Question 1

The price of good X increases by 25%, causing the quantity consumed of good Y to decrease by 10%. If everything else is held constant in the economy, we can say with certainty that good X and good Y are:

Accepted Answer

A)   substitutes.
B)   inferior.
C)   complements.
D)   normal.
E)   unrelated.F) C) and D)
G) A) and B)

Question 2

Taxes cause the equilibrium price of a good to:

Accepted Answer

A)   increase.
B)   decrease.
C)   remain the same.
D)   go up only for producers.
E)   go down only for consumers.F) A) and B)
G) D) and E)

Question 3

Which of the following scenarios would explain the change in equilibrium shown in the accompanying figure?

Accepted Answer

A)   an increase in an input price
B)   a decrease in the number of buyers in a market
C)   an increase in the price of a substitute good
D)   an increase in the expected future price
E)   a negative technological changeF) A) and C)
G) D) and E)

Question 4

Susie decided to start selling lemonade on her street. The other kids in the neighborhood noticed that Susie was making a lot of money selling lemonade. These kids decided to open their own lemonade stand. When they opened their own lemonade stand, the equilibrium price:

Accepted Answer

A)   increased and the equilibrium quantity decreased.
B)   decreased and the equilibrium quantity increased.
C)   increased and the equilibrium quantity increased.
D)   decreased and the equilibrium quantity decreased.
E)   stayed the same and the equilibrium quantity stayed the same.F) B) and D)
G) None of the above

Question 5

Leading economic indicators suggest that incomes will be going up next year. In response to these reports, companies are forecasting increased prices for future sales of their goods. As a result of these increases, the supply curve will:

Accepted Answer

A)   shift to the right, causing the equilibrium price to decrease.
B)   remain the same, but the equilibrium price will increase.
C)   remain the same, but the equilibrium price will decrease.
D)   shift to the right, causing the equilibrium price to increase.
E)   shift to the left, causing the equilibrium price to increase.F) A) and E)
G) B) and E)

Question 6

If all else is held constant, what would happen to the equilibrium price and quantity of iPhones if the price of an Android phone decreased?

Accepted Answer

A)   They would both increase.
B)   They would both decrease.
C)   One would increase and one would decrease, but we don't know which would do what.
D)   The price would increase and the quantity would decrease.
E)   The price would decrease and the quantity would increase.F) B) and D)
G) A) and D)

Question 7

Which of the following scenarios best describes the change in the equilibrium shown in the accompanying graph?

Accepted Answer

A)   firms entering the market
B)   firms leaving the market
C)   buyers entering the market
D)   buyers leaving the market
E)   an input cost decreasingF) A) and E)
G) B) and D)

Question 8

When firms in a market expect the price of their product to rise, the supply curve of their good:

Accepted Answer

A)   decreases, causing the equilibrium price to rise.
B)   decreases, causing the equilibrium price to fall.
C)   increases, causing the equilibrium price to fall.
D)   increases, causing the equilibrium price to rise.
E)   increases, causing the equilibrium price to rise and the equilibrium quantity to fall.F) A) and D)
G) None of the above

Question 9

Which of the following will cause a movement along a good's supply curve?

Accepted Answer

A)   an increase in the price of an input
B)   the price of the good increases
C)   the production process of the good becomes more efficient
D)   more firms enter the market
E)   the government places a subsidy on the producer of the goodF) C) and D)
G) A) and B)

Question 10

Compare and contrast the following sets of words:
a. normal good versus inferior good
b. substitute good versus complementary good
c. a supply curve versus a supply schedule
d. the law of demand versus the law of supply

Accepted Answer

a. A normal good is one that consumers d...

Question 11

When the price of ground beef increases and all else is held constant, we would expect the supply of hamburgers to _________, causing the price to _________.

Accepted Answer

A)   decrease; increase
B)   decease; decrease
C)   stay the same; stay the same
D)   increase; increase
E)   increase; decreaseF) A) and C)
G) A) and E)

Question 12

What would happen to the equilibrium price and quantity for the market for cigarettes if the government increased the tax and a scientific study came out confirming that smoking cigarettes increased the rate of heart disease?

