Question 1

If consumers are willing to pay a higher price than previously for each level of output, we can say that there has occurred:

Accepted Answer

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

Question 2

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.The equilibrium quantity is:

Accepted Answer

A)  10
B)  20
C)  15
D)  30E) None of the above
F) B) and C)

Question 3

If products C and D are close substitutes, an increase in the price of C will:

Accepted Answer

A)  tend to cause the price of D to fall.
B)  shift the demand curve of C to the left and the demand curve of D to the right.
C)  shift the demand curve of D to the right.
D)  shift the demand curves of both products to the right.E) A) and D)
F) B) and C)

Question 4

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) None of the above
F) A) and B)

Question 5

Which would cause an increase in quantity supplied of product A?

Accepted Answer

A)  an improvement in technology affecting the production of A
B)  an increase in the price of product B, a complement in the production of A
C)  a decrease in the price of resources used in producing A
D)  an increase in the price of AE) C) and D)
F) B) and C)

Question 6

Refer to the table below.  If a technological advance lowers production costs such that the quantity supplied increases by 60 units of this product at each price, the new equilibrium price would be:

Accepted Answer

A)  $11
B)  $12
C)  $13
D)  $14E) A) and D)
F) A) and C)

Question 7

The table below shows three individual buyers' demand for wheat.Assume that there are three buyers in the market for wheat (data are hypothetical) .  Refer to the table above.The market demand for wheat is:

Accepted Answer

A)  17 bushels at $6 and 37 bushels at $5.
B)  24 bushels at $5 and 52 bushels at $4.
C)  37 bushels at $4 and 52 bushels at $3.
D)  52 bushels at $5 and 37 bushels at $6.E) B) and D)
F) All of the above

Question 8

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 B)
F) None of the above

Question 9

If price is above the equilibrium level, competition among sellers to reduce the resulting:

Accepted Answer

A)  surplus will increase quantity demanded and decrease quantity supplied.
B)  shortage will decrease quantity demanded and increase quantity supplied.
C)  surplus will decrease quantity demanded and increase quantity supplied.
D)  shortage will increase quantity demanded and decrease quantity supplied.E) None of the above
F) All of the above

Question 10

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 C)
F) A) and D)

Question 11

Which factor will increase the demand for a product?

Accepted Answer

A)  an unfavourable report on the value of the product
B)  an increase in the price of a substitute product
C)  an increase in the price of a complementary product
D)  a decrease in the number of buyersE) B) and D)
F) B) and C)

Question 12

Which of the above diagrams illustrate(s)  the effect of an increase in automobile worker wages on the market for automobiles?

Accepted Answer

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

Question 13

Refer to the above data.The equilibrium price in this market is:

Accepted Answer

A)  $11
B)  $12
C)  $13
D)  $14E) A) and B)
F) A) and C)

Question 14

Price floors and ceiling prices:

Accepted Answer

A)  both cause shortages.
B)  both cause surpluses.
C)  cause the supply and demand curves to shift until equilibrium is established.
D)  interfere with the rationing function of prices.E) None of the above
F) A) and B)

Question 15

Which of the following statements is correct?

Accepted Answer

A)  If demand increases and supply decreases, equilibrium price will fall.
B)  If supply increases and demand decreases, equilibrium price will fall.
C)  If demand decreases and supply increases, equilibrium price will rise.
D)  If supply declines and demand remains constant, equilibrium price will fall.E) B) and C)
F) A) and D)

Question 16

If a product is in surplus supply, we can conclude that its price:

Accepted Answer

A)  is below the equilibrium level.
B)  is above the equilibrium level.
C)  will rise in the near future.
D)  is in equilibrium.E) A) and D)
F) All of the above

Question 17

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) B) and C)
F) C) and D)

Question 18

Refer to the diagram.The equilibrium price and quantity in this market will be:

Accepted Answer

A)  $1.00 and 200.
B)  $1.60 and 130.
C)  $.50 and 130.
D)  $1.60 and 290.E) A) and B)
F) A) and C)

Question 19

The law of supply is illustrated by a curve which is:

Accepted Answer

A)  horizontal.
B)  downward sloping.
C)  vertical.
D)  upward sloping.E) None of the above
F) All of the above

Question 20

Which of the above diagrams illustrate(s)  the effect of a decrease in consumer incomes upon the market for second-hand clothing? (Second-hand clothing is considered to be an inferior good)

Accepted Answer

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

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

If consumers are willing to pay a higher price than previously for each level of output, we can say that there has occurred:

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Price floors and ceiling prices:

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Which would cause an increase in quantity supplied of product A?

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Which factor will increase the demand for a product?

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The table below shows three individual buyers' demand for wheat.Assume that there are three buyers in the market for wheat (data are hypothetical) . Refer to the table above.The market demand for wheat is:

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The law of supply indicates that:

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Which of the above diagrams illustrate(s) the effect of an increase in automobile worker wages on the market for automobiles?

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The law of supply is illustrated by a curve which is:

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Refer to the above data.The equilibrium price in this market is:

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If price is above the equilibrium level, competition among sellers to reduce the resulting:

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If a product is in surplus supply, we can conclude that its price:

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Refer to the diagram.The equilibrium price and quantity in this market will be:

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Which of the following statements is correct?

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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.The equilibrium quantity is:

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Refer to the table below. If a technological advance lowers production costs such that the quantity supplied increases by 60 units of this product at each price, the new equilibrium price would be:

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

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Which of the above diagrams illustrate(s) the effect of a decrease in consumer incomes upon the market for second-hand clothing? (Second-hand clothing is considered to be an inferior good)

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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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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:

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If products C and D are close substitutes, an increase in the price of C will:

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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:

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