Question 1

The demand schedule assumes that factors other than price:

Accepted Answer

A)   remain the same.
B)   must also be in the table.
C)   remain separate in the table.
D)   change as price changes.E) A) and B)
F) All of the above

Question 2

The four important characteristics that define a perfectly competitive market are:

Accepted Answer

A)   a standardized good, full information, no transaction costs, and price-taking participants.
B)   standardized information, a finished good, no transaction costs, and price-making participants.
C)   a standardized good, the same information for buyers and sellers, low transaction costs, and price-taking participants.
D)   a standardized good, full information, no transaction costs, and price-making participants.E) A) and B)
F) C) and D)

Question 3

Why is the market for used cars not considered to be perfectly competitive?

Accepted Answer

A)   There is complete information.
B)   The buyers are not price takers.
C)   The good is standardized.
D)   There are always very low transaction costs.E) B) and C)
F) A) and D)

Question 4

Suppose the price of gasoline has recently increased. How will this affect the market for hybrid cars?

Accepted Answer

A)   The demand for hybrid cars will increase, increasing the equilibrium price and quantity of hybrid cars.
B)   The supply of hybrid cars will increase, decreasing the equilibrium price and increasing the equilibrium quantity of hybrid cars.
C)   The demand for hybrid cars will increase, decreasing the equilibrium price and increasing the equilibrium quantity of hybrid cars.
D)   The demand for and supply of hybrid cars will increase, decreasing the equilibrium quantity, but the effect on price cannot be determined without more information.E) B) and C)
F) B) and D)

Question 5

The supply curve is a(n)  _____ line that reflects the _____ relationship between price and quantity supplied.

Accepted Answer

A)   downward-sloping; inverse
B)   upward-sloping; inverse
C)   downward-sloping; direct
D)   upward-sloping; directE) B) and C)
F) A) and D)

Question 6

Consider a market that is in equilibrium. If the market experiences a decrease in demand:

Accepted Answer

A)   the equilibrium price and quantity will rise.
B)   the equilibrium price will rise and the equilibrium quantity will fall.
C)   the equilibrium price and quantity will fall.
D)   the equilibrium price will fall and the equilibrium quantity will rise.E) A) and B)
F) A) and C)

Question 7

What is a supply curve?

Accepted Answer

A)   A graphical representation that visually displays the supply schedule.
B)   A graph depicting various price-quantity combinations of multiple goods.
C)   A graph that shows the quantities of a particular good or service that producers will sell at one price.
D)   A table that displays various price-quantity combinations of a good or service.E) A) and D)
F) A) and C)

Question 8

Consider the market for roses, which is currently in equilibrium. However, Valentine's Day is coming up, and the rose is the most popular flower to gift to a significant other on this holiday. How will the market for roses change on Valentine's Day?

Accepted Answer

A)   The equilibrium price and quantity will increase due to an increase in supply.
B)   The equilibrium price and quantity will increase due to an increase in demand.
C)   The quantity demanded will increase because the price increases.
D)   The quantity supplied will decrease because the price decreases.E) A) and B)
F) All of the above

Question 9

The table shown depicts the demand and supply schedules of a good. At a price of $1.00:

Accepted Answer

A)   a shortage (excess demand)  will exist.
B)   a surplus (excess supply)  will exist.
C)   more is being supplied than demanded.
D)   the market is in equilibrium.E) A) and B)
F) C) and D)

Question 10

Suppose the demand for socks has decreased. This change can be shown graphically as a:

Accepted Answer

A)   shift in the demand curve to the right.
B)   shift in the demand curve to the left.
C)   movement along the demand curve to the right.
D)   movement along the demand curve to the left.E) A) and B)
F) A) and C)

Question 11

Suppose the graph shown depicts the demand for a normal good. A shift from A to B might be caused by:

Accepted Answer

A)   a decrease in the price of a substitute.
B)   a decrease in the price of a complement.
C)   an increase in the price of a complement.
D)   an increase in the good's price.E) A) and D)
F) B) and C)

Question 12

A decrease in the price of spaghetti noodles is likely to cause a(n)  _____ in the demand for penne pasta, due to a change in the price of a _____.

