Ch.4 Demand And Supply Full Test Bank 2nd Edition - Microeconomics Australia 2e Complete Test Bank by Michael Parkin, Robin Bade. DOCX document preview.
Parkin&Bade, Microeconomics, 2nd edition
Chapter 4: Demand and Supply
Multiple choice: Choose the one alternative that best completes the statement or answers the question.
A) a physical place where people buy only goods.
B) any arrangement that brings buyers and sellers together.
C) a place where one good is bartered for another.
D) a physical place where people buy both goods and services.
E) a store where people buy physical goods.
Standard/Graduate Attribute AACSB: Reflective thinking
A) is not a market because buyers can buy from only one seller at any point in time.
B) will be considered a market when the Internet firms become profitable.
C) is a market because buyers and sellers are brought together to buy and sell.
D) cannot function as a market.
E) would be a market if there were only one physical location.
Standard/Graduate Attribute AACSB: Reflective thinking
3) What is the 'quantity demanded'?
A) The amount of a good people are able and willing to buy during a specific time period and at a given price.
B) The maximum amount of a good that can be consumed during a specific time period.
C) The minimum amount of a good that people are willing to buy during a specific time period and at a given price.
D) The amount of a good people are able and willing to buy at all possible prices.
E) The amount of a good people desire.
Standard/Graduate Attribute AACSB: Reflective thinking
4) The law of demand refers to how
A) the price of the good changes when people's demand for the good changes.
B) demand changes when people's incomes change.
C) the quantity demanded changes when the demand for the good changes.
D) the quantity demanded changes when the price of the good changes.
E) demand changes when the prices of substitutes and complements change.
Standard/Graduate Attribute AACSB: Reflective thinking
5) Petrol prices increase by 50 per cent and other things remain the same. As a result, there is
A) an increase in the demand for petrol.
B) a decrease in the quantity of petrol demanded.
C) a decrease in the demand for petrol.
D) no change in the quantity of petrol demanded.
E) More information is needed to determine if the demand for petrol increases or decreases.
Standard/Graduate Attribute AACSB: Reflective thinking
6) The law of demand implies that, other things remaining the same,
A) as the price of a cheeseburger rises, the quantity of cheeseburgers demanded decreases.
B) as the demand for cheeseburgers increases, the price of a cheeseburger falls.
C) as more people demand cheeseburgers, the quantity demanded increases.
D) as the price of a cheeseburger rises, the quantity of cheeseburgers demanded increases.
E) as income increases, the quantity of cheeseburgers demanded increases.
Standard/Graduate Attribute AACSB: Reflective thinking
7) Which of the following results in a movement upward along the demand curve for movies?
A) An increase in income, assuming that movies are a normal good.
B) A decrease in the price of Netflix, a substitute for movies.
C) A decrease in income, assuming that movies are a normal good.
D) An increase in the price of movie tickets.
E) A decrease in the price of movie tickets.
Standard/Graduate Attribute AACSB: Analytical thinking
8) The price of cotton clothing falls. As a result,
A) the quantity demanded of cotton clothing decreases.
B) the demand for cotton clothing increases.
C) the demand for cotton clothing decreases.
D) the quantity demanded of cotton clothing increases.
E) both the demand for cotton clothing increases AND the quantity demanded of cotton clothing increases.
Standard/Graduate Attribute AACSB: Reflective thinking
A) shows the quantity demanded at one price.
B) is a graph showing a relationship between the quantity demanded and the price of a good.
C) shows that demand is on schedule.
D) shows how demand changes when the supply changes.
E) is a list of the quantities demanded at each different price when all other influences on buying plans remain the same.
Standard/Graduate Attribute AACSB: Reflective thinking
09) The downward slope of a demand curve
A) shows that, as the price of a good rises, consumers increase the quantity they demand.
B) indicates how the quantity demanded changes when incomes rise and the good is a normal good.
C) indicates how demand changes when the price changes and the good is a normal good.
D) indicates how demand changes when incomes rise and the good is a normal good.
E) represents the law of demand.
Standard/Graduate Attribute AACSB: Reflective thinking
A) cannot show a change in demand for a good.
C) is the vertical sum of individual demand curves.
D) cannot show how quantity demanded changes in response to a change in price.
E) is the horizontal sum of individual demand curves.
Standard/Graduate Attribute AACSB: Analytical thinking
12) There are five hundred buyers in the market for cheese. If we know each individual's demand curves, to find the market demand we must
A) add the prices that each buyer will pay at every quantity.
B) add the quantities that each buyer will purchase at every price.
C) give up because there is no way to find the market demand.
D) average the price each buyer is willing to pay for each given quantity.
E) multiply the price times quantity for each buyer and then add the resulting products together.
Standard/Graduate Attribute AACSB: Analytical thinking
13) The market demand curve for mousetraps is
A) found by summing the prices of mousetraps at each quantity of mousetraps demanded by each buyer.
B) the horizontal sum of the individual demand curves for mousetraps of all the buyers.
C) found by summing the quantities of mousetraps demanded at each income level by each buyer.
D) Both answers B and C are correct.
E) Both answers A and C are correct.
Standard/Graduate Attribute AACSB: Analytical thinking
14) The phrase 'a change in demand' most directly implies a
A) movement along a demand curve.
C) change in the quantity demanded of a good.
D) movement along the price curve.
E) movement along the quantity curve.
Standard/Graduate Attribute AACSB: Reflective thinking
15) A change in the demand for apples could result from any of the following EXCEPT
A) increased preferences for fresh fruit consumption for health reasons.
B) a change in the number of buyers.
D) a change in the price of a banana.
E) a change in the price of an apple.