Accepted Answer

A)   Equilibrium price will be indeterminate and equilibrium quantity will go down.
B)   Equilibrium price will go up and equilibrium quantity will go up.
C)   Equilibrium price will go down and equilibrium quantity will be indeterminate.
D)   Equilibrium price will be indeterminate and equilibrium quantity will go up.
E)   Equilibrium price will go up and equilibrium quantity will be indeterminate.F) A) and B)
G) A) and C)

Question 13

If a new french fryÐcutting machine works twice as fast as the old machine, McDonald's would:

Accepted Answer

A)   be willing to produce and sell fewer french fries at every price.
B)   be making less profit.
C)   be willing to produce and sell more french fries at every price.
D)   lose customers.
E)   pay its employees more.F) C) and D)
G) B) and D)

Question 14

When the demand curve shifts to the left and all else is held constant, the

Accepted Answer

A)   equilibrium price falls and the equilibrium quantity rises.
B)   equilibrium price rises and the equilibrium quantity falls.
C)   equilibrium price falls and the equilibrium quantity falls.
D)   equilibrium price rises and the equilibrium quantity rises.
E)   equilibrium price falls and the equilibrium quantity remains constant.F) A) and E)
G) None of the above

Question 15

You are given the following demand schedule: $$\begin{array} { | l | l | } 
\hline \text { Price } & \text { Quantity Demanded } \
\hline \$ 0 & 40 \
\hline \$ 3 & 30 \
\hline \$ 6 & 20 \
\hline \$ 9 & 10 \
\hline \$ 12 & 0 \
\hline
\end{array}$$ 
schedule. Be sure to label everything.

a. What happened to the demand curve?
b. List five things that could make the demand curve reflect your answer in part

Accepted Answer

a. The demand curve shifted to the righ...

Question 16

If the cost of flour increases from $3 to $5 a bag, you could predict the supply curve for bagels to:

Accepted Answer

A)   shift to the right.
B)   shift to the left.
C)   become steeper.
D)   become flatter.
E)   increase.F) A) and B)
G) A) and C)

Question 17

A monopoly:

Accepted Answer

A)   exists when either the buyer OR the seller has the ability to influence the market price.
B)   exists when there are so many buyers and sellers that each has only a small impact on the market price and output.
C)   exists when a single consumer demands the entire market for a particular good or service.
D)   can have many sellers but only one buyer.
E)   exists when a single company supplies the entire market for a particular good or service.F) A) and E)
G) C) and E)

Question 18

As the life expectancy in the United States increases, which of the following could likely happen to the demand curve for items such as health care, cancer treatments, and nursing facilities, holding all else constant, and why?

Accepted Answer

A)   There would be a decrease because individuals are healthier.
B)   There would be an increase because the cost of these items is falling.
C)   There would be an increase because there will be more buyers in these markets.
D)   There would be a decrease because Social Security benefits are running out.
E)   They will stay the same because these changes would affect the supply curve and not the demand curve.F) A) and C)
G) D) and E)

Question 19

According to the supply and demand model, when the cotton gin was invented and if all else was held constant, we would expect the equilibrium price of cotton to _________ and the equilibrium quantity of cotton to _________.

Accepted Answer

A)   increase; increase.
B)   increase; decrease.
C)   decrease; increase.
D)   decrease; decrease.
E)   remain the same; increase.F) B) and C)
G) All of the above

Question 20

Using a supply and demand model, show what happens to the equilibrium price and equilibrium quantity in the market for cigarettes when the government imposes a tax on their production.

Accepted Answer

The answer of Using a supply and demand model, show...

Exam 3: The Market at Work: Supply and Demand

When the price of ground beef increases and all else is held constant, we would expect the supply of hamburgers to _, causing the price to _.

Correct Answer
verified

What would happen to the equilibrium price and quantity for the market for cigarettes if the government increased the tax and a scientific study came out confirming that smoking cigarettes increased the rate of heart disease?

Correct Answer
verified

A monopoly:

Correct Answer
verified

If all else is held constant, what would happen to the equilibrium price and quantity of iPhones if the price of an Android phone decreased?

Correct Answer
verified

Correct Answer
verified

a. The demand curve shifted to the righ...
View Answer

Which of the following will cause a movement along a good's supply curve?

Correct Answer
verified

The price of good X increases by 25%, causing the quantity consumed of good Y to decrease by 10%. If everything else is held constant in the economy, we can say with certainty that good X and good Y are:

Correct Answer
verified

Which of the following scenarios would explain the change in equilibrium shown in the accompanying figure?

Correct Answer
verified

As the life expectancy in the United States increases, which of the following could likely happen to the demand curve for items such as health care, cancer treatments, and nursing facilities, holding all else constant, and why?

Correct Answer
verified

Compare and contrast the following sets of words: a. normal good versus inferior good b. substitute good versus complementary good c. a supply curve versus a supply schedule d. the law of demand versus the law of supply

Correct Answer
verified
a. A normal good is one that consumers d...
View Answer

Which of the following scenarios best describes the change in the equilibrium shown in the accompanying graph?

Correct Answer
verified

When the demand curve shifts to the left and all else is held constant, the

Correct Answer
verified

Using a supply and demand model, show what happens to the equilibrium price and equilibrium quantity in the market for cigarettes when the government imposes a tax on their production.

