Question 1

Which of the following statements correctly defines the law of demand?

Accepted Answer

A)   The lower the price of a commodity, the lower the quantity demanded of that commodity.
B)   As the price of a commodity increases, the quantity demanded of that commodity also increases.
C)   The lower the price of a commodity, the greater the quantity demanded of that commodity.
D)   The lower the price of a commodity, the greater the quantity supplied of that commodity.
E)   The quantity demanded of a particular good decreases with an increase in the price of a substitute good.

Question 2

The market demand curve is derived by:

Accepted Answer

A)   studying an individual's demand for a product over a year.
B)   comparing the monthly consumption of a group of people.
C)   surveying a set of consumers and ascertaining their preferences.
D)   adding up the quantities that consumers in a market are willing and able to purchase at each price.
E)   calculating the average price a random sample of consumers are willing to pay for a product.

Question 3

Other things remaining unchanged, which of the following is a determinant of the quantity supplied of a good?

Accepted Answer

A)   The cost of inputs used in production
B)   The price of the product
C)   The income levels of consumers
D)   The price expectations of producers
E)   The preferences of consumers B

Question 4

Which of the following will have no impact on the demand for ice cream in the short run?

Accepted Answer

A)   A change in population size
B)   A change in the price of ice cream
C)   A change in seasons
D)   A change in consumer preferences
E)   A change in consumer incomes

Question 5

A price control always benefits consumers.

Accepted Answer

A) True 
 B)False

Question 6

Assume that the supply curve for tomatoes is upward sloping. If the price per pound increases from $0.99 to $1.89, a greater quantity of tomatoes will be supplied to the market.

Accepted Answer

A) True 
 B)False

Question 7

The table given below reports the quantity demanded and supplied of a commodity in a market at different price levels.?
 
-Consider the market described by Table 3.4. Identify the correct statement.

Accepted Answer

A)   The law of demand is violated
B)   The law of supply is violated
C)   There is no equilibrium
D)   At $5 per unit, people will purchase 400 units
E)   At $2 per unit, people will purchase 900 units

Question 8

The removal of a price ceiling in a market results in:

Accepted Answer

A)   an increase in the market price.
B)   a shortage in the market.
C)   over-production of the commodity and a surplus.
D)   a fall in the market price.
E)   abnormal profits for producers. A

Question 9

In the figure given below, D₁ and S₁ are the initial demand and supply curves for a commodity in the market.Figure 3.3
 
-If both supply and demand for a good increase, which of the following will definitely happen?

Accepted Answer

A)   Equilibrium price will remain the same
B)   Equilibrium price will increase
C)   Equilibrium price will decrease
D)   Equilibrium quantity will increase
E)   Equilibrium quantity will decrease

Question 10

If demand increases and supply decreases, then equilibrium price must decrease, but equilibrium quantity is indeterminate.

Accepted Answer

A) True 
 B)False

Question 11

In the figure given below, D₁ and S₁ are the original demand and supply curves.Figure 3.1
 
-Refer to Figure 3.1. If demand shifts from D₁ to D₂ and supply shifts from S₁ to S₂:

Accepted Answer

A)   equilibrium price will rise to F, but equilibrium quantity will remain at B.
B)   equilibrium price will move to C and equilibrium quantity to G.
C)   demand will decrease and supply will increase.
D)   equilibrium price will rise to G, and equilibrium quantity will remain at B.
E)   both equilibrium price and equilibrium quantity will decrease. D

Question 12

Without money, no transaction can occur.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following will cause an increase in the quantity demanded of ice cream at an ice cream store?

Accepted Answer

A)   The onset of summer brings about an increase in the temperature.
B)   The price of frozen yogurt that is sold at the store is reduced by 5 percent.
C)   A new ice cream flavor is introduced at the store.
D)   The store introduces a limited period offer of 20 percent off on the price of ice cream.
E)   The income of the store's consumers increases.

Question 14

A sharp increase in gasoline prices will cause the supply curve for trucking services to shift to the right.