Standard/Graduate Attribute AACSB: Reflective thinking
16) Changes in which of the following factors do NOT shift the demand curve?
C) The price expected in the future
E) The price of a substitute good
Standard/Graduate Attribute AACSB: Reflective thinking
17) Consumers regard Dell computers and Apple computers as substitutes. If the price of a Dell computer decreases, the
A) demand for Apple computers decreases.
B) demand for Dell computers increases.
C) supply of Dell computers increases.
D) demand for Apple computers increases.
E) demand for Dell computers decreases.
Standard/Graduate Attribute AACSB: Reflective thinking
18) Consider the market for smart phones. Which of the following shifts the demand curve rightward?
A) A decrease in the number of smart phone buyers.
B) An increase in the price of smart phones.
C) A decrease in the price of smart phones.
D) An increase in the supply of smart phones.
E) An increase in the price of land-line phone service, a substitute for smart phones.
Standard/Graduate Attribute AACSB: Reflective thinking
19) Which of the following shifts the demand curve for movies leftward?
A) An increase in incomes, assuming movies are a normal good.
B) A decrease in the price of Netflix, a substitute for movies.
C) An increase in the price of movie tickets.
D) A decrease in the price of movie tickets.
E) An increase in movie star salaries.
Standard/Graduate Attribute AACSB: Analytical thinking
20) Car insurance and cars are complements. If the price of car insurance increases, the
C) quantity of cars demanded increases.
D) quantity of cars demanded decreases.
E) More information is needed to determine if the demand for cars increases or decreases.
Standard/Graduate Attribute AACSB: Reflective thinking
21) What happens to the demand for a good if a complement's price increases?
A) The demand decreases and the demand curve shifts rightward.
B) The demand increases and the demand curve shifts leftward.
C) The demand increases and the demand curve shifts rightward.
D) The demand decreases and the demand curve shifts leftward.
E) There is no impact on demand for the good and the demand curve does not shift.
Standard/Graduate Attribute AACSB: Reflective thinking
22) A popular dinner among university students today is sushi, green tea and wasabi dip, so these foods are complements. If the price of green tea increases and the price of wasabi dip increases, what would be the effect on the demand for sushi at lunch?
A) The demand for sushi could increase or decrease.
B) The demand for sushi would increase.
C) The demand for sushi would be unaffected, but the price would increase.
D) The demand for sushi would decrease.
E) The demand for sushi would be unaffected, but the price would decrease.
Standard/Graduate Attribute AACSB: Reflective thinking
23) If the demand for digital cameras increases when consumers' incomes rise, then digital cameras are
C) made using advanced technology.
D) a substitute for camcorders.
E) a complement to camcorders.
Standard/Graduate Attribute AACSB: Reflective thinking
24) In a recession, consumers have less income to spend. As a result, if dining out is a normal good, then which of the following would happen to the demand curve for dining out?
A) The demand curve would shift rightward.
B) The demand curve would not shift but the price of dining out would fall.
C) The effect on the demand curve is unknown.
D) The demand curve would not shift but the price of dining out would rise.
E) The demand curve would shift leftward.
Standard/Graduate Attribute AACSB: Reflective thinking
25) If macaroni and cheese is an inferior good, then a decrease in income results in
A) a decrease in the demand for macaroni and cheese.
B) a decrease in the supply of macaroni and cheese.
C) an increase in the demand for macaroni and cheese.
D) an increase in the supply of macaroni and cheese.
E) Both answers A and D are correct.
Standard/Graduate Attribute AACSB: Reflective thinking
26) Two minute noodles are a staple food item for many university students. Two minute noodles are very inexpensive, easy to prepare, and can be combined easily with other foods. After students graduate, find employment and earn a higher income, they decrease their two minute noodle purchases significantly. In this case, two minute noodles are
B) a complement for higher-income people.
E) None of the above answers is correct.
Standard/Graduate Attribute AACSB: Reflective thinking
27) A huge 50 per cent off sale on golf clubs is advertised for next week. What happens this week in the market for golf clubs?
A) The supply of golf clubs increases.
B) The demand for golf clubs decreases.
C) The supply of golf clubs decreases.
D) The demand for golf clubs increases.
E) The demand for and the supply of golf clubs decreases.
Standard/Graduate Attribute AACSB: Reflective thinking
28) Which of the following increases the demand for a good?
A) A rise in the price of a complement.
B) A decrease in the number of buyers.
C) The expectation that future income will be higher.
D) A fall in the price of a substitute.
E) An increase in income, assuming the good is an inferior good.
Standard/Graduate Attribute AACSB: Reflective thinking
29) Consider the market for smart phones. Which of the following shifts the demand curve leftward?
A) An increase in the price of smart phones.
B) Studies showing that using smart phones can cause brain cancer.
C) A decrease in the quantity demanded of smart phones.
D) An increase in the services provided by smart phones, such as text messaging.
E) A decrease in the price of smart phones.
Standard/Graduate Attribute AACSB: Reflective thinking
Scooters and bicycles are substitutes. Suppose the price of a bicycle falls. Which of the figures above best illustrates how this fall in price affects the demand curve for scooters?
E) None of the above answers is correct because the change in the price of a bicycle will affect the supply curve NOT the demand curve.
Standard/Graduate Attribute AACSB: Analytical thinking
31) Scooters are a normal good and buyers' incomes decrease. Which of the figures above best illustrates how this change affects the demand curve for scooters?
E) None of the above answers is correct because the decrease in income will affect the supply curve NOT the demand curve.
Standard/Graduate Attribute AACSB: Analytical thinking
32) A scooter uses much less petrol than a car. Suppose the price of petrol rises substantially. Which of the figures above best illustrates how this change affects the demand curve for scooters?
Standard/Graduate Attribute AACSB: Analytical thinking
In the above figure, the movement from point a to point b reflects
A) an increase in the number of people who eat pizza.
B) a decrease in the price of pizza.
C) an increase in the demand for pizza.
D) an increase in the price of the tomato sauce used to produce pizza.
E) a decrease in the number of firms producing pizza.
Standard/Graduate Attribute AACSB: Analytical thinking
In the above figure, the shift in the demand curve from D to D1 can be the result of
A) an increase in the price of soft drinks, a complement to pizza.
B) an increase in the price of pizza.
C) a change in quantity demanded.
D) an increase in the price of a sub sandwich, a substitute for pizza.
E) a decrease in income if pizza is a normal good.
Standard/Graduate Attribute AACSB: Analytical thinking
The figure above shows the market for iPhones. Which of the following creates a movement from point A to point B?
A) A decrease in the price of Zunes, a substitute for iPodsiPhones.
B) An increase in people's incomes.
C) A decrease in the price of iPodsiPhones.
D) An increase in the price of iPodsiPhones.
E) A requirement that all students at universities have an iPodiPhone.
Standard/Graduate Attribute AACSB: Analytical thinking
The figure above shows the market for iPhones. Which of the following shifts the demand curve from D0 to D1?
A) An increase in people's incomes.
B) A requirement that all students at universities have an iPhone.
C) A decrease in the price of Zunes, a substitute for iPhones.
D) An increase in the price of iPhones.
E) A decrease in the price of iPhones.
Standard/Graduate Attribute AACSB: Analytical thinking
In the above figure, ________ will shift the demand curve from D to D1.
A) a fall in the cost of producing pizza
B) buyers' expectations that pizza will be less expensive next week
C) a scientific article published that demonstrates eating pizza is good for one's health
D) an increase in income if pizza is an inferior good
E) a decrease in the price of a sub sandwich, a substitute for pizza
Standard/Graduate Attribute AACSB: Analytical thinking
38) The impact of an increase in the price of a particular good is illustrated as a
A) movement downward and to the right along its demand curve.
B) rightward shift in its demand curve.
C) leftward shift in its demand curve.
D) rightward shift in its demand curve AND a movement upward and to the left along its demand curve.
E) movement upward and to the left along its demand curve.
Standard/Graduate Attribute AACSB: Analytical thinking
According to the figure above, which of the following events will increase the quantity demanded of bottled water?
A) A rise in the price of a fitness club membership.
B) A fall in the price of bottled water.
C) An increase in the number of buyers of bottled water.
D) A rise in the price of bottled water.
E) A fall in the price of soft drinks.
Standard/Graduate Attribute AACSB: Analytical thinking
The graph illustrates the demand for peanuts. Peanuts are a normal good because
A) the demand curve shows that, if the price of peanuts rises, there is a movement along the demand curve to a lower quantity demanded.
B) peanuts have both substitutes and complements.
C) the demand for peanuts increases when the price of one of its substitutes rises.
D) the demand curve for peanuts slopes downward.
E) the demand for peanuts increases when income increases.
Standard/Graduate Attribute AACSB: Analytical thinking
41) A normal good is DEFINED as a good
A) for which demand increases when the price of a complement falls.
B) for which demand increases when income increases.
C) with a downward-sloping demand curve.
D) for which demand increases when the number of demanders increases.
E) for which demand increases when the price of a substitute rises.
Standard/Graduate Attribute AACSB: Reflective thinking
Soft drinks and peanuts are complements. Other influences on buying plans remaining the same, a rise in the price of soft drinks
A) decreases the demand for soft drinks.
B) increases the demand for peanuts.
C) increases the demand for soft drinks.
D) decreases the demand for peanuts.
E) has no effect on the demand for peanuts, though it does change the quantity demanded of peanuts.
Standard/Graduate Attribute AACSB: Reflective thinking
43) Teenagers drink more soft drinks than other age groups. If the number of teenagers increases, everything else remaining the same,
A) market demand for soft drinks decreases.
B) market demand for soft drinks does not change.
C) there is a movement along the market demand curve for soft drinks.
D) market demand for soft drinks increases.
E) None of the above answers is correct because the effect on demand depends whether the supply curve shifts rightward, leftward or not at all.
Standard/Graduate Attribute AACSB: Reflective thinking
The graph illustrates the demand curve for soft drinks. After a rise in the price of a soft drink from $1.00 a can to $2.00 a can, the quantity of soft drinks demanded
A) decreases from 1 can to 0 cans a day.
C) increases from 0 cans to 2 cans a day.
D) decreases from 2 cans to 0 cans a day.
E) cannot be determined from the figure because the demand curve will shift to a new curve.
Standard/Graduate Attribute AACSB: Analytical thinking
45) Assume that pizza and tacos are substitutes, and the price of a pizza increases. Which of the following correctly indicates what happens?
A) The demand for pizza decreases and the demand for tacos increases.
B) The quantity of tacos demanded increases and the quantity of pizza demanded decreases.
C) The quantity of pizza demanded decreases and the demand for tacos increases.
D) The demand for each decreases because both are normal goods.
E) The demand for both goods decreases.
Standard/Graduate Attribute AACSB: Reflective thinking
46) To be part of the supply for a good, a producer must be
A) both able and willing to supply the good.
B) both able and willing to supply the good, and have already sold the good.
C) only willing to supply the good.
D) only able to supply the good.
E) both able and willing to supply the good, and have already identified a buyer.
Standard/Graduate Attribute AACSB: Reflective thinking
47) The quantity supplied of a good or service is the
A) list of all quantities at different prices, as illustrated by a demand schedule and a demand curve.
B) quantity consumed at one price
C) one quantity produced at a variety of prices.
D) list of all quantities at different prices, as illustrated by a supply schedule and a supply curve.
E) quantity produced at one price.
Standard/Graduate Attribute AACSB: Reflective thinking
48) The law of supply states that, other things remaining the same,
A) if the price of a good increases, firms buy less of it.
B) demand increases when supply increases.
C) if the price of a good increases, the supply increases.
D) as people's income increases, the supply of goods increases.
E) if the price of a good increases, the quantity supplied increases.
Standard/Graduate Attribute AACSB: Reflective thinking
49) The law of supply reflects the fact that
A) suppliers have an incentive to use their resources in the way that brings the biggest return.
B) people buy more of a good when its price falls.
C) businesses can sell more goods at lower prices.
D) higher prices are more attractive to consumers because they signal a higher quality product.
E) the demand curve is downward sloping.
Standard/Graduate Attribute AACSB: Reflective thinking
B) is a graph of the relationship between the quantity supplied of a good and its price.
D) Both answers A and B are correct.
E) Both answers A and C are correct.
Standard/Graduate Attribute AACSB: Reflective thinking
51) Which of the following results in a movement upward along the supply curve for movies in cinemas?
A) A decrease in the price of downloaded movies.
B) An increase in the number of cinemas.
C) An increase in the price of movie tickets.
D) A decrease in the price of movie tickets.
E) A decrease in movie star salaries.
Standard/Graduate Attribute AACSB: Analytical thinking
52) Which of the following increases the quantity supplied of compact discs, but does NOT increase the supply of compact discs?
A) A decrease in the number of suppliers of compact discs.
B) An increase in the price of the resources used to produce compact discs.
C) New technology that lowers the cost of producing compact discs.
D) A decrease in the price of a compact disc.
E) An increase in the price of a compact disc.
Standard/Graduate Attribute AACSB: Reflective thinking
53) Which of the following increases the supply of a product?
A) Some producers going bankrupt and leaving the industry.
B) Lower prices for the resources used to produce the product.
C) A decrease in productivity.
D) An increase in the expected future price of the product.
E) A higher price for the product.
Standard/Graduate Attribute AACSB: Reflective thinking
54) Which of the following does NOT increase the supply of personal computers, that is, does NOT shift the supply curve of personal computers?
A) An increase in the number of firms producing personal computers.
B) A change in the expected future price of a personal computer.
C) A fall in the cost of the components used to assemble personal computers.
D) A rise the price of a personal computer.
E) An advance in the technology used to produce personal computers.
Standard/Graduate Attribute AACSB: Reflective thinking
55) A decrease in the price of a complement in production leads to
A) an increase in the supply of the good in question.
B) an increase in the supply of the good in question and a decrease in the quantity supplied of the good in question.
C) a decrease in the quantity supplied of the good in question.
D) a decrease in the supply of the good in question.
E) no change in the supply of the good in question.
Standard/Graduate Attribute AACSB: Reflective thinking
56) Milk can be used to produce cheese or butter. If the price of a kilogram of butter rises, what happens to the supply of cheese?
A) The supply of cheese could increase, decrease or stay the same depending on what happens to the supply of butter.
B) The supply of cheese stays the same, and there is no change in the quantity supplied of cheese.
C) The supply of cheese increases.
D) The supply of cheese decreases.
E) The supply of cheese stays the same, and there is a decrease in the quantity supplied of cheese.
Standard/Graduate Attribute AACSB: Reflective thinking
57) The Motor Vehicle Builders' Union bargained for higher wages and more benefits for its members. As a result of the higher wages and increased benefits,
i. the quantity of new cars supplied decreases.
ii. the supply of new cars decreases.
iii. the supply of new cars increases.
E) Neither i, ii nor iii is correct.
Standard/Graduate Attribute AACSB: Reflective thinking
58) If the Motor Vehicle Builders' Union successfully negotiates a wage increase for its members, how does the wage hike affect the supply of cars?
A) The quantity supplied decreases.
D) The quantity supplied increases.
E) Both answers B and D are correct.
Standard/Graduate Attribute AACSB: Reflective thinking
59) It is expected that the price of a tonne of wheat will increase in one month. This belief will result in
A) an increase in the current supply of wheat.
B) no change in the current or future supply of wheat.
C) an increase in the current quantity supplied of wheat.
D) a decrease in the future supply of wheat.
E) a decrease in the current supply of wheat.
Standard/Graduate Attribute AACSB: Reflective thinking
60) An increase in the number of fast-food restaurants
A) increases both the demand and supply of fast-food meals.
B) increases the supply of fast-food meals.
C) increases the demand for fast-food meals.
D) increases the demand for substitutes for fast-food meals.
E) raises the price of fast-food meals.
Standard/Graduate Attribute AACSB: Reflective thinking
61) An increase in the number of pineapple growers results in
A) no change in the supply of pineapples and a movement along the supply curve of pineapples.
B) an increase in the supply of pineapples and a leftward shift in the supply curve of pineapples.
C) an increase in the supply of pineapples and a rightward shift in the supply curve of pineapples.
D) an increase in the quantity of pineapples supplied and no shift in the supply curve of pineapples.
E) None of the above answers is correct.
Standard/Graduate Attribute AACSB: Reflective thinking
62) Researchers have found a hybrid of corn that is cheaper to grow. This technological breakthrough
A) increases the demand for corn.
B) decreases the supply of corn.
C) increases the supply of corn.
D) Both answers A and C are correct.
E) Both answers A and B are correct.
