Question 1

Given the supply curve for butter, a reduction in the price of margarine will tend to:

Accepted Answer

A)  increase the demand for butter.
B)  increase the demand for margarine.
C)  raise the price of butter.
D)  lower the price of butter.E) B) and D)
F) A) and C)

Question 2

One reason why the quantity demanded of a good increases when its price falls is that the:

Accepted Answer

A)  lower price shifts the supply curve to the left.
B)  lower price shifts the demand curve to the left.
C)  lower price shifts the demand curve to the right.
D)  lower price increases the real incomes of buyers, enabling them to buy more.E) C) and D)
F) B) and C)

Question 3

A schedule that shows the various amounts of a product which producers are willing and able to produce at each price in a series of possible prices during a specified period of time is called:

Accepted Answer

A)  quantity supplied.
B)  quantity demanded.
C)  supply.
D)  demand.E) A) and B)
F) B) and D)

Question 4

The higher a price floor is above the equilibrium price, the greater will be the surplus output.

Accepted Answer

A) True 
 B)False

Question 5

Refer to the above data.The equilibrium price in this market is:

Accepted Answer

A)  $11
B)  $12
C)  $13
D)  $14E) A) and C)
F) None of the above

Question 6

In competitive markets a surplus or shortage will:

Accepted Answer

A)  never exist.
B)  cause buyer and seller reactions which tend to eliminate the surplus or shortage.
C)  cause shifts in the demand and supply curves.
D)  cause buyer and seller reactions which tend to intensify the surplus or shortage.E) None of the above
F) All of the above

Question 7

A and B are substitute goods, but A and C are complementary goods (in consumption) .If the costs of production of A decrease, then the demand for:

Accepted Answer

A)  both B and C will decrease.
B)  both B and C will increase.
C)  B will increase and the demand for C will decrease.
D)  B will decrease and the demand for C will increase.E) C) and D)
F) A) and D)

Question 8

A market is in equilibrium:

Accepted Answer

A)  when there is a surplus of the product in the market.
B)  at all prices above the price shown by the intersection of the supply curve and the demand curve.
C)  if the amount producers want to sell is equal to the amount consumers want to buy.
D)  whenever the demand curve is downward sloping and the supply curve is upward sloping.E) B) and C)
F) A) and C)

Question 9

Refer to the diagram.A price of $60 in this market will result in:

Accepted Answer

A)  equilibrium.
B)  a shortage of 50 units.
C)  a surplus of 50 units.
D)  a surplus of 100 units.E) A) and B)
F) None of the above

Question 10

If consumer incomes increase, the demand for product X:

Accepted Answer

A)  will necessarily remain unchanged.
B)  may shift either to the right or left.
C)  will necessarily shift to the right.
D)  will necessarily shift to the left.E) A) and B)
F) A) and C)

Question 11

When the price of a product rises, consumers shift their purchases to other products whose prices are now relatively lower.This statement describes:

Accepted Answer

A)  an inferior good.
B)  complementary goods.
C)  the substitution effect.
D)  the income effect.E) A) and B)
F) A) and C)

Question 12

An improvement in production technology will:

Accepted Answer

A)  increase equilibrium price.
B)  shift the supply curve to the left.
C)  shift the supply curve to the right.
D)  shift the demand curve to the left.E) A) and C)
F) A) and B)

Question 13

A firm's supply curve is upward sloping because:

Accepted Answer

A)  the expansion of production necessitates the use of qualitatively inferior techniques.
B)  mass production economies are associated with larger levels of output.
C)  consumers envision a positive relationship between price and quality.
D)  beyond some point the production costs of additional units of output will rise.E) A) and B)
F) A) and C)

Question 14

As a result of a decrease in the price of hamburgers, consumers buy more hamburgers and more T-bone steak.This is an illustration of:

Accepted Answer

A)  irrational consumer behaviour.
B)  changing tastes and preferences.
C)  the substitution effect.
D)  the income effect.E) None of the above
F) All of the above

Question 15

What combination of changes would most likely decrease the equilibrium price?

Accepted Answer

A)  when supply decreases and demand increases
B)  when demand increases and supply increases
C)  when demand decreases and supply decreases
D)  when supply increases and demand decreasesE) A) and D)
F) A) and C)

Question 16

In a competitive market, if the existing price is below the equilibrium price, market forces will drive the price:

Accepted Answer

A)  up and quantity supplied up.
B)  up and quantity supplied down.
C)  up and supply up.
D)  down and demand down.E) A) and B)
F) None of the above

Question 17

Identify the correct statement(s)  about markets.

Accepted Answer

A)  Markets can be local.
B)  Markets can be national.
C)  Markets can be international.
D)  All of the choices are correct.E) C) and D)
F) A) and B)

Question 18

If a legal ceiling price for gasoline is set above the equilibrium price:

Accepted Answer

A)  a shortage of the gasoline will occur.
B)  a surplus of the gasoline will occur.
C)  a black market will evolve.
D)  neither the equilibrium price nor equilibrium quantity will be affected.E) A) and B)
F) A) and C)

Question 19

1 to S3? A) a decrease in the price of fertilizer B) an increase in the price of irrigation equipment C) an increase in consumer incomes D) a change in consumer tastes in favour of cornbread" class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram, which shows three supply curves for corn.Which of the following would cause the change in the supply of corn illustrated by the shift from S1 to S3?

Accepted Answer

A)  a decrease in the price of fertilizer
B)  an increase in the price of irrigation equipment
C)  an increase in consumer incomes
D)  a change in consumer tastes in favour of cornbreadE) All of the above
F) A) and C)

Question 20

We observe a market in which the price has risen and the quantity sold has risen as well.This could be caused by a(n) :

Accepted Answer

A)  increase in demand.
B)  increase in supply.
C)  decrease in demand.
D)  decrease in supply.E) B) and D)
F) C) and D)

Exam 3: B: Demand, Supply, and Market Equilibrium

In competitive markets a surplus or shortage will:

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The higher a price floor is above the equilibrium price, the greater will be the surplus output.

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One reason why the quantity demanded of a good increases when its price falls is that the:

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If a legal ceiling price for gasoline is set above the equilibrium price:

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Refer to the diagram.A price of $60 in this market will result in:

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An improvement in production technology will:

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When the price of a product rises, consumers shift their purchases to other products whose prices are now relatively lower.This statement describes:

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Refer to the above data.The equilibrium price in this market is:

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If consumer incomes increase, the demand for product X:

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We observe a market in which the price has risen and the quantity sold has risen as well.This could be caused by a(n) :

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A firm's supply curve is upward sloping because:

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As a result of a decrease in the price of hamburgers, consumers buy more hamburgers and more T-bone steak.This is an illustration of:

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In a competitive market, if the existing price is below the equilibrium price, market forces will drive the price:

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A and B are substitute goods, but A and C are complementary goods (in consumption) .If the costs of production of A decrease, then the demand for:

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Given the supply curve for butter, a reduction in the price of margarine will tend to:

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Identify the correct statement(s) about markets.

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Refer to the above diagram, which shows three supply curves for corn.Which of the following would cause the change in the supply of corn illustrated by the shift from S1 to S3?

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What combination of changes would most likely decrease the equilibrium price?

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A market is in equilibrium:

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A schedule that shows the various amounts of a product which producers are willing and able to produce at each price in a series of possible prices during a specified period of time is called:

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Refer to the above diagram, which shows three supply curves for corn.Which of the following would cause the change in the supply of corn illustrated by the shift from S₁ to S₃?

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