Old Exam Questions Which Cover Chapter 3 Questions
20) Refer to Figure 3-2. If the price is _____, then every willing buyer can find a willing seller, but not every willing seller can find a willing buyer. If the price is _____, then every willing seller can find a willing buyer, but not every willing buyer can find a willing seller. A) $25 ; $10 B) $10 ; $20 C) $25 ; $20 D) $10 ; $25
A) $25 ; $10
21) Refer to Figure 3-2. If the price is $10, then the quantity demanded is ______, the quantity supplied is _______, and the quantity actually produced and consumed is _______. A) 800 ; 200 ; 200 B) 200 ; 600 ; 800 C) 200 ; 800 ; 600 D) 600 ; 600 ; 600 E) 800 ; 200 ; 600
A) 800 ; 200 ; 200
28) Which of the following statements is true? A) An increase in demand causes a change in equilibrium price; the change in price does not cause a further shifts in demand or supply. B) If demand decreases and supply increases one cannot determine if equilibrium price will increase or decrease without knowing which change is greater. C) A decrease in supply causes equilibrium price to rise; the increase in price then results in a decrease in demand. D) If both demand and supply increase there must be an increase in equilibrium price; equilibrium quantity may either increase or decrease. E) All of the above are true
A) An increase in demand causes a change in equilibrium price; the change in price does not cause a further shifts in demand or supply.
50) Which of the following would cause a decrease in the supply of milk? A) An increase the price of a product that producers sell instead of milk. B) An increase in the price of cookies (assuming that milk and cookies are complements). C) A decrease in the price of milk D) An increase in the number of firms that produce milk. E) More than one of the above would decrease the supply of milk
A) An increase the price of a product that producers sell instead of milk.
71) What is the difference between an ʺincrease in supplyʺ and an ʺincrease in quantity suppliedʺ? A) An ʺincrease in supplyʺ means the supply curve has shifted to the right while an ʺincrease in quantity suppliedʺ refers to a movement along a given supply curve in response to an increase in price. B) An ʺincrease in supplyʺ means the supply curve has shifted to the left while an ʺincrease in quantity suppliedʺ refers to a movement along a given supply curve in response to an increase in price. C) There is no difference between the two terms; they both refer to a shift of the supply curve. D) There is no difference between the two terms; they both refer to a movement along a given supply curve
A) An ʺincrease in supplyʺ means the supply curve has shifted to the right while an ʺincrease in quantity suppliedʺ refers to a movement along a given supply curve in response to an increase in price.
82) Which of the following correctly describes how price adjustments eliminate a shortage? A) As the price rises, the quantity demanded decreases while the quantity supplied increases. B) As the price falls, the quantity demanded increases while the quantity supplied decreases. C) As the price falls, the quantity demanded decreases while the quantity supplied increases. D) As the price rises, the quantity demanded increases while the quantity supplied decreases.
A) As the price rises, the quantity demanded decreases while the quantity supplied increases.
36) In most years, consumers demand more gasoline during summer months. Thus, during the summer months, the price of gasoline is typically higher than during other times of the year, and people use more gasoline at these higher prices. Does this outcome represent a violation of the law of demand? A) No it is not a violation of the law of demand. The ʺceteris paribusʺ portion of the law of demand doesnʹt hold in this example. B) No it is not a violation of the law of demand. The law of demand maintains that, ceteris paribus, people will demand more of a good at higher prices which is exactly what happens in this example. C) Yes it is a violation of the law of demand. Gasoline is different than most goods. People tend to use more of it at higher prices.
A) No it is not a violation of the law of demand. The ʺceteris paribusʺ portion of the law of demand doesnʹt hold in this example.
89) In most years, consumers demand more gasoline during summer months. Thus, during the summer months, the price of gasoline is typically higher than during other times of the year, and people use more gasoline at these higher prices. Does this outcome represent a violation of the law of demand? A) No it is not a violation of the law of demand. The ʺceteris paribusʺ portion of the law of demand doesnʹt hold in this example. B) Yes it is a violation of the law of demand. Gasoline is different than most goods. People tend to use more of it at higher prices. C) No it is not a violation of the law of demand. The law of demand maintains that, ceteris paribus, people will demand more of a good at higher prices which is exactly what happens in this example.
A) No it is not a violation of the law of demand. The ʺceteris paribusʺ portion of the law of demand doesnʹt hold in this example.
1) The law of demand defines a A) negative relationship between price and quantity demanded. B) negative relationship between income and quantity demanded. C) positive relationship between income and quantity demanded. D) positive relationship between price and quantity demanded.