Standard/Graduate Attribute AACSB: Reflective thinking
63) Suppose over the next few years the productivity of firms producing electric cars improves dramatically. The advance in productivity leads to
A) an increase in the supply electric cars so that the supply curve shifts rightward.
B) a decrease in the supply of electric cars so that the supply curve shifts rightward.
C) a decrease in the supply of electric cars so that the supply curve shifts leftward.
D) an increase in the supply of electric cars so that the supply curve shifts leftward.
E) no change in the supply of electric cars, only a change in the quantity supplied of electric cars.
Standard/Graduate Attribute AACSB: Reflective thinking
64) Advances in productivity increase supply because they might
A) raise the prices of resources used to produce the good.
B) increase the price expected in the future.
C) decrease the number of goods available.
D) increase the number of firms producing the good.
E) decrease the cost of production.
Standard/Graduate Attribute AACSB: Reflective thinking
65) Which of the following shifts the supply curve for oranges?
A) An increase in the number of orange consumers.
B) Disastrous weather that destroys about half of this year's orange crop.
C) A newly discovered increase in the nutritional value of oranges.
D) An increase in income for all orange consumers if oranges are a normal good.
E) An increase in the price of bananas, a substitute in consumption for oranges.
Standard/Graduate Attribute AACSB: Analytical thinking
In the above figure, the movement from point a to point b reflects
A) an increase in the number of producers of pizza.
B) a decrease in the cost of the tomato sauce used to produce pizza.
C) a decrease in income if pizza is a normal good.
D) an increase in the supply of pizza.
E) an increase in the price of pizza.
Standard/Graduate Attribute AACSB: Analytical thinking
In the above figure, the shift in the supply curve from S to S1 reflects
A) an increase in the quantity of pizza supplied.
B) a decrease in the supply of pizza.
C) an increase in the supply of pizza.
D) a decrease in the quantity of pizza supplied.
E) None of the above answers is correct.
Standard/Graduate Attribute AACSB: Analytical thinking
In the above figure, the shift in the supply curve from S to S2 reflects
A) a decrease in the supply of pizza AND a simultaneous decrease in the quantity of pizza supplied.
B) a decrease in the quantity of pizza supplied.
C) an increase in the quantity of pizza supplied.
D) an increase in the supply of pizza.
E) a decrease in the supply of pizza.
Standard/Graduate Attribute AACSB: Analytical thinking
In the above figure, an increase in cost of the cheese used to produce pizza
A) results in a movement from point b to point a.
B) results in a movement from point a to point b.
C) shifts the supply curve from S to S2.
D) shifts the supply curve from S to S1.
Standard/Graduate Attribute AACSB: Analytical thinking
In the above figure, an increase in productivity
A) shifts the supply curve from S to S2.
B) results in a movement from point b to point a.
C) shifts the supply curve from S to S1.
D) results in a movement from point a to point b.
Standard/Graduate Attribute AACSB: Analytical thinking
The above figure illustrates the market for corn. If point 'a' represents the original equilibrium and point 'b' the new equilibrium, which of the following could have caused the change?
A) An increase in consumers' preferences for corn.
B) An increase in the labour costs of producing corn.
C) An increase in consumers' income if corn is a normal good.
D) An improvement in the technology of producing corn.
E) An increase in consumers' income if corn is an inferior good.
Standard/Graduate Attribute AACSB: Analytical thinking
The above figure illustrates the market for corn. If point 'a' represents the original equilibrium and point 'b' the new equilibrium, which of the following could have caused the change?
A) An increase in the number of corn growers.
B) An increase in the cost of the fertiliser used to grow the corn.
C) An increase in the price of wheat, a substitute in production for corn.
D) An increase in income if corn is a normal good.
E) A belief among corn farmers that the price of a tonne of corn will be higher next month.
Standard/Graduate Attribute AACSB: Analytical thinking
The above figure illustrates the market for corn. If point 'a' represents the original equilibrium and point 'b' the new equilibrium, which of the following could have caused the change?
A) An increased belief among buyers that corn is healthy.
B) A decrease in buyers' incomes if corn is an inferior good.
C) A decrease in the price of wheat, a substitute in production for corn.
D) A decrease in the number of corn growers.
E) An increase in the cost of the seed used to grow the corn.
Standard/Graduate Attribute AACSB: Analytical thinking
74) Which of the following leads to an increase in the quantity supplied, but not an increase in supply?
A) An advance in the technology used to produce the good.
B) An increase in the product's price.
C) A decrease in the costs of production.
D) An increase in the price of another product that the suppliers can produce.
E) An increase in the number of firms producing the good or service.
Standard/Graduate Attribute AACSB: Reflective thinking
75) If a higher price for wheat decreases the quantity of corn being produced, which of the following describes what has occurred?
A) The quantity of wheat supplied increased and quantity of corn supplied decreased.
B) The supply of wheat increased and the quantity of corn supplied decreased
C) The supply of wheat increased and the supply of corn decreased.
D) The supply of wheat decreased and the supply of corn decreased.
E) The quantity of wheat supplied increased and the supply of corn decreased.
Standard/Graduate Attribute AACSB: Reflective thinking
76) The quantity supplied of a good is
A) always larger than the quantity demanded at each price.
B) equal to the difference between the quantity available and the quantity desired by all consumers and producers.
C) the same thing as the quantity demanded at each price.
D) the amount that the people are willing and able to sell during a given time period at a specified price.
E) the amount the firm will sell when it can sell all it wants.
Standard/Graduate Attribute AACSB: Reflective thinking
The graph illustrates the supply of sweaters. Which of the following events will increase the quantity supplied of sweaters?
A) A decrease in the number of sweater buyers.
B) A rise in the price of a sweater.
