Question 1

Which would best explain a decrease in both the price and the quantity of a product over a period of time?

Accepted Answer

A)   A decrease in people's incomes, and the product is an inferior good
B)   A long strike by workers who make the product
C)   A decrease in the price of a substitute good
D)   A technological improvement in production methodsE) C) and D)
F) A) and D)

Question 2

Refer to the diagram above, which shows three supply curves for corn. A movement from point a to point b is caused by a change in the:

Accepted Answer

A)   Price of resources used to produce corn
B)   Number of corn farmers
C)   Price of corn in the market
D)   Technology of corn farmingE) B) and C)
F) All of the above

Question 3

Refer to the above table. If supply decreased by 2 units at each price, what would the new equilibrium price and quantity be?

Accepted Answer

A)   $3 and 5 units
B)   $4 and 4 units
C)   $5 and 5 units
D)   $6 and 6 unitsE) B) and C)
F) None of the above

Question 4

Refer to the above graph with three demand curves. An increase in price, other factors constant, would cause a change from:

Accepted Answer

A)   Point 4 to point 5
B)   Point 3 to point 6
C)   Point 1 to point 5
D)   Point 2 to point 4E) A) and B)
F) A) and C)

Question 5

A headline reads "Lumber Prices Up Sharply." In a competitive market, this situation would lead to a(n) :

Accepted Answer

A)   Increase in the price and quantity of new homes
B)   Decrease in the price and quantity of new homes
C)   Increase in the price of new homes and decrease in quantity
D)   Decrease in the price of new homes and increase in quantityE) A) and B)
F) A) and C)

Question 6

Which statement best illustrates the concept of diminishing marginal utility?

Accepted Answer

A)   As one consumes more hamburgers per week, one would be willing to pay a higher price for additional hamburgers
B)   Some consumers will receive less satisfaction from consuming hamburgers than from consuming fried chicken
C)   A typical consumer will receive less satisfaction from consuming the fourth hamburger than from the third hamburger in a week
D)   A decrease in the price of hamburgers will cause consumers to buy more hamburgers because they can afford to buy moreE) A) and B)
F) A) and C)

Question 7

In understanding and analyzing "demand," we focus on how much of a product the buyers are:

Accepted Answer

A)   Willing and wanting to buy
B)   Actually buying now and in the recent past
C)   Able to buy with their given income
D)   Willing and able to buyE) A) and B)
F) A) and C)

Question 8

Refer to the above graph. An increase in price, other factors constant, would cause a change from:

Accepted Answer

A)   Point 5 to point 1
B)   Point 4 to point 5
C)   Point 1 to point 6
D)   Point 3 to point 4E) B) and D)
F) All of the above

Question 9

In the foreign exchange market, if Canadian companies import more products from the U.S., then the demand for Canadian dollars will increase.

Accepted Answer

A) True 
 B)False

Question 10

What combination of changes would most likely decrease the equilibrium price?

Accepted Answer

A)   When supply decreases and demand increases
B)   When demand increases and supply increases
C)   When demand decreases and supply decreases
D)   When supply increases and demand decreasesE) All of the above
F) A) and D)

Question 11

Refer to the above table. If demand decreased by 4 units at each price, what would the new equilibrium price and quantity be?

Accepted Answer

A)   $3 and 5 units
B)   $4 and 6 units
C)   $5 and 7 units
D)   $6 and 8 unitsE) A) and B)
F) A) and C)

Question 12

The following data show the supply and demand schedules for a product.  Refer to the above data. The government now introduces a subsidy payment to producers of $30 per unit. Assuming a purely competitive market for the product, the new equilibrium price will be between:

Accepted Answer

A)   $40-$50
B)   $50-$60
C)   $60-$70
D)   $70-$80E) A) and B)
F) C) and D)

Question 13

Refer to the above graph with three demand curves. A "decrease in demand" would be illustrated as a change from:

