Question 1

There is a surplus in a market for a product when:

Accepted Answer

A)  the decrease in supply is greater than the increase in demand.
B)  the increase in demand is greater than the decrease in supply.
C)  quantity supplied is less than quantity demanded.
D)  quantity demanded is less than quantity supplied.E) C) and D)
F) None of the above

Question 2

Assume in a competitive market that price is initially below the equilibrium level.We can predict that price will:

Accepted Answer

A)  decrease, quantity demanded will decrease, and quantity supplied will increase.
B)  decrease and quantity demanded and quantity supplied will both decrease.
C)  decrease, quantity demanded will increase, and quantity supplied will decrease.
D)  increase, quantity demanded will decrease, and quantity supplied will increase.E) A) and B)
F) A) and C)

Question 3

An increase in the supply of product X, with demand held constant, will increase the price of product X.

Accepted Answer

A) True 
 B)False

Question 4

Which of the above diagrams illustrate(s)  the effect of a decline in the price of irrigation equipment upon the market for corn?

Accepted Answer

A)  B only
B)  C only
C)  B and C
D)  D onlyE) B) and C)
F) C) and D)

Question 5

Identify the correct statement(s)  about markets.

Accepted Answer

A)  Markets can be local.
B)  Markets can be national.
C)  Markets can be international.
D)  All of the choices are correct.E) A) and C)
F) B) and C) D

Question 6

The income and substitution effects account for:

Accepted Answer

A)  the upward sloping supply curve.
B)  the downward sloping demand curve.
C)  movements along a given supply curve.
D)  the "other things equal" assumption.E) B) and C)
F) A) and B)

Question 7

A price fixed above the equilibrium price of a product will cause a shortage of that product.

Accepted Answer

A) True 
 B)False

Question 8

Refer to the diagram illustrating the market for corn.If the price in this market were to be fixed at $4 per bushel, the part of the line marked A would represent a:

Accepted Answer

A)  surplus of 8,000 bushels.
B)  shortage of 8,000 bushels.
C)  surplus of 7,000 bushels.
D)  shortage of 7,000 bushels.E) A) and D)
F) None of the above

Question 9

Suppose in each of four successive years producers sell more of their product and at lower prices.This could be explained:

Accepted Answer

A)  by small annual increases in supply accompanied by large annual increases in demand.
B)  in terms of a stable supply curve and increasing demand.
C)  in terms of a stable demand curve and increasing supply.
D)  as an exception to the law of supply.E) All of the above
F) B) and C)

Question 10

In constructing a stable demand curve for product X:

Accepted Answer

A)  consumer preferences are allowed to vary.
B)  the prices of other goods are assumed to be constant.
C)  money incomes are allowed to vary.
D)  the supply curve of product X is assumed to be fixed.E) C) and D)
F) A) and B) B

Question 11

An increase in product price will cause:

Accepted Answer

A)  quantity demanded to decrease.
B)  quantity supplied to decrease.
C)  quantity demanded to increase.
D)  the supply curve to shift to the right.E) A) and B)
F) C) and D)

Question 12

During the 1970s the price of oil rose dramatically, which in turn caused the price of coal to increase.This can best be explained by saying that oil and coal are:

Accepted Answer

A)  complementary goods and the higher price for oil increased the demand for coal.
B)  substitute goods and the higher price for oil increased the demand for coal.
C)  complementary goods and the higher price for oil decreased the supply of coal.
D)  substitute goods and the higher price for oil decreased the supply of coal.E) None of the above
F) All of the above

Question 13

A normal good is defined as one:

Accepted Answer

A)  whose amount demanded will increase as its price decreases.
B)  whose amount demanded will increase as its price increases.
C)  whose demand curve will shift leftward as incomes rise.
D)  the consumption of which varies directly with incomes.E) B) and C)
F) A) and B)

Question 14

What combination of changes in supply and demand would most likely increase the equilibrium price?

Accepted Answer

A)  when supply increases and demand decreases
B)  when supply decreases and demand increases
C)  when supply decreases and demand decreases
D)  when supply increases and demand increasesE) C) and D)
F) A) and B)

Question 15

The law of supply:

Accepted Answer

A)  reflects the amounts which producers will want to offer at each price in a series of prices.
B)  is reflected in an upsloping supply curve.
C)  shows that the relationship between price and quantity supplied is positive.
D)  is reflected in all of the above.E) None of the above
F) A) and D)

Question 16

An increase in consumer incomes will:

Accepted Answer

A)  increase the demand for an inferior good.
B)  increase the supply of an inferior good.
C)  increase the demand for a normal good.
D)  decrease the supply of a normal good.E) A) and D)
F) C) and D)

Question 17

In presenting the notion of a demand curve economists presume that the most important variable in determining the quantity demanded is:

Accepted Answer

A)  the price of the product itself.
B)  consumer income.
C)  the prices of related goods.
D)  consumer tastes.E) A) and B)
F) A) and C)