C) An increase in the number of sellers of sweaters.
D) A rise in the expected future price of a sweater.
E) A rise in the wage rate paid to the workers who make sweaters.
Standard/Graduate Attribute AACSB: Analytical thinking
78) One reason supply curves have an upward slope is because
A) a higher price brings a greater profit, so firms want to sell more of that good.
B) increased supply will require increased technology.
C) to have more of the good supplied requires more firms to open.
D) people will pay a higher price when less is supplied.
E) None of the above answers is correct because supply curves have a downward slope.
Standard/Graduate Attribute AACSB: Reflective thinking
79) Wheat is used to produce cereal. When the price of wheat falls, the
B) demand for wheat increases.
C) demand for cereal increases.
D) demand for cereal decreases.
E) supply of cereal increases.
Standard/Graduate Attribute AACSB: Reflective thinking
80) A rise in the price of a substitute in production for a good leads to
A) a decrease in the quantity of that good supplied.
B) an increase in the supply of that good.
C) no change in the supply of that good; instead there is a change in the quantity supplied.
D) no change in either the supply or the quantity supplied of the good.
E) a decrease in the supply of that good.
Standard/Graduate Attribute AACSB: Reflective thinking
81) An increase in the number of producers of bird seed ________ the supply of bird seed and shifts the supply curve of bird seed ________.
Standard/Graduate Attribute AACSB: Analytical thinking
The graph illustrates the supply of sweaters. Which of the following events will increase the supply of sweaters?
A) A rise in the wage rate paid to the workers who make sweaters.
B) A rise in the expected future price of a sweater.
C) An increase in income if sweaters are a normal good.
D) An increase in the number of sellers of sweaters.
E) A rise in the price of a sweater.
Standard/Graduate Attribute AACSB: Analytical thinking
The graph illustrates the supply of sweaters. As the technology used to produce sweaters improves, the
A) quantity of sweaters supplied decreases.
B) quantity of sweaters supplied increases.
C) supply of sweaters decreases and the demand for sweaters does not change.
D) supply of sweaters increases AND the demand for sweaters increases.
E) supply of sweaters increases and the demand for sweaters does not change.
Standard/Graduate Attribute AACSB: Analytical thinking
The graph illustrates the supply of sweaters. A fall in the price of sweaters brings
A) a movement along the supply curve.
B) a decrease in the quantity supplied of sweaters.
C) a shift of the supply curve.
D) Both answers A and B are correct.
E) Both answers B and C are correct.
Standard/Graduate Attribute AACSB: Analytical thinking
85) Market equilibrium occurs when
A) demand and supply move in opposite directions.
B) the quantity demanded equals the quantity supplied.
C) opposing forces pull demand and supply apart.
E) demand and supply change so that they are equal at ALL possible prices.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Reflective thinking
i. can never occur because there are always people who want a good but cannot afford it.
ii. occurs at the intersection of the supply and demand curves.
iii. is the point where the price equals the quantity.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Reflective thinking
87) A surplus of cardboard boxes means that
A) at the current price of a cardboard box, the quantity demanded equals the quantity supplied and the price will fall to restore the equilibrium.
B) the current price of a cardboard box is less than the equilibrium price.
C) at the current price of a cardboard box, the quantity demanded exceeds the quantity supplied.
D) at the current price of a cardboard box, the quantity demanded is less than the quantity supplied.
E) More information is needed to determine if the price of cardboard boxes is higher than, lower than or equal to the equilibrium price.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Reflective thinking
88) If there is a surplus of tacos, then the
A) quantity of tacos demanded equals the quantity of tacos supplied.
B) quantity of tacos demanded is greater than the quantity of tacos supplied.
C) quantity of tacos demanded is less than the quantity of tacos supplied.
D) supply curve of tacos will shift leftward to eliminate the surplus.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Reflective thinking
89) Suppose the equilibrium price of oranges is $2.00 per kilogram. If the actual price is above the equilibrium price, a
A) surplus exists but nothing happens until either the demand or the supply changes.
B) surplus exists and the price rises to restore equilibrium.
C) shortage exists and the price rises to restore equilibrium.
D) surplus exists and the price falls to restore equilibrium.
E) shortage exists and the price falls to restore equilibrium.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Reflective thinking
90) If the price is below the equilibrium price,
A) the supply curve will shift rightward.
B) the supply curve will shift leftward.
C) the demand curve will shift leftward.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Reflective thinking
91) When there is a shortage of parking spaces at your university, the
A) supply of parking spaces is greater than the demand.
B) quantity of parking spaces supplied is greater than the quantity of parking spaces demanded.
C) demand for parking spaces is greater than the supply.
D) quantity of parking spaces demanded is greater than the quantity of parking spaces supplied.
E) Both answers A and D are correct.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Reflective thinking
92) Suppose the current price of a kilogram of steak is $6 per kilogram and the equilibrium price is $9 per kilogram. What takes place?
A) There is a shortage, so the price rises and quantity demanded increases.
B) There is a shortage, so the price rises and quantity demanded decreases.
C) There is a surplus, so the price falls and quantity demanded increases.
D) There is a shortage, so the price falls and quantity demanded increases.
E) There is a shortage, so the price falls and quantity demanded decreases.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Reflective thinking
Using the data in the table above, the equilibrium quantity and equilibrium price for a cellular smart phone is
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
94) Using the data in the table above, at the price of $80 a phone,
A) a surplus of 25,000 smartphones occurs.
B) a surplus of 80,000 smartphones occurs.
C) a shortage of 55,000 smartphones occurs.
D) the market is in equilibrium.
