Question 1

If there were a decrease in the market demand for a product with no change in market supply, the equilibrium price would:

Accepted Answer

A)   increase and the equilibrium quantity increase.
B)   increase and the equilibrium quantity decrease.
C)   decrease and the equilibrium quantity increase.
D)   decrease and the equilibrium quantity decrease.

Question 2

-There would be no surplus or shortage in this market if producers charged a price of:

Accepted Answer

A)   $2.
B)   $4.
C)   $6.
D)   $8.

Question 3

If the price elasticity of supply for a product is 1.4, then the percentage change in quantity supplied is:

Accepted Answer

A)   larger than the percentage change in price, and supply is price elastic.
B)   larger than the percentage change in price, and supply is price inelastic.
C)   smaller than the percentage change in price, and supply is price elastic.
D)   smaller than the percentage change in price, and supply is price inelastic.

Question 4

An increase in the popularity of a good in a market would cause equilibrium price:

Accepted Answer

A)   and quantity to increase.
B)   and quantity to decrease.
C)   to increase and equilibrium quantity to decrease.
D)   to decrease and equilibrium quantity to increase.

Question 5

-The effect on sellers of a change in a product's price would be shown by a movement from point A to point B in figure:

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.

Question 6

A usury law on interest rates is an example of a:

Accepted Answer

A)   price floor.
B)   price ceiling.
C)   policy to allow the free market to determine the level of interest rates.
D)   none of the above.

Question 7

If supply decreases and demand increases in a market, there will be:

Accepted Answer

A)   an increase in equilibrium price, but whether equilibrium quantity increases or decreases will depend on how much supply and demand shift.
B)   a decrease in equilibrium price, but whether equilibrium quantity increases or decreases will depend on how much supply and demand shift.
C)   an increase in equilibrium quantity, but whether equilibrium price increases or decreases will depend on how much supply and demand shift.
D)   a decrease in equilibrium quantity, but whether equilibrium price increases or decreases will depend on how much supply and demand shift.

Question 8

The demand curve for a product would shift to the left if:

Accepted Answer

A)   the price of the product decreased.
B)   the popularity of the product decreased.
C)   the number of sellers in the market decreased.
D)   buyers expected the product's price to be much higher in the future.

Question 9

Which of the following would cause the supply of cat food to increase?

Accepted Answer

A)   A rise in the price of cat food.
B)   An increase in the demand for cat food.
C)   An increase in the number of buyers of cat food.
D)   New and cheaper sources of fish, a principle ingredient in cat food.

Question 10

If the demand for CDs rises and the supply remains the same, then:

Accepted Answer

A)   the price of CDs will rise and the quantity will fall.
B)   the price and the quantity of CDs will fall.
C)   the price of CDs will fall and the quantity will rise.
D)   the price and the quantity of CDs will rise.

Question 11

The purpose of a price ceiling is to keep the actual price charged in a market:

Accepted Answer

A)   above an equilibrium price that is considered too low, and shortages may develop.
B)   above an equilibrium price that is considered too low, and surpluses may develop.
C)   below an equilibrium price that is considered too high, and shortages may develop.
D)   below an equilibrium price that is considered too high, and surpluses may develop.

Question 12

Which of the following explains why consumers purchase less of a good or service when its price increases?

Accepted Answer

A)   A limited income from which purchases can be made.
B)   The availability of substitute goods or services.
C)   Both of the above.
D)   None of the above.

Question 13

The supply of a product is price elastic when:

Accepted Answer

A)   prices increase, but not when they decrease.
B)   a given percentage change in price leads to a larger percentage change in quantity supplied.
C)   sellers produce goods that buyers see as luxuries, but not when they produce goods that buyers see as necessities.
D)   none of the above.

Question 14

Suppose the government sets a price floor of $3.50 per bushel on corn when the current

Accepted Answer

A)   cause a surplus of corn.
B)   cause a shortage of corn.
C)   increase the demand for corn.
D)   have no effect on the price of corn.

Question 15

If the price charged in a free market is below the equilibrium price, the equilibrium price will fall to the price that is charged.

Accepted Answer

A) True 
 B)False

Question 16

A supply schedule shows:

Accepted Answer

A)   that price and quantity supplied are inversely related.
B)   the different amounts of a product a seller would make available for sale at different prices.
C)   the different amounts of a product a seller would make available for sale at one particular price.
D)   that, because of the profit motive, a seller will offer more of a product for sale when its price is low than when its price is high.

Question 17

What is the relationship between demand and supply when there is a shortage in a market, and what must happen to price to remove the shortage?

Accepted Answer

With a shortage, quantity demanded has e...

Question 18

-If the government imposed a price floor of $5.00 in this market there would be:

Accepted Answer

A)   a surplus of 1800 units.
B)   a shortage of 1200 units.
C)   a shortage of 1800 units.
D)   none of the above.

Question 19

A local supermarket had been charging $2.00 a pound for eggplants and selling 200 pounds a week. When it raised the price to $2.50, eggplant sales fell to 190 pounds a week. The price elasticity of demand for eggplants is:

Accepted Answer

A)   0.05.
B)   0.20.
C)   0.25.
D)   5.00.

Question 20

A surplus of a product in a market indicates that the quantity demanded:

Accepted Answer

A)   exceeds the quantity supplied and that the equilibrium price is above the price charged.
B)   exceeds the quantity supplied and that the equilibrium price is below the price charged.
C)   is less than the quantity supplied and that the equilibrium price is above the price charged.
D)   is less than the quantity supplied and that the equilibrium price is below the price charged.

Exam 3: Demand, Supply, and the Determination of Price

Which of the following explains why consumers purchase less of a good or service when its price increases?

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If the price charged in a free market is below the equilibrium price, the equilibrium price will fall to the price that is charged.

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A supply schedule shows:

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A surplus of a product in a market indicates that the quantity demanded:

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If the demand for CDs rises and the supply remains the same, then:

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-If the government imposed a price floor of $5.00 in this market there would be:

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A local supermarket had been charging $2.00 a pound for eggplants and selling 200 pounds a week. When it raised the price to $2.50, eggplant sales fell to 190 pounds a week. The price elasticity of demand for eggplants is:

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-There would be no surplus or shortage in this market if producers charged a price of:

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-The effect on sellers of a change in a product's price would be shown by a movement from point A to point B in figure:

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The purpose of a price ceiling is to keep the actual price charged in a market:

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If the price elasticity of supply for a product is 1.4, then the percentage change in quantity supplied is:

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If there were a decrease in the market demand for a product with no change in market supply, the equilibrium price would:

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If supply decreases and demand increases in a market, there will be:

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An increase in the popularity of a good in a market would cause equilibrium price:

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The supply of a product is price elastic when:

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Which of the following would cause the supply of cat food to increase?

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Suppose the government sets a price floor of $3.50 per bushel on corn when the current

Correct AnswerverifiedShow Answer

A usury law on interest rates is an example of a:

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What is the relationship between demand and supply when there is a shortage in a market, and what must happen to price to remove the shortage?

Correct AnswerverifiedWith a shortage, quantity demanded has e...View AnswerShow Answer

The demand curve for a product would shift to the left if:

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With a shortage, quantity demanded has e...
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