Question 1

​ Exhibit 3-13 Supply and demand curves 
-​ Which of the graphs in Exhibit 3-13 illustrates a shortage exists at the indicated market price?

Accepted Answer

A)   Diagram A.
B)   ​Diagram B.
C)   ​Diagram C.
D)   ​Diagrams A and B.E) B) and C)
F) C) and D) C

Question 2

The law of demand states that, ceteris paribus, price and quantity demanded are:

Accepted Answer

A)   directly related.
B)   inversely related.
C)   uniformly related.
D)   horizontally related.E) B) and C)
F) B) and D)

Question 3

A surplus of wheat:

Accepted Answer

A)   is impossible if people are hungry.
B)   is impossible if the price of wheat is below equilibrium.
C)   will result when the quantity demanded exceeds the quantity supplied at the current price.
D)   is unlikely to cause any change in the price of wheat.
E)   indicates that the problem of scarcity of wheat has been solved.F) B) and C)
G) A) and D)

Question 4

Which of the following is most likely to increase the supply of corn?

Accepted Answer

A)   The farm worker's union successfully negotiates a pay increase for corn harvest workers.
B)   The Surgeon General announces that eating corn bread contributes to baldness in men.
C)   Congress and the President eliminate subsidies formerly paid to corn farmers.
D)   Farmers that grow soybeans can also grow corn, and the price of soybeans drops by 75 percent.E) A) and B)
F) None of the above

Question 5

All of the following apply to the description of a market in equilibrium except:

Accepted Answer

A)   quantity supplied equals quantity demanded.
B)   ​the intersection of the supply and demand curves.
C)   ​ no excess supply exists.
D)   ​no excess demand exists.
E)   ​the price of the good is falling.​F) A) and B)
G) D) and E) E

Question 6

Suppose A and B are substitute goods. Other things being equal, the demand curve for A will shift to the right when the price of B goes down.

Accepted Answer

A) True 
 B)False

Question 7

The law of demand indicates that:

Accepted Answer

A)   every physical good has a use.
B)   when people want a good badly enough, they will find a way to pay for it.
C)   the desire for a good is unrelated to its price.
D)   the quantity of a good that people will buy is inversely related to the price of the good.E) A) and D)
F) A) and C)

Question 8

Suppose the prices of petroleum products, including gasoline and fuel oil, fell sharply. Which of the following would most likely occur as the result of the lower prices of petroleum products?

Accepted Answer

A)   A reduction in the consumption of gasoline.
B)   An increase in demand for solar heating systems.
C)   An increase in demand for smaller, more efficient automobiles.
D)   A reduction in the demand for home insulation products.E) C) and D)
F) A) and D)

Question 9

Other things being equal, the effect of a decrease in the price of Coca-Cola would cause which of the following?

Accepted Answer

A)   A rightward shift in the demand curve for Coca-Cola.
B)   A downward movement along the demand curve for Coca-Cola.
C)   A leftward shift in the demand curve for Coca-Cola.
D)   An upward movement along the demand curve for Coca-Cola.E) A) and B)
F) A) and C) B

Question 10

Assume that crackers and soup are complementary goods. The effect on the soup market of an increase in the price of crackers (other things being equal)  would best be described as a(n) :

Accepted Answer

A)   decrease in the quantity of soup demanded.
B)   decrease in the demand for soup.
C)   increase in the quantity of soup demanded.
D)   increase in the demand for soup.E) B) and D)
F) A) and D)

Question 11

Two goods, X and Y, are complementary goods if the demand for X:

Accepted Answer

A)   increases when the price of Y increases.
B)   increases when income increases.
C)   decreases when the price of Y increases.
D)   increases as the price of its substitute good increases.
E)   decreases as the price of its substitute good decreases.F) B) and C)
G) A) and E)

Question 12

When economists say the supply of a product has decreased, they mean that:

Accepted Answer

A)   the supply curve has shifted to the left.
B)   the product price has decreased, and as a consequence, suppliers are producing less of the product.
C)   producers are now willing to sell more of this product at each possible price.
D)   the supply curve has shifted to the right.E) None of the above
F) B) and C)

Question 13

Exhibit 3-3 Demand curves 
-Assume that consumers expect the price of gasoline to rise sharply in the future. Which of the graphs in Exhibit 3-3 depicts this effect?

Accepted Answer

A)   Graph A.
B)   Graph B.
C)   Graph C.
D)   Graph D.E) A) and B)
F) All of the above

Question 14

Equilibrium in a market exists when there is neither a surplus nor a shortage of the item.

Accepted Answer

A) True 
 B)False

Question 15

An increase in the cost of chicken feed will reduce the supply of eggs.

Accepted Answer

A) True 
 B)False

Question 16

​​Exhibit 3-15 Supply and demand curves for good X 
-In Exhibit 3-15, if the market price of good X is initially $.50, a movement toward equilibrium requires:

Accepted Answer

A)   ​no change, because an equilibrium already exists.
B)   ​the price to fall below $.50 and both the quantity supplied and the quantity demanded to rise.
C)   ​the price to remain the same, but the supply curve to shift to the left.
D)   ​the price to rise above $.50, the quantity supplied to rise, and the quantity demanded to fall.E) None of the above
F) A) and B)

Question 17

Two goods that are complementary are:

Accepted Answer

A)   wrapping paper and scotch tape.
B)   letter and fax.
C)   beef and chicken.
D)   bicycle and motorcycle.
E)   Coke and Pepsi.F) A) and C)
G) B) and C)

Question 18

Assume Qs represents the quantity supplied at a given price and Qd represents the quantity demanded at the same given price. Which of the following market conditions produce a downward movement of the price?

Accepted Answer

A)   Qs = 1,000, Qd = 750.
B)   Qs = 750, Qd = 750.
C)   Qs = 750, Qd = 1,000.
D)   Qs = 1,000, Qd = 1,000.E) B) and C)
F) A) and C)

Question 19

When economists say the quantity demanded of a product has increased, they mean the:

Accepted Answer

A)   demand curve has shifted to the left.
B)   demand curve has shifted to the right.
C)   price of the product has fallen, and consequently, consumers are buying more of it.
D)   price of the product has risen, and consequently, consumers are buying less of it.E) A) and D)
F) C) and D)

Question 20

Assuming that hamburgers and hot dogs are substitutes, an increase in the price of hamburgers, other things being equal, results in a:

Accepted Answer

A)   rightward shift in the demand curve for hot dogs.
B)   leftward shift in the demand curve for hamburgers.
C)   rightward shift in the demand curve for hamburgers.
D)   leftward shift in the demand curve for hot dogs.E) B) and C)
F) A) and D)

Exam 3: Market Demand and Supply

​ Exhibit 3-13 Supply and demand curves -​ Which of the graphs in Exhibit 3-13 illustrates a shortage exists at the indicated market price?

Correct AnswerverifiedC

The law of demand states that, ceteris paribus, price and quantity demanded are:

Correct AnswerverifiedShow Answer

A surplus of wheat:

Correct AnswerverifiedShow Answer

Which of the following is most likely to increase the supply of corn?

Correct AnswerverifiedShow Answer

All of the following apply to the description of a market in equilibrium except:

Correct AnswerverifiedE

Suppose A and B are substitute goods. Other things being equal, the demand curve for A will shift to the right when the price of B goes down.

Correct AnswerverifiedShow Answer

The law of demand indicates that:

Correct AnswerverifiedShow Answer

Suppose the prices of petroleum products, including gasoline and fuel oil, fell sharply. Which of the following would most likely occur as the result of the lower prices of petroleum products?

Correct AnswerverifiedShow Answer

Other things being equal, the effect of a decrease in the price of Coca-Cola would cause which of the following?

Correct AnswerverifiedB

Assume that crackers and soup are complementary goods. The effect on the soup market of an increase in the price of crackers (other things being equal) would best be described as a(n) :

Correct AnswerverifiedShow Answer

Two goods, X and Y, are complementary goods if the demand for X:

Correct AnswerverifiedShow Answer

When economists say the supply of a product has decreased, they mean that:

Correct AnswerverifiedShow Answer

Exhibit 3-3 Demand curves -Assume that consumers expect the price of gasoline to rise sharply in the future. Which of the graphs in Exhibit 3-3 depicts this effect?

Correct AnswerverifiedShow Answer

Equilibrium in a market exists when there is neither a surplus nor a shortage of the item.

Correct AnswerverifiedShow Answer

An increase in the cost of chicken feed will reduce the supply of eggs.

Correct AnswerverifiedShow Answer

​​Exhibit 3-15 Supply and demand curves for good X -In Exhibit 3-15, if the market price of good X is initially $.50, a movement toward equilibrium requires:

Correct AnswerverifiedShow Answer

Two goods that are complementary are:

Correct AnswerverifiedShow Answer

Assume Qs represents the quantity supplied at a given price and Qd represents the quantity demanded at the same given price. Which of the following market conditions produce a downward movement of the price?

Correct AnswerverifiedShow Answer

When economists say the quantity demanded of a product has increased, they mean the:

Correct AnswerverifiedShow Answer

Assuming that hamburgers and hot dogs are substitutes, an increase in the price of hamburgers, other things being equal, results in a:

Correct AnswerverifiedShow Answer

Exhibit 3-13 Supply and demand curves - Which of the graphs in Exhibit 3-13 illustrates a shortage exists at the indicated market price?

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C

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E

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B

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Exhibit 3-15 Supply and demand curves for good X -In Exhibit 3-15, if the market price of good X is initially $.50, a movement toward equilibrium requires:

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Assume Q_s represents the quantity supplied at a given price and Q_d represents the quantity demanded at the same given price. Which of the following market conditions produce a downward movement of the price?

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