Question 1

Travel by bus and pawn-shop services would be expected to be examples of:

Accepted Answer

A)   normal goods.
B)   inferior goods.
C)   substitute goods.
D)   complementary goods.

Question 2

An increase in demand:

Accepted Answer

A)   results in a leftward shift of the demand curve.
B)   could be caused by a decrease in the price of the good.
C)   could be caused by an increase in the price of a substitute good.
D)   is shown as movement down along a demand curve.

Question 3

At a price of $5, Sam buys 10 units of a product; when the price increases to $6, Sam buys 8 units. Martha says Sam's demand has decreased. Is Martha correct?

Accepted Answer

A)   Yes, Martha is correct. Sam's demand has decreased.
B)   No, Martha is incorrect. Sam's demand has increased.
C)   No, Martha is incorrect. Sam's quantity demanded has decreased, and his demand has not changed.
D)   No, Martha is incorrect. Sam's quantity demanded has increased, and his demand has increased.
E)   No, Martha is incorrect. Sam's demand has increased, and his quantity demanded has decreased.

Question 4

A reduction in production costs will result in a(n) :

Accepted Answer

A)   rightward shift of the supply curve.
B)   increase in supply.
C)   greater willingness and ability of producers to supply a larger quantity at any given price.
D)   greater willingness and ability of producers to supply the same quantity at a lower price.
E)   all of the above.

Question 5

The law of demand states that:

Accepted Answer

A)   as the price of a good increases, more units are demanded.
B)   there is a direct relationship between the price of a good and the quantity of the good produced.
C)   there is a negative relationship between the price of a good and the quantity of the good demanded.
D)   there is an increase in the need for a good as the price of the good increases.

Question 6

Demand curves slope downward to the right.

Accepted Answer

A) True 
 B)False

Question 7

Suppose that X and Y are substitute goods. If the price of good X increases, we can expect:

Accepted Answer

A)   the demand for good X to shift to the left.
B)   an upward movement along the demand curve for good Y.
C)   the demand curve for good Y to shift to the right.
D)   a downward movement along the demand curve for good Y.
E)   the demand curve for good Y to shift to the left.

Question 8

Exhibit 3-11  Demand and supply curves  In Exhibit 3-11, in Panel A the movement from A to B describes a(n) :

Accepted Answer

A)   increase in demand and an increase in the quantity supplied.
B)   increase in the quantity demanded and an increase in supply.
C)   decrease in demand and a decrease in the quantity supplied.
D)   decrease in the quantity demanded and a decrease in supply.
E)   decrease in the quantity demanded and an increase in supply.

Question 9

Suppose the prices of petroleum products, including gasoline and fuel oil, fell sharply. Which of the following would most likely occur as the result of the lower prices of petroleum products?

Accepted Answer

A)   A reduction in the consumption of gasoline.
B)   An increase in demand for solar heating systems.
C)   An increase in demand for smaller, more efficient automobiles.
D)   A reduction in the demand for home insulation products.

Question 10

Which of the following has a direct relationship rather than an inverse relationship with the supply curve?

Accepted Answer

A)   The number of sellers.
B)   Resource prices.
C)   Consumer income.
D)   Prices of other goods that firms could produce.

Question 11

If consumer incomes go up and Harley Davidson motorcycles are a normal good, the effect on the demand for motorcycles, ceteris paribus, will be a(n) :

Accepted Answer

A)   upward movement along the demand curve for motorcycles.
B)   downward movement along the demand curve for motorcycles.
C)   rightward shift in the demand curve for motorcycles.
D)   leftward shift in the demand curve for motorcycles.

Question 12

Which of the following will not shift the demand curve for televisions?

Accepted Answer

A)   An increase in the price of televisions.
B)   An increase in consumer income.
C)   An increase in the price of radios (a substitute) .
D)   An increase in the price of cable service (a complement) .

Question 13

A technological improvement in producing good A would be a shift in the:

Accepted Answer

A)   supply curve for A to the right.
B)   supply curve for A to the left.
C)   demand curve for A to the right.
D)   demand curve for A to the left.

Question 14

The "other things being equal" clause in the law of demand does not allow which of the following factors to change?

Accepted Answer

A)   Consumer income.
B)   The prices of other goods.
C)   Consumer tastes and preferences.
D)   All of the above.

Question 15

If X is a normal good, a rise in consumer income will shift the:

Accepted Answer

A)   demand curve for X to the right.
B)   demand curve for X to the left.
C)   supply curve for X to the right.
D)   supply curve for X to the left.

Question 16

The development of new technology typically:

Accepted Answer

A)   shifts the supply curve to the right.
B)   reduces profits.
C)   results in a downward movement along a supply curve.
D)   increases costs of production.
E)   shifts the demand curve to the right.

Question 17

There is a technological advance in the production of digital watches. This will cause:

Accepted Answer

A)   demand to increase.
B)   supply to increase.
C)   demand to decrease.
D)   supply to decrease.
E)   the price to increase.

Question 18

We can find the market demand for pears by:

Accepted Answer

A)   adding up all the prices people are willing to pay for pears.
B)   multiplying the number of people times the price of pears.
C)   adding up the number of pears that producers are willing to sell.
D)   multiplying the number of pears by the price of pears.
E)   adding up all the individual demand curves for pears.

Question 19

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

Accepted Answer

A)   A change in the price of a complementary good.
B)   A change in the price of good X.
C)   A change in consumer tastes and preferences for good X.
D)   An increase in consumer income.

Question 20

Assuming that travel from New York to Los Angeles is a normal good, a decrease in consumer income, other things being equal, will:

Accepted Answer

A)   decrease the quantity demanded of travel to Los Angeles.
B)   increase the demand for travel to Los Angeles.
C)   decrease the demand for travel to Los Angeles.
D)   increase the quantity of travel to Los Angeles demanded.

Exam 3: Market Demand and Supply

If X is a normal good, a rise in consumer income will shift the:

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Which of the following will not shift the demand curve for televisions?

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The law of demand states that:

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If consumer incomes go up and Harley Davidson motorcycles are a normal good, the effect on the demand for motorcycles, ceteris paribus, will be a(n) :

Correct AnswerverifiedShow Answer

An increase in demand:

Correct AnswerverifiedShow Answer

Travel by bus and pawn-shop services would be expected to be examples of:

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The development of new technology typically:

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The "other things being equal" clause in the law of demand does not allow which of the following factors to change?

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We can find the market demand for pears by:

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At a price of $5, Sam buys 10 units of a product; when the price increases to $6, Sam buys 8 units. Martha says Sam's demand has decreased. Is Martha correct?

Correct AnswerverifiedShow Answer

Assuming that travel from New York to Los Angeles is a normal good, a decrease in consumer income, other things being equal, will:

Correct AnswerverifiedShow Answer

Demand curves slope downward to the right.

Correct AnswerverifiedShow Answer

A reduction in production costs will result in a(n) :

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A technological improvement in producing good A would be a shift in the:

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

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Exhibit 3-11 Demand and supply curves In Exhibit 3-11, in Panel A the movement from A to B describes a(n) :

Correct AnswerverifiedShow Answer

Suppose the prices of petroleum products, including gasoline and fuel oil, fell sharply. Which of the following would most likely occur as the result of the lower prices of petroleum products?

Correct AnswerverifiedShow Answer

Which of the following has a direct relationship rather than an inverse relationship with the supply curve?

Correct AnswerverifiedShow Answer

Suppose that X and Y are substitute goods. If the price of good X increases, we can expect:

Correct AnswerverifiedShow Answer

There is a technological advance in the production of digital watches. This will cause:

Correct AnswerverifiedShow Answer

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