Question 1

A decrease in supply of X increases the equilibrium price of X,which reduces the demand for X and automatically returns the price of X to its initial level.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is correct?

Accepted Answer

A)   If demand increases and supply decreases,equilibrium price will fall.
B)   If supply increases and demand decreases,equilibrium price will fall.
C)   If demand decreases and supply increases,equilibrium price will rise.
D)   If supply declines and demand remains constant,equilibrium price will fall.

Question 3

An increase in the excise tax on cigarettes raises the price of cigarettes by shifting the:

Accepted Answer

A)   demand curve for cigarettes rightward.
B)   demand curve for cigarettes leftward.
C)   supply curve for cigarettes rightward.
D)   supply curve for cigarettes leftward.

Question 4

A product market is in equilibrium:

Accepted Answer

A)   whenever there is no surplus of the product.
B)   whenever there is no shortage of the product.
C)   when consumers want to buy more of the product than producers offer for sale.
D)   where the demand and supply curves intersect.

Question 5

Because of unseasonably cold weather,the supply of oranges has substantially decreased.This statement indicates the:

Accepted Answer

A)   demand for oranges will necessarily rise.
B)   equilibrium quantity of oranges will rise.
C)   amount of oranges that will be available at various prices has declined.
D)   price of oranges will fall.

Question 6

A firm's supply curve is upsloping because:

Accepted Answer

A)   the expansion of production necessitates the use of qualitatively inferior inputs.
B)   mass production economies are associated with larger levels of output.
C)   consumers envision a positive relationship between price and quality.
D)   beyond some point the production costs of additional units of output will rise.

Question 7

(Advanced analysis) The equation for the demand curve in the below diagram:

Accepted Answer

A)   is P = 70 - Q.
B)   is P = 35 - 2Q.
C)   is P = 35 - .5Q.
D)   cannot be determined from the information given.

Question 8

When the price of oil declines significantly,the price of gasoline also declines.The latter occurs because of a(n) :

Accepted Answer

A)   increase in the demand for gasoline.
B)   decrease in the demand for gasoline.
C)   increase in the supply of gasoline.
D)   decrease in the supply of gasoline.

Question 9

In which of the following instances is the effect on equilibrium price dependent on the magnitude of the shifts in supply and demand?

Accepted Answer

A)   Demand rises and supply rises.
B)   Supply falls and demand remains constant.
C)   Demand rises and supply falls.
D)   Supply rises and demand falls.

Question 10

Other things equal,if the price of a key resource used to produce product X falls,the:

Accepted Answer

A)   product supply curve of X will shift to the right.
B)   product demand curve of X will shift to the right.
C)   product supply curve of X will shift to the left.
D)   product supply curve of X will not shift.

Question 11

The demand for most products varies directly with changes in consumer incomes.Such products are known as:

Accepted Answer

A)   complementary goods.
B)   competitive goods.
C)   inferior goods.
D)   normal goods.

Question 12

Suppose that in the clothing market,production costs have fallen,but the equilibrium price and quantity purchased have both increased.Based on this information we can conclude that:

Accepted Answer

A)   the supply of clothing has grown faster than the demand for clothing.
B)   demand for clothing has grown faster than the supply of clothing.
C)   the supply of and demand for clothing have grown by the same proportion.
D)   there is no way to determine what has happened to supply and demand with this information.

Question 13

The rationing function of prices refers to the:

Accepted Answer

A)   tendency of supply and demand to shift in opposite directions.
B)   fact that ration coupons are needed to alleviate wartime shortages of goods.
C)   capacity of a competitive market to equalize quantity demanded and quantity supplied.
D)   ability of the market system to generate an equitable distribution of income.

Question 14

Tennis rackets and ballpoint pens are:

Accepted Answer

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

Question 15

At the equilibrium price:

Accepted Answer

A)   quantity supplied may exceed quantity demanded or vice versa.
B)   there are no pressures on price to either rise or fall.
C)   there are forces that cause price to rise.
D)   there are forces that cause price to fall.

Question 16

In the following question you are asked to determine,other things equal,the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for,or supply (S) of,X; (2) the equilibrium price (P) of X;and (3) the equilibrium quantity (Q) of X. Refer to the given information.Consumer expectations that the price of X will rise sharply in the future will:

Accepted Answer

A)   increase S,increase P,and increase Q.
B)   increase D,increase P,and increase Q.
C)   decrease S,increase P,and increase Q.
D)   increase D,decrease P,and increase Q.

Question 17

Over time,the equilibrium price of a gigabyte of computer memory has fallen while the equilibrium quantity purchased has increased.Based on this we can conclude that:

Accepted Answer

A)   decreases in the demand for computer memory have exceeded increases in supply.
B)   decreases in the supply of computer memory have exceeded increases in demand.
C)   increases in the demand for computer memory have exceeded increases in supply.
D)   increases in the supply of computer memory have exceeded increases in demand.

