Question 1

The quintessential example for the price of an input and its impact on an output is

Accepted Answer

A)  Hotdogs and hotdog buns
B)  Crude oil and gasoline
C)  Corn and soybeans
D)  7up and Sprite

Question 2

Which of the following is the best example of the concept of "substitute"?

Accepted Answer

A)  SUV's
B)  Coke and Pepsi
C)  Ramen noodles
D)  Hot dogs and hot dog buns

Question 3

The Law of Demand indicates that

Accepted Answer

A)  there is a negative relationship between quantity demanded and quantity supplied.
B)  there is a negative relationship between quantity demanded and price.
C)  there is a positive relationship between quantity demanded and quantity supplied.
D)  there is a positive relationship between quantity demanded and price.

Question 4

-In Figure 2.1, Box 2 would be labeled

Accepted Answer

A)  P* for equilibrium price.
B)  P for price.
C)  S for supply.
D)  D for demand.

Question 5

If a good is normal and income increases then

Accepted Answer

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

Question 6

The notion that the money in your possession will buy less when the price rises is provided as the explanation for

Accepted Answer

A)  the substitution effect.
B)  the real-balances effect.
C)  diminishing marginal utility.

Question 7

-Of the collection of supply and demand diagrams in Figure 2.2 which one(s) show the result of an decrease in the expected future price?

Accepted Answer

A)  Figure 1
B)  Figure 4
C)  Figures 2 and 3
D)  Figures 1 and 4

Question 8

If there is an expectation that the price of a good will increase in the next month this would immediately

Accepted Answer

A)  move its supply curve to the right.
B)  move its supply curve to the left.
C)  cause a movement along the supply curve to a (higher price, higher quantity) point.
D)  cause a movement along the supply curve to a (lower price, lower quantity) point.

Question 9

If there is a good that is consumed almost entirely by the elderly, an aging of the overall population would

Accepted Answer

A)  move its demand curve to the right.
B)  move its demand curve to the left.
C)  cause a movement along the demand curve to a (higher price, lower quantity) point.
D)  cause a movement along the demand curve to a (lower price, higher quantity) point.

Question 10

The notion that when the price of the good you want rises you will buy less of it because you will find another good that will do instead, is provided as the explanation for

Accepted Answer

A)  the substitution effect.
B)  the real-balances effect.
C)  diminishing marginal utility.

Question 11

-Of the collection of supply and demand diagrams in Figure 2.2, which one shows the result of a decrease in the price of a complement for a good?

Accepted Answer

A)  Figure 1
B)  Figure 2
C)  Figure 3
D)  Figure 4

Question 12

If the taste for a good increases, the

Accepted Answer

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

Question 13

If a subsidy (going to consumers) on a good is eliminated this would

Accepted Answer

A)  move its demand curve to the right.
B)  move its demand curve to the left.
C)  cause a movement along the demand curve to a (higher price, lower quantity) point.
D)  cause a movement along the demand curve to a (lower price, higher quantity) point.

Question 14

The Law of Supply indicates that

Accepted Answer

A)  there is a negative relationship between quantity demanded and quantity supplied.
B)  there is a negative relationship between quantity supplied and price.
C)  there is a positive relationship between quantity demanded and quantity supplied.
D)  there is a positive relationship between quantity supplied and price.

Question 15

The quantity demanded is the amount households wish to purchase

Accepted Answer

A)  at all possible prices during a specified period of time.
B)  at a particular price during a specified period of time.
C)  at a particular price (the timeframe is irrelevant) .
D)  at all possible prices (the timeframe is irrelevant) .

Question 16

If a tax (paid by consumers) on a good is reduced this would

Accepted Answer

A)  move its demand curve to the right.
B)  move its demand curve to the left.
C)  cause a movement along the demand curve to a (higher price, lower quantity) point.
D)  cause a movement along the demand curve to a (lower price, higher quantity) point.

Question 17

A shortage exists when

Accepted Answer

A)  QD>QS
B)  QD<QS
C)  QD=QS
D)  an act of god makes goods available at very low prices.

Question 18

-In Figure 2.1, Box 6 would be labeled

Accepted Answer

A)  P* for equilibrium price.
B)  S for supply.
C)  P for price.
D)  Q/t for quantity per unit of time.

Question 19

Unless circumstances are quite out of the ordinary, a supply curve will be

Accepted Answer

A)  vertical.
B)  horizontal.
C)  downward sloping.
D)  upward sloping.

Question 20

On the Heritage Foundation's scale of "Economic Freedom," which of the following countries is most "Free"?

Accepted Answer

A)  Venezuela
B)  Ireland
C)  North Korea
D)  Russia

Exam 2: Supply and Demand

If a subsidy (going to consumers) on a good is eliminated this would

Correct AnswerverifiedShow Answer

-In Figure 2.1, Box 2 would be labeled

Correct AnswerverifiedShow Answer

A shortage exists when

Correct AnswerverifiedShow Answer

The notion that the money in your possession will buy less when the price rises is provided as the explanation for

Correct AnswerverifiedShow Answer

The notion that when the price of the good you want rises you will buy less of it because you will find another good that will do instead, is provided as the explanation for

Correct AnswerverifiedShow Answer

-Of the collection of supply and demand diagrams in Figure 2.2, which one shows the result of a decrease in the price of a complement for a good?

Correct AnswerverifiedShow Answer

-In Figure 2.1, Box 6 would be labeled

Correct AnswerverifiedShow Answer

On the Heritage Foundation's scale of "Economic Freedom," which of the following countries is most "Free"?

Correct AnswerverifiedShow Answer

If there is a good that is consumed almost entirely by the elderly, an aging of the overall population would

Correct AnswerverifiedShow Answer

If the taste for a good increases, the

Correct AnswerverifiedShow Answer

Which of the following is the best example of the concept of "substitute"?

Correct AnswerverifiedShow Answer

If there is an expectation that the price of a good will increase in the next month this would immediately

Correct AnswerverifiedShow Answer

Unless circumstances are quite out of the ordinary, a supply curve will be

Correct AnswerverifiedShow Answer

The quintessential example for the price of an input and its impact on an output is

Correct AnswerverifiedShow Answer

If a good is normal and income increases then

Correct AnswerverifiedShow Answer

The Law of Supply indicates that

Correct AnswerverifiedShow Answer

The Law of Demand indicates that

Correct AnswerverifiedShow Answer

-Of the collection of supply and demand diagrams in Figure 2.2 which one(s) show the result of an decrease in the expected future price?

Correct AnswerverifiedShow Answer

If a tax (paid by consumers) on a good is reduced this would

Correct AnswerverifiedShow Answer

The quantity demanded is the amount households wish to purchase

Correct AnswerverifiedShow Answer

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