Question 1

The market system automatically corrects a surplus condition in a competitive market by:

Accepted Answer

A)  raising the price of the commodity in question while increasing the quantity demanded.
B)  raising the price of the commodity in question while decreasing the quantity demanded.
C)  reducing the price of the commodity in question while increasing the quantity demanded.
D)  reducing the price of the commodity in question while decreasing the quantity demanded.E) A) and D)
F) C) and D)

Question 2

A result of a fall in the price of gasoline, consumers buy more gasoline and take more driving vacations.This situation is an illustration of:

Accepted Answer

A)  the income effect.
B)  the substitution effect.
C)  diminishing marginal utility.
D)  the demand for inferior goods.E) A) and D)
F) A) and B)

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Refer to the above graph.X and Y are complementary products.Which one of the lines in the graph best illustrates this relationship?

Accepted Answer

A)  A
B)  B
C)  C
D)  DE) None of the above
F) C) and D)

Question 5

Which of the following will cause a decrease in market equilibrium price and an increase in equilibrium quantity?

Accepted Answer

A)  an increase in supply
B)  an increase in demand
C)  a decrease in supply
D)  a decrease in demandE) A) and B)
F) A) and C)

Question 6

The demand curve for a product might shift as the result of a change in:

Accepted Answer

A)  consumer tastes.
B)  consumer incomes.
C)  the prices of related goods.
D)  all of the above.E) None of the above
F) A) and D)

Question 7

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) All of the above
F) C) and D)

Question 8

Which of the above diagrams illustrate(s)  the effect of an increase in the price of Molson upon the market for Labatt? (Molson and Labatt are brands of beer that are considered to be substitute goods.)

Accepted Answer

A)  A and C
B)  A only
C)  B only
D)  C onlyE) A) and B)
F) A) and C)

Question 9

An increase in demand for oil and an increase in supply of oil will:

Accepted Answer

A)  decrease price and increase quantity.
B)  increase price and decrease quantity.
C)  increase quantity, but whether it increases price depends on how much each curve shifts.
D)  increase price, but whether it increases quantity depends on how much each curve shifts.E) None of the above
F) C) and D)

Question 10

If X is a normal good, a rise in money income will shift the:

Accepted Answer

A)  supply curve for X to the left.
B)  supply curve for X to the right.
C)  demand curve for X to the left.
D)  demand curve for X to the right.E) All of the above
F) None of the above

Question 11

Lamps and light bulbs are:

Accepted Answer

A)  substitute goods.
B)  complementary goods.
C)  independent goods.
D)  inferior goods.E) B) and D)
F) A) and B)

Question 12

The table below shows the demand schedule for three individual buyers purchasing bushels of wheat.Assume that there are three buyers in the market for wheat (data are hypothetical) .  Refer to the table above.If there were 1,500 buyers with demand schedules similar to the demand schedules for each of the three buyers in the table above, then the market demand for wheat at $5 will be:

Accepted Answer

A)  8,500 bushels.
B)  12,000 bushels.
C)  18,500 bushels.
D)  26,000 bushels.E) None of the above
F) B) and C)

Question 13

In a competitive market the equilibrium price and quantity occur where:

Accepted Answer

A)  the downward sloping demand curve intersects the upward sloping supply curve.
B)  the upward sloping demand curve intersects the downward sloping supply curve.
C)  consumers and suppliers bargain to a mutually acceptable price.
D)  quantity demanded exceeds quantity supplied or vice versa.E) B) and D)
F) None of the above

Question 14

Superstar rock singers may set concert ticket prices below the equilibrium level because:

Accepted Answer

A)  it is too costly to estimate the equilibrium price.
B)  equilibrium ticket prices would be illegal.
C)  it lowers their gross income which has consequent tax advantages.
D)  the behaviour of fans in attempting to get tickets generates publicity and sold-out concerts promote record sales.E) C) and D)
F) A) and D)

Question 15

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 downward sloping.
C)  consumers will purchase less of a product 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) B) and D)
F) B) and C)

Question 16

Which of the following combinations of changes in supply and demand (listed in the same order)  is likely to cause an indeterminate change in price?

Accepted Answer

A)  Increase/Increase
B)  Increase/Decrease
C)  Decrease/Increase
D)  Static/DecreaseE) B) and D)
F) C) and D)

Question 17

For most commodities, purchases tend to rise with increases in buyers' incomes, and fall with decreases in buyers' incomes.Such commodities are known as:

Accepted Answer

A)  inferior goods.
B)  direct goods.
C)  average goods.
D)  normal goods.E) B) and C)
F) A) and B)

Question 18

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) None of the above
F) C) and D)

Question 19

Refer to the diagram, which shows demand and supply conditions in the competitive market for product X.Other things equal, a shift of the supply curve from S0 to S1 might be caused by a(n) : 0 to S1 might be caused by a(n) :   A) increase in the wage rates paid to the labours employed in the production of X. B) government subsidy per unit of output paid to firms producing X. C) decline in the price of the basic raw material used in producing X. D) increase in the number of firms producing X." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)  increase in the wage rates paid to the labours employed in the production of X.
B)  government subsidy per unit of output paid to firms producing X.
C)  decline in the price of the basic raw material used in producing X.
D)  increase in the number of firms producing X.E) All of the above
F) A) and D)