A) Panel (a)
3) Refer to Figure H. Assume that the graphs in this figure represent the demand and supply curves for chicken sandwiches. What panel shows an increase in the quantity demanded of chicken sandwiches? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)
A) Panel (a)
43) Refer to Figure H. Assume that the graphs in this figure represent the demand and supply curves for chicken sandwiches. What panel shows the effects of a decrease of prices of inputs needed to produce chicken sandwiches? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)
A) Panel (a)
44) Refer to Figure H. Assume that the graphs in this figure represent the demand and supply curves for chicken sandwiches. What panel shows an increase in the quantity demanded of chicken sandwiches? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)
A) Panel (a)
94) Refer to Figure H. Assume that the graphs in this figure represent the demand and supply curves for cheese. Which panel best describes what happens in the cheese market when there is a decrease in the price of yogurt (a production substitute for cheese)? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)
A) Panel (a)
62) Refer to Figure 3.14. An increase in quantity supplied is represented by the movement from A) Point B to Point A along supply curve S2. B) S2 to S3. C) S2 to S1. D) Point B to Point C along supply curve S2.
A) Point B to Point A along supply curve S2.
23) Suppose that in 1996, 12 million cars were purchased at $15,000 each, while in 1997, 14 million cars were purchased at $18,000 each. What might have caused this change? A) The price of airplane tickets (a substitute for cars) rose B) Automobile manufacturing technology increased C) Automobile manufacturing technology decreased D) The price of airplane tickets (a substitute for cars) fell
A) The price of airplane tickets (a substitute for cars) rose
75) Suppose that in October the price of a cup of cafe latte was $2.50 and 400 lattes were consumed. In November the price of a latte was $2.00 and 300 lattes were consumed. What might have caused this change? A) The price of tea (a substitute for cafe lattes) fell. B) The price of coffee beans (an input of production of cafe lattes) rose. C) The price of tea (a substitute for cafe lattes) rose. D) The price of coffee beans (an input of production of cafe lattes) fell.
A) The price of tea (a substitute for cafe lattes) fell.
74) In recent years the cost of producing wines in the U.S. has increased largely due to rising rents for vineyards. At the same time, more and more Americans prefer wine over beer. Which of the following best explains the effect of these events in the wine market? A) The supply curve has shifted to the left and the demand curve has shifted to the right. As a result, there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity. B) Both the supply and demand curves have shifted to the right. As a result, there has been an increase in both the equilibrium price and the equilibrium quantity. C) Both the supply and demand curves have shifted to the right. As a result, there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity. D) The supply curve has shifted to the left and the demand curve has shifted to the right. As a result there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price.
A) The supply curve has shifted to the left and the demand curve has shifted to the right. As a result, there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity.
25) Refer to Figure G. The figure above represents the market for canvas tote bags. Assume that the market price is $35. Which of the following statement is true? A) There is a surplus that will cause the price to decrease; quantity demanded will then increase and quantity supplied will decrease until the price equals $25. B) There will be a surplus that will cause the price to decrease; demand will then increase and supply will decrease until the price equals $25. C) There is a surplus that will cause the price to decrease; quantity supplied will then increase and quantity demanded will decrease until the price equals $25. D) There is a surplus that will cause the price to increase; quantity demanded will then decrease and quantity supplied will increase until the price equals $25.
A) There is a surplus that will cause the price to decrease; quantity demanded will then increase and quantity supplied will decrease until the price equals $25.
19) Suppose that the market for bottled water is initially in equilibrium. If the demand for bottled water decreases, but the price of bottled water stays at the initial equilibrium price, then A) There will be a surplus of bottled water. B) The bottled water market will be in equilibrium. C) There will be a shortage of bottled water.
A) There will be a surplus of bottled water.
47) Refer to Figure 3-2. If the current market price is $25, the market will achieve equilibrium by A) a price decrease, decreasing the quantity supplied and increasing the quantity demanded. B) a price increase, increasing the supply and decreasing the demand. C) a price increase, increasing the quantity supplied and decreasing the quantity demanded. D) a price decrease, decreasing the supply and increasing the demand.
A) a price decrease, decreasing the quantity supplied and increasing the quantity demanded.
57) If a decrease in income leads to an increase in the demand for macaroni, then macaroni is A) an inferior good. B) a neutral good. C) a necessity. D) a normal good.
A) an inferior good.
59) Refer to Table 4.1. If the price per pizza is $10, the price will: A) decrease because there is an excess supply in the market. B) increase because there is an excess supply in the market. C) increase because there is an excess demand in the market. D) remain constant because the market is in equilibrium. E) decrease because there is an excess demand in the market.
A) decrease because there is an excess supply in the market.
