Question 1

If a market is in disequilibrium,economists would predict that the product's price would __________ to reach equilibrium when the quantity demanded is __________ than the quantity supplied.
A) rise; greater
B) fall; less
C) fall; greater
D) rise; less
E) a and b

Accepted Answer

When the quantity demanded is greater than the quantity supplied, prices tend to rise to reach equilibrium, as the scarcity of the product increases its value. Conversely, when the quantity demanded is less than the quantity supplied, prices tend to fall to eliminate the surplus and reach equilibrium.

Question 2

Which of the following is an example of a service?
A) medical care
B) dental care
C) a psychology lecture
D) a television set
E) a, b and c

Accepted Answer

Medical care, dental care, and a psychology lecture are all examples of services because they involve the provision of intangible benefits or activities performed for a consumer, unlike a television set, which is a tangible good.

Question 3

Exhibit 3-14
 
-Refer to Exhibit 3-14. At a price of $11,there is a ____________ unit ____________ of good X.
A) 290; shortage
B) 215; shortage
C) 40; surplus
D) