Question 1

One reason that supply curves display positive slope is that:

Accepted Answer

A)  expanded production may require the use of superior resources.
B)  people are not willing to pay a higher price for more goods.
C)  expanded industry output might cause a labor shortage and subsequently increase the wage rate included in the cost of production.
D)  extra production brings in the more efficient, lower-cost producers.
E)  the law of diminishing returns is important to producers.F) B) and D)
G) None of the above

Question 2

In a competitive market, price is determined by:

Accepted Answer

A)  the costs of producing the good in question.
B)  the supply of the good.
C)  the decisions of the buyers about how much they are willing to pay.
D)  the interaction of tastes and demand.
E)  all of the above.F) C) and E)
G) C) and D)

Question 3

An increase in price will lead to a lower quantity demanded because:

Accepted Answer

A)  suppliers will supply only the smaller amount.
B)  some individuals will no longer purchase the good.
C)  individuals purchase less of the good.
D)  a and b.
E)  b and c.F) B) and C)
G) All of the above

Question 4

If the price of bread is causing quantity demanded to increase but not quantity supplied, the price will begin to be pushed upward.

Accepted Answer

A) True 
 B)False

Question 5

A price at which the amount people wish to buy exceeds the amount that people wish to produce (given upward-sloping supply curves) :

Accepted Answer

A)  lies above the equilibrium, market clearing price.
B)  lies below the market clearing price.
C)  will induce a shift in the demand schedule to achieve equilibrium.
D)  is impossible.
E)  is none of the above.F) B) and E)
G) B) and D)

Question 6

Lower prices coax out higher quantities demanded along a downward-sloping demand curve.

Accepted Answer

A) True 
 B)False

Question 7

Upward-sloping supply curves are the result of:

Accepted Answer

A)  increasing returns to scale.
B)  increasing costs of labor.
C)  changes in government policies.
D)  changes in technology.
E)  none of the aboveF) A) and C)
G) A) and B)

Question 8

If you observe a stationary price for some commodity, you can guess that demand and supply curves intersect at that price.

Accepted Answer

A) True 
 B)False

Question 9

Given a fixed supply of lamb chops, a reduction in the price of pork chops (close substitutes) will tend to:

Accepted Answer

A)  shift the demand curve for lamb chops to the right.
B)  shift the demand curve for pork chops to the right.
C)  shift the demand curve for pork chops to the left.
D)  raise the price of lamb chops.
E)  lower the price of lamb chops.F) None of the above
G) B) and E)

Question 10

When a big movement of hogs to market causes pork prices to fall, this will tend to push beef prices down also.

Accepted Answer

A) True 
 B)False

Question 11

The high and rising price of lobsters must be indicative of monopoly in the lobster fishing market.

Accepted Answer

A) True 
 B)False

Question 12

Assume that the demand for penicillin as reflected in the figure below is P = 40 - .1Q, while supply is P = 10 + .9Q.Market equilibrium would be given by:

Accepted Answer

A)  P = 37, Q = 30
B)  P = 30, Q = 37
C)  P = 40, Q = 36
D)  P = 370, Q = 30
E)  None of the aboveF) C) and D)
G) B) and D)

Question 13

An equilibrium point could conceivably lie on the supply schedule, but not the demand schedule.

Accepted Answer

A) True 
 B)False

Question 14

According to the law of demand:

Accepted Answer

A)  the intersection of demand and supply establishes the market equilibrium point.
B)  consumers' tastes can influence the quantity demanded.
C)  there is an inverse relationship between price and the quantity demanded.
D)  "all other things held equal" is an important concept.
E)  there is a direct relationship between price and the quantity demanded.F) A) and D)
G) C) and D)

Question 15

An increase in demand means a movement to a higher price along a given demand curve.

Accepted Answer

A) True 
 B)False

Question 16

Use the following to answer questions :
Figure 3-1 
-Let P* and Q* represent market clearing price and quantity, respectively.Given the supply and demand curves drawn in Figure 3-1, the appearance of foreign suppliers willing to sell any quantity at a price slightly higher than equilibrium can be expected to cause:

Accepted Answer

A)  P* and Q* to climb.
B)  P* and Q* to fall.
C)  P* to climb while Q* falls.
D)  Q* to fall while P* holds steady.
E)  none of the above.F) B) and E)
G) A) and B)

Question 17

Use the following to answer questions :
Figure 3-1 
-Let P* and Q* represent market clearing price and quantity, respectively.Given the supply and demand curves drawn in Figure 3-1, an increase in the price of an input employed in the production of Q can be expected to cause:

Accepted Answer

A)  P* and Q* to climb.
B)  P* to climb while Q* falls.
C)  P* to climb while Q* holds steady.
D)  P* to fall while Q* climbs.
E)  P* and Q* to fall.F) A) and C)
G) A) and B)

Question 18

Use the following to answer questions :
Figure 3-3 
-Assume that automotive workers go on strike, so that the production of cars falls.Given the supply and demand curves in Figure 3-3, which of the following would result in comparison to the initial equilibrium position?

Accepted Answer

A)  Prices fall, Quantity falls
B)  Prices rise, Quantity falls
C)  Prices rise, Quantity rises
D)  Prices and Quantity do not change.
E)  None of the above.F) B) and D)
G) D) and E)

Question 19

Equilibrium occurs where the demand curve intersects the supply curve.

Accepted Answer

A) True 
 B)False

Question 20

One reason why the quantity demanded of a good tends to fall as its price rises is that:

Accepted Answer

A)  the increase in price shifts the supply curve upward.
B)  the increase in price shifts the demand curve downward.
C)  at higher prices, suppliers are willing to supply less.
D)  people feel poorer and cut down on their use of the good.
E)  demand has to fall to restore equilibrium after a price rise.F) B) and C)
G) A) and E)

Exam 3: Basic Elements of Supply and Demand Part

Use the following to answer questions : Figure 3-1 -Let P* and Q* represent market clearing price and quantity, respectively.Given the supply and demand curves drawn in Figure 3-1, an increase in the price of an input employed in the production of Q can be expected to cause:

Correct Answer
verified

If you observe a stationary price for some commodity, you can guess that demand and supply curves intersect at that price.

Correct Answer
verified

In a competitive market, price is determined by:

Correct Answer
verified

An increase in price will lead to a lower quantity demanded because:

Correct Answer
verified

One reason that supply curves display positive slope is that:

Correct Answer
verified

When a big movement of hogs to market causes pork prices to fall, this will tend to push beef prices down also.

Correct Answer
verified

According to the law of demand:

Correct Answer
verified

An increase in demand means a movement to a higher price along a given demand curve.

Correct Answer
verified

Equilibrium occurs where the demand curve intersects the supply curve.

Correct Answer
verified

Given a fixed supply of lamb chops, a reduction in the price of pork chops (close substitutes) will tend to:

Correct Answer
verified

Assume that the demand for penicillin as reflected in the figure below is P = 40 - .1Q, while supply is P = 10 + .9Q.Market equilibrium would be given by:

Correct Answer
verified

One reason why the quantity demanded of a good tends to fall as its price rises is that:

Correct Answer
verified

Upward-sloping supply curves are the result of:

Correct Answer
verified

Use the following to answer questions : Figure 3-3 -Assume that automotive workers go on strike, so that the production of cars falls.Given the supply and demand curves in Figure 3-3, which of the following would result in comparison to the initial equilibrium position?

Correct Answer
verified

A price at which the amount people wish to buy exceeds the amount that people wish to produce (given upward-sloping supply curves) :

Correct Answer
verified

If the price of bread is causing quantity demanded to increase but not quantity supplied, the price will begin to be pushed upward.

Correct Answer
verified

The high and rising price of lobsters must be indicative of monopoly in the lobster fishing market.

Correct Answer
verified

Lower prices coax out higher quantities demanded along a downward-sloping demand curve.

Correct Answer
verified

An equilibrium point could conceivably lie on the supply schedule, but not the demand schedule.

Correct Answer
verified

Correct Answer
verified

Exam 3: Basic Elements of Supply and Demand Part

Use the following to answer questions : Figure 3-1 -Let P* and Q* represent market clearing price and quantity, respectively.Given the supply and demand curves drawn in Figure 3-1, an increase in the price of an input employed in the production of Q can be expected to cause:

Correct AnswerverifiedShow Answer

If you observe a stationary price for some commodity, you can guess that demand and supply curves intersect at that price.

Correct AnswerverifiedShow Answer

In a competitive market, price is determined by:

Correct AnswerverifiedShow Answer

An increase in price will lead to a lower quantity demanded because:

Correct AnswerverifiedShow Answer

One reason that supply curves display positive slope is that:

Correct AnswerverifiedShow Answer

When a big movement of hogs to market causes pork prices to fall, this will tend to push beef prices down also.

Correct AnswerverifiedShow Answer

According to the law of demand:

Correct AnswerverifiedShow Answer

An increase in demand means a movement to a higher price along a given demand curve.

Correct AnswerverifiedShow Answer

Equilibrium occurs where the demand curve intersects the supply curve.

Correct AnswerverifiedShow Answer

Given a fixed supply of lamb chops, a reduction in the price of pork chops (close substitutes) will tend to:

Correct AnswerverifiedShow Answer

Assume that the demand for penicillin as reflected in the figure below is P = 40 - .1Q, while supply is P = 10 + .9Q.Market equilibrium would be given by:

Correct AnswerverifiedShow Answer

One reason why the quantity demanded of a good tends to fall as its price rises is that:

Correct AnswerverifiedShow Answer

Upward-sloping supply curves are the result of:

Correct AnswerverifiedShow Answer

Use the following to answer questions : Figure 3-3 -Assume that automotive workers go on strike, so that the production of cars falls.Given the supply and demand curves in Figure 3-3, which of the following would result in comparison to the initial equilibrium position?

Correct AnswerverifiedShow Answer

A price at which the amount people wish to buy exceeds the amount that people wish to produce (given upward-sloping supply curves) :

Correct AnswerverifiedShow Answer

If the price of bread is causing quantity demanded to increase but not quantity supplied, the price will begin to be pushed upward.

Correct AnswerverifiedShow Answer

The high and rising price of lobsters must be indicative of monopoly in the lobster fishing market.

Correct AnswerverifiedShow Answer

Lower prices coax out higher quantities demanded along a downward-sloping demand curve.

Correct AnswerverifiedShow Answer

An equilibrium point could conceivably lie on the supply schedule, but not the demand schedule.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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