92) The cost of raising beef cattle has fallen at the same time as consumer preference for beef has fallen (i.e. decrease in beef demand). In the market for beef, these events result in the equilibrium price ________ and the equilibrium quantity ________. A) decreasing ; increasing, decreasing, or not changing B) increasing, decreasing, or not changing; increasing C) increasing, decreasing, or not changing; decreasing D) increasing; increasing, decreasing, or not changing
A) decreasing ; increasing, decreasing, or not changing
83) Suppose that the demand for tatoo ink increases at the same time that there is a technological advance in the production of tatoo ink. It is impossible for the A) equilbrium quantity of tatoo ink to fall. B) equilbrium price of tatoo ink to fall. C) equilbrium quantity of tatoo ink to rise. D) equilbrium price of tatoo ink to rise.
A) equilbrium quantity of tatoo ink to fall.
87) Refer to Figure 3-2. If the price is $25, A) every willing buyer can find a willing seller, but not every willing seller can find a willing buyer. B) there is no pressure on the price to rise or fall. C) there is a shortage of 300 units. D) there is a surplus of 100 units. E) More than one of the above is correct.
A) every willing buyer can find a willing seller, but not every willing seller can find a willing buyer.
41) Suppose that when the price of hamburgers increases, the Ruiz family increases their purchases of hot dogs. To the Ruiz family, A) hamburgers and hot dogs are substitutes. B) hamburgers and hot dogs are inferior goods. C) hamburgers and hot dogs are complements. D) hamburgers and hot dogs are normal goods.
A) hamburgers and hot dogs are substitutes.
14) The law of demand implies, holding everything else constant, that as the price of yogurt A) increases, the quantity of yogurt demanded will decrease. B) increases, the demand for yogurt will increase. C) decreases, the quantity of yogurt demanded will decrease. D) decreases, the demand for yogurt will increase.
A) increases, the quantity of yogurt demanded will decrease.
79) The cost of raising beef cattle has risen at the same time as consumer preference for beef has declined (i.e. decrease in beef demand). In the market for beef, these events result in the equilibrium price ________ and the equilibrium quantity ________. A) increasing, decreasing, or not changing; decreasing B) increasing; increasing, decreasing, or not changing C) decreasing ; increasing, decreasing, or not changing D) increasing, decreasing, or not changing; increasing
A) increasing, decreasing, or not changing; decreasing
76) When thereʹs a change in anything that affects the demand for a good, other than a change in the price, graphically we must: A) shift the entire demand curve B) slide along the given demand curve
A) shift the entire demand curve
90) If the demand for jelly increases at the same time that the price of grapes (used to make jelly) rises A) the equilibrium price of jelly rises and the equilibrium quantity of jelly might rise or fall. B) the equilibrium price of jelly falls and the equilibrium quantity of jelly might rise or fall. C) the equilibrium price of jelly might rise or fall, and the equilibrium quantity of jelly falls. D) the equilibrium price of jelly might rise or fall, and the equilibrium quantity of jelly rises.
A) the equilibrium price of jelly rises and the equilibrium quantity of jelly might rise or fall.
12) During the winter, about 20% of the local lettuce crop was destroyed by flooding. At the same time that part of the lettuce crop was destroyed, the demand for lettuce increased. Taken together, these two situations would have caused: A) the equilibrium price of lettuce to increase. The equilibrium quantity of lettuce could have increased, decreased, or remained the same. B) both the equilibrium price and quantity of lettuce to decrease. C) the equilibrium price to increase and the equilibrium quantity of lettuce to decrease. D) the equilibrium price of lettuce to either increase, decrease, or remain the same and the equilibrium quantity of lettuce to decrease.
A) the equilibrium price of lettuce to increase. The equilibrium quantity of lettuce could have increased, decreased, or remained the same.
84) Which of the following is held constant along a given demand curve? A) the incomes of buyers B) the price of the good C) Both of the above D) None of the above
A) the incomes of buyers
72) Select the phrase that correctly completes the following statement. ʺAn increase in input prices caused a decrease in the supply of baseballs. As a result ________.ʺ A) the price of baseballs increased and the quantity demanded of baseballs decreased B) the price of baseballs increased. The higher price caused the supply of baseballs to increase C) the price of baseballs increased and the demand for baseballs decreased D) the equilibrium quantity of baseballs increased
A) the price of baseballs increased and the quantity demanded of baseballs decreased
8) Refer to Figure 3-2. Suppose that the price is initially at $15 and it rises over time to $20. As the price increases, which of the following occurs? A) the quantity supplied increases B) demand for the good decreases C) supply of the good increases D) the quantity demanded increases E) More than one of the above is correct
A) the quantity supplied increases
73) Suppose favorable weather resulted in a bumper crop of oranges in Florida. In the market for oranges A) the supply curve shifted to the right resulting in a decrease in the equilibrium price. B) the supply curve shifted to the right resulting in an increase in the equilibrium price. C) the demand curve shifted to the left resulting in a decrease in the equilibrium price. D) the demand curve shifted to the right resulting in an increase in the equilibrium price.
A) the supply curve shifted to the right resulting in a decrease in the equilibrium price.
67) Refer to Figure 3.13. If supply shifts from S1 to S2 which of the following is TRUE? A) there is a decrease in the quantity demanded of cheeseburgers B) the equilibrium price and equilibrium quantity of cheeseburgers both increase C) there is an increase in the supply of cheeseburgers D) there is a decrease in demand for cheeseburgers E) More than one of the above
A) there is a decrease in the quantity demanded of cheeseburgers
60) Refer to Figure 3-2. Suppose that you observe this market and see that store shelves are persistently empty of this product, and that many consumers come to the stores for this product, but there is none available. Which of the following is most likely the actual market price of the good? A) $20 B) $15 C) $25
B) $15
33) Farmers can plant either corn or soybeans in their fields. Which of the following would cause the supply of soybeans to decrease? A) A decrease in the price of corn. B) An increase in the price of corn. C) A decrease in the price of soybeans. D) An increase in the price of soybeans.
B) An increase in the price of corn.
86) Figure 4.4 illustrates the demand for guitars. If buyers expect the price of guitars to decrease in the near future, this would most likely bring about (in the current time frame) a movement from: A) point B to point C. B) D1 to D0. C) point B to point A. D) D1 to D2.
B) D1 to D0.
16) Refer to Figure H. Assume that the graphs in this figure represent the demand and supply curves for chicken sandwiches. What panel shows a decrease in supply of chicken sandwiches? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)
B) Panel (b)
17) Refer to Figure H. Assume that the graphs in this figure represent the demand and supply curves for chicken sandwiches. What panel shows a decrease in the quantity demanded of chicken sandwiches? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)
B) Panel (b)
53) Refer to Figure H. Assume that the graphs in this figure represent the demand and supply curves for cheese. Which panel best describes what happens in the cheese market when there is an increase in demand for yogurt (a production substitute for cheese)? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)
B) Panel (b)
93) Refer to Figure H. Assume that the graphs in this figure represent the demand and supply curves for chicken sandwiches. What panel shows the effects of an increase of prices of inputs needed to produce chicken sandwiches? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)
B) Panel (b)
34) During 2002 the supply of petroleum increased while at the same time the demand for petroleum increased. If the magnitude of the increase in demand was greater than the magnitude of the increase in supply, which of the following occurred? A) The equilibrium price of petroleum decreased and the equilibrium quantity increased. B) The equilibrium price of petroleum increased and the equilibrium quantity increased. C) The equilibrium price of petroleum decreased and the equilibrium quantity did not change. D) The equilibrium price of petroleum decreased and the equilibrium quantity decreased. E) The equilibrium price of petroleum increased and the equilibrium quantity decreased.
B) The equilibrium price of petroleum increased and the equilibrium quantity increased.
11) If the demand for letters written by Abraham Lincoln is higher than the demand for letters written by John Wilkes Booth, what would have to be true for the market equilibrium prices for these letters to be equal? A) If the demand for Lincoln letters is greater than the demand for Booth letters, the market equilibrium price for Lincoln letters will always be greater than the market equilibrium price for Booth letters. B) The supply of Booth letters would have to be less than the supply of Lincoln letters. C) The supply of Lincoln letters would have to be less than the supply of Booth letters. D) The supply of Lincoln letters and the supply of Booth letters would have to be equal.
B) The supply of Booth letters would have to be less than the supply of Lincoln letters.
27) Suppose that in 2009, 12 million cars were purchased at $15,000 each, while in 2010, 14 million cars were purchased at $12,000 each. What most likely caused this change? A) The demand for automobiles decreased B) The supply of automobiles increased C) The supply of automobiles decreased D) The demand for automobiles increased
B) The supply of automobiles increased
81) Which of the following shifts the supply curve rightward? A) an increase in the number of potential buyers B) a decrease in the price of an input used to produce the good C) a decrease in the price of the good D) an increase in the price of the good E) More than one of the above is correct
B) a decrease in the price of an input used to produce the good
99) Which of the following would shift the demand curve of a good to the right? A) an increase in income if the good is inferior B) an increase in the expected future price of the good C) a decrease in the price of the good D) an increase in the price of a complement E) More than one of the above is correct
B) an increase in the expected future price of the good
55) Petroleum and solar power are substitutes (in consumption). Petroleum and automobiles are complements (in consumption). When the price of petroleum decreases, the demand for solar power will __________ and the demand for automobiles will ___________. A) decrease ; decrease B) decrease ; increase C) increase ; decrease D) not change ; not change E) increase ; increase
B) decrease ; increase
26) During the 1990s positive technological change in the production of chicken caused an increase in supply of chicken. What should this change have done to the equilibrium price and quantity of chicken? A) increase the equilibrium price and increase the equilibrium quantity B) decrease the equilibrium price and increase the equilibrium quantity C) increase the equilibrium price and decrease the equilibrium quantity D) decrease the equilibrium price and decrease the equilibrium quantity
B) decrease the equilibrium price and increase the equilibrium quantity
30) Refer to Figure 4.12. Assume that the pizza market is initially in equilibrium at Point B. If pizza and beer are consumption complements, a decrease in the price of beer will cause a movement from Point B on demand curve D2 to _______________________ in the pizza market. A) demand curve D1. B) demand curve D3. C) Point A on demand curve D2. D) Point C on demand curve D2.
