Question 1

Which of the following situations could generate a shortage?

Accepted Answer

A)  Demand for a good increases, resulting in a new higher market clearing price.
B)  Demand for a good decreases, resulting in a new lower market clearing price.
C)  Demand for a good increases, but the price is not permitted to rise.
D)  Demand for a good decreases, but the price is not permitted to fall.

Question 2

If there is a shortage in a free market, then

Accepted Answer

A)  consumers will offer to pay a lower price for the good, and the price will fall toward the equilibrium level.
B)  consumers will offer to pay a higher price for the good, and the price will rise toward the equilibrium level.
C)  suppliers will decrease their output to match demand.
D)  suppliers will accept any price below equilibrium.

Question 3

An excess quantity supplied can be corrected by

Accepted Answer

A)  a fall in price.
B)  legally fixing the price at its present level.
C)  a decrease in demand.
D)  an increase in supply.

Question 4

In economic terminology, a normal good is a good

Accepted Answer

A)  on which a monetary value cannot be placed.
B)  that is liked only by normal people.
C)  for which demand increases when price increases.
D)  for which demand increases when income increases.

Question 5

The price of a gallon of gasoline increased from $2.00 to $2.25 while the price of a ride on the city bus increased from 50 cents to 75 cents. The relative price of riding the city bus

Accepted Answer

A)  increased from 0.25 to 0.6.
B)  decreased from 4.0 to 3.0.
C)  stayed constant at 0.25.
D)  stayed constant at 4.0.

Question 6

-According to the above figure, a shortage will occur at a price at which

Accepted Answer

A)  quantity demanded equals quantity supplied.
B)  quantity demanded exceeds quantity supplied.
C)  quantity supplied exceeds quantity demanded.
D)  government sets a price above equilibrium.

Question 7

When the amount supplied is greater at each price, there is a(n)

Accepted Answer

A)  rightward shift in the supply curve.
B)  leftward shift in the supply curve.
C)  upward movement along the supply curve.
D)  downward movement along the supply curve.

Question 8

-Refer to the above figure. Suppose that Cheerios and Apple Jacks are substitutes. Which diagram shows the effect on the demand for Cheerios when the price of Apple Jacks cereal has decreased?

Accepted Answer

A)  A
B)  B
C)  neither graph
D)  both graphs

Question 9

Which of the following would cause a change in the quantity demanded of a product?

Accepted Answer

A)  a higher price
B)  a higher income
C)  expectations of future price increases
D)  All of the above are correct.

Question 10

All other factors held constant, when McDonald's raises the price of its Quarter Pounder by 50 cents,

Accepted Answer

A)  there is likely to be a decrease in the quantity of Taco Bell's Chalupas demanded, assuming the Quarter Pounder and Chalupas are substitutes.
B)  there is likely to be an increase in demand for Taco Bell's Chalupas, assuming the Quarter Pounder and Chalupas are substitutes.
C)  there is likely to be a decrease in demand for Taco Bell's Chalupas, assuming the Quarter Pounder and Chalupas are substitutes.
D)  there is likely to be an increase in demand for McDonald's Quarter Pounder, assuming the Quarter Pounder and Chalupas are substitutes.

Question 11

The quantity supplied of a particular good is the amount of the good that

Accepted Answer

A)  households are willing to consume at each particular price.
B)  firms will actually end up buying at a particular price during a given time period.
C)  firms are willing to sell at each price during a particular time period.
D)  households want firms to sell at each price during a particular time period.

Question 12

-In the above figure, what are the equilibrium price and quantity?

Accepted Answer

A)  $40 and 200 units
B)  $50 and 100 units
C)  $10 and 200 units
D)  $30 and 100 units

Question 13

-Refer to the above figure. At a price of two cents, the quantity of bubble gum demanded will be

Accepted Answer

A)  3.
B)  2.
C)  4.
D)  5.

Question 14

Which of the following statements is FALSE?

Accepted Answer

A)  An increase in income causes an increase in the demand for a normal good.
B)  An increase in income causes a decrease in the demand for an inferior good.
C)  A decrease in income causes the demand curve for a normal good to shift to the left.
D)  An increase in income causes the demand curve for an inferior good to shift to the right.

Question 15

-Refer to the above figure. For a normal good, the rightward shift of the curve could have been caused by

Accepted Answer

A)  a technological improvement.
B)  an increase in the cost of inputs.
C)  an increase in income.
D)  a decrease in income.