E) a shortage of 25,000 smartphones occurs.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
In the figure above, a price of $35 per dozen roses results in
A) an eventual rightward shift of the demand curve and/or leftward shift of the supply curve.
C) upward pressure on the price of roses.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
In the figure above, a price of $15 per dozen roses results in
B) an eventual leftward shift of the demand curve and/or rightward shift of the supply curve.
D) downward pressure on the price of roses.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
The above figure shows the market for t-shirts. If the price of t-shirts is $12, then
A) there is a shortage and the price of t-shirts will fall.
B) there is a surplus and the price of t-shirts will rise.
C) there is a surplus and the price of t-shirts will fall.
D) there is a shortage and the price of t-shirts will rise.
E) the market is in equilibrium.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
98) Assume a competitive market is in equilibrium. There is an increase in demand, but no change in supply. As a result the equilibrium price ________, and the equilibrium quantity ________.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
99) If a market begins in equilibrium and then the demand curve shifts leftward, a
A) shortage is created, which is eliminated by a rise in price.
B) surplus is created, which is eliminated by the supply curve shifting leftward.
C) surplus is created, which is eliminated by a rise in price.
D) shortage is created, which is eliminated by a fall in price.
E) surplus is created, which is eliminated by a fall in price.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
199) An increase in both the equilibrium price and quantity can be the result of
E) None of the above answers is correct.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Reflective thinking
100) Because of a sharp increase in the price of petrol, the demand for Sports Utility vehicles (SUVs) has decreased. So, the high price of petrol leads to a
A) leftward shift of the supply curve of SUVs and no shift in the demand curve for SUVs.
B) rightward shift of the supply curve of SUVs and no shift in the demand curve for SUVs.
C) leftward shift of the demand curve for SUVs and the supply curve of SUVs.
D) leftward shift of the demand curve for SUVs and no shift in the supply curve of SUVs.
E) leftward shift of the demand curve for SUVs and a rightward shift of the supply curve of SUVs.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
101) If the price of tangerines increases, the price of oranges also rises because
A) buyers' incomes must have decreased and oranges are an inferior good.
B) consumers consider the two goods complements and so sellers decrease the supply of oranges.
C) if the supply of tangerines decreases, then the supply of oranges also must decrease.
D) consumers consider the two goods substitutes and demand for oranges increases.
E) buyers must have expected a higher price for oranges and thus increased their demand for oranges.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
102) Suppose the equilibrium price and quantity of new houses both increase. Which of the following could be a cause of this change?
A) A technological advance in framing a new house might have occurred.
B) More home buyers might have moved into the area.
C) The cost of wood framing used to build houses might have fallen.
D) The rent for nearby apartments might have fallen.
E) The wage paid to carpenters who build new houses might have risen.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
103) For consumers, corn chips and salsa are complements. If the price of salsa rises, what is the effect on the equilibrium price and quantity of corn chips?
A) The equilibrium price of corn chips falls, and the equilibrium quantity decreases.
B) The equilibrium price of corn chips rises, and the equilibrium quantity decreases.
C) The equilibrium price of corn chips rises, and the equilibrium quantity increases.
D) There is no change in the equilibrium price of corn chips, and the equilibrium quantity increases.
E) The equilibrium price of corn chips could rise, fall or stay the same, and the equilibrium quantity increases.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
104) Bagels and cream cheese are complementary goods. Suppose that the price of flour, which is used to produce bagels, increases. The equilibrium price of CREAM CHEESE ________, and the equilibrium quantity of CREAM CHEESE ________.
C) does not change; does not change
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
105) Assume a market is in equilibrium. There is an increase in supply, but no change in demand As a result the equilibrium price ________, and the equilibrium quantity ________.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
106) If good weather conditions result in a larger than normal crop of peaches, then the
A) increase in the supply of peaches induces a greater demand for peaches, so that the equilibrium price rises and the equilibrium quantity increases.
B) demand curve for peaches shifts leftward.
C) equilibrium price of peaches falls, and the equilibrium quantity of peaches decreases.
D) equilibrium price of peaches rises, and the equilibrium quantity of peaches increases.
E) equilibrium price of peaches falls, and the equilibrium quantity of peaches increases.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
107) Suppose the equilibrium price of movie tickets is $10. If the supply curve for movies shifts ________, the equilibrium price will ________.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
108) When laptops were first produced, the price was very high. As time passed, the price of personal laptops fell because
A) the initial price was too high and nobody bought laptops.
B) the demand for laptops decreased.
C) there were technological advances in the production of laptops.
D) people's incomes increased and laptops are an inferior good.
E) None of the above answers is correct.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
109) Suppose the price of bread rises. This rise could be the result of
A) an increase in the supply of bread.
B) a decrease in the demand for bread.
C) a decrease in the supply of bread.
D) Both answers A and C are correct.
E) Both answers B and C are correct.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
110) If an early frost destroys most of the apple crop, the equilibrium price of an apple ________ and the equilibrium quantity ________.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
111) Suppose that the price of flour used to produce bagels increases. Hence the equilibrium price of a bagel ________, and the equilibrium quantity ________.
C) does not change; does not change
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
A construction boom occurs and many of the new buildings need plywood for their framing. Which of the figures above best illustrates this change?
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
113) The number of logging firms increases. Which of the figures above best illustrates this change?
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
114) New technology for producing plywood is developed. Which of the figures above best illustrates this change?
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
Which figure above shows the effect if research is published claiming that eating pizza is healthy?
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
116) Pizza is a normal good. Which figure above shows the effect of a decrease in consumers' incomes?
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
Which figure above shows the effect of a decrease in the number of pizza sellers?
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
The above figure shows the market for pizza. The market is in equilibrium when people's incomes decrease. If pizza is a normal good, then which point represents the most likely new price and quantity?