B) demand curve D3.
69) Suppose that the demand for tatoo ink decreases at the same time that there is a technological advance in the production of tatoo ink. It is impossible for the A) equilbrium quantity of tatoo ink to fall. B) equilbrium price of tatoo ink to rise. C) equilbrium quantity of tatoo ink to rise. D) equilbrium price of tatoo ink to fall.
B) equilbrium price of tatoo ink to rise.
65) Suppose that ʺsafe carsʺ and ʺdangerous carsʺ are substitutes in consumption. If there is a technological advance in the production of ʺsafe carsʺ then the equilibrium price of ʺsafe carsʺ will __________ and the equilibrium quantity of ʺsafe carsʺ will ______________. Additionally, the equilibrium quantity of ʺdangerous carsʺ will ______________. A) rise ; decrease ; increase B) fall ; increase ; decrease C) fall ; increase ; increase D) rise ; increase ; increase E) None of the above
B) fall ; increase ; decrease
22) Suppose that good weather increases the supply of avocados. Avocados are an input in the production of guacamole, and guacamole is in turn a consumption substitute for salsa. The equilibrium price of salsa will __________ and the equilibrium quantity of salsa will ________. A) not change; not change B) fall; fall C) rise; fall D) rise; rise E) fall; rise
B) fall; fall
42) Consider the market for tacos. If a new report warns that taco consumption is an unhealthy behavior at the same time that the price of beef (input to taco production) rises, the price of tacos will ____________ and the quantity of tacos will ____________. A) fall ; rise, fall, or not change B) rise, fall, or not change ; fall C) rise ; rise, fall, or not change D) rise, fall, or not change ; rise E) None of the above
B) rise, fall, or not change ; fall
70) Refer to Figure 3.15. A decrease in the price of mushrooms (an input for gardenburgers) will cause a movement from Point B on supply curve S2 to A) Point C on supply curve S2. B) supply curve S3. C) Point A on supply curve S2. D) supply curve S1.
B) supply curve S3.
31) Lettuce is an inferior good. During the winter, about 20% of the lettuce crop was destroyed by flooding. At the same time that part of the lettuce crop was destroyed, consumer income also decreased. Taken together, these two situations would have caused: A) the equilibrium price to increase and the equilibrium quantity of lettuce to decrease. B) the equilibrium price of lettuce to increase. The equilibrium quantity of lettuce could have increased, decreased, or remained the same. C) the equilibrium price of lettuce to either increase, decrease, or remain the same and the equilibrium quantity of lettuce to decrease. D) both the equilibrium price and quantity of lettuce to decrease.
B) the equilibrium price of lettuce to increase. The equilibrium quantity of lettuce could have increased, decreased, or remained the same.
38) One would speak of a movement along a supply curve for a good, rather than a change in supply, if A) the cost of producing the good changes. B) the price of the good changes C) Both of the above are correct
B) the price of the good changes
13) Consider the market for tacos. There is a decrease in taco demand at the same time that there is a decrease in taco supply. As these shifts occur, we observe that the equilibrium price of tacos rises and the equilibrium quantity of tacos falls. We can thus deduce that A) the supply and demand shifts were of equal size B) the supply shift was larger in size than the demand shift C) the demand shift was larger in size than the supply shift
B) the supply shift was larger in size than the demand shift
64) An insect that is resistant to currently used pesticides has infested the cotton crop, and this yearʹs crop is only half of what was produced last year. You accurately predict that this A) will shift the supply curve of cotton to the left, the equilibrium price of cotton will increase, and the demand for cotton will fall. B) will shift the supply curve of cotton to the left, the equilibrium price of cotton will increase, and the quantity demanded of cotton will decrease. C) will shift the supply curve of cotton to the right, the equilibrium price of cotton will increase, and the demand for cotton will fall. D) will shift the supply curve of cotton to the right, the equilibrium price of cotton will increase, and the quantity demanded of cotton will decrease.
B) will shift the supply curve of cotton to the left, the equilibrium price of cotton will increase, and the quantity demanded of cotton will decrease.
48) Refer to Figure 3-2. If the price is $25, then the quantity demanded is ______, the quantity supplied is _______, and the quantity actually consumed is _______. A) 500 ; 800 ; 600 B) 600 ; 800 ; 200 C) 500 ; 800 ; 500 D) 800 ; 600 ; 600 E) 600 ; 800 ; 600
C) 500 ; 800 ; 500
98) Which of the following would cause decreases in both the equilibrium price and quantity of white bread? A) An increase in the price of rye bread, a consumption substitute for white bread. B) A decrease in the price of flour, an input to white bread production. C) An increase in the price of butter, a consumption complement for white bread. D) An increase in the price of flour, an input to white bread production.
C) An increase in the price of butter, a consumption complement for white bread.
96) Figure 4.3 illustrates the demand for tacos. Assume that tacos and beer are consumption complements. An increase in the price of beer would bring about a movement from A) point a to point b. B) point c to point b. C) D1 to D0. D) D1 to D2.
C) D1 to D0.
2) Refer to Figure H. Assume that the graphs in this figure represent the demand and supply curves for chicken sandwiches. What panel shows an increase in demand for chicken sandwiches? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)
C) Panel (c)
52) Refer to Figure H. Assume that the graphs in this figure represent the demand and supply curves for almonds. Which panel best describes what happens in this market when there is a new well-publicized health report proclaiming the health benefits of almond consumption? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)
C) Panel (c)
40) Refer to Figure 3-2. A technological advancement in the production of this good would be represented by a movement from A) A to B. B) B to A. C) S1 to S2. D) S2 to S1.
C) S1 to S2.
100) Suppose that the market for pineapples (a normal good) is initially in equilibrium. If the incomes of potential buyers rise, but the price of pineapples stays at the initial equilibrium price, then A) The pineapple market will be in equilibrium. B) There will be a surplus of pineapples. C) There will be a shortage of pineapples.
C) There will be a shortage of pineapples.
37) The phrase ʺdemand has increasedʺ means that A) there has been a downward movement along a demand curve. B) there has been an upward movement along a demand curve. C) a demand curve has shifted to the right. D) a demand curve has shifted to the left.
C) a demand curve has shifted to the right.
29) Refer to Figure 4.12. Assume that the pizza market is initially in equilibrium at Point B. If pizza and hamburgers are consumption substitutes, a decrease in the price of hamburgers will cause a movement from Point B on demand curve D2 to: A) Point C on demand curve D2. B) Point A on demand curve D2. C) demand curve D1. D) demand curve D3.
C) demand curve D1.
15) A(n) ________ is represented by a rightward shift of the demand curve while a(n) ________ is represented by a movement along a given demand curve. A) increase in quantity demanded; increase in demand B) increase in demand; decrease in demand C) increase in demand; increase in quantity demanded D) decrease in demand; decrease in quantity demanded
C) increase in demand; increase in quantity demanded
18) A supply curve A) is the relationship between the supply of a good and the cost of producing the good. B) is a table that shows the relationship between the price of a product and the profits earned by sellers. C) is a curve that shows the relationship between the price of a product and the quantity of the product supplied. D) is a curve that shows the relationship between the price of a product and the quantity of the product that producers and consumers are willing to exchange with one another
C) is a curve that shows the relationship between the price of a product and the quantity of the product supplied.
80) The law of demand states that, other things remaining the same, the higher the price of a good, the A) larger is the quantity demanded of the good. B) larger is the demand for the good. C) smaller is the quantity demanded of the good. D) smaller is the demand for the good.
C) smaller is the quantity demanded of the good.