Question 18

Refer to the graph below, showing the market supply and demand for a product.Assume that the market is initially in equilibrium where D1 and S1 intersect.If consumer incomes decreased and production costs increased, then new equilibrium would be at: 1 and S1 intersect.If consumer incomes decreased and production costs increased, then new equilibrium would be at:   A) P1 and Q3. B) P2 and Q2. C) P3 and Q1. D) P4 and Q2." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)  P1 and Q3.
B)  P2 and Q2.
C)  P3 and Q1.
D)  P4 and Q2.E) B) and C)
F) B) and D) C

Question 19

One reason why the quantity demanded of a good increases when its price falls is that the:

Accepted Answer

A)  lower price shifts the supply curve to the left.
B)  lower price shifts the demand curve to the left.
C)  lower price shifts the demand curve to the right.
D)  lower price increases the real incomes of buyers, enabling them to buy more.E) A) and B)
F) All of the above

Question 20

You are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product Xupon (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 above.A decrease in the number of consumers of product X will:

Accepted Answer

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

Exam 3: Part B: Demand, Supply, and Market Equilibrium

There is a surplus in a market for a product when:

Correct Answer
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Assume in a competitive market that price is initially below the equilibrium level.We can predict that price will:

Correct Answer
verified

An increase in the supply of product X, with demand held constant, will increase the price of product X.

Correct Answer
verified

Which of the above diagrams illustrate(s) the effect of a decline in the price of irrigation equipment upon the market for corn?

Correct Answer
verified

Identify the correct statement(s) about markets.

Correct Answer
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D

The income and substitution effects account for:

Correct Answer
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A price fixed above the equilibrium price of a product will cause a shortage of that product.

Correct Answer
verified

Refer to the diagram illustrating the market for corn.If the price in this market were to be fixed at $4 per bushel, the part of the line marked A would represent a:

Correct Answer
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Suppose in each of four successive years producers sell more of their product and at lower prices.This could be explained:

Correct Answer
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In constructing a stable demand curve for product X:

Correct Answer
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B

An increase in product price will cause:

Correct Answer
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During the 1970s the price of oil rose dramatically, which in turn caused the price of coal to increase.This can best be explained by saying that oil and coal are:

Correct Answer
verified

A normal good is defined as one:

Correct Answer
verified

What combination of changes in supply and demand would most likely increase the equilibrium price?

Correct Answer
verified

The law of supply:

Correct Answer
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An increase in consumer incomes will:

Correct Answer
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In presenting the notion of a demand curve economists presume that the most important variable in determining the quantity demanded is:

Correct Answer
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Refer to the graph below, showing the market supply and demand for a product.Assume that the market is initially in equilibrium where D₁ and S₁ intersect.If consumer incomes decreased and production costs increased, then new equilibrium would be at:

Correct Answer
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C

One reason why the quantity demanded of a good increases when its price falls is that the:

Correct Answer
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Correct Answer
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Exam 3: Part B: Demand, Supply, and Market Equilibrium

There is a surplus in a market for a product when:

Correct AnswerverifiedShow Answer

Assume in a competitive market that price is initially below the equilibrium level.We can predict that price will:

Correct AnswerverifiedShow Answer

An increase in the supply of product X, with demand held constant, will increase the price of product X.

Correct AnswerverifiedShow Answer

Which of the above diagrams illustrate(s) the effect of a decline in the price of irrigation equipment upon the market for corn?

Correct AnswerverifiedShow Answer

Identify the correct statement(s) about markets.

Correct AnswerverifiedD

The income and substitution effects account for:

Correct AnswerverifiedShow Answer

A price fixed above the equilibrium price of a product will cause a shortage of that product.

Correct AnswerverifiedShow Answer

Refer to the diagram illustrating the market for corn.If the price in this market were to be fixed at $4 per bushel, the part of the line marked A would represent a:

Correct AnswerverifiedShow Answer

Suppose in each of four successive years producers sell more of their product and at lower prices.This could be explained:

Correct AnswerverifiedShow Answer

In constructing a stable demand curve for product X:

Correct AnswerverifiedB

An increase in product price will cause:

Correct AnswerverifiedShow Answer

During the 1970s the price of oil rose dramatically, which in turn caused the price of coal to increase.This can best be explained by saying that oil and coal are:

Correct AnswerverifiedShow Answer

A normal good is defined as one:

Correct AnswerverifiedShow Answer

What combination of changes in supply and demand would most likely increase the equilibrium price?

Correct AnswerverifiedShow Answer

The law of supply:

Correct AnswerverifiedShow Answer

An increase in consumer incomes will:

Correct AnswerverifiedShow Answer

In presenting the notion of a demand curve economists presume that the most important variable in determining the quantity demanded is:

Correct AnswerverifiedShow Answer

Refer to the graph below, showing the market supply and demand for a product.Assume that the market is initially in equilibrium where D1 and S1 intersect.If consumer incomes decreased and production costs increased, then new equilibrium would be at:

Correct AnswerverifiedC

One reason why the quantity demanded of a good increases when its price falls is that the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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D

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B

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Correct Answer
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Correct Answer
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Refer to the graph below, showing the market supply and demand for a product.Assume that the market is initially in equilibrium where D₁ and S₁ intersect.If consumer incomes decreased and production costs increased, then new equilibrium would be at:

Correct Answer
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C

Correct Answer
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Correct Answer
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