Question 1

The fundamental reason why most supply curves are upward sloping is that

Accepted Answer

A)  consumers substitute lower-priced goods for higher-priced goods.
B)  the quantity supplied increases as more firms enter the market.
C)  a higher price never reduces quantity supplied by enough to lower total revenue and so higher production is motivated.
D)  higher production raises the opportunity costs of production and so price must rise to induce more output.

Question 2

When P = $5,the quantity demanded of a good is 30 units,and the quantity supplied of the good is 50 units.For every $1 decrease in the price of this good,quantity demanded rises by 5 units and quantity supplied falls by 5 units.The equilibrium price of this good is ___________and the equilibrium quantity of this good is _________ units.

Accepted Answer

A)  $3;40
B)  $4;35
C)  $2;45
D)  $2;35
E)  $3;35

Question 3

Exhibit 3-4 
-A "decrease in demand" means that

Accepted Answer

A)  the demand curve has shifted to the left.
B)  price has declined and consumers want to purchase more of the good.
C)  the demand curve has shifted to the right.
D)  the price of the good can be expected to decline,assuming supply stays constant.

Question 4

When income rises for the buyers of good X,the ____________ curve for good X will shift ________________.

Accepted Answer

A)  demand;rightward
B)  demand;leftward
C)  supply;rightward
D)  supply;leftward
E)  This question cannot be answered unless we know whether good X is a normal good,a neutral good,or an inferior good.

Question 5

Resource X is necessary to the production of good Y.If the price of resource X falls,

Accepted Answer

A)  the supply curve of Y shifts leftward.
B)  the supply curve of Y shifts rightward.
C)  the supply curve of Y is unaffected.
D)  there is a movement down the supply curve of Y.
E)  there is a movement up the supply curve of Y.

Question 6

If the price a buyer pays for a good is $50 and the maximum price she would be willing and able to pay is $53,then ____________ is _______________.

Accepted Answer

A)  producers' surplus;$103
B)  consumers' surplus;$103
C)  consumers' surplus;$3
D)  producers' surplus;$3
E)  consumers' surplus;$40

Question 7

If computers and software are complements,then

Accepted Answer

A)  a fall in the price of computers will increase the demand for software and,ceteris paribus,the price of software will rise.
B)  a rise in the price of computers will decrease the demand for software and,ceteris paribus,the price of software will rise.
C)  a fall in the price of computers will decrease the demand for software and,ceteris paribus,the price of software will fall.
D)  a rise in the price of software will increase the demand for computers and,ceteris paribus,the price of computers will rise.
E)  a fall in the price of software will decrease the demand for computers and,ceteris paribus,the price of computers will fall.

Question 8

Exhibit 3-4 
-A "decrease in the quantity demanded" means that

Accepted Answer

A)  the demand curve has shifted to the right.
B)  the supply curve has shifted to the left.
C)  price has declined and consumers therefore want to purchase more of the good.
D)  price has increased and consumers therefore want to purchase less of the good.

Question 9

Exhibit 3-4 
-An "increase in the quantity demanded" means that

Accepted Answer

A)  the demand curve has shifted to the right.
B)  the supply curve has shifted to the left.
C)  price has declined and consumers therefore want to purchase more of the good.
D)  given supply,the price of the good can be expected to rise.

Question 10

Which of the following is true about the relationship between price and quantity supplied?

Accepted Answer

A)  There is always a direct relationship between price and quantity supplied.
B)  There is always an inverse relationship between price and quantity supplied.
C)  There is usually a direct relationship between price and quantity supplied.
D)  There is usually an inverse relationship between price and quantity supplied.

Question 11

Exhibit 3-8 
-Refer to Exhibit 3-8.A price of $5 will result in a ___________________ in this market which will cause the price of the product to gravitate _______________.

Accepted Answer

A)  shortage;downward
B)  shortage;upward
C)  surplus;downward
D)  surplus;upward

Question 12

A simultaneous decrease in the demand and the supply of good X always leads to a decrease in the price of good X.

Accepted Answer

A) True 
 B)False

Question 13

The law of supply states that price and quantity supplied are

Accepted Answer

A)  inversely related,ceteris paribus.
B)  directly related,ceteris paribus.
C)  not related.
D)  fixed.

Question 14

Which of the following statements represents a correct and sequentially accurate economic explanation?

Accepted Answer

A)  Goods X and Y are substitutes.The price of X falls,the quantity demanded of X rises,and the demand for Y rises.
B)  Goods X and Y are substitutes.The price of X rises,the demand for X falls,and the demand for Y rises.
C)  Goods X and Y are substitutes.The price of X falls,the demand for X rises,and the quantity demanded of Y rises.
D)  Goods X and Y are substitutes.The price of X falls,the quantity demanded of X rises,and the demand for Y falls.
E)  Goods X and Y are complements.The price of X falls,the quantity demanded of X rises,and the demand for Y falls.

Question 15

On a supply-and-demand diagram,quantity demanded equals quantity supplied

Accepted Answer

A)  only at the single equilibrium price.
B)  at every price at or above the equilibrium price.
C)  at every price at or below the equilibrium price.
D)  at every price.

Question 16

At a price above the equilibrium price,there is

Accepted Answer

A)  a shortage.
B)  a surplus.
C)  excess demand.
D)  super-equilibrium.
E)  none of the above

Question 17

Which of the following statements represents a correct and sequentially accurate economic explanation?

