Question 1

Which of the following statements is false ?

Accepted Answer

A)  The shift factors for the supply curve are: income, preferences, prices of related goods, the number of buyers, and expectations of future price.
B)  A change in (own) price changes the quantity supplied of a good.
C)  A change in demand is graphically represented by a shift in the demand curve.
D)  A change in quantity demanded is represented by a movement along a given demand curve.

Question 2

When the price of carrots falls, the quantity demanded of carrots rises, ceteris paribus.

Accepted Answer

A) True 
 B)False

Question 3

If a demand curve shifts rightward, this means

Accepted Answer

A)  quantity demanded is greater only at one particular price.
B)  quantity demanded is lower at every price.
C)  buyers are willing and able to purchase more of the good at every price.
D)  buyers are willing and able to purchase less of the good at every price.

Question 4

Exhibit 3-5 1 to S2 could have been caused by A) a decline in the number of buyers in the market. B) a decline in the price of a substitute good. C) a decrease in income (assuming the good is a normal good) . D) the granting of a subsidy to the producer." class="answers-bank-image d-inline" rel="preload" >
Refer to Exhibit 3-5. In the market shown, a rightward shift in supply from S1 to S2 could have been caused by

Accepted Answer

A)  a decline in the number of buyers in the market.
B)  a decline in the price of a substitute good.
C)  a decrease in income (assuming the good is a normal good) .
D)  the granting of a subsidy to the producer.

Question 5

If the supply curve and the demand curve for lettuce both shift to the left by an equal amount, what can we say about the resulting changes in equilibrium price and quantity?

Accepted Answer

A)  The price will increase, but the quantity may increase or decrease.
B)  The price will increase, and the quantity will increase.
C)  The price will decrease, and the quantity will increase.
D)  The price will stay the same, but the quantity will increase.
E)  The price will stay the same, but the quantity will decrease.

Question 6

Exhibit 3-1 
Refer to Exhibit 3-1. At a price of $6 there is a

Accepted Answer

A)  surplus of 100 units.
B)  surplus of 150 units.
C)  surplus of 200 units.
D)  shortage of 150 units.
E)  shortage of 200 units.

Question 7

One major reason for the law of demand is that

Accepted Answer

A)  one price changing requires at least one other price to change in the opposite direction.
B)  people substitute relatively lower-priced goods for relatively higher-priced goods.
C)  a higher price never reduces quantity demanded by enough to lower total revenue.
D)  people are willing to produce more units at a higher price.

Question 8

At a price of $9.99 per digital book, Danielle buys 3 digital books per month. When the price decreases to $7.99, Danielle buys 4 digital books per month. Jason says that Danielle's demand for digital books has increased. Is Jason correct?

Accepted Answer

A)  Yes, Jason is correct.
B)  No, Jason is incorrect. Danielle's demand has decreased.
C)  No, Jason is incorrect. Danielle's quantity demanded has decreased, but her demand has stayed the same.
D)  No, Jason is incorrect. Danielle's quantity demanded has increased, but her demand has stayed the same.
E)  No, Jason is incorrect. Danielle's quantity demanded has increased and her demand has decreased.

Question 9

If the demand curve for a good shifts leftward,

Accepted Answer

A)  quantity demanded is less at each price.
B)  quantity demanded remains constant at each price.
C)  quantity demanded is greater at each price.
D)  demand is greater at each price.

Question 10

Resource X is necessary to the production of good Y. If the price of resource X rises,

Accepted Answer

A)  the supply curve of Y shifts leftward.
B)  the supply curve of Y shifts rightward.
C)  the supply curve of Y is unaffected.
D)  there is a movement down the supply curve of Y.
E)  there is a movement up the supply curve of Y.

Question 11

Exhibit 3-4 
Refer to Exhibit 3-4. A price of $4 in the market will result in

Accepted Answer

A)  a shortage of 10 units.
B)  a surplus of 10 units.
C)  a surplus of 5 units.
D)  a shortage of 5 units.
E)  no shortage or surplus.