85) Consider the market for flavored mineral water. If the price of soda (a consumption substitute for flavored mineral water) increases, which one of the following is likely to be the outcome? A) the equilibrium quantity of flavored mineral water will fall B) the price of flavored mineral water will fall C) the demand for flavored mineral water will increase (shift right) D) the demand for soda will decrease (shift left) E) More than one of the above are correct
C) the demand for flavored mineral water will increase (shift right)
4) One would speak of a movement along a supply curve for a good, rather than a change in supply, if A) the cost of producing the good changes. B) the number of firms providing the good changes. C) the price of the good changes. D) there is a technological breakthrough in the production of the good. E) More than one of the above is correct
C) the price of the good changes
91) Refer to Figure 3.13. If supply shifts from S1 to S2 which of the following is TRUE? A) the equilibrium price and equilibrium quantity of cheeseburgers both increase B) there is an increase in the supply of cheeseburgers C) there is a decrease in the quantity demanded of cheeseburgers D) there is a decrease in demand for cheeseburgers E) More than one of the above
C) there is a decrease in the quantity demanded of cheeseburgers
88) Refer to Figure 3-2. If the price is _____, then every willing buyer can find a willing seller, but not every willing seller can find a willing buyer. If the price is _____, then every willing seller can find a willing buyer, but not every willing buyer can find a willing seller. A) $10 ; $25 B) $10 ; $20 C) $25 ; $20 D) $25 ; $10
D) $25 ; $10
7) Refer to Figure 3-2. At a price of $25, how many units will be sold? A) 800 B) 600 C) 400 D) 500
D) 500
5) Which of the following illustrates the ʺlaw of supplyʺ? A) As the cost of producing socks increases, sock producers respond by producing more socks to make up for their lower profit margin. B) As the cost of producing socks increases, sock producers respond by producing less socks. C) As the price of socks decreases, sock producers respond by producing more socks. D) As the price of socks decreases, sock producers respond by producing fewer socks.
D) As the price of socks decreases, sock producers respond by producing fewer socks.
97) Figure 4.3 illustrates the demand for tacos. Assume tacos are an inferior good. A decrease in income would bring about a movement from A) point a to point b. B) point c to point b. C) D1 to D0. D) D1 to D2.
D) D1 to D2.
51) Which of the following statements is true? A) If both demand and supply decrease there must be a decrease in equilibrium price; equilibrium quantity may either increase or decrease. B) A decrease in supply causes equilibrium price to rise; the increase in price then results in a decrease in demand. C) An increase in demand causes a change in equilibrium price; the change in price causes a shift of the supply curve. D) If demand increases and supply decreases then the equilibrium price will increase. E) More than one of the above is correct
D) If demand increases and supply decreases then the equilibrium price will increase.
54) Refer to Figure H. Assume that the graphs in this figure represent the demand and supply curves for computer memory. What panel describes the current effect when buyers expect a decrease in computer memory prices in the future? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)
D) Panel (d)
49) Suppose that in 2009, 12 million cars were purchased at $15,000 each, while in 2010, 11 million cars were purchased at $12,000 each. What most likely caused this change? A) The supply of automobiles decreased B) The demand for automobiles increased C) The supply of automobiles increased D) The demand for automobiles decreased
D) The demand for automobiles decreased
9) Suppose that in 2009, 12 million cars were purchased at $15,000 each, while in 2010, 14 million cars were purchased at $18,000 each. What most likely caused this change? A) The supply of automobiles decreased B) The supply of automobiles increased C) The demand for automobiles decreased D) The demand for automobiles increased
D) The demand for automobiles increased
58) During 2008 the supply of eggs increased while at the same time the demand for eggs decreased. If the magnitude of the demand shift was greater than the magnitude of the supply shift, which of the following occurred? A) The equilibrium price of eggs increased and the equilibrium quantity decreased. B) The equilibrium price of eggs decreased and the equilibrium quantity increased. C) The equilibrium price of eggs increased and the equilibrium quantity increased. D) The equilibrium price of eggs decreased and the equilibrium quantity decreased. E) The equilibrium price of eggs increased and the equilibrium quantity did not change.
D) The equilibrium price of eggs decreased and the equilibrium quantity decreased.
24) Suppose that in 2011, 12 million cars were purchased at $15,000 each, while in 2012, 10 million cars were purchased at $13,000 each. What might have caused this change? A) The price of airplane tickets (a comsumption substitute for cars) rose B) Automobile manufacturing technology decreased C) Automobile manufacturing technology increased D) The price of airplane tickets (a comsumption substitute for cars) fell
D) The price of airplane tickets (a comsumption substitute for cars) fell
45) Hurricane Katrina damaged a large portion of refining and pipeline capacity when it swept through the Gulf coast states in August 2005. As a result of this, many gasoline distributors were not able to maintain normal deliveries. If the price of gasoline stayed at the pre-hurricane price (that is, if the price of gasoline did not change despite the hurricane), then we would expect to see A) an increase in the demand for gasoline. B) a surplus of gasoline. C) the quantity demanded equal to the quantity supplied. D) a shortage of gasoline.
D) a shortage of gasoline.
61) Refer to Figure 3.7. An increase in quantity demanded is represented by movement A) from D2 to D1. B) from D2 to D3. C) along D2 from Point B to point A. D) along D2 from Point B to point C.
D) along D2 from Point B to point C.
