Question 1

As the number of firms in a market decreases,the supply curve will shift to the left and the equilibrium price will rise.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is true?

Accepted Answer

A)  An increase in demand causes a change in equilibrium price;the change in price does not cause a further change in demand or supply.
B)  A decrease in supply causes equilibrium price to rise;the increase in price then results in a decrease in demand.
C)  If both demand and supply increase there must be an increase in equilibrium price;equilibrium quantity may either increase or decrease.
D)  If demand decreases and supply increases one cannot determine if equilibrium price will increase or decrease without knowing which change is greater.

Question 3

Market equilibrium occurs where supply equals demand.

Accepted Answer

A) True 
 B)False

Question 4

An increase in the number of firms in a market will cause the quantity of a good supplied to increase.

Accepted Answer

A) True 
 B)False

Question 5

A change in supply is represented by a shift of the supply curve.

Accepted Answer

A) True 
 B)False

Question 6

Buyers rush to purchase stocks in California vineyards following a forecast of a 30 percent decline in this year's grape harvest.What happens in the California wine market as a result of this announcement?

Accepted Answer

A)  The demand curve for California wine shifts to the left in anticipation of higher prices in the future.
B)  The demand curve for California wine shifts to the right in anticipation of higher prices in the future.
C)  The supply curve for California wine shifts to the right in anticipation of higher prices in the future.
D)  The supply curve for California wine shifts to the left in anticipation of lower quantities in the future.

Question 7

A supply schedule

Accepted Answer

A)  is a table that shows the relationship between the price of a product and the quantity of the product supplied.
B)  is a curve that shows the relationship between the price of a product and the quantity of the product supplied.
C)  is the relationship between the supply of a good and the cost of producing the good.
D)  is a table that shows the relationship between the price of a product and the quantity of the product that producers and consumers are willing to exchange.

Question 8

Figure 3-1 1 to D2. D) D2 to D1." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 3-1.A decrease in the price of the product would be represented by a movement from

Accepted Answer

A)  A to B.
B)  B to A.
C)  D1 to D2.
D)  D2 to D1.

Question 9

What would happen in the market for laser eye surgery if insurance companies started to cover a portion of the price of voluntary procedures?

Accepted Answer

A)  Demand will increase,but this will not shift the supply curve.
B)  Supply will increase,but this will not shift the demand curve.
C)  Demand and supply will both increase.
D)  Demand will increase and supply will decrease.

Question 10

Figure 3-4 
-Refer to Figure 3-4.If the price is $10,

Accepted Answer

A)  there would be a surplus of 600 units.
B)  there would be a shortage of 600 units.
C)  there would be a surplus of 200 units.
D)  there would be a shortage of 200 units.

Question 11

The Internet has created a new category in the book selling market,namely,the "barely used" book.How does the availability of barely used books affect the market for new books?

Accepted Answer

A)  the demand curve for new books shifts to the right.
B)  the demand curve for new books shifts to the left.
C)  the supply curve for new books shifts to the right.
D)  the supply curve for new books shifts to the left.

Question 12

If the demand curve for a product shifts to the left and the supply curve for the product shifts to the left,the equilibrium quantity will decrease.

Accepted Answer

A) True 
 B)False

Question 13

One would speak of a change in the quantity of a good supplied,rather than a change in supply,if

Accepted Answer

A)  supplier expectations about future prices change.
B)  the price of the good changes.
C)  the cost of producing the good changes.
D)  prices of substitutes in production change.

Question 14

In January,buyers of gold expect that the price of gold will rise in February.What happens in the gold market in January,holding all else constant?

Accepted Answer

A)  The supply curve shifts to the right.
B)  The demand curve shifts to the left.
C)  The demand curve shifts to the right.
D)  The quantity demanded increases.

Question 15

If the number of firms producing mouthwash increases and consumer preference for mouthwash increases,the equilibrium price of mouthwash will definitely increase.

Accepted Answer

A) True 
 B)False

Question 16

During the recession of 2007-2009,despite falling income levels,the fast-food chain Subway experienced increased sales.The increase in demand for Subway sandwiches despite the decline in income indicates that Subway sandwiches are considered

Accepted Answer

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

Question 17

Tom Searchinger,a senior attorney at the Environmental Defense Fund,observed that generous farm subsidies have encouraged farmers to produce more corn and more wheat.How does this affect the market for fertilizer?

Accepted Answer

A)  The supply of fertilizer increases.
B)  The supply of fertilizer decreases
C)  The demand for fertilizer increases.
D)  The demand for fertilizer decreases.

Question 18

"The price of compact fluorescent light bulbs fell because of improvements in production technology.As a result,the demand for incandescent light bulbs decreased.This caused the price of incandescent light bulbs to fall;as the price of incandescent light bulbs fell the demand for incandescent light bulbs decreased even further." Evaluate this statement.

Accepted Answer

A)  The statement is false.A decrease in the price of compact fluorescent light bulbs would decrease the demand for incandescent light bulbs,but a decrease in the price of incandescent light bulbs would not cause the demand for incandescent light bulbs to decrease.
B)  The statement is false because the demand for incandescent light bulbs would increase as the price of compact fluorescent light bulbs fell.
C)  The statement is false because compact fluorescent light bulbs producers would not reduce their prices as a result of improvements in technology;doing so would reduce their profits.
D)  The statement is false because it confuses the law of demand with the law of supply.

Question 19

If in the market for peaches,the supply curve has shifted to the left,

Accepted Answer

A)  the supply of peaches has increased.
B)  the supply of peaches has decreased.
C)  the quantity of peaches supplied has increased.
D)  the quantity of peaches supplied has decreased.