Accepted Answer

A)   Point 1 to point 4
B)   Point 1 to point 3
C)   Line C to B
D)   Line A to CE) B) and C)
F) A) and B)

Question 14

Over a period of time, the equilibrium price of a good increases and the quantity decreases. All of the following could account for this situation, except:

Accepted Answer

A)   An increase in the costs of production
B)   The removal of a subsidy on the good or service
C)   The imposition of a sales tax on the good or service
D)   A decrease in the price of an alternative good or service that producers could also produceE) A) and B)
F) A) and C)

Question 15

In a competitive market illustrated by the diagram above, a price ceiling of $10 per unit will result in:

Accepted Answer

A)   A shortage of 200 units
B)   A surplus of 200 units
C)   A surplus of 250 units
D)   A shortage of 250 unitsE) A) and C)
F) C) and D)

Question 16

In the dollar-yen foreign exchange market, if Japanese companies sharply increase their importation of U.S. products, then the:

Accepted Answer

A)   Supply of yen will decrease and the yen will appreciate
B)   Supply of yen will increase and the yen will depreciate
C)   Demand for yen will increase and the yen will appreciate
D)   Demand yen will decrease and the yen will depreciateE) A) and B)
F) A) and C)

Question 17

Which of the following will not cause the supply curve to shift?

Accepted Answer

A)   A change in the costs of resources needed to produce the good
B)   A technological change in the production of the good
C)   A change in the price of the good
D)   A change in the prices of other goods that producers could be producingE) B) and D)
F) A) and D)

Question 18

If two goods are substitutes, a decline in the price of one will cause a decrease in the demand for the other.

Accepted Answer

A) True 
 B)False

Question 19

If the price of a product decreases, we would expect:

Accepted Answer

A)   Demand to increase
B)   Quantity supplied to decrease
C)   Supply to decrease
D)   Quantity supplied to increaseE) All of the above
F) A) and D)

Question 20

Which is of the following statements is correct?

Accepted Answer

A)   If demand increases, then price will decrease
B)   If demand decreases, then price will decrease
C)   If price increases, then demand will decrease
D)   If price decreases, then demand will decreaseE) A) and B)
F) A) and C)

Exam 3: Demand, Supply, and Market Equilibrium

In understanding and analyzing "demand," we focus on how much of a product the buyers are:

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A headline reads "Lumber Prices Up Sharply." In a competitive market, this situation would lead to a(n) :

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In a competitive market illustrated by the diagram above, a price ceiling of $10 per unit will result in:

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If the price of a product decreases, we would expect:

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Refer to the above graph. An increase in price, other factors constant, would cause a change from:

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Refer to the above graph with three demand curves. An increase in price, other factors constant, would cause a change from:

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Which would best explain a decrease in both the price and the quantity of a product over a period of time?

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Which statement best illustrates the concept of diminishing marginal utility?

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If two goods are substitutes, a decline in the price of one will cause a decrease in the demand for the other.

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In the dollar-yen foreign exchange market, if Japanese companies sharply increase their importation of U.S. products, then the:

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Refer to the above graph with three demand curves. A "decrease in demand" would be illustrated as a change from:

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Which of the following will not cause the supply curve to shift?

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Over a period of time, the equilibrium price of a good increases and the quantity decreases. All of the following could account for this situation, except:

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The following data show the supply and demand schedules for a product. Refer to the above data. The government now introduces a subsidy payment to producers of $30 per unit. Assuming a purely competitive market for the product, the new equilibrium price will be between:

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Refer to the above table. If demand decreased by 4 units at each price, what would the new equilibrium price and quantity be?

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What combination of changes would most likely decrease the equilibrium price?

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Refer to the above table. If supply decreased by 2 units at each price, what would the new equilibrium price and quantity be?

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Which is of the following statements is correct?

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In the foreign exchange market, if Canadian companies import more products from the U.S., then the demand for Canadian dollars will increase.

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Refer to the diagram above, which shows three supply curves for corn. A movement from point a to point b is caused by a change in the:

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