Question 1

A market is in equilibrium:

Accepted Answer

A)  when there is a surplus of the product in the market.
B)  at all prices above the price shown by the intersection of the supply curve and the demand curve.
C)  if the amount producers want to sell is equal to the amount consumers want to buy.
D)  whenever the demand curve is downward sloping and the supply curve is upward sloping.E) A) and D)
F) B) and D)

Question 2

Assuming competitive markets with typical supply and demand curves, which of the following statements is correct?

Accepted Answer

A)  An increase in supply with a decrease in demand will result in an increase in price.
B)  An increase in supply with no change in demand will result in an increase in price.
C)  An increase in supply with no change in demand will result in a decline in sales.
D)  An increase in demand with no change in supply will result in an increase in sales.E) C) and D)
F) All of the above

Question 3

If a legal ceiling price for gasoline is set above the equilibrium price:

Accepted Answer

A)  a shortage of the gasoline will occur.
B)  a surplus of the gasoline will occur.
C)  a black market will evolve.
D)  neither the equilibrium price nor equilibrium quantity will be affected.E) B) and C)
F) A) and D)

Question 4

Surpluses drive market prices up; shortages drive them down.

Accepted Answer

A) True 
 B)False

Question 5

1/3Q. B) is P = 5 + 2Q. C) is P = 5 + 3Q. D) is P = 5 - 3Q." class="answers-bank-image d-inline" rel="preload" > The equation for the supply curve in the above diagram:

Accepted Answer

A)  is P = 5 + 1/3Q.
B)  is P = 5 + 2Q.
C)  is P = 5 + 3Q.
D)  is P = 5 - 3Q.E) A) and C)
F) B) and C)

Question 6

Assume in a competitive market that price is initially above the equilibrium level.We can predict that price will:

Accepted Answer

A)  decrease, quantity demanded will decrease, and quantity supplied will increase.
B)  decrease and quantity demanded and quantity supplied will both decrease.
C)  decrease, quantity demanded will increase, and quantity supplied will decrease.
D)  increase, quantity demanded will decrease, and quantity supplied will increase.E) B) and D)
F) A) and C)

Question 7

At the equilibrium price:

Accepted Answer

A)  quantity supplied may exceed quantity demanded or vice versa.
B)  there are no pressures on price to either rise or fall.
C)  there are forces which cause price to rise.
D)  there are forces which cause price to fall.E) None of the above
F) A) and C)

Question 8

The rationing function of prices refers to the:

Accepted Answer

A)  tendency of supply and demand to shift in opposite directions.
B)  fact that ration coupons are needed to alleviate wartime shortages of goods.
C)  capacity of a competitive market to equate the quantity demanded and the quantity supplied.
D)  ability of the market system to generate an equitable distribution of income.E) A) and D)
F) A) and C)

Question 9

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.If demand changes from P = 10 - .2Q to P = 7 - .3Q, we can conclude that:

Accepted Answer

A)  demand has increased.
B)  demand has declined.
C)  supply will increase.
D)  supply will decrease.E) None of the above
F) A) and B)

Question 10

If the demand for a normal good (for example, steak)  shifts to the left, the most likely reason is that:

Accepted Answer

A)  consumer incomes have fallen.
B)  cattle production has declined.
C)  the price of steak has risen.
D)  the price of cattle feed has gone up.E) C) and D)
F) B) and D)

Question 11

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 D)
F) All of the above

Question 12

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

Question 13

A decrease in demand and an increase in supply will:

Accepted Answer

A)  increase the equilibrium quantity and decrease price.
B)  decrease the equilibrium quantity and affect price in an indeterminate way.
C)  decrease price and affect the equilibrium quantity in an indeterminate way.
D)  increase price and affect the equilibrium quantity in an indeterminate way.E) B) and C)
F) A) and C)

Question 14

An inferior good is one:

Accepted Answer

A)  that doesn't work.
B)  that costs too much.
C)  that won't be purchased at any price.
D)  for which demand increases as income decreases.E) B) and C)
F) C) and D)

Question 15

Given the supply curve for butter, a reduction in the price of margarine will tend to:

Accepted Answer

A)  increase the demand for butter.
B)  increase the demand for margarine.
C)  raise the price of butter.
D)  lower the price of butter.E) C) and D)
F) A) and B)

Question 16

If producers must obtain higher prices than previously to produce various levels of output, 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 C)
F) A) and D)

Question 17

A decrease in the price of gasoline will:

Accepted Answer

A)  cause the demand curve for gas powered cars to become vertical.
B)  shift the demand curve for gas powered cars to the right.
C)  shift the demand curve for gas powered cars to the left.
D)  not affect the demand for gas powered cars.E) C) and D)
F) All of the above

Question 18

Uber's pricing model creates what type of waiting lines?

Accepted Answer

A)  Long
B)  Short
C)  Normal
D)  UncertainE) A) and B)
F) B) and D)

Question 19

1 to S2? A) an increase in the price of fertilizer B) a change in consumer tastes away from cornbread C) a decrease in consumer incomes D) the development of a more effective insecticide for corn rootworm" class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram, which shows three supply curves for corn.Which of the following would cause the change in the supply of corn illustrated by the shift from S1 to S2?

Accepted Answer

A)  an increase in the price of fertilizer
B)  a change in consumer tastes away from cornbread
C)  a decrease in consumer incomes
D)  the development of a more effective insecticide for corn rootwormE) B) and C)
F) A) and B)

Question 20

0, if the supply curve moved from S0 to S1, then: A) supply has increased and equilibrium quantity has decreased. B) supply has decreased and equilibrium quantity has decreased. C) there has been an increase in the quantity supplied. D) supply has increased and price has risen to 0G." class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram, which shows demand and supply conditions in the competitive market for product X.Given D0, if the supply curve moved from S0 to S1, then:

Accepted Answer

A)  supply has increased and equilibrium quantity has decreased.
B)  supply has decreased and equilibrium quantity has decreased.
C)  there has been an increase in the quantity supplied.
D)  supply has increased and price has risen to 0G.E) B) and C)
F) C) and D)

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

Refer to the above diagram, which shows three supply curves for corn.Which of the following would cause the change in the supply of corn illustrated by the shift from S1 to S2?

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

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Assume in a competitive market that price is initially above the equilibrium level.We can predict that price will:

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Uber's pricing model creates what type of waiting lines?

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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.If demand changes from P = 10 - .2Q to P = 7 - .3Q, we can conclude that:

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If producers must obtain higher prices than previously to produce various levels of output, there has occurred:

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The rationing function of prices refers to the:

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Assuming competitive markets with typical supply and demand curves, which of the following statements is correct?

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Refer to the above diagram, which shows demand and supply conditions in the competitive market for product X.Given D0, if the supply curve moved from S0 to S1, then:

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

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The equation for the supply curve in the above diagram:

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Given the supply curve for butter, a reduction in the price of margarine will tend to:

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An inferior good is one:

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At the equilibrium price:

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A decrease in the price of gasoline will:

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If a legal ceiling price for gasoline is set above the equilibrium price:

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If the demand for a normal good (for example, steak) shifts to the left, the most likely reason is that:

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A market is in equilibrium:

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Surpluses drive market prices up; shortages drive them down.

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A decrease in demand and an increase in supply will:

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Refer to the above diagram, which shows three supply curves for corn.Which of the following would cause the change in the supply of corn illustrated by the shift from S₁ to S₂?

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Refer to the above diagram, which shows demand and supply conditions in the competitive market for product X.Given D₀, if the supply curve moved from S₀ to S₁, then:

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