Question 1

Which of the following would cause an increase in the supply of a product at a given price?

Accepted Answer

A)  an increase in the price of the product
B)  a decrease in the cost of producing a substitute product
C)  an increase in the cost of resources to produce the product
D)  a reduction in the cost of resources to produce the productE) A) and B)
F) A) and C)

Question 2

A surplus of a product will arise when price is:

Accepted Answer

A)  above equilibrium with the result that quantity demanded exceeds quantity supplied.
B)  above equilibrium with the result that quantity supplied exceeds quantity demanded.
C)  below equilibrium with the result that quantity demanded exceeds quantity supplied.
D)  below equilibrium with the result that quantity supplied exceeds quantity demanded.E) A) and C)
F) A) and D)

Question 3

A headline reads "Soccer is the new popular sport among youth." In a competitive market, this situation would lead to a(n) :

Accepted Answer

A)  increase in the price of soccer shoes and quantity sold.
B)  decrease in the price of soccer shoes and quantity sold.
C)  increase in the price of soccer shoes and decrease in quantity sold.
D)  decrease in the price of soccer shoes and increase in quantity sold.E) All of the above
F) A) and D)

Question 4

A news story states that "Videotapes lose their appeal as consumers switch to DVDs for movies." In a competitive market for the purchase of videotapes of movies, this situation would lead to a(n) :

Accepted Answer

A)  increase in the price of videotapes and the quantity sold.
B)  decrease in the price of videotapes and the quantity sold.
C)  increase in the price of videotapes and decrease in the quantity sold.
D)  decrease in the price of videotapes and increase in the quantity sold.E) A) and B)
F) A) and C)

Question 5

Which one of the following would cause a leftward shift in the supply curve for car washes?

Accepted Answer

A)  an increase in the number of cars on the street
B)  an increase in the price of car washing equipment
C)  a decrease in youth unemployment
D)  a decrease in the price of waterE) B) and C)
F) None of the above

Question 6

An increase in demand for oil and an increase in supply of oil will:

Accepted Answer

A)  decrease price and increase quantity.
B)  increase price and decrease quantity.
C)  increase quantity, but whether it increases price depends on how much each curve shifts.
D)  increase price, but whether it increases quantity depends on how much each curve shifts.E) A) and B)
F) A) and C)

Question 7

Which of the following is most likely to be an inferior good?

Accepted Answer

A)  fur coats
B)  Porsches
C)  used clothing
D)  steakE) None of the above
F) All of the above

Question 8

Students at Informed University pay $40 per year for a parking permit but many complain that they are unable to find a parking place in University lots.In terms of equilibrium, this suggests that:

Accepted Answer

A)  student incomes are too low.
B)  parking permits are underpriced.
C)  parking permits are overpriced.
D)  the University should make parking free.E) C) and D)
F) B) and C)

Question 9

When the price of a product increases, a consumer is able to buy less of it with a given money income.This describes:

Accepted Answer

A)  the cost effect.
B)  the inflationary effect.
C)  the income effect.
D)  the substitution effect.E) A) and D)
F) All of the above

Question 10

Which of the following is likely to result in black markets?

Accepted Answer

A)  Price ceilings
B)  Price floors
C)  Common markets
D)  SurplusesE) None of the above
F) A) and B)

Question 11

If the price of product L increases, the demand curve for close-substitute product J will:

Accepted Answer

A)  shift downward toward the horizontal axis.
B)  shift to the left.
C)  shift to the right.
D)  remain unchanged.E) A) and C)
F) C) and D)

Question 12

An effective price floor on wheat will:

Accepted Answer

A)  force otherwise profitable farmers out of business.
B)  result in a shortage of wheat.
C)  result in a surplus of wheat.
D)  clear the market for wheat.E) None of the above
F) A) and D)

Question 13

Refer to the table.  In a free-market economy, according to the rationing function of prices, the market price and quantity will adjust to:

Accepted Answer

A)  $10 and 2,000 units.
B)  $15 and 1,600 units.
C)  $20 and 900 units.
D)  $25 and 1,200 units.E) A) and D)
F) A) and C)

