ECON200 Chapter 3

An increase in the price of a good will lead to an increase in the quantity supplied. True or False

True

If two goods are complements, a fall in the price of one will lead to an increase in demand for the other. True or False

True

The theory underlying demand and supply curves assumes that, all other things unchanged, the primary variable that assures the equality of the quantities demanded and supplied is: a. consumer income. b. the preferences of consumers. c. the expectations of consumers and producers. d. price

d. price

The theory underlying demand and supply curves assumes that, all other things unchanged, the primary variable that assures the equality of the quantities demanded and supplied is: a. consumer income. b.the preferences of consumers. c.the expectations of consumers and producers. d.price.

d.price.

A decrease in supply means: a. a shift to the left of the entire supply curve. b. moving downward (to the left) along the supply curve with lower prices. c. less will be demanded at every price. d. more will be supplied at every price.

a. a shift to the left of the entire supply curve.

An increase in demand, with no change in supply, will lead to ________ in equilibrium quantity and ________ in equilibrium price. a. an increase; an increase b. an increase; a decrease c. a decrease; an increase d. a decrease; a decrease

a. an increase; an increase

In a competitive market, when price is below the equilibrium price, there will be pressure for the price to: a. fall. b. stay the same. c. rise. d. change only if demand and/or supply change.

c. rise.

A supply curve that is upward sloping means that: a. demand is being ignored. b. consumers will buy less at lower prices. c. suppliers will want to sell more at higher prices. d. suppliers will want to sell less at higher prices.

c. suppliers will want to sell more at higher prices.

When the market price is established where demand and supply curves intersect: a. consumer buying tends to exceed the quantity producers supply. b. the quantity consumers demand generally fall short of the quantity producers supply. c. the quantity demanded and the quantity supplied are equal. d. all of the above will result.

c. the quantity demanded and the quantity supplied are equal.

A decrease in price will lead to an increase in demand. True or False

False

A shortage will exert pressures for the price to decrease. True or False

False

An increase in supply is caused by: a. an increase in resource prices. b. a decrease in the number of sellers in the market. c. suppliers' expectations of higher prices in the future. d. an advancement in the technology for producing the good.

d. an advancement in the technology for producing the good.

Given that chicken and beef are substitute goods, if the price of chicken decreases substantially, there would be: a. an increase in the demand for beef. b. a decrease in the demand for beef. c. a decrease in the quantity of beef demanded. d. no change in the demand for beef.

b. a decrease in the demand for beef.

Which of the following always results in an increase in price and quantity? a. an increase in supply and a decrease in demand b. an increase in demand with no change in supply c. an increase in supply with no change in demand d. all of the above

b. an increase in demand with no change in supply

If both the demand for a product and the supply of it decrease, then the equilibrium quantity will ________ and the equilibrium price will ________. a. increase; either increase, decrease, or remain constant b. decrease; either increase, decrease, or remain constant c. increase; increase d. increase; decrease

b. decrease; either increase, decrease, or remain constant

How a supply curve is sloped and located is affected by: a. consumer preferences. b. resource prices. c. the number of consumers. d. all of the above.

b. resource prices.

Demand and supply curves are drawn assuming ceteris paribus. This means that: a. economists ignore all assumptions. b. economists don't watch for the fallacy of false cause. c. changes will be proportional. d. all other things besides price and quantity are assumed unchanged.

d. all other things besides price and quantity are assumed unchanged.

Which of the following would shift the demand curve for new textbooks to the right? a. A decrease in the price of paper. b. A fall in the price of used textbooks. c. An increase in college enrollments. d. A fall in the price of new textbooks.

c. An increase in college enrollments.

Researchers demonstrate conclusively that drinking 4-6 ounces of ginger ale each day increases life expectancy by 3 years. What happens in the market for ginger ale? a. The equilibrium price falls, and the equilibrium quantity rises. b. The equilibrium price rises, and the equilibrium quantity falls. c. The equilibrium price and quantity rise. d. The equilibrium price and quantity fall.

c. The equilibrium price and quantity rise.

An increase in supply of a good is caused by: a. resource prices rising. b. a fall in the price of the good. c. an increase in the number of sellers. d. expectations of future price increases.

c. an increase in the number of sellers.

A price above the equilibrium price will: a. result in quantity supplied being less than quantity demanded. b. result in a shortage. c. create pressure for price to fall. d. tend to rise over time..

c. create pressure for price to fall.