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
The above figure shows the market for pizza. The market is in equilibrium when the cheese used to produce pizza falls in price. What point represents the most likely new price and quantity?
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
The above figure shows the market for pizza. The market is in equilibrium when new pizza firms enter the market. What point represents the most likely new price and quantity?
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
The above figure shows the market for pizza. The market is in equilibrium. Pizza and tacos are substitutes for consumers. The price of tacos falls. What point represents the most likely new price and quantity?
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
122) If both the supply and demand curves shift simultaneously, we can ALWAYS predict what will happen to
A) both the price and the quantity.
B) either the price or the quantity, but not both.
E) neither the price nor the quantity.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
123) Kiwi fruit and strawberries are substitutes for consumers. An increase in the price of a kiwi fruit coupled with an increase in the number of strawberry growers ________ the equilibrium price of a kilogram of strawberries and ________ the equilibrium quantity of strawberries.
B) probably changes, but more information is needed to determine if it raises or lowers; increases
D) lowers; probably changes, but more information is needed to determine if it increases or decreases
E) raises; probably changes, but more information is needed to determine if it increases or decreases
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
124) A competitive market is in equilibrium. Then there is a decrease in demand and a decrease in supply. The equilibrium price ________, and the equilibrium quantity ________.
B) perhaps changes but we can't say if it rises, falls or stays the same; decreases
E) perhaps changes but we can't say if it rises, falls or stays the same; increases
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
125) Suppose the demand curve for desktop computers shifts rightward and at the same time the supply curve shifts leftward. Which of the following could have caused these shifts?
A) Consumers purchased more computers because of the Christmas season, and the labour costs of producing desktop computers decreased.
B) Desktop computers are a normal good and incomes increased, while the labour costs of producing personal computers increased.
C) The price of a laptop computer, a substitute for desktop computers, fell and the cost of producing desktop computers decreased.
D) Desktop computers are a normal good and incomes decreased, while the labour costs of producing personal computers increased.
E) Desktop computers are a normal good and incomes increased, while more firms entered the market.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
126) If the demand curve for desktop computers shifts rightward and at the same time the supply curve shifts leftward, then
A) the equilibrium quantity definitely increases.
B) the equilibrium quantity definitely remains the same.
C) more information is needed to determine the effect on the equilibrium quantity.
D) the equilibrium quantity definitely decreases.
E) the equilibrium price definitely falls.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
127) The demand for cat food decreases while the supply increases. The equilibrium price of cat food ________, and the equilibrium quantity ________.
A) falls; perhaps changes but we can't say if it increases, decreases or stays the same
B) rises; perhaps changes but we can't say if it increases, decreases or stays the same
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
128) If both producers and consumers believe that a product's price will rise in the future, then in the present, the equilibrium price
A) might rise, fall or not change, but the change can never be predicted.
B) might rise, fall or not change depending on whether the effect from the producers is greater or less than the effect from the consumers.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
129) If there is a surplus of a good, the quantity demanded is ________ the quantity supplied, and the price will ________.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Reflective thinking
The graph illustrates the market for bottled water. When the price exceeds the equilibrium price, the quantity demanded is ________ the quantity supplied and the price of the good will ________.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
131) The number of people looking to buy ceiling fans increases, so there is an increase in the
A) supply of ceiling fans and no change in the price of a ceiling fan.
B) demand for ceiling fans and a surplus of ceiling fans.
C) quantity of ceiling fans demanded and a surplus of ceiling fans.
D) demand for ceiling fans and in the supply of ceiling fans.
E) demand for ceiling fans and a rise in the price of a ceiling fan.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
132) A technological improvement lowers the cost of producing corn. As a result, the price of a kilogram of corn ________ and the quantity of corn ________.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
The graph illustrates the market for bottled water. If the producers of bottled water switch to using improved technology, then the
A) quantity demanded of bottled water does not change.
B) price of bottled water rises.
C) quantity demanded of bottled water increases.
D) supply curve shifts leftward.
E) supply of bottled water decreases.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
134) Suppose a medical study reveals new benefits to consuming beef and at the same time a bumper corn crop reduces the cost of feeding cows. The equilibrium quantity of beef will
C) definitely either stay the same or decrease.
E) perhaps increase, decrease or stay the same, but more information is needed to determine which it will do.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
135) Suppose improvements in technology cause the supply of natural gas to increase and at the same time the demand for natural gas increases. What are we sure of?
A) Both equilibrium price and quantity increase.
B) Equilibrium price decreases.
C) Equilibrium price increases.
D) Equilibrium quantity decreases.
E) Equilibrium quantity increases.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
The graph illustrates the market for computers. If the number of buyers of computers increases and technology advances, you predict that the
A) equilibrium quantity of computers will decrease.
B) equilibrium price of a computer will fall.
C) equilibrium quantity of computers will increase.
D) equilibrium quantity of computers might increase, decrease or not change.
E) equilibrium price of a computer will rise.
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Analytical thinking
137) When demand increases and supply decreases by the same amount, the equilibrium quantity ________ and the equilibrium price ________.
A) decreases; might rise, fall or not change
E) does not change; might rise, fall or not change
A-Head: 4.3 Market Equilibrium
Standard/Graduate Attribute AACSB: Reflective thinking
The graph illustrates the market for pounds sterling, the currency of the United Kingdom. As the number of buyers of pounds decreases and the number of sellers of pounds increases, the equilibrium price of a pound
D) might rise, fall or remain the same but more information is needed.
E) will rise if the magnitude of the effect on the buyers is larger than the magnitude of the effect on the sellers.
A-Head: 4.3 Market Equilibrium
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