Question 14

Given a downward sloping demand curve and an upward sloping supply curve for product X, an increase in the price of a substitute good (in consumption)  will:

Accepted Answer

A)  increase equilibrium price and quantity of X.
B)  decrease equilibrium price and quantity of X.
C)  increase equilibrium price and decrease equilibrium quantity of X.
D)  decrease equilibrium price and increase equilibrium quantity of X.E) A) and D)
F) A) and C)

Question 15

1 to D3? A) a decrease in the price of tea B) an increase in consumer incomes C) a decrease in the price of sugar D) a technological improvement in the production of coffee" class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram, which shows three demand curves for coffee.Which of the following would cause the change in the demand for coffee illustrated by the shift from D1 to D3?

Accepted Answer

A)  a decrease in the price of tea
B)  an increase in consumer incomes
C)  a decrease in the price of sugar
D)  a technological improvement in the production of coffeeE) A) and D)
F) None of the above

Question 16

By an "increase in demand" we mean:

Accepted Answer

A)  that product price has fallen so consumers move down to a new point on the demand curve.
B)  the quantity demanded at each price in a set of prices is greater.
C)  the quantity demanded at each price in a set of prices is smaller.
D)  none of the above.E) A) and C)
F) A) and B)

Question 17

Refer to the above diagram.A price of $20 in this market will result in:

Accepted Answer

A)  equilibrium.
B)  a shortage of 50 units.
C)  a surplus of 50 units.
D)  a shortage of 100 units.E) All of the above
F) C) and D)

Question 18

Which of the above diagrams illustrate(s)  the effect of an increase in the price of Molson upon the market for Labatt? (Molson and Labatt are brands of beer that are considered to be substitute goods.)

Accepted Answer

A)  A and C
B)  A only
C)  B only
D)  C onlyE) All of the above
F) A) and B)

Question 19

A and B are substitute goods, but A and C are complementary goods (in consumption) .If the costs of production of A decrease, then the demand for:

Accepted Answer

A)  both B and C will decrease.
B)  both B and C will increase.
C)  B will increase and the demand for C will decrease.
D)  B will decrease and the demand for C will increase.E) All of the above
F) A) and D)

Question 20

A decrease in the prices of resources used in producing a product will increase the supply of the product.

Accepted Answer

A) True 
 B)False

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

A headline reads "Soccer is the new popular sport among youth." In a competitive market, this situation would lead to a(n) :

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Which one of the following would cause a leftward shift in the supply curve for car washes?

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An effective price floor on wheat will:

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A news story states that "Videotapes lose their appeal as consumers switch to DVDs for movies." In a competitive market for the purchase of videotapes of movies, this situation would lead to a(n) :

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Refer to the above diagram.A price of $20 in this market will result in:

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If the price of product L increases, the demand curve for close-substitute product J will:

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A surplus of a product will arise when price is:

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By an "increase in demand" we mean:

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A decrease in the prices of resources used in producing a product will increase the supply of the product.

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When the price of a product increases, a consumer is able to buy less of it with a given money income.This describes:

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Refer to the above diagram, which shows three demand curves for coffee.Which of the following would cause the change in the demand for coffee illustrated by the shift from D1 to D3?

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An increase in demand for oil and an increase in supply of oil will:

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Which of the above diagrams illustrate(s) the effect of an increase in the price of Molson upon the market for Labatt? (Molson and Labatt are brands of beer that are considered to be substitute goods.)

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Students at Informed University pay $40 per year for a parking permit but many complain that they are unable to find a parking place in University lots.In terms of equilibrium, this suggests that:

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Which of the following is most likely to be an inferior good?

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A and B are substitute goods, but A and C are complementary goods (in consumption) .If the costs of production of A decrease, then the demand for:

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Given a downward sloping demand curve and an upward sloping supply curve for product X, an increase in the price of a substitute good (in consumption) will:

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Which of the following is likely to result in black markets?

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Which of the following would cause an increase in the supply of a product at a given price?

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Refer to the table. In a free-market economy, according to the rationing function of prices, the market price and quantity will adjust to:

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Refer to the above diagram, which shows three demand curves for coffee.Which of the following would cause the change in the demand for coffee illustrated by the shift from D₁ to D₃?

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