Question 16

Jane has noticed that she used to pay $2 for coffee and now she pays $2.50. Which of the following statements is TRUE?

Accepted Answer

A)  The relative price of coffee has increased compared to tea.
B)  The money price of coffee has increased.
C)  The law of supply explains why the price of coffee has increased.
D)  Jane will stop consuming coffee.

Question 17

Suppose a concert by Lady Gaga and a basketball game played by the L.A. Lakers are substitutes, then which of the following is TRUE?

Accepted Answer

A)  If the price of a ticket to a Lakers game increases, then the demand for Lady Gaga tickets will fall.
B)  If the price of a ticket to a Lakers game decreases, the quantity of Lakers tickets demanded will increase.
C)  If the price of a ticket to a Lakers game increases, then the demand for Lady Gaga tickets will remain unchanged.
D)  The price of a ticket to a Lakers game will always equal the price of a ticket to a Lady Gaga concert.

Question 18

With reference to the difference between a change in demand and a change in quantity demanded, which of the following is TRUE?

Accepted Answer

A)  If a good's price goes down, then demand for the good will decrease.
B)  If a good's price goes down, then quantity demanded will increase.
C)  If demand increases, then the demand curve will shift to the left.
D)  If price rises and quantity demanded decreases, then the demand curve will shift to the left.

Question 19

Which of the following is a likely result of the dramatic decrease in the price of microprocessor chips to computer manufacturers in the last two decades?

Accepted Answer

A)  an increase in the demand for computers
B)  a decrease in the supply of diskettes
C)  an increase in the supply of computers
D)  an increase in the quantity supplied of computers

Question 20

When the price of tablet devices decreased in the 2010s, there was an increase in the demand for computing apps because tablet devices and computing apps are

Accepted Answer

A)  substitute goods.
B)  capital goods.
C)  inferior goods.
D)  complementary goods.

Exam 3: Demand and Supply

-Refer to the above figure. Suppose that Cheerios and Apple Jacks are substitutes. Which diagram shows the effect on the demand for Cheerios when the price of Apple Jacks cereal has decreased?

Correct AnswerverifiedShow Answer

-Refer to the above figure. For a normal good, the rightward shift of the curve could have been caused by

Correct AnswerverifiedShow Answer

-Refer to the above figure. At a price of two cents, the quantity of bubble gum demanded will be

Correct AnswerverifiedShow Answer

Which of the following situations could generate a shortage?

Correct AnswerverifiedShow Answer

When the amount supplied is greater at each price, there is a(n)

Correct AnswerverifiedShow Answer

The price of a gallon of gasoline increased from $2.00 to $2.25 while the price of a ride on the city bus increased from 50 cents to 75 cents. The relative price of riding the city bus

Correct AnswerverifiedShow Answer

The quantity supplied of a particular good is the amount of the good that

Correct AnswerverifiedShow Answer

With reference to the difference between a change in demand and a change in quantity demanded, which of the following is TRUE?

Correct AnswerverifiedShow Answer

All other factors held constant, when McDonald's raises the price of its Quarter Pounder by 50 cents,

Correct AnswerverifiedShow Answer

Suppose a concert by Lady Gaga and a basketball game played by the L.A. Lakers are substitutes, then which of the following is TRUE?

Correct AnswerverifiedShow Answer

Which of the following statements is FALSE?

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When the price of tablet devices decreased in the 2010s, there was an increase in the demand for computing apps because tablet devices and computing apps are

Correct AnswerverifiedShow Answer

An excess quantity supplied can be corrected by

Correct AnswerverifiedShow Answer

Which of the following would cause a change in the quantity demanded of a product?

Correct AnswerverifiedShow Answer

-According to the above figure, a shortage will occur at a price at which

Correct AnswerverifiedShow Answer

Jane has noticed that she used to pay $2 for coffee and now she pays $2.50. Which of the following statements is TRUE?

Correct AnswerverifiedShow Answer

If there is a shortage in a free market, then

Correct AnswerverifiedShow Answer

Which of the following is a likely result of the dramatic decrease in the price of microprocessor chips to computer manufacturers in the last two decades?

Correct AnswerverifiedShow Answer

-In the above figure, what are the equilibrium price and quantity?

Correct AnswerverifiedShow Answer

In economic terminology, a normal good is a good

Correct AnswerverifiedShow Answer

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