Question 1

The income effect of a price change results in a

Accepted Answer

A)  shift of the demand curve when income changes.
B)  movement along the demand curve due to a change in relative prices.
C)  shift of the demand curve due to a change in purchasing power brought about by the price change.
D)  movement along the demand curve due to a change in purchasing power brought about by the price change.E) A) and D)
F) A) and C)

Question 2

What is the difference between a "change in demand" and a "change in quantity demanded"?

Accepted Answer

A "change in demand" means the demand cu...

Question 3

What would happen in the market for knee replacement surgery if insurance companies started to cover a smaller portion of the cost of the surgery?

Accepted Answer

A)  Demand will decrease,but this will not shift the supply curve.
B)  Supply will decrease,but this will not shift the demand curve.
C)  Demand and supply will both decrease.
D)  Demand will decrease and supply will increase.E) B) and C)
F) A) and D)

Question 4

Studies have shown that smoking cigarettes can cause heart disease.Assume this is true,and favorable weather has increased the tobacco harvest in North Carolina.In the market for cigarettes,these two developments would

Accepted Answer

A)  decrease demand and decrease supply,resulting in an increase in the equilibrium quantity and a decrease in the equilibrium price of cigarettes.
B)  increase demand and increase supply resulting in an increase in the equilibrium quantity and an uncertain effect on the equilibrium price of cigarettes.
C)  decrease demand and increase supply,resulting in a decrease in the equilibrium price and an uncertain effect on the equilibrium quantity of cigarettes.
D)  decrease demand and increase supply,resulting in an increase in both the equilibrium price and the equilibrium quantity of cigarettes.E) A) and B)
F) A) and C)

Question 5

Which of the following will not shift the demand curve for a good?

Accepted Answer

A)  an increase in population
B)  an increase in the price of the good
C)  a decrease in the price of a substitute good
D)  an increase in consumer incomesE) B) and D)
F) None of the above

Question 6

Explain the Law of Demand.

Accepted Answer

The law of demand is the rule that,holdi...

Question 7

A demand curve shows the relationship between

Accepted Answer

A)  the price of a product and the quantity of the product demanded.
B)  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.
C)  the quantity that consumers are willing and able to buy and the quantity that sellers are willing and able to offer.
D)  the price of a produce and the demand for the product.E) A) and D)
F) B) and D)

Question 8

Suppose that when the price of hamburgers increases,the Ruiz family increases their purchases of hot dogs.To the Ruiz family,

Accepted Answer

A)  hamburgers and hot dogs are complements.
B)  hamburgers and hot dogs are inferior goods.
C)  hamburgers and hot dogs are normal goods.
D)  hamburgers and hot dogs are substitutes.E) All of the above
F) A) and B)

Question 9

If the demand curve for a product shifts to the right and the supply curve for the product shifts to the left,equilibrium price and equilibrium quantity will both increase.

Accepted Answer

A) True 
 B)False

Question 10

If,in response to an increase in the price of pineapples,the quantity demanded of pineapples decreases,economists would describe this as

Accepted Answer

A)  an decrease in demand.
B)  a decrease in quantity demanded.
C)  a change in consumer income.
D)  a decrease in consumers' taste for coffee.E) None of the above
F) A) and D)

Question 11

Suppose that when the price of oranges decreases,the Sarita decreases her purchases of peaches.To Sarita,

Accepted Answer

A)  oranges and peaches are complements.
B)  oranges and peaches are inferior goods.
C)  oranges and peaches are normal goods.
D)  oranges and peaches are substitutes.E) A) and B)
F) A) and C)

Question 12

The income effect explains why there is a direct relationship between the price of a product and the quantity of the product demanded.

Accepted Answer

A) True 
 B)False

Question 13

Electric car manufacturers want to sell more electric cars at a higher price.Which of the following events would have this effect?

Accepted Answer

A)  technological advancement in the production of electric car batteries.
B)  an increase in the number of manufacturers of electric cars.
C)  a decrease in the price of lithium,which is used in the electric car batteries.
D)  an increase in the price of gasoline.E) B) and C)
F) None of the above

Question 14

Which of the following is evidence of a shortage of chocolate?

Accepted Answer

A)  Firms lower the price of chocolate.
B)  The price of chocolate is raised in order to increase sales.
C)  The equilibrium price of chocolate falls due to a decrease in demand.
D)  The quantity of chocolate demanded is greater than the quantity supplied.E) A) and D)
F) B) and C)

Question 15

Factory incentives on cell phones have encouraged consumers to upgrade their phones.How does this affect the market for bluetooth headsets?

