Question 1

Assume the demand schedule for cookies is downward sloping. What is the effect if the price of cookies falls?

Accepted Answer

A)   A larger quantity of cookies will be demanded.
B)   A smaller quantity of cookies will be demanded.
C)   The demand for cookies will rise.
D)   The demand for cookies will fall.

Question 2

If the price of pizza falls, the demand for pizza will rise.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following describes what happens when the price of a Big Mac doubles, while the price of a Whopper increases by one-third?

Accepted Answer

A)   The relative price of a Whopper falls.
B)   The relative price of a Big Mac falls.
C)   The nominal prices of Big Macs and Whoppers rise, but their relative prices remain the same.
D)   The relative price of a Whopper rises.

Question 4

Suppose we observe an increase in the price of oranges. Which of the following is the most likely cause?

Accepted Answer

A)   a scientific discovery that states that oranges cause tooth decay
B)   good growing weather in Florida
C)   a decrease in income if oranges are a normal good
D)   an increase in the price of apples

Question 5

Which of the following best describes what happens when you move along the supply curve?

Accepted Answer

A)   Quantity supplied changes as technology changes.
B)   Quantity supplied changes as price changes.
C)   Supply changes as price changes.
D)   Supply changes as technology changes.

Question 6

Which of the following would NOT cause a change in the supply of milk?

Accepted Answer

A)   an increase in the cost of feed for cows
B)   the discovery of growth hormones to stimulate the milk production of cows
C)   an increase in government subsidies to dairy farmers
D)   an increase in the price of milk

Question 7

In economics, what does the demand for a good refer to?

Accepted Answer

A)   The amount people would like to have if the good was free.
B)   The amount people need to achieve a minimum standard of living.
C)   The amount people will buy at alternative income levels.
D)   The amount people will buy at various prices.

Question 8

When Mom buys more Jell-O⁽™⁾ because the price of pudding has risen, it is an example of the substitution effect.

Accepted Answer

A) True 
 B)False

Question 9

When quantity demanded decreases in response to a change in price, how is this reflected in the demand curve?

Accepted Answer

A)   There is a movement down along the demand curve.
B)   There is a movement up along the demand curve.
C)   The demand curve shifts to the right.
D)   The demand curve shifts to the left.

Question 10

When the relative price of steak falls, we would expect people to buy a greater quantity of steak.

Accepted Answer

A) True 
 B)False

Question 11

TABLE 3-1
 
-Refer to Table 3-1. It illustrates the demand schedules for gourmet ice cream of two individuals and the rest of the market. At a price of $8, what would the quantity demanded in the market be?

Accepted Answer

A)   12
B)   22
C)   31
D)   39

Question 12

What provides an explanation for the inverse relationship between price and quantity demanded?

Accepted Answer

A)   a preference for cheaper items
B)   the income effect
C)   a decline in money incomes as prices fall
D)   the price effect

Question 13

Which of the following statements about the supply curve is the most accurate?

Accepted Answer

A)   It shows how the average cost of production varies with price.
B)   It shows the same basic information as a demand curve.
C)   It shows how the quantity demanded varies with price.
D)   It shows how the quantity supplied varies with price.

Question 14

What type of shift will a technological improvement that lowers production costs for a good cause?

Accepted Answer

A)   a shift of the demand curve to the right
B)   a shift of the supply curve to the right
C)   a shift of the demand curve to the left
D)   a shift of the supply curve to the left

Question 15

If the price of ice cream increases and the quantity demanded decreases, how would economists describe this?

Accepted Answer

A)   a change in quantity demanded
B)   a change in demand
C)   a change in consumer income
D)   a change in one of the variables that shifts demand

Question 16

What do you expect will happen to the worldwide price of airline tickets as incomes in India increase?

Accepted Answer

Air travel is a normal good. A...

Question 17

Which of the following statements about the law of supply is most accurate?

Accepted Answer

A)   There is an inverse relationship between price and the quantity supplied.
B)   There is an inverse relationship between price and quantity demanded.
C)   There is a direct relationship between price and quantity demanded.
D)   There is a direct relationship between price and the quantity supplied.

Question 18

If the price of Nike⁽ᵗᵐ⁾ running shoes increased from $100 to $120, and the price of comparable New Balance⁽ᵗᵐ⁾ shoes increased from $100 to $130, how have the prices changed?

Accepted Answer

A)   The nominal prices of both shoes have decreased, and the relative price of the Nike shoes has fallen.
B)   The nominal prices of both shoes have decreased, and the relative price of the Nike shoes has risen.
C)   The nominal prices of both shoes have increased, and the relative price of the Nike shoes has fallen.
D)   The nominal prices of both shoes have increased, and the relative price of the Nike shoes has risen.

Question 19

Which of the following will NOT cause a change in the supply of a product?

Accepted Answer

A)   a change in the price of alternative goods that could be produced with the same resources
B)   a natural disaster
C)   a change in the price of suppliers' inputs
D)   a change in the price of the product

Question 20

A market is a place where some sort of exchange occurs.

Accepted Answer

A) True 
 B)False

Exam 3: Supply and Demand

In economics, what does the demand for a good refer to?

Correct AnswerverifiedShow Answer

If the price of Nike⁽ᵗᵐ⁾ running shoes increased from $100 to $120, and the price of comparable New Balance⁽ᵗᵐ⁾ shoes increased from $100 to $130, how have the prices changed?

Correct AnswerverifiedShow Answer

Assume the demand schedule for cookies is downward sloping. What is the effect if the price of cookies falls?

Correct AnswerverifiedShow Answer

Which of the following statements about the law of supply is most accurate?

Correct AnswerverifiedShow Answer

What do you expect will happen to the worldwide price of airline tickets as incomes in India increase?

Correct AnswerverifiedAir travel is a normal good. A...View AnswerShow Answer

Which of the following best describes what happens when you move along the supply curve?

Correct AnswerverifiedShow Answer

When Mom buys more Jell-O⁽™⁾ because the price of pudding has risen, it is an example of the substitution effect.

Correct AnswerverifiedShow Answer

Which of the following would NOT cause a change in the supply of milk?

Correct AnswerverifiedShow Answer

When the relative price of steak falls, we would expect people to buy a greater quantity of steak.

Correct AnswerverifiedShow Answer

Which of the following describes what happens when the price of a Big Mac doubles, while the price of a Whopper increases by one-third?

Correct AnswerverifiedShow Answer

If the price of pizza falls, the demand for pizza will rise.

Correct AnswerverifiedShow Answer

If the price of ice cream increases and the quantity demanded decreases, how would economists describe this?

Correct AnswerverifiedShow Answer

Suppose we observe an increase in the price of oranges. Which of the following is the most likely cause?

Correct AnswerverifiedShow Answer

A market is a place where some sort of exchange occurs.

Correct AnswerverifiedShow Answer

When quantity demanded decreases in response to a change in price, how is this reflected in the demand curve?

Correct AnswerverifiedShow Answer

What type of shift will a technological improvement that lowers production costs for a good cause?

Correct AnswerverifiedShow Answer

What provides an explanation for the inverse relationship between price and quantity demanded?

Correct AnswerverifiedShow Answer

Which of the following statements about the supply curve is the most accurate?

Correct AnswerverifiedShow Answer

Which of the following will NOT cause a change in the supply of a product?

Correct AnswerverifiedShow Answer

TABLE 3-1 -Refer to Table 3-1. It illustrates the demand schedules for gourmet ice cream of two individuals and the rest of the market. At a price of $8, what would the quantity demanded in the market be?

Correct AnswerverifiedShow Answer

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Air travel is a normal good. A...
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