Question 1

If the price of potato chips increases, other things being equal, demand for potato-chip dip will:

Accepted Answer

A)   not change, only the quantity demanded will change.
B)   increase, because the goods are substitutes.
C)   decrease, because the goods are substitutes.
D)   decrease, because the goods are complements.

Question 2

There is a technological advance in the production of digital watches. This will cause:

Accepted Answer

A)   demand to increase.
B)   supply to increase.
C)   demand to decrease.
D)   supply to decrease.
E)   the price to increase.

Question 3

The supply curve for chicken will shift to the right if production costs increase.

Accepted Answer

A) True 
 B)False

Question 4

The equilibrium price is best defined as the price at which:

Accepted Answer

A)   quality demanded is equal to quantity supplied.
B)   suppliers want to supply more goods.
C)   demanders want to buy more goods.
D)   quantity demanded is equal to quantity supplied.

Question 5

Which of the following is true about the market equilibrium?

Accepted Answer

A)   As the price increases, the quantity demanded and the quantity supplied increases.
B)   As the price increases, the quantity demanded and the quantity supplied decreases.
C)   As the price increases, the quantity demanded increases and the quantity suppliedDecreases.
D)   As the price increases, the quantity demanded decreases and the quantity suppliedIncreases.

Question 6

The law of supply indicates that a decrease in price will cause a decrease in supply, which is reflected graphically as a leftward shift of the supply curve.

Accepted Answer

A) True 
 B)False

Question 7

Narrbegin Exhibit 3.1 Market demand  
-Suppose there are only three people in the economy: Jane, Harry and Bob. The individual demand for corn for each of these consumers is given in Exhibit 3.1. The total quantity of corn demanded if the market price is $4 is _____.

Accepted Answer

A)   three
B)   eight
C)   17
D)   25
E)   36

Question 8

If quantity supplied is greater than the quantity demanded, then according to the market process:

Accepted Answer

A)   the shortage exists and the price will increase to the equilibrium level.
B)   the surplus exists and the price will increase to the equilibrium level.
C)   the shortage exists and the price will decrease to the equilibrium level.
D)   the surplus exists and the price will decrease to the equilibrium level.

Question 9

Which of the following pairs is the best example of substitutes?

Accepted Answer

A)   Coffee and cream.
B)   Videotapes and VCRs.
C)   Honey and biscuits.
D)   Hiking boots and athletic shoes.

Question 10

A surplus means that the quantity supplied is greater than the quantity demanded at the prevailing price.

Accepted Answer

A) True 
 B)False

Question 11

The most plausible reason why changes in the price of cotton can cause shifts in the supply curve for tobacco is:

Accepted Answer

A)   cigarette smokers often wear cotton shirts.
B)   when incomes rise, people consume more cotton and tobacco.
C)   firms can switch from growing tobacco to cotton and vice versa.
D)   tobacco is an input in the production of cotton.
E)   cotton and tobacco are unrelated markets in all ways.

Question 12

Which of the following will increase the supply of a good?

Accepted Answer

A)   An increase in the price of another good that producers could produce.
B)   A lower price paid for resources used in the production of the good.
C)   A decrease in the number of sellers.
D)   An increase in taxes paid to the government by producers.

Question 13

A demand curve:

Accepted Answer

A)   has a positive slope.
B)   has a negative slope.
C)   is constant regardless of price.
D)   is based on the assumption of a stable supply curve.

Question 14

Supply is:

Accepted Answer

A)   the number of units available.
B)   the cost of resources.
C)   the relationship between the number of units available and demand.
D)   the relationship between a range of prices and quantities supplied.

Question 15

A leftward shift of a supply curve is called a/an:

Accepted Answer

A)   decrease in demand.
B)   increase in supply.
C)   decrease in supply.
D)   increase in quantity supplied.

Question 16

Assume Qs represents the quantity supplied at a given price and Qd represents quantity demanded at a given price. Which of the following market conditions produces an upward movement of the price?

Accepted Answer

A)   Qs = 10, Qd = 5.
B)   Qs = 5, Qd = 5.
C)   Qs = 5, Qd = 10.
D)   Qs = 5, Qd = 3.

Question 17

The effect of a decrease in the price of coffee, other things being equal, causes a:

Accepted Answer

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

Question 18

Consumer sovereignty means:

Accepted Answer

A)   sellers are able to sell the product of their choice.
B)   supply follows the demand.
C)   less freedom of consumers to make their own choices.
D)   noregulation from the government.

Question 19

Which of the following states the definition of the law of supply?

Accepted Answer

A)   More of a good is supplied at a lower price.
B)   There is a positive relationship between the price of a good and the quantity that buyers purchase.
C)   There is a positive relationship between the price of a good and the quantity offered for sale by suppliers.
D)   There is a negative relationship between the price of a good and the quantity offered for sale by suppliers.

Question 20

Which of the following will not cause a movement along the supply curve?

Accepted Answer

A)   Changes in consumers' expectations.
B)   Increases in consumers' income.
C)   Changes in consumers' preferences.
D)   Changes in input prices.

Exam 4: Market Demand and Supply

Narrbegin Exhibit 3.1 Market demand -Suppose there are only three people in the economy: Jane, Harry and Bob. The individual demand for corn for each of these consumers is given in Exhibit 3.1. The total quantity of corn demanded if the market price is $4 is _____.

Correct AnswerverifiedShow Answer

The effect of a decrease in the price of coffee, other things being equal, causes a:

Correct AnswerverifiedShow Answer

Consumer sovereignty means:

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If quantity supplied is greater than the quantity demanded, then according to the market process:

Correct AnswerverifiedShow Answer

Which of the following is true about the market equilibrium?

Correct AnswerverifiedShow Answer

Assume Qs represents the quantity supplied at a given price and Qd represents quantity demanded at a given price. Which of the following market conditions produces an upward movement of the price?

Correct AnswerverifiedShow Answer

If the price of potato chips increases, other things being equal, demand for potato-chip dip will:

Correct AnswerverifiedShow Answer

Which of the following pairs is the best example of substitutes?

Correct AnswerverifiedShow Answer

The law of supply indicates that a decrease in price will cause a decrease in supply, which is reflected graphically as a leftward shift of the supply curve.

Correct AnswerverifiedShow Answer

A demand curve:

Correct AnswerverifiedShow Answer

Supply is:

Correct AnswerverifiedShow Answer

Which of the following will not cause a movement along the supply curve?

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Which of the following states the definition of the law of supply?

Correct AnswerverifiedShow Answer

Which of the following will increase the supply of a good?

Correct AnswerverifiedShow Answer

A leftward shift of a supply curve is called a/an:

Correct AnswerverifiedShow Answer

A surplus means that the quantity supplied is greater than the quantity demanded at the prevailing price.

Correct AnswerverifiedShow Answer

There is a technological advance in the production of digital watches. This will cause:

Correct AnswerverifiedShow Answer

The most plausible reason why changes in the price of cotton can cause shifts in the supply curve for tobacco is:

Correct AnswerverifiedShow Answer

The equilibrium price is best defined as the price at which:

Correct AnswerverifiedShow Answer

The supply curve for chicken will shift to the right if production costs increase.

Correct AnswerverifiedShow Answer

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Assume Q_s represents the quantity supplied at a given price and Q_d represents quantity demanded at a given price. Which of the following market conditions produces an upward movement of the price?

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