Question 1

The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q.Refer to the above information.After the change in demand, the new equilibrium quantity is:

Accepted Answer

A)  10
B)  20
C)  15
D)  30E) C) and D)
F) A) and C)

Question 2

Refer to the diagram.The equilibrium price and quantity for milk in this market are:

Accepted Answer

A)  $1.50 and 28 million gallons.
B)  $1.50 and 30 million gallons.
C)  $2.00 and 20 million gallons.
D)  $1.00 and 35 million gallons.E) A) and B)
F) A) and C)

Question 3

A surplus of a product will arise when price is:

Accepted Answer

A)  above equilibrium with the result that quantity demanded exceeds quantity supplied.
B)  above equilibrium with the result that quantity supplied exceeds quantity demanded.
C)  below equilibrium with the result that quantity demanded exceeds quantity supplied.
D)  below equilibrium with the result that quantity supplied exceeds quantity demanded.E) B) and D)
F) A) and B)

Question 4

Which of the above diagrams illustrate(s)  the effect of a decline in the price of irrigation equipment upon the market for corn?

Accepted Answer

A)  B only
B)  C only
C)  B and C
D)  D onlyE) A) and C)
F) None of the above

Question 5

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

Accepted Answer

A)  A
B)  B
C)  C
D)  DE) A) and B)
F) A) and C)

Question 6

Students at Informed University pay $40 per year for a parking permit but many complain that they are unable to find a parking place in University lots.In terms of equilibrium, this suggests that:

Accepted Answer

A)  student incomes are too low.
B)  parking permits are underpriced.
C)  parking permits are overpriced.
D)  the University should make parking free.E) A) and B)
F) B) and C)

Question 7

Refer to the diagram.A price of $2.00 in this market will result in:

Accepted Answer

A)  a shortage of 10 million gallons of milk per week.
B)  a surplus of 8 million gallons of milk per week.
C)  a surplus of 10 million gallons of milk per week.
D)  a shortage of 8 million gallons of milk per week.E) A) and C)
F) None of the above

Question 8

Which are not generally considered to be complementary goods?

Accepted Answer

A)  gasoline and motor oil
B)  beef and chicken
C)  beer and pretzels
D)  razors and razor bladesE) A) and B)
F) None of the above

Question 9

In moving along a demand curve which of the following is not held constant?

Accepted Answer

A)  the price of the product for which the demand curve is relevant
B)  price expectations
C)  consumer incomes
D)  the prices of complementary goodsE) A) and B)
F) All of the above

Question 10

An inferior good is:

Accepted Answer

A)  one whose demand curve will shift rightward as incomes rise.
B)  one whose price and quantity demanded varies directly.
C)  one which has not been approved by the federal Ministry of Agriculture.
D)  one whose demand curve will shift leftward as income rise.E) A) and D)
F) All of the above

Question 11

One can say with certainty that equilibrium quantity will increase when supply:

Accepted Answer

A)  and demand both decrease.
B)  increases and demand decreases.
C)  decreases and demand increases.
D)  and demand both increase.E) A) and B)
F) A) and C)

Question 12

At the point where the demand and supply curves intersect:

Accepted Answer

A)  the market is in equilibrium.
B)  there is neither a surplus nor a shortage of the product.
C)  quantity demanded equals quantity supplied.
D)  all of the above hold true.E) None of the above
F) All of the above

Question 13

A shift to the right in the demand curve for product A can be most reasonably explained by saying that:

Accepted Answer

A)  consumer incomes have declined and they now want to buy less of A at each possible price.
B)  the price of A has increased and, as a result, consumers want to purchase less of it.
C)  consumer preferences have changed in favour of A so that they now want to buy more at each possible price.
D)  the price of A has declined and, as a result, consumers want to purchase more of it.E) C) and D)
F) All of the above

Question 14

Graphically, the market demand curve is:

Accepted Answer

A)  steeper than any individual demand curve which comprises it.
B)  greater than the sum of the individual demand curves.
C)  the horizontal sum of individual demand curves.
D)  the vertical sum of individual demand curves.E) B) and D)
F) B) and C)

Question 15

Which of the following will cause the demand curve for product A to shift to the left?

Accepted Answer

A)  population growth which causes an expansion in the number of persons consuming A
B)  an increase in money income if A is a normal good
C)  a decrease in the price of complementary product C
D)  an increase in money income if A is an inferior goodE) A) and D)
F) B) and D)

Question 16

Which of the following statements is correct about the determinants of supply and demand?

Accepted Answer

A)  A majority of the determinants of demand and supply are the same.
B)  All the determinants of demand and supply are the same.
C)  A minority of the determinants of demand and supply are the same.
D)  None of the determinants of demand and supply are the same.E) A) and C)
F) None of the above

Question 17

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

Accepted Answer

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

Question 18

An "increase in the quantity demanded" means that:

Accepted Answer

A)  given supply, the price of the product can be expected to decline.
B)  price has declined and consumers therefore want to purchase more of the product.
C)  the demand curve has shifted to the right.
D)  the demand curve has shifted to the left.E) A) and B)
F) None of the above

Question 19

People demand more of product X when the price of product Y decreases.This means X and Y are:

Accepted Answer

A)  complements.
B)  substitutes.
C)  not related.
D)  both inexpensive.E) None of the above
F) B) and C)

Question 20

Refer to the diagram illustrating the market for corn.If the price in this market were to be fixed at $4 per bushel, the part of the line marked A would represent a:

Accepted Answer

A)  surplus of 8,000 bushels.
B)  shortage of 8,000 bushels.
C)  surplus of 7,000 bushels.
D)  shortage of 7,000 bushels.E) A) and B)
F) B) and D)

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

Which of the above diagrams illustrate(s) the effect of a decline in the price of irrigation equipment upon the market for corn?

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Students at Informed University pay $40 per year for a parking permit but many complain that they are unable to find a parking place in University lots.In terms of equilibrium, this suggests that:

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An "increase in the quantity demanded" means that:

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Refer to the diagram.A price of $2.00 in this market will result in:

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People demand more of product X when the price of product Y decreases.This means X and Y are:

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Which of the following will cause the demand curve for product A to shift to the left?

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In moving along a demand curve which of the following is not held constant?

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An inferior good is:

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The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q.Refer to the above information.After the change in demand, the new equilibrium quantity is:

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Refer to the diagram.The equilibrium price and quantity for milk in this market are:

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At the point where the demand and supply curves intersect:

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A shift to the right in the demand curve for product A can be most reasonably explained by saying that:

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A surplus of a product will arise when price is:

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Which are not generally considered to be complementary goods?

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

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One can say with certainty that equilibrium quantity will increase when supply:

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

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Refer to the diagram illustrating the market for corn.If the price in this market were to be fixed at $4 per bushel, the part of the line marked A would represent a:

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Graphically, the market demand curve is:

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Which of the following statements is correct about the determinants of supply and demand?

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