Question 1

There will be a surplus of a product when:

Accepted Answer

A)  price is below the equilibrium level.
B)  the supply curve is downward sloping and the demand curve is upward sloping.
C)  the demand and supply curves fail to intersect.
D)  consumers want to buy less than producers offer for sale.E) B) and C)
F) A) and C)

Question 2

When an economy achieves both allocative and productive efficiency, it implies that there is:

Accepted Answer

A)  income equality.
B)  price stability.
C)  full production.
D)  fixed technology.E) B) and C)
F) A) and B)

Question 3

If an effective legal ceiling is imposed on credit card interest rates:

Accepted Answer

A)  such credit would be less readily available.
B)  annual credit card fees would fall.
C)  the product prices charged by merchants who issue credit cards would fall.
D)  more credit cards will be issued.E) All of the above
F) A) and B)

Question 4

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) None of the above
F) All of the above

Question 5

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) A) and C)

Question 6

1 and D2 represent different demand curves.A change from E1 to E2 is most likely to result from: A) an increase in expectations of higher future prices for chicken. B) an increase in the cost of chicken feed to produce chickens. C) a decrease in the price of beef products. D) an increase in consumer incomes." class="answers-bank-image d-inline" rel="preload" > Refer to the above graph, which shows the market for chicken where D1 and D2 represent different demand curves.A change from E1 to E2 is most likely to result from:

Accepted Answer

A)  an increase in expectations of higher future prices for chicken.
B)  an increase in the cost of chicken feed to produce chickens.
C)  a decrease in the price of beef products.
D)  an increase in consumer incomes.E) A) and C)
F) A) and D)

Question 7

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 8

For some commodities, purchases tend to decrease as the buyer's income increases.Such commodities are known as:

Accepted Answer

A)  common goods.
B)  inferior goods.
C)  inverse goods.
D)  normal goods.E) A) and B)
F) A) and C)

Question 9

A shift to the right in the demand curve for product A can be most reasonably explained by saying that:

Accepted Answer

A)  consumer incomes have declined and they now want to buy less of A at each possible price.
B)  the price of A has increased and, as a result, consumers want to purchase less of it.
C)  consumer preferences have changed in favour of A so that they now want to buy more at each possible price.
D)  the price of A has declined and, as a result, consumers want to purchase more of it.E) A) and C)
F) None of the above

Question 10

If demand for a good decreases and supply remains constant, equilibrium price:

Accepted Answer

A)  and quantity will both increase.
B)  will increase, and equilibrium quantity will decrease.
C)  will decrease, and equilibrium quantity will increase.
D)  and quantity will both decrease.E) A) and D)
F) C) and D)

Question 11

All of the following are held to be constant when the supply curve for a product is drawn, except the:

Accepted Answer

A)  price of the product.
B)  state of technology.
C)  number of producers.
D)  price of inputs used to make the product.E) A) and B)
F) None of the above

Question 12

Refer to the diagram given below. 0 and S0 respectively, the initial equilibrium price and quantity will be: A) 0F and 0C respectively. B) 0G and 0B respectively. C) 0F and 0A respectively. D) 0E and 0B respectively." class="answers-bank-image d-inline" rel="preload" > The above diagram shows the demand for and the supply of Product X.Assume that the market for Product X is competitive.If the initial demand and supply curves are D0 and S0 respectively, the initial equilibrium price and quantity will be:

Accepted Answer

A)  0F and 0C respectively.
B)  0G and 0B respectively.
C)  0F and 0A respectively.
D)  0E and 0B respectively.E) C) and D)
F) All of the above

Question 13

In which of the following instances will the effect on equilibrium price be dependent on the magnitude of the shifts in supply and demand?

Accepted Answer

A)  demand rises and supply rises
B)  supply falls and demand remains constant
C)  demand rises and supply falls
D)  supply rises and demand fallsE) B) and C)
F) A) and B)

Question 14

Which will not cause a shift in the demand for product A?

Accepted Answer

A)  a change in consumer preferences
B)  a change in the price of A
C)  a decline in consumer incomes
D)  a decrease in the price of close-substitute product BE) All of the above
F) B) and D)

Question 15

Which of the following would most likely cause a decrease in current consumer demand for normal good X?

Accepted Answer

A)  a decline in the price of product X
B)  an increase in consumer income
C)  a decrease in the prices of goods which are close substitutes for X
D)  an increase in the price which consumers expect will prevail for product X in the futureE) A) and D)
F) All of the above

Question 16

Refer to the diagram.The equilibrium price and quantity for milk in this market are:

Accepted Answer

A)  $1.50 and 28 million gallons.
B)  $1.50 and 30 million gallons.
C)  $2.00 and 20 million gallons.
D)  $1.00 and 35 million gallons.E) B) and C)
F) All of the above

Question 17

A television station reports that the price of orange juice has declined but the quantity sold has increased.This situation would 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) A) and B)

Question 18

Which is a determinant of supply?

Accepted Answer

A)  tastes and preferences
B)  technology
C)  consumer income
D)  number of consumersE) B) and C)
F) A) and B)

Question 19

If the market price is above the equilibrium price:

Accepted Answer

A)  a shortage will occur and producers will produce more and lower prices.
B)  a surplus will occur and producers will produce less and lower prices.
C)  a surplus will result and consumers will bid prices up.
D)  producers will make extremely high profits.E) A) and D)
F) A) and B)

Question 20

A market supply schedule for a product indicates that:

Accepted Answer

A)  as the product's price falls, producers produce more.
B)  there is an inverse relationship between price and quantity supplied.
C)  as a product's price rises, producers produce less.
D)  there is a direct relationship between price and quantity supplied.E) A) and B)
F) B) and C)

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

Which of the following would most likely cause a decrease in current consumer demand for normal good X?

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A shift to the right in the demand curve for product A can be most reasonably explained by saying that:

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In which of the following instances will the effect on equilibrium price be dependent on the magnitude of the shifts in supply and demand?

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There will be a surplus of a product when:

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If the market price is above the equilibrium price:

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A market supply schedule for a product indicates that:

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If consumer incomes increase, the demand for product X:

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Refer to the diagram given below. The above diagram shows the demand for and the supply of Product X.Assume that the market for Product X is competitive.If the initial demand and supply curves are D0 and S0 respectively, the initial equilibrium price and quantity will be:

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For some commodities, purchases tend to decrease as the buyer's income increases.Such commodities are known as:

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If an effective legal ceiling is imposed on credit card interest rates:

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Which is a determinant of supply?

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Refer to the diagram.The equilibrium price and quantity for milk in this market are:

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A television station reports that the price of orange juice has declined but the quantity sold has increased.This situation would be caused by a(n) :

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An improvement in production technology will:

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Refer to the above graph, which shows the market for chicken where D1 and D2 represent different demand curves.A change from E1 to E2 is most likely to result from:

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If demand for a good decreases and supply remains constant, equilibrium price:

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Which will not cause a shift in the demand for product A?

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All of the following are held to be constant when the supply curve for a product is drawn, except the:

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When an economy achieves both allocative and productive efficiency, it implies that there is:

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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:

Correct AnswerverifiedShow Answer

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Refer to the diagram given below. The above diagram shows the demand for and the supply of Product X.Assume that the market for Product X is competitive.If the initial demand and supply curves are D₀ and S₀ respectively, the initial equilibrium price and quantity will be:

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Refer to the above graph, which shows the market for chicken where D₁ and D₂ represent different demand curves.A change from E₁ to E₂ is most likely to result from:

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