Question 20

Refer to the diagram given below. 1 and the demand curve is D0, then: A) a shortage would occur at any price above 0G. B) there is a surplus of AC units at OF. C) a surplus of GH units would occur. D) there is a shortage of AC units at OF." class="answers-bank-image d-inline" rel="preload" > The above diagram shows the demand for and the supply of Product X.Assume that the market for Product X is competitive.If the supply curve is S1 and the demand curve is D0, then:

Accepted Answer

A)  a shortage would occur at any price above 0G.
B)  there is a surplus of AC units at OF.
C)  a surplus of GH units would occur.
D)  there is a shortage of AC units at OF.E) B) and D)
F) B) and C)

Exam 3: B: Demand, Supply, and Market Equilibrium

For most commodities, purchases tend to rise with increases in buyers' incomes, and fall with decreases in buyers' incomes.Such commodities are known as:

Correct Answer
verified

If X is a normal good, a rise in money income will shift the:

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

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

Correct Answer
verified

An increase in demand for oil and an increase in supply of oil will:

Correct Answer
verified

Which of the above diagrams illustrate(s) the effect of an increase in the price of Molson upon the market for Labatt? (Molson and Labatt are brands of beer that are considered to be substitute goods.)

Correct Answer
verified

Superstar rock singers may set concert ticket prices below the equilibrium level because:

Correct Answer
verified

In a competitive market the equilibrium price and quantity occur where:

Correct Answer
verified

Which of the following combinations of changes in supply and demand (listed in the same order) is likely to cause an indeterminate change in price?

Correct Answer
verified

A result of a fall in the price of gasoline, consumers buy more gasoline and take more driving vacations.This situation is an illustration of:

Correct Answer
verified

Refer to the above graph.X and Y are complementary products.Which one of the lines in the graph best illustrates this relationship?

Correct Answer
verified

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

Correct Answer
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Refer to the diagram given below. The above diagram shows the demand for and the supply of Product X.Assume that the market for Product X is competitive.If the supply curve is S₁ and the demand curve is D₀, then:

Correct Answer
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Lamps and light bulbs are:

Correct Answer
verified

The demand curve for a product might shift as the result of a change in:

Correct Answer
verified

Which of the following will cause a decrease in market equilibrium price and an increase in equilibrium quantity?

Correct Answer
verified

The market system automatically corrects a surplus condition in a competitive market by:

Correct Answer
verified

The law of supply indicates that:

Correct Answer
verified

Refer to the diagram, which shows demand and supply conditions in the competitive market for product X.Other things equal, a shift of the supply curve from S₀ to S₁ might be caused by a(n) :

Correct Answer
verified

Exam 3: B: Demand, Supply, and Market Equilibrium

For most commodities, purchases tend to rise with increases in buyers' incomes, and fall with decreases in buyers' incomes.Such commodities are known as:

Correct AnswerverifiedShow Answer

If X is a normal good, a rise in money income will shift the:

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

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

Correct AnswerverifiedShow Answer

An increase in demand for oil and an increase in supply of oil will:

Correct AnswerverifiedShow Answer

Which of the above diagrams illustrate(s) the effect of an increase in the price of Molson upon the market for Labatt? (Molson and Labatt are brands of beer that are considered to be substitute goods.)

Correct AnswerverifiedShow Answer

Superstar rock singers may set concert ticket prices below the equilibrium level because:

Correct AnswerverifiedShow Answer

In a competitive market the equilibrium price and quantity occur where:

Correct AnswerverifiedShow Answer

Which of the following combinations of changes in supply and demand (listed in the same order) is likely to cause an indeterminate change in price?

Correct AnswerverifiedShow Answer

A result of a fall in the price of gasoline, consumers buy more gasoline and take more driving vacations.This situation is an illustration of:

Correct AnswerverifiedShow Answer

Refer to the above graph.X and Y are complementary products.Which one of the lines in the graph best illustrates this relationship?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Refer to the diagram given below. The above diagram shows the demand for and the supply of Product X.Assume that the market for Product X is competitive.If the supply curve is S1 and the demand curve is D0, then:

Correct AnswerverifiedShow Answer

Lamps and light bulbs are:

Correct AnswerverifiedShow Answer

The demand curve for a product might shift as the result of a change in:

Correct AnswerverifiedShow Answer

Which of the following will cause a decrease in market equilibrium price and an increase in equilibrium quantity?

Correct AnswerverifiedShow Answer

The market system automatically corrects a surplus condition in a competitive market by:

Correct AnswerverifiedShow Answer

The law of supply indicates that:

Correct AnswerverifiedShow Answer

Refer to the diagram, which shows demand and supply conditions in the competitive market for product X.Other things equal, a shift of the supply curve from S0 to S1 might be caused by a(n) :

Correct AnswerverifiedShow Answer

Correct Answer
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Refer to the diagram given below. The above diagram shows the demand for and the supply of Product X.Assume that the market for Product X is competitive.If the supply curve is S₁ and the demand curve is D₀, then:

Correct Answer
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Correct Answer
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Refer to the diagram, which shows demand and supply conditions in the competitive market for product X.Other things equal, a shift of the supply curve from S₀ to S₁ might be caused by a(n) :

Correct Answer
verified