Exam 3: Demand and Supply

In economic terminology, an inferior good is a good

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A market is in equilibrium when

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How does a change in quantity supplied differ from a change in supply?

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Suppose that goods X and Y are substitutes and the price of good Y falls. We would then expect

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Which of the following is NOT a non-price determinant of demand?

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A given supply curve illustrates

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Which of the following is an example of the law of demand?

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When the current price of an item is greater than the item's market clearing price

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Pam graduates from law school and gets a position in a law firm. At the same time the price of hamburger falls while other food prices have stayed the same. She notices that she buys less hamburger than she did before. Is she violating the law of demand?

Correct AnswerverifiedShow Answer

Which of the following products are likely to be complementary goods?

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Another name for a surplus is

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Which of the following will cause a movement along the demand curve instead of a shift of the demand curve?

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-Refer to the above figure. Which panel best demonstrates the demand curve?

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Which of the following is NOT a determinant of demand?

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The market clearing price is

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-Refer to the above figure. A surplus will exist when

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A demand schedule

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Suppose the price of cement goes up in the United States. What happens in the market for new homes?

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Explain why there is a direct relationship between price and quantity supplied.

Correct AnswerverifiedFor firms to produce more of a good per ...View AnswerShow Answer

-Refer to the above figure. At a price of three cents, a(n) ________ of bubble gum will exist in the market.

Correct AnswerverifiedShow Answer

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For firms to produce more of a good per ...
View Answer

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