Question 12

At a price of $15 each, Marta buys 4 books per month. When the price increases to $20, Marta buys 3 books per month. Luz says that Marta's demand for books has decreased. Is Luz correct?

Accepted Answer

A)  Yes, Luz is correct.
B)  No, Luz is incorrect. Marta's demand has increased.
C)  No, Luz is incorrect. Marta's quantity demanded has decreased, but her demand has stayed the same.
D)  No, Luz is incorrect. Marta's quantity demanded has increased, but her demand has stayed the same.
E)  No, Luz is incorrect. Marta's quantity demanded has decreased and her demand has increased.

Question 13

Exhibit 3-2

Good X
​
​
Refer to Exhibit 3-2. Suppose equilibrium is at point A. Something then changes and equilibrium becomes point C. Which of the following is consistent with the change in equilibrium from point A to C (assuming that good X is a normal good) ?

Accepted Answer

A)  There was a decrease in the number of buyers and business taxes increased.
B)  There was an increase in the number of buyers and business taxes decreased.
C)  There was an increase in the number of buyers and business taxes increased.
D)  There was a decrease in the number of buyers and business taxes decreased.

Question 14

Exhibit 3-3

Good Y
​
​
Refer to Exhibit 3-3. A movement from point Z to point W would have been the result of

Accepted Answer

A)  a reduction in the price of good Y.
B)  an increase in taxes paid by the producers of good Y.
C)  a decline in technology in the production of good Y.
D)  an increase in the number of buyers of good Y.

Question 15

Exhibit 3-7 1 is the relevant supply curve, an increase in the price of good X may cause A) the supply of good X to shift from S1 to S2 B) the supply of good X to shift from S1 to S3. C) a movement along S1 perhaps from point A to point B. D) a movement along S1 perhaps from point A to point C. E) no change in the quantity supplied of good X." class="answers-bank-image d-inline" rel="preload" >
Refer to Exhibit 3-7. If S1 is the relevant supply curve, an increase in the price of good X may cause

Accepted Answer

A)  the supply of good X to shift from S1 to S2
B)  the supply of good X to shift from S1 to S3.
C)  a movement along S1 perhaps from point A to point B.
D)  a movement along S1 perhaps from point A to point C.
E)  no change in the quantity supplied of good X.

Question 16

A change in price will lead to a change in __________ and to a change in __________, while a change in government subsidies will lead to a change in __________ and a change in the number of buyers will lead to a change in __________.

Accepted Answer

A)  quantity demanded; quantity supplied; supply; demand
B)  demand; quantity supplied; supply; quantity demanded
C)  quantity demanded; supply; quantity supplied; demand
D)  quantity supplied; quantity demanded; demand; supply
E)  quantity demanded; demand; quantity supplied; supply

Question 17

Jerry has $50,000 in his savings account and the average new car price is $23,000. Does Jerry have a demand for a new car?

Accepted Answer

A)  Yes, since Jerry can afford a new car.
B)  Not necessarily. Jerry has the ability to buy a new car, but we don't know if he also has the willingness to buy a new car.
C)  Yes, since Jerry's savings is more than double the average new car price.
D)  Yes, since Jerry probably needs a new car.

Question 18

An increase in supply is graphically represented by a leftward shift of the supply curve.

Accepted Answer

A) True 
 B)False

Question 19

One reason that helps to explain the law of supply is the law of

Accepted Answer

A)  diminishing marginal utility.
B)  diminishing marginal returns.
C)  decreasing opportunity costs.
D)  demand.

Question 20

A change in price will lead to a change in __________ and to a change in __________, while a change in preferences will lead to a change in __________ and a change in the prices of relevant resources will lead to a change in __________.

Accepted Answer

A)  quantity supplied; demand; income; supply
B)  demand; quantity supplied; supply; quantity demanded
C)  quantity supplied; supply; quantity supplied; demand
D)  quantity supplied; quantity demanded; demand; supply
E)  quantity supplied; quantity demanded; supply; demand

Exam 3: Supply and Demand: Theory

If the supply curve and the demand curve for lettuce both shift to the left by an equal amount, what can we say about the resulting changes in equilibrium price and quantity?