Correct Answer
verified

Taxes cause the equilibrium price of a good to:

Correct Answer
verified

When firms in a market expect the price of their product to rise, the supply curve of their good:

Correct Answer
verified

Leading economic indicators suggest that incomes will be going up next year. In response to these reports, companies are forecasting increased prices for future sales of their goods. As a result of these increases, the supply curve will:

Correct Answer
verified

Susie decided to start selling lemonade on her street. The other kids in the neighborhood noticed that Susie was making a lot of money selling lemonade. These kids decided to open their own lemonade stand. When they opened their own lemonade stand, the equilibrium price:

Correct Answer
verified

If a new french fryÐcutting machine works twice as fast as the old machine, McDonald's would:

Correct Answer
verified

If the cost of flour increases from $3 to $5 a bag, you could predict the supply curve for bagels to:

Correct Answer
verified

According to the supply and demand model, when the cotton gin was invented and if all else was held constant, we would expect the equilibrium price of cotton to _ and the equilibrium quantity of cotton to _.

Correct Answer
verified

Exam 3: The Market at Work: Supply and Demand

When the price of ground beef increases and all else is held constant, we would expect the supply of hamburgers to _________, causing the price to _________.

Correct AnswerverifiedShow Answer

What would happen to the equilibrium price and quantity for the market for cigarettes if the government increased the tax and a scientific study came out confirming that smoking cigarettes increased the rate of heart disease?

Correct AnswerverifiedShow Answer

A monopoly:

Correct AnswerverifiedShow Answer

If all else is held constant, what would happen to the equilibrium price and quantity of iPhones if the price of an Android phone decreased?

Correct AnswerverifiedShow Answer

Correct Answerverifieda. The demand curve shifted to the righ...View AnswerShow Answer

Which of the following will cause a movement along a good's supply curve?

Correct AnswerverifiedShow Answer

The price of good X increases by 25%, causing the quantity consumed of good Y to decrease by 10%. If everything else is held constant in the economy, we can say with certainty that good X and good Y are:

Correct AnswerverifiedShow Answer

Which of the following scenarios would explain the change in equilibrium shown in the accompanying figure?

Correct AnswerverifiedShow Answer

As the life expectancy in the United States increases, which of the following could likely happen to the demand curve for items such as health care, cancer treatments, and nursing facilities, holding all else constant, and why?

Correct AnswerverifiedShow Answer

Compare and contrast the following sets of words: a. normal good versus inferior good b. substitute good versus complementary good c. a supply curve versus a supply schedule d. the law of demand versus the law of supply

Correct Answerverifieda. A normal good is one that consumers d...View AnswerShow Answer

Which of the following scenarios best describes the change in the equilibrium shown in the accompanying graph?

Correct AnswerverifiedShow Answer

When the demand curve shifts to the left and all else is held constant, the

Correct AnswerverifiedShow Answer

Using a supply and demand model, show what happens to the equilibrium price and equilibrium quantity in the market for cigarettes when the government imposes a tax on their production.

Correct AnswerverifiedShow Answer

Taxes cause the equilibrium price of a good to:

Correct AnswerverifiedShow Answer

When firms in a market expect the price of their product to rise, the supply curve of their good:

Correct AnswerverifiedShow Answer

Leading economic indicators suggest that incomes will be going up next year. In response to these reports, companies are forecasting increased prices for future sales of their goods. As a result of these increases, the supply curve will:

Correct AnswerverifiedShow Answer

Susie decided to start selling lemonade on her street. The other kids in the neighborhood noticed that Susie was making a lot of money selling lemonade. These kids decided to open their own lemonade stand. When they opened their own lemonade stand, the equilibrium price:

Correct AnswerverifiedShow Answer

If a new french fryÐcutting machine works twice as fast as the old machine, McDonald's would:

Correct AnswerverifiedShow Answer

If the cost of flour increases from $3 to $5 a bag, you could predict the supply curve for bagels to:

Correct AnswerverifiedShow Answer

According to the supply and demand model, when the cotton gin was invented and if all else was held constant, we would expect the equilibrium price of cotton to _________ and the equilibrium quantity of cotton to _________.

Correct AnswerverifiedShow Answer

When the price of ground beef increases and all else is held constant, we would expect the supply of hamburgers to _, causing the price to _.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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a. The demand curve shifted to the righ...
View 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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Correct Answer
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a. A normal good is one that consumers d...
View 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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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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According to the supply and demand model, when the cotton gin was invented and if all else was held constant, we would expect the equilibrium price of cotton to _ and the equilibrium quantity of cotton to _.

Correct Answer
verified