Accepted Answer

A)   increase; complementary good
B)   increase; substitute good
C)   decrease; complementary good
D)   decrease; substitute goodE) A) and B)
F) A) and C)

Question 13

Supply describes how much of something producers:

Accepted Answer

A)   are willing and able to buy under certain circumstances.
B)   want to sell under certain circumstances, although they may not be able to.
C)   are willing and able to offer for sale at various prices under given circumstances.
D)   are able to sell under certain circumstances, although they may not be willing to.E) A) and B)
F) None of the above

Question 14

The equilibrium price is sometimes called the:

Accepted Answer

A)   market-clearing price.
B)   optimum price.
C)   maximum price.
D)   quantity-clearing price.E) B) and C)
F) All of the above

Question 15

The prices of related goods matter when determining supply because they affect:

Accepted Answer

A)   the opportunity cost of production.
B)   whether or not a good will sell.
C)   the competition in the market.
D)   the availability of substitute goods.E) A) and B)
F) A) and C)

Question 16

The graph shown depicts the market for a good. Suppose the government sets the price of this good at $36. At this price, there is:

Accepted Answer

A)   a surplus (excess supply)  of 9,000 units.
B)   a shortage (excess demand)  of 2,000 units.
C)   a shortage (excess demand)  of 7,000 units.
D)   a surplus (excess supply)  of 7,000 units.E) C) and D)
F) B) and C)

Question 17

Bob just got laid off from his job and now has no income. What can we assume about his demand?

Accepted Answer

A)   His demand for normal goods will increase.
B)   His demand for inferior goods will increase.
C)   His demand for inferior goods will decrease.
D)   His demand for normal goods will stay the same.E) A) and D)
F) B) and C)

Question 18

The demand curve is a(n)  _____ line that reflects the _____ relationship between price and quantity.

Accepted Answer

A)   downward-sloping; inverse
B)   upward-sloping; inverse
C)   downward-sloping; positive
D)   upward-sloping; directE) None of the above
F) B) and C)

Question 19

A change in a non-price factor of demand will cause:

Accepted Answer

A)   a movement along the demand curve.
B)   a shift of the demand curve.
C)   the demand curve to rotate inward.
D)   the demand curve to rotate outward.E) A) and C)
F) All of the above

Question 20

A non-price determinant of supply refers to something:

Accepted Answer

A)   other than supply that affects the price.
B)   other than the price that affects supply.
C)   that determines how large a role the price plays in the supply decision.
D)   that determines how the price is affected by the seller's income.E) A) and D)
F) A) and B)

Exam 3: Markets

Consider the market for roses, which is currently in equilibrium. However, Valentine's Day is coming up, and the rose is the most popular flower to gift to a significant other on this holiday. How will the market for roses change on Valentine's Day?

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A non-price determinant of supply refers to something:

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Why is the market for used cars not considered to be perfectly competitive?

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Suppose the price of gasoline has recently increased. How will this affect the market for hybrid cars?

Correct AnswerverifiedShow Answer

The equilibrium price is sometimes called the:

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Bob just got laid off from his job and now has no income. What can we assume about his demand?

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Supply describes how much of something producers:

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A change in a non-price factor of demand will cause:

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The prices of related goods matter when determining supply because they affect:

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Consider a market that is in equilibrium. If the market experiences a decrease in demand:

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What is a supply curve?

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Suppose the demand for socks has decreased. This change can be shown graphically as a:

Correct AnswerverifiedShow Answer

The supply curve is a(n) _____ line that reflects the _____ relationship between price and quantity supplied.

Correct AnswerverifiedShow Answer

The four important characteristics that define a perfectly competitive market are:

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The table shown depicts the demand and supply schedules of a good. At a price of $1.00:

Correct AnswerverifiedShow Answer

The demand schedule assumes that factors other than price:

Correct AnswerverifiedShow Answer

A decrease in the price of spaghetti noodles is likely to cause a(n) _____ in the demand for penne pasta, due to a change in the price of a _____.

Correct AnswerverifiedShow Answer

Suppose the graph shown depicts the demand for a normal good. A shift from A to B might be caused by:

Correct AnswerverifiedShow Answer

The demand curve is a(n) _____ line that reflects the _____ relationship between price and quantity.

Correct AnswerverifiedShow Answer

The graph shown depicts the market for a good. Suppose the government sets the price of this good at $36. At this price, there is:

Correct AnswerverifiedShow Answer

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The supply curve is a(n) _ line that reflects the _ relationship between price and quantity supplied.

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A decrease in the price of spaghetti noodles is likely to cause a(n) _ in the demand for penne pasta, due to a change in the price of a _.

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The demand curve is a(n) _ line that reflects the _ relationship between price and quantity.

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