Question 1

Which of the following statements is correct?

Accepted Answer

A)   If demand increases and supply decreases,equilibrium price will fall.
B)   If supply increases and demand decreases,equilibrium price will fall.
C)   If demand decreases and supply increases,equilibrium price will rise.
D)   If supply declines and demand remains constant,equilibrium price will fall.E) B) and C)
F) A) and D)

Question 2

Refer to the diagram,which shows demand and supply conditions in the competitive market for product X.A shift in the demand curve from D0 to D1 might be caused by a(n) : 0 to D1 might be caused by a(n) :   A)  decrease in income if X is an inferior good. B)  increase in the price of complementary good Y. C)  increase in money incomes if X is a normal good. D)  increase in the price of substitute product Y." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)   decrease in income if X is an inferior good.
B)   increase in the price of complementary good Y.
C)   increase in money incomes if X is a normal good.
D)   increase in the price of substitute product Y.E) A) and B)
F) All of the above

Question 3

If the supply of a product decreases and demand increases,the equilibrium price and quantity will increase.

Accepted Answer

A) True 
 B)False

Question 4

If the price of product L increases,the demand curve for close-substitute product J will:

Accepted Answer

A)   shift downward toward the horizontal axis.
B)   shift to the left.
C)   shift to the right.
D)   remain unchanged.E) A) and B)
F) None of the above

Question 5

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 6

If the demand curve for product B shifts to the right as the price of product A declines,it can be concluded that:

Accepted Answer

A)   both A and B are inferior goods.
B)   A is a superior good and B is an inferior good.
C)   A is an inferior good and B is a superior good.
D)   A and B are complementary goods.E) B) and D)
F) None of the above

Question 7

The law of supply indicates that:

Accepted Answer

A)   producers will offer more of a product at high prices than they will at low prices.
B)   the product supply curve is downsloping.
C)   consumers will purchase less of a good at high prices than they will at low prices.
D)   producers will offer more of a product at low prices than they will at high prices.E) A) and B)
F) B) and D)

Question 8

Shortages and surpluses can occur in markets other than those in which government imposes the price floors and ceilings.This phenomenon could be explained by the action of seller(s) :

Accepted Answer

A)   because they set the prices in advance of sales and these prices happen to be below the equilibrium prices.
B)   because they set the prices in advance of sales and these prices happen to be above the equilibrium prices.
C)   because they do not set the prices in advance.
D)   because they set the prices in advance of sales and these prices happen to be below or above equilibrium prices.E) B) and C)
F) All of the above

Question 9

When the government sets a price that is above the equilibrium price in a market:

Accepted Answer

A)   new firms will enter the industry.
B)   there will be a surplus in the market.
C)   there will be a shortage in the market.
D)   quantity demanded in the market will equal quantity supplied.E) A) and C)
F) B) and C)

Question 10

The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q.
-Refer to the above information.The equilibrium price for X is:

Accepted Answer

A)   $2
B)   $4
C)   $6
D)   $7E) A) and B)
F) A) and C)

Question 11

Which is most likely to be observed in a community where legal ceilings are imposed on residential rents?

Accepted Answer

A)   Poor people will be able to find adequate housing.
B)   Tenants will reduce their use of housing space,making more available for others.
C)   Those whose needs for housing are most urgent will be able to obtain the space they want.
D)   People moving into the community will have difficulty locating residential space to rent.E) A) and B)
F) B) and D)

Question 12

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) A) and C)
F) A) and D)

Question 13

If consumer tastes or preferences for a product increase,the demand for the product will tend to decrease.

Accepted Answer

A) True 
 B)False

Question 14

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) A) 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 B)
F) A) and D)

Question 16

Other things equal,an excise tax on a product will:

Accepted Answer

A)   increase its supply.
B)   increase its price.
C)   increase the quantity sold.
D)   increase its demand.E) C) and D)
F) A) and B)

Question 17

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 improvement in the technology used to produce X will:

Accepted Answer

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

Question 18

Which would cause an increase in quantity supplied of product A?

Accepted Answer

A)   an improvement in technology affecting the production of A
B)   an increase in the price of product B,a complement in the production of A
C)   a decrease in the price of resources used in producing A
D)   an increase in the price of AE) None of the above
F) B) and D)

Question 19

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) C) and D)
F) B) and D)

Question 20

A market is in equilibrium:

Accepted Answer

A)   when there is a surplus of the product in the market.
B)   at all prices above that shown by the intersection of the supply and demand curves.
C)   if the amount producers want to sell is equal to the amount consumers want to buy.
D)   whenever the demand curve is downsloping and the supply curve is upsloping.E) A) and B)
F) None of the above

Exam 3: Demand, Supply, and Market Equilibrium

When the government sets a price that is above the equilibrium price in a market:

Correct Answer
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The law of supply indicates that:

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

Correct Answer
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Refer to the diagram,which shows demand and supply conditions in the competitive market for product X.A shift in the demand curve from D₀ to D₁ might be caused by a(n) :

Correct Answer
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If the demand curve for product B shifts to the right as the price of product A declines,it can be concluded that:

Correct Answer
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If the price of product L increases,the demand curve for close-substitute product J will:

Correct Answer
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Which would cause an increase in quantity supplied of product A?

Correct Answer
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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:

Correct Answer
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Which is most likely to be observed in a community where legal ceilings are imposed on residential rents?

Correct Answer
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The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. -Refer to the above information.The equilibrium price for X is:

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

Correct Answer
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Shortages and surpluses can occur in markets other than those in which government imposes the price floors and ceilings.This phenomenon could be explained by the action of seller(s) :

Correct Answer
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A market is in equilibrium:

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

Correct Answer
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If the supply of a product decreases and demand increases,the equilibrium price and quantity will increase.

Correct Answer
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Which of the following statements is correct?

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

Correct Answer
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Other things equal,an excise tax on a product will:

Correct Answer
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Correct Answer
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If consumer tastes or preferences for a product increase,the demand for the product will tend to decrease.

Correct Answer
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Exam 3: Demand, Supply, and Market Equilibrium

When the government sets a price that is above the equilibrium price in a market:

Correct AnswerverifiedShow Answer

The law of supply indicates that:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Refer to the diagram,which shows demand and supply conditions in the competitive market for product X.A shift in the demand curve from D0 to D1 might be caused by a(n) :

Correct AnswerverifiedShow Answer

If the demand curve for product B shifts to the right as the price of product A declines,it can be concluded that:

Correct AnswerverifiedShow Answer

If the price of product L increases,the demand curve for close-substitute product J will:

Correct AnswerverifiedShow Answer

Which would cause an increase in quantity supplied of product A?

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

Which is most likely to be observed in a community where legal ceilings are imposed on residential rents?

Correct AnswerverifiedShow Answer

The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. -Refer to the above information.The equilibrium price for X is:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Shortages and surpluses can occur in markets other than those in which government imposes the price floors and ceilings.This phenomenon could be explained by the action of seller(s) :

Correct AnswerverifiedShow Answer

A market is in equilibrium:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the supply of a product decreases and demand increases,the equilibrium price and quantity will increase.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Other things equal,an excise tax on a product will:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If consumer tastes or preferences for a product increase,the demand for the product will tend to decrease.

Correct AnswerverifiedShow Answer

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Refer to the diagram,which shows demand and supply conditions in the competitive market for product X.A shift in the demand curve from D₀ to D₁ might be caused by a(n) :

Correct Answer
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