Accepted Answer

A) True 
 B)False

Question 15

Other things remaining the same, an individual demand schedule shows the various quantities of a good:

Accepted Answer

A)   that a person wants and is able to purchase at alternative prices.
B)   that are demanded with a change in the quantity demanded of a substitute good.
C)   that a person is able to purchase at alternative income levels.
D)   that are demanded at various levels of utility.
E)   that are demanded by the market at various prices.

Question 16

In general, the purpose of markets is to facilitate the exchange of goods and services between buyers and sellers.

Accepted Answer

A) True 
 B)False

Question 17

Barter can best be defined as:

Accepted Answer

A)   the direct exchange of one good for money.
B)   the direct exchange of money for a good.
C)   the direct exchange of goods and services without the use of money.
D)   the direct exchange of labor services for wages.
E)   the payment of interest on a savings account.

Question 18

A market survey conducted by an electronics manufacturer reported a year on year growth in the sale of television sets, along with an increase in the selling price. Which of the following could be a likely cause for this situation?

Accepted Answer

A)   A decrease in supply
B)   An increase in demand
C)   A decrease in demand
D)   An exception to the law of demand
E)   An increase in supply

Question 19

A supply curve slopes downward because of the law of supply.

Accepted Answer

A) True 
 B)False

Question 20

The demand curve of a commodity slopes downward because of:

Accepted Answer

A)   the insatiable nature of human wants.
B)   the presence of double coincidence of wants.
C)   the law of demand.
D)   the scarcity of goods and services in an economy.
E)   the law of diminishing marginal utility.

Exam 3: The Market and Price System

Which of the following statements correctly defines the law of demand?

Correct AnswerverifiedShow Answer

The market demand curve is derived by:

Correct AnswerverifiedShow Answer

Other things remaining unchanged, which of the following is a determinant of the quantity supplied of a good?

Correct AnswerverifiedB

Which of the following will have no impact on the demand for ice cream in the short run?

Correct AnswerverifiedShow Answer

A price control always benefits consumers.

Correct AnswerverifiedShow Answer

Assume that the supply curve for tomatoes is upward sloping. If the price per pound increases from $0.99 to $1.89, a greater quantity of tomatoes will be supplied to the market.

Correct AnswerverifiedShow Answer

The table given below reports the quantity demanded and supplied of a commodity in a market at different price levels.? -Consider the market described by Table 3.4. Identify the correct statement.

Correct AnswerverifiedShow Answer

The removal of a price ceiling in a market results in:

Correct AnswerverifiedA

In the figure given below, D₁ and S₁ are the initial demand and supply curves for a commodity in the market.Figure 3.3 -If both supply and demand for a good increase, which of the following will definitely happen?

Correct AnswerverifiedShow Answer

If demand increases and supply decreases, then equilibrium price must decrease, but equilibrium quantity is indeterminate.

Correct AnswerverifiedShow Answer

In the figure given below, D₁ and S₁ are the original demand and supply curves.Figure 3.1 -Refer to Figure 3.1. If demand shifts from D₁ to D₂ and supply shifts from S₁ to S₂:

Correct AnswerverifiedD

Without money, no transaction can occur.

Correct AnswerverifiedShow Answer

Which of the following will cause an increase in the quantity demanded of ice cream at an ice cream store?

Correct AnswerverifiedShow Answer

A sharp increase in gasoline prices will cause the supply curve for trucking services to shift to the right.

Correct AnswerverifiedShow Answer

Other things remaining the same, an individual demand schedule shows the various quantities of a good:

Correct AnswerverifiedShow Answer

In general, the purpose of markets is to facilitate the exchange of goods and services between buyers and sellers.

Correct AnswerverifiedShow Answer

Barter can best be defined as:

Correct AnswerverifiedShow Answer

A market survey conducted by an electronics manufacturer reported a year on year growth in the sale of television sets, along with an increase in the selling price. Which of the following could be a likely cause for this situation?

Correct AnswerverifiedShow Answer

A supply curve slopes downward because of the law of supply.

Correct AnswerverifiedShow Answer

The demand curve of a commodity slopes downward because of:

Correct AnswerverifiedShow Answer

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B

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A

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D

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