Question 20

In 2004,hurricanes damaged a large portion of Florida's orange crop.As a result of this,many orange growers were not able to supply fruit to the market.At the pre-hurricane equilibrium price (i.e. ,at the initial equilibrium price) ,we would expect to see

Accepted Answer

A)  a surplus of oranges.
B)  the quantity demanded equal to the quantity supplied.
C)  a shortage of oranges.
D)  an increase in the demand for oranges.

Exam 3: Where Prices Come From: the Interaction of Demand and Supply

A change in supply is represented by a shift of the supply curve.

Correct Answer
verified

If the demand curve for a product shifts to the left and the supply curve for the product shifts to the left,the equilibrium quantity will decrease.

Correct Answer
verified

What would happen in the market for laser eye surgery if insurance companies started to cover a portion of the price of voluntary procedures?

Correct Answer
verified

The Internet has created a new category in the book selling market,namely,the "barely used" book.How does the availability of barely used books affect the market for new books?

Correct Answer
verified

As the number of firms in a market decreases,the supply curve will shift to the left and the equilibrium price will rise.

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

In January,buyers of gold expect that the price of gold will rise in February.What happens in the gold market in January,holding all else constant?

Correct Answer
verified

Tom Searchinger,a senior attorney at the Environmental Defense Fund,observed that generous farm subsidies have encouraged farmers to produce more corn and more wheat.How does this affect the market for fertilizer?

Correct Answer
verified

A supply schedule

Correct Answer
verified

Buyers rush to purchase stocks in California vineyards following a forecast of a 30 percent decline in this year's grape harvest.What happens in the California wine market as a result of this announcement?

Correct Answer
verified

In 2004,hurricanes damaged a large portion of Florida's orange crop.As a result of this,many orange growers were not able to supply fruit to the market.At the pre-hurricane equilibrium price (i.e. ,at the initial equilibrium price) ,we would expect to see

Correct Answer
verified

Figure 3-4 -Refer to Figure 3-4.If the price is $10,

Correct Answer
verified

If in the market for peaches,the supply curve has shifted to the left,

Correct Answer
verified

One would speak of a change in the quantity of a good supplied,rather than a change in supply,if

Correct Answer
verified

Market equilibrium occurs where supply equals demand.

Correct Answer
verified

If the number of firms producing mouthwash increases and consumer preference for mouthwash increases,the equilibrium price of mouthwash will definitely increase.

Correct Answer
verified

Correct Answer
verified

During the recession of 2007-2009,despite falling income levels,the fast-food chain Subway experienced increased sales.The increase in demand for Subway sandwiches despite the decline in income indicates that Subway sandwiches are considered

Correct Answer
verified

An increase in the number of firms in a market will cause the quantity of a good supplied to increase.

Correct Answer
verified

Figure 3-1 -Refer to Figure 3-1.A decrease in the price of the product would be represented by a movement from

Correct Answer
verified

Exam 3: Where Prices Come From: the Interaction of Demand and Supply

A change in supply is represented by a shift of the supply curve.

Correct AnswerverifiedShow Answer

If the demand curve for a product shifts to the left and the supply curve for the product shifts to the left,the equilibrium quantity will decrease.

Correct AnswerverifiedShow Answer

What would happen in the market for laser eye surgery if insurance companies started to cover a portion of the price of voluntary procedures?

Correct AnswerverifiedShow Answer

The Internet has created a new category in the book selling market,namely,the "barely used" book.How does the availability of barely used books affect the market for new books?

Correct AnswerverifiedShow Answer

As the number of firms in a market decreases,the supply curve will shift to the left and the equilibrium price will rise.

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

In January,buyers of gold expect that the price of gold will rise in February.What happens in the gold market in January,holding all else constant?

Correct AnswerverifiedShow Answer

Tom Searchinger,a senior attorney at the Environmental Defense Fund,observed that generous farm subsidies have encouraged farmers to produce more corn and more wheat.How does this affect the market for fertilizer?

Correct AnswerverifiedShow Answer

A supply schedule

Correct AnswerverifiedShow Answer

Buyers rush to purchase stocks in California vineyards following a forecast of a 30 percent decline in this year's grape harvest.What happens in the California wine market as a result of this announcement?

Correct AnswerverifiedShow Answer

In 2004,hurricanes damaged a large portion of Florida's orange crop.As a result of this,many orange growers were not able to supply fruit to the market.At the pre-hurricane equilibrium price (i.e. ,at the initial equilibrium price) ,we would expect to see

Correct AnswerverifiedShow Answer

Figure 3-4 -Refer to Figure 3-4.If the price is $10,

Correct AnswerverifiedShow Answer

If in the market for peaches,the supply curve has shifted to the left,

Correct AnswerverifiedShow Answer

One would speak of a change in the quantity of a good supplied,rather than a change in supply,if

Correct AnswerverifiedShow Answer

Market equilibrium occurs where supply equals demand.

Correct AnswerverifiedShow Answer

If the number of firms producing mouthwash increases and consumer preference for mouthwash increases,the equilibrium price of mouthwash will definitely increase.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

During the recession of 2007-2009,despite falling income levels,the fast-food chain Subway experienced increased sales.The increase in demand for Subway sandwiches despite the decline in income indicates that Subway sandwiches are considered

Correct AnswerverifiedShow Answer

An increase in the number of firms in a market will cause the quantity of a good supplied to increase.

Correct AnswerverifiedShow Answer

Figure 3-1 -Refer to Figure 3-1.A decrease in the price of the product would be represented by a movement from

Correct AnswerverifiedShow Answer

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