66) Refer to Figure 3.12. The market is initially in equilibrium at Point A. If demand shifts from D1 to D2 and the price of burritos remains constant at $3.00, there will be A) an excess supply of 50 million pounds of burritos. B) an excess supply of 150 million pounds of burritos. C) an excess demand of 100 million pounds of burritos. D) an excess demand of 150 million pounds of burritos.
D) an excess demand of 150 million pounds of burritos.
77) Which of the following definitely results in a productʹs equilibrium price rising? A) a decrease in both demand and supply B) an increase in both demand and supply C) a decrease in demand combined with an increase in supply D) an increase in demand combined with a decrease in supply E) More than one of the above
D) an increase in demand combined with a decrease in supply
39) Which of the following would cause an increase in the supply of cheese? A) an increase in the costs of producing cheese B) an increase in demand for cheese C) an increase in the price of cheese D) an increase in the number of firms that produce cheese E) All of the above
D) an increase in the number of firms that produce cheese
63) If the market for tires is unregulated and is presently characterized by excess supply, you can accurately predict that price will A) decrease, the quantity demanded will fall, and the quantity supplied will rise. B) increase, the quantity demanded will fall, and the quantity supplied will rise. C) increase, the quantity demanded will rise, and the quantity supplied will fall. D) decrease, the quantity demanded will rise, and the quantity supplied will fall.
D) decrease, the quantity demanded will rise, and the quantity supplied will fall.
95) Suppose that you observe an increase in the equilibrium price of a good. You are not able to observe what happens to the equilibrium quantity. Which of the following is the most correct conclusion? A) either supply increased or demand increased B) it must be the case that supply increased C) it must be the case that demand increased D) either supply decreased or demand increased
D) either supply decreased or demand increased
32) A change in which variable will change (shift) the market demand for a product? A) the number of firms in the market B) the price of the product C) the quantity supplied of the product D) expected future prices E) More than one of the above is correct
D) expected future prices
10) In 1996, a group of American doctors called for a limit on the number of foreign-trained physicians permitted to practice in the United States. Such a policy would result in a decrease in supply of doctor services in the United States. It is likely that the equilibrium price of doctor services would __________ and the equilibrium quantity of doctor services would ___________. A) increase ; increase B) decrease ; increase C) not change ; decrease D) increase ; decrease E) decrease ; decrease
D) increase ; decrease
56) If buyers and sellers both expect the price of washing machines to rise within the next six months, today in the washing machine market, the demand will A) decrease, supply will increase, and the change in the equilibrium price will be ambiguous. B) increase, supply will increase, and the change in the equilibrium price will be ambiguous. C) increase, supply will decrease, and the equilibrium price will fall. D) increase, supply will decrease, and the equilibrium price will rise. E) decrease, supply will increase, and the equilibrium price will fall.
D) increase, supply will decrease, and the equilibrium price will rise.
35) A demand curve shows the relationship between A) the quantity that consumers are willing and able to buy and the quantity that sellers are willing and able to offer. B) the price of a product and the income demanded to buy it. C) the amount of a product sellers are willing to sell at a particular price and the amount consumers are willing to buy at that price. D) the price of a product and the quantity of the product demanded.
D) the price of a product and the quantity of the product demanded.
68) Suppose that the demand for a product falls during the winter months, but its price rises during those months. Which of the following best describes how this could occur? A) there is also a decrease in supply during winter months and it is quite small in size B) there is also an increase in supply during winter months and it is quite large in size C) there is also an increase in supply during winter months and it is quite small in size D) there is also a decrease in supply during winter months and it is quite large in size E) None of the above - it is impossible for price to rise if demand decreases
D) there is also a decrease in supply during winter months and it is quite large in size
78) Suppose that the demand for a product falls during the winter months, but its price rises during those months. Which of the following best describes how this could occur? A) there is also an increase in supply during winter months and it is quite large in size B) there is also a decrease in supply during winter months and it is quite small in size C) there is also an increase in supply during winter months and it is quite small in size D) there is also a decrease in supply during winter months and it is quite large in size E) None of the above - it is impossible for price to rise if demand decreases
D) there is also a decrease in supply during winter months and it is quite large in size
46) Refer to Figure 3-2. If the price is $10, A) every willing buyer can find a willing seller, but not every willing seller can find a willing buyer. B) there is pressure on the price to fall. C) there is a shortage of 400 units. D) there is a surplus of 300 units. E) None of the above is correct.
E) None of the above is correct.
6) Refer to Figure 3-2. At a price of $25, there is __________________ in this market, which should cause ________________. A) a shortage of 100 units ; the price of the good to rise B) a surplus of 100 units ; the price of the good to fall C) a surplus of 300 units ; the price of the good to rise D) equilibrium ; the price to not change in the future E) a surplus of 300 units ; the price of the good to fall
E) a surplus of 300 units ; the price of the good to fall