Question 18

Suppose product X is an input in the production of product Y.Product Y in turn is a substitute for product Z.An increase in the price of X can be expected to:

Accepted Answer

A)   decrease the demand for Z.
B)   increase the demand for Z.
C)   have no effect on the demand for Z.
D)   decrease the supply of Z.

Question 19

Which of the following is a consequence of rent controls established to keep housing affordable for the poor?

Accepted Answer

A)   Less rental housing is available as prospective landlords find it unprofitable to rent at restricted prices.
B)   The quality of rental housing declines as landlords lack the funds and incentive to maintain properties.
C)   Apartment buildings are torn down in favor of office buildings,shopping malls,and other buildings where rents are not controlled.
D)   All of these are consequences of rent controls.

Question 20

Which of the following would not shift the demand curve for beef?

Accepted Answer

A)   A widely publicized study that indicates beef consumption increases one's cholesterol.
B)   A reduction in the price of cattle feed.
C)   An effective advertising campaign by pork producers.
D)   A change in the incomes of beef consumers.

Exam 3: Demand, Supply, and Market Equilibrium

In which of the following instances is the effect on equilibrium price dependent on the magnitude of the shifts in supply and demand?

Correct Answer
verified

Which of the following would not shift the demand curve for beef?

Correct Answer
verified

An increase in the excise tax on cigarettes raises the price of cigarettes by shifting the:

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Because of unseasonably cold weather,the supply of oranges has substantially decreased.This statement indicates the:

Correct Answer
verified

Other things equal,if the price of a key resource used to produce product X falls,the:

Correct Answer
verified

A firm's supply curve is upsloping because:

Correct Answer
verified

At the equilibrium price:

Correct Answer
verified

Over time,the equilibrium price of a gigabyte of computer memory has fallen while the equilibrium quantity purchased has increased.Based on this we can conclude that:

Correct Answer
verified

Which of the following is a consequence of rent controls established to keep housing affordable for the poor?

Correct Answer
verified

The demand for most products varies directly with changes in consumer incomes.Such products are known as:

Correct Answer
verified

Suppose product X is an input in the production of product Y.Product Y in turn is a substitute for product Z.An increase in the price of X can be expected to:

Correct Answer
verified

Suppose that in the clothing market,production costs have fallen,but the equilibrium price and quantity purchased have both increased.Based on this information we can conclude that:

Correct Answer
verified

Correct Answer
verified

The rationing function of prices refers to the:

Correct Answer
verified

A decrease in supply of X increases the equilibrium price of X,which reduces the demand for X and automatically returns the price of X to its initial level.

Correct Answer
verified

(Advanced analysis) The equation for the demand curve in the below diagram:

Correct Answer
verified

When the price of oil declines significantly,the price of gasoline also declines.The latter occurs because of a(n) :

Correct Answer
verified

Tennis rackets and ballpoint pens are:

Correct Answer
verified

A product market is in equilibrium:

Correct Answer
verified

Exam 3: Demand, Supply, and Market Equilibrium

In which of the following instances is the effect on equilibrium price dependent on the magnitude of the shifts in supply and demand?

Correct AnswerverifiedShow Answer

Which of the following would not shift the demand curve for beef?

Correct AnswerverifiedShow Answer

An increase in the excise tax on cigarettes raises the price of cigarettes by shifting the:

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Because of unseasonably cold weather,the supply of oranges has substantially decreased.This statement indicates the:

Correct AnswerverifiedShow Answer

Other things equal,if the price of a key resource used to produce product X falls,the:

Correct AnswerverifiedShow Answer

A firm's supply curve is upsloping because:

Correct AnswerverifiedShow Answer

At the equilibrium price:

Correct AnswerverifiedShow Answer

Over time,the equilibrium price of a gigabyte of computer memory has fallen while the equilibrium quantity purchased has increased.Based on this we can conclude that:

Correct AnswerverifiedShow Answer

Which of the following is a consequence of rent controls established to keep housing affordable for the poor?

Correct AnswerverifiedShow Answer

The demand for most products varies directly with changes in consumer incomes.Such products are known as:

Correct AnswerverifiedShow Answer

Suppose product X is an input in the production of product Y.Product Y in turn is a substitute for product Z.An increase in the price of X can be expected to:

Correct AnswerverifiedShow Answer

Suppose that in the clothing market,production costs have fallen,but the equilibrium price and quantity purchased have both increased.Based on this information we can conclude that:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The rationing function of prices refers to the:

Correct AnswerverifiedShow Answer

A decrease in supply of X increases the equilibrium price of X,which reduces the demand for X and automatically returns the price of X to its initial level.

Correct AnswerverifiedShow Answer

(Advanced analysis) The equation for the demand curve in the below diagram:

Correct AnswerverifiedShow Answer

When the price of oil declines significantly,the price of gasoline also declines.The latter occurs because of a(n) :

Correct AnswerverifiedShow Answer

Tennis rackets and ballpoint pens are:

Correct AnswerverifiedShow Answer

A product market is in equilibrium:

Correct AnswerverifiedShow Answer

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