Correct AnswerverifiedShow Answer

Exhibit 3-4 Refer to Exhibit 3-4. A price of $4 in the market will result in

Correct AnswerverifiedShow Answer

If a demand curve shifts rightward, this means

Correct AnswerverifiedShow Answer

Which of the following statements is false ?

Correct AnswerverifiedShow Answer

A change in price will lead to a change in __________ and to a change in __________, while a change in government subsidies will lead to a change in __________ and a change in the number of buyers will lead to a change in __________.

Correct AnswerverifiedShow Answer

At a price of $9.99 per digital book, Danielle buys 3 digital books per month. When the price decreases to $7.99, Danielle buys 4 digital books per month. Jason says that Danielle's demand for digital books has increased. Is Jason correct?

Correct AnswerverifiedShow Answer

At a price of $15 each, Marta buys 4 books per month. When the price increases to $20, Marta buys 3 books per month. Luz says that Marta's demand for books has decreased. Is Luz correct?

Correct AnswerverifiedShow Answer

Jerry has $50,000 in his savings account and the average new car price is $23,000. Does Jerry have a demand for a new car?

Correct AnswerverifiedShow Answer

Exhibit 3-3 Good Y ​ ​ Refer to Exhibit 3-3. A movement from point Z to point W would have been the result of

Correct AnswerverifiedShow Answer

Exhibit 3-5 Refer to Exhibit 3-5. In the market shown, a rightward shift in supply from S1 to S2 could have been caused by

Correct AnswerverifiedShow Answer

When the price of carrots falls, the quantity demanded of carrots rises, ceteris paribus.

Correct AnswerverifiedShow Answer

An increase in supply is graphically represented by a leftward shift of the supply curve.

Correct AnswerverifiedShow Answer

Exhibit 3-7 Refer to Exhibit 3-7. If S1 is the relevant supply curve, an increase in the price of good X may cause

Correct AnswerverifiedShow Answer

One major reason for the law of demand is that

Correct AnswerverifiedShow Answer

Exhibit 3-2 Good X ​ ​ Refer to Exhibit 3-2. Suppose equilibrium is at point A. Something then changes and equilibrium becomes point C. Which of the following is consistent with the change in equilibrium from point A to C (assuming that good X is a normal good) ?

Correct AnswerverifiedShow Answer

Resource X is necessary to the production of good Y. If the price of resource X rises,

Correct AnswerverifiedShow Answer

Exhibit 3-1 Refer to Exhibit 3-1. At a price of $6 there is a

Correct AnswerverifiedShow Answer

One reason that helps to explain the law of supply is the law of

Correct AnswerverifiedShow Answer

If the demand curve for a good shifts leftward,

Correct AnswerverifiedShow Answer

A change in price will lead to a change in __________ and to a change in __________, while a change in preferences will lead to a change in __________ and a change in the prices of relevant resources will lead to a change in __________.

Correct AnswerverifiedShow Answer

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A change in price will lead to a change in and to a change in , while a change in government subsidies will lead to a change in and a change in the number of buyers will lead to a change in .

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Exhibit 3-3 Good Y Refer to Exhibit 3-3. A movement from point Z to point W would have been the result of

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Exhibit 3-5 Refer to Exhibit 3-5. In the market shown, a rightward shift in supply from S₁ to S₂ could have been caused by

Correct Answer
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Exhibit 3-7 Refer to Exhibit 3-7. If S₁ is the relevant supply curve, an increase in the price of good X may cause

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Exhibit 3-2 Good X Refer to Exhibit 3-2. Suppose equilibrium is at point A. Something then changes and equilibrium becomes point C. Which of the following is consistent with the change in equilibrium from point A to C (assuming that good X is a normal good) ?

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A change in price will lead to a change in and to a change in , while a change in preferences will lead to a change in and a change in the prices of relevant resources will lead to a change in .

Correct Answer
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