Question 1

You are asked to determine,other things equal,the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for,or supply (S) of,X, (2) the equilibrium price (P) of X and (3) the equilibrium quantity (Q) of X.
-Refer to the above.An increase in the price of a product which is a close substitute for X will:

Accepted Answer

A)   decrease D,increase P,and decrease Q.
B)   increase D,increase P,and decrease Q.
C)   increase D,increase P,and increase Q.
D)   increase D,decrease P,and increase Q.E) B) and C)
F) A) and C)

Question 2

If two goods are complements:

Accepted Answer

A)   they are consumed jointly.
B)   an increase in the price of one will reduce the demand for the other.
C)   a decrease in the price of one will increase the demand for the other.
D)   all of the above will be true.E) A) and C)
F) B) and C)

Question 3

A decrease in the prices of resources used in producing a product will increase the supply of the product.

Accepted Answer

A) True 
 B)False

Question 4

1 and D1 represent the original supply and demand curves and S2 and D2 the new curves.In this market: A)  supply has decreased and equilibrium price has increased. B)  demand and Supply have increased and equilibrium price has decreased. C)  demand has decreased and equilibrium price has decreased. D)  demand has increased and equilibrium price has increased." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above diagram,in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves.In this market:

Accepted Answer

A)   supply has decreased and equilibrium price has increased.
B)   demand and Supply have increased and equilibrium price has decreased.
C)   demand has decreased and equilibrium price has decreased.
D)   demand has increased and equilibrium price has increased.E) C) and D)
F) All of the above

Question 5

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) B) and C)
F) A) and B)

Question 6

If the supply of a product decreases and the demand for that product simultaneously increases,we can conclude that equilibrium:

Accepted Answer

A)   price must rise,but equilibrium quantity may either rise,fall,or remain unchanged.
B)   price must rise and equilibrium quantity must fall.
C)   price and equilibrium quantity must both increase.
D)   price and equilibrium quantity must both decline.E) A) and C)
F) A) and B)

Question 7

An increase in consumer incomes will cause a decrease in the demand for an inferior good.

Accepted Answer

A) True 
 B)False

Question 8

An economist predicts that in a bicycle company,other things equal,a rise in consumer incomes will increase the demand for bicycles.This prediction is based on the assumption that:

Accepted Answer

A)   there are many goods which are substitutes for bicycles.
B)   there are many goods which are complementary to bicycles.
C)   there are few goods which are substitutes for bicycles.
D)   bicycles are normal goods.E) A) and B)
F) A) and C)

Question 9

The concept of economic efficiency is primarily concerned with:

Accepted Answer

A)   the limited wants-unlimited resources dilemma.
B)   considerations of equity in the distribution of wealth.
C)   obtaining the maximum output from available resources.
D)   the conservation of irreplaceable natural resources.E) A) and B)
F) B) and D)

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

A leftward shift of a product supply curve might be caused by:

Accepted Answer

A)   an improvement in the relevant technique of production.
B)   a decline in the prices of needed inputs.
C)   an increase in consumer incomes.
D)   some firms leaving the industry.E) A) and D)
F) A) and C)

Question 12

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

Accepted Answer

A)   $11
B)   $12
C)   $13
D)   $14E) B) and D)
F) C) and D)

Question 13

Refer to the diagram.The equilibrium price and quantity in this market will be:

Accepted Answer

A)   $1.00 and 200.
B)   $1.60 and 130.
C)   $.50 and 130.
D)   $1.60 and 290.E) None of the above
F) C) and D)

Question 14

Graphically,the market demand curve is:

Accepted Answer

A)   steeper than any individual demand curve which comprises it.
B)   greater than the sum of the individual demand curves.
C)   the horizontal sum of individual demand curves.
D)   the vertical sum of individual demand curves.E) B) and D)
F) C) and D)

Question 15

With allocative efficiency:

Accepted Answer

A)   the state of technology,or methods used to produce output,do not change.
B)   the available supplies of factors of production are fixed in both quantity and quality.
C)   there is production of any particular mix of goods and services in the least costly way.
D)   there is production of that particular mix of goods and services most wanted by society.E) All of the above
F) None of the above

Question 16

Lamps and light bulbs are:

Accepted Answer

A)   substitute goods.
B)   complementary goods.
C)   independent goods.
D)   inferior goods.E) C) and D)
F) All of the above

Question 17

In recent years,there has been a rapid increase in consumption of sushi in Canada and yet,the price of sushi has remained relatively stable.An explanation for this phenomenon could be:

Accepted Answer

A)   although the demand for sushi has gone up,the supply of fish ( an input in the production of sushi) has declined as well.
B)   while the demand for sushi has gone up,the supply of sushi has increase by about the same magnitude and therefore,the price has stayed relatively stable.
C)   while the demand for sushi has gone up,the supply of sushi has decreased by about the same magnitude and therefore,the price has stayed relatively stable.
D)   while the demand for sushi has gone up,the supply of sushi has not changed and therefore,the price has stayed relatively stable.E) C) and D)
F) A) and C)

Question 18

Refer to the table. 
In a free-market economy,according to the rationing function of prices,the market price and quantity will adjust to:

Accepted Answer

A)   $10 and 2,000 units.
B)   $15 and 1,600 units.
C)   $20 and 900 units.
D)   $25 and 1,200 units.E) A) and D)
F) None of the above

Question 19

The law of supply is illustrated by a curve which is:

Accepted Answer

A)   horizontal.
B)   downward sloping.
C)   vertical.
D)   upward sloping.E) A) and B)
F) None of the above

Question 20

There is a surplus in a market for a product when:

Accepted Answer

A)   the decrease in supply is greater than the increase in demand.
B)   the increase in demand is greater than the decrease in supply.
C)   quantity supplied is less than quantity demanded.
D)   quantity demanded is less than quantity supplied.E) All of the above
F) B) and D)

Exam 3: Demand, Supply, and Market Equilibrium

Lamps and light bulbs are:

Correct Answer
verified

Refer to the table. In a free-market economy,according to the rationing function of prices,the market price and quantity will adjust to:

Correct Answer
verified

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

Correct Answer
verified

A decrease in the prices of resources used in producing a product will increase the supply of the product.

Correct Answer
verified

There is a surplus in a market for a product when:

Correct Answer
verified

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

Correct Answer
verified

The law of supply is illustrated by a curve which is:

Correct Answer
verified

If two goods are complements:

Correct Answer
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Correct Answer
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If the supply of a product decreases and the demand for that product simultaneously increases,we can conclude that equilibrium:

Correct Answer
verified

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

Correct Answer
verified

Refer to the diagram.The equilibrium price and quantity in this market will be:

Correct Answer
verified

A leftward shift of a product supply curve might be caused by:

Correct Answer
verified

An economist predicts that in a bicycle company,other things equal,a rise in consumer incomes will increase the demand for bicycles.This prediction is based on the assumption that:

Correct Answer
verified

The concept of economic efficiency is primarily concerned with:

Correct Answer
verified

With allocative efficiency:

Correct Answer
verified

An increase in consumer incomes will cause a decrease in the demand for an inferior good.

Correct Answer
verified

Graphically,the market demand curve is:

Correct Answer
verified

-Refer to the above diagram,in which S₁ and D₁ represent the original supply and demand curves and S₂ and D₂ the new curves.In this market:

Correct Answer
verified

In recent years,there has been a rapid increase in consumption of sushi in Canada and yet,the price of sushi has remained relatively stable.An explanation for this phenomenon could be:

Correct Answer
verified

Exam 3: Demand, Supply, and Market Equilibrium

Lamps and light bulbs are:

Correct AnswerverifiedShow Answer

Refer to the table. In a free-market economy,according to the rationing function of prices,the market price and quantity will adjust to:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A decrease in the prices of resources used in producing a product will increase the supply of the product.

Correct AnswerverifiedShow Answer

There is a surplus in a market for a product when:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The law of supply is illustrated by a curve which is:

Correct AnswerverifiedShow Answer

If two goods are complements:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the supply of a product decreases and the demand for that product simultaneously increases,we can conclude that equilibrium:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Refer to the diagram.The equilibrium price and quantity in this market will be:

Correct AnswerverifiedShow Answer

A leftward shift of a product supply curve might be caused by:

Correct AnswerverifiedShow Answer

An economist predicts that in a bicycle company,other things equal,a rise in consumer incomes will increase the demand for bicycles.This prediction is based on the assumption that:

Correct AnswerverifiedShow Answer

The concept of economic efficiency is primarily concerned with:

Correct AnswerverifiedShow Answer

With allocative efficiency:

Correct AnswerverifiedShow Answer

An increase in consumer incomes will cause a decrease in the demand for an inferior good.

Correct AnswerverifiedShow Answer

Graphically,the market demand curve is:

Correct AnswerverifiedShow Answer

-Refer to the above diagram,in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves.In this market:

Correct AnswerverifiedShow Answer

In recent years,there has been a rapid increase in consumption of sushi in Canada and yet,the price of sushi has remained relatively stable.An explanation for this phenomenon could be:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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-Refer to the above diagram,in which S₁ and D₁ represent the original supply and demand curves and S₂ and D₂ the new curves.In this market:

Correct Answer
verified

Correct Answer
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