Accepted Answer

A)  Good X is an inferior good and good Y is a substitute for X.Income rises,the demand for X falls,the price of X falls,and the demand for Y rises.
B)  Good X is an inferior good and good Y is a substitute for X.Income rises,the demand for X falls,the price of X falls,and the demand for Y falls.
C)  Good X is an inferior good and good Y is a substitute for X.Income falls,the demand for X rises,the price of X rises,and the demand for Y falls.
D)  Good X is an inferior good and good Y is a substitute for X.Income rises,the quantity demanded of X rises,the price of X rises,and the demand for Y falls.
E)  none of the above

Question 18

Economists use the terms neutral good and normal good interchangeably.

Accepted Answer

A) True 
 B)False

Question 19

The terms scarcity and shortage are synonyms.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is consistent with the law of demand?

Accepted Answer

A)  People substitute higher-priced goods for higher-quality goods.
B)  People substitute some higher-priced goods for other higher-priced goods.
C)  People substitute lower-priced goods for higher-priced goods.
D)  People substitute some lower-priced goods for other lower-priced goods.

Exam 3: Supply and Demand: Theory

Correct Answer
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Which of the following statements represents a correct and sequentially accurate economic explanation?

Correct Answer
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When income rises for the buyers of good X,the curve for good X will shift ____.

Correct Answer
verified

Which of the following is consistent with the law of demand?

Correct Answer
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At a price above the equilibrium price,there is

Correct Answer
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Resource X is necessary to the production of good Y.If the price of resource X falls,

Correct Answer
verified

If computers and software are complements,then

Correct Answer
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A simultaneous decrease in the demand and the supply of good X always leads to a decrease in the price of good X.

Correct Answer
verified

Which of the following is true about the relationship between price and quantity supplied?

Correct Answer
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Exhibit 3-8 -Refer to Exhibit 3-8.A price of $5 will result in a _____ in this market which will cause the price of the product to gravitate _.

Correct Answer
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Exhibit 3-4 -An "increase in the quantity demanded" means that

Correct Answer
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If the price a buyer pays for a good is $50 and the maximum price she would be willing and able to pay is $53,then is ___.

Correct Answer
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The terms scarcity and shortage are synonyms.

Correct Answer
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Exhibit 3-4 -A "decrease in demand" means that

Correct Answer
verified

Which of the following statements represents a correct and sequentially accurate economic explanation?

Correct Answer
verified

The fundamental reason why most supply curves are upward sloping is that

Correct Answer
verified

Exhibit 3-4 -A "decrease in the quantity demanded" means that

Correct Answer
verified

Economists use the terms neutral good and normal good interchangeably.

Correct Answer
verified

On a supply-and-demand diagram,quantity demanded equals quantity supplied

Correct Answer
verified

The law of supply states that price and quantity supplied are

Correct Answer
verified

Exam 3: Supply and Demand: Theory

Correct AnswerverifiedShow Answer

Which of the following statements represents a correct and sequentially accurate economic explanation?

Correct AnswerverifiedShow Answer

When income rises for the buyers of good X,the ____________ curve for good X will shift ________________.

Correct AnswerverifiedShow Answer

Which of the following is consistent with the law of demand?

Correct AnswerverifiedShow Answer

At a price above the equilibrium price,there is

Correct AnswerverifiedShow Answer

Resource X is necessary to the production of good Y.If the price of resource X falls,

Correct AnswerverifiedShow Answer

If computers and software are complements,then

Correct AnswerverifiedShow Answer

A simultaneous decrease in the demand and the supply of good X always leads to a decrease in the price of good X.

Correct AnswerverifiedShow Answer

Which of the following is true about the relationship between price and quantity supplied?

Correct AnswerverifiedShow Answer

Exhibit 3-8 -Refer to Exhibit 3-8.A price of $5 will result in a ___________________ in this market which will cause the price of the product to gravitate _______________.

Correct AnswerverifiedShow Answer

Exhibit 3-4 -An "increase in the quantity demanded" means that

Correct AnswerverifiedShow Answer

If the price a buyer pays for a good is $50 and the maximum price she would be willing and able to pay is $53,then ____________ is _______________.

Correct AnswerverifiedShow Answer

The terms scarcity and shortage are synonyms.

Correct AnswerverifiedShow Answer

Exhibit 3-4 -A "decrease in demand" means that

Correct AnswerverifiedShow Answer

Which of the following statements represents a correct and sequentially accurate economic explanation?

Correct AnswerverifiedShow Answer

The fundamental reason why most supply curves are upward sloping is that

Correct AnswerverifiedShow Answer

Exhibit 3-4 -A "decrease in the quantity demanded" means that

Correct AnswerverifiedShow Answer

Economists use the terms neutral good and normal good interchangeably.

Correct AnswerverifiedShow Answer

On a supply-and-demand diagram,quantity demanded equals quantity supplied

Correct AnswerverifiedShow Answer

The law of supply states that price and quantity supplied are

Correct AnswerverifiedShow Answer

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Correct Answer
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When income rises for the buyers of good X,the curve for good X will shift ____.

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Exhibit 3-8 -Refer to Exhibit 3-8.A price of $5 will result in a _____ in this market which will cause the price of the product to gravitate _.

Correct Answer
verified

Correct Answer
verified

If the price a buyer pays for a good is $50 and the maximum price she would be willing and able to pay is $53,then is ___.

Correct Answer
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