Accepted Answer

A)  The quantity of bluetooth headsets demanded increases.
B)  The quantity of bluetooth headsets demanded decreases.
C)  The demand for bluetooth headsets increases.
D)  The demand for bluetooth headsets decreases.E) A) and B)
F) C) and D)

Question 16

Assume that in recent years the cost of producing microbrew beer in the U.S.has decreased largely due to technological improvements.At the same time,more and more Americans prefer microbrew beer over wine.Which of the following best explains the effect of these events in the microbrew beer market?

Accepted Answer

A)  The supply curve has shifted to the right and the demand curve has shifted to the left.As a result there has been a decrease in the equilibrium quantity and an uncertain effect on the equilibrium price.
B)  Both the supply and demand curves have shifted to the right.As a result,there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price.
C)  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.
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 price and an uncertain effect on the equilibrium quantity.E) A) and B)
F) None of the above

Question 17

An increase in the equilibrium price for a product will result

Accepted Answer

A)  when the quantity demanded for the product exceeds the quantity supplied.
B)  when there is a decrease in supply and an increase in demand for the product.
C)  when there is a decrease in supply and a decrease in demand for the product.
D)  when there is an increase in demand and an increase in the number of firms producing the product.E) A) and D)
F) C) and D)

Question 18

An increase in population results in an increase in demand.

Accepted Answer

A) True 
 B)False

Question 19

Farmers can raise either goats or ostriches on their land.Which of the following would cause the supply of goats to decrease?

Accepted Answer

A)  an increase in the price of ostriches
B)  a decrease in the price of goats
C)  an increase in the demand for goats
D)  an increase in the price of ostrich feedE) A) and D)
F) C) and D)

Question 20

An increase in the price of MP3 players will result in

Accepted Answer

A)  a smaller quantity of MP3 players supplied.
B)  a larger quantity of MP3 players supplied.
C)  a decrease in the demand for MP3 players.
D)  an increase in the supply of MP3 players.E) None of the above
F) A) and B)

Exam 3: Where Prices Come From: the Interaction of Demand and Supply

Studies have shown that smoking cigarettes can cause heart disease.Assume this is true,and favorable weather has increased the tobacco harvest in North Carolina.In the market for cigarettes,these two developments would

Correct AnswerverifiedShow Answer

The income effect of a price change results in a

Correct AnswerverifiedShow Answer

Farmers can raise either goats or ostriches on their land.Which of the following would cause the supply of goats to decrease?

Correct AnswerverifiedShow Answer

An increase in the price of MP3 players will result in

Correct AnswerverifiedShow Answer

An increase in the equilibrium price for a product will result

Correct AnswerverifiedShow Answer

Electric car manufacturers want to sell more electric cars at a higher price.Which of the following events would have this effect?

Correct AnswerverifiedShow Answer

If,in response to an increase in the price of pineapples,the quantity demanded of pineapples decreases,economists would describe this as

Correct AnswerverifiedShow Answer

A demand curve shows the relationship between

Correct AnswerverifiedShow Answer

Which of the following is evidence of a shortage of chocolate?

Correct AnswerverifiedShow Answer

Assume that in recent years the cost of producing microbrew beer in the U.S.has decreased largely due to technological improvements.At the same time,more and more Americans prefer microbrew beer over wine.Which of the following best explains the effect of these events in the microbrew beer market?

Correct AnswerverifiedShow Answer

Suppose that when the price of oranges decreases,the Sarita decreases her purchases of peaches.To Sarita,

Correct AnswerverifiedShow Answer

Explain the Law of Demand.

Correct AnswerverifiedThe law of demand is the rule that,holdi...View AnswerShow Answer

If the demand curve for a product shifts to the right and the supply curve for the product shifts to the left,equilibrium price and equilibrium quantity will both increase.

Correct AnswerverifiedShow Answer

Suppose that when the price of hamburgers increases,the Ruiz family increases their purchases of hot dogs.To the Ruiz family,

Correct AnswerverifiedShow Answer

An increase in population results in an increase in demand.

Correct AnswerverifiedShow Answer

What is the difference between a "change in demand" and a "change in quantity demanded"?

Correct AnswerverifiedA "change in demand" means the demand cu...View AnswerShow Answer

Which of the following will not shift the demand curve for a good?

Correct AnswerverifiedShow Answer

The income effect explains why there is a direct relationship between the price of a product and the quantity of the product demanded.

Correct AnswerverifiedShow Answer

Factory incentives on cell phones have encouraged consumers to upgrade their phones.How does this affect the market for bluetooth headsets?

Correct AnswerverifiedShow Answer

What would happen in the market for knee replacement surgery if insurance companies started to cover a smaller portion of the cost of the surgery?

Correct AnswerverifiedShow Answer

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The law of demand is the rule that,holdi...
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A "change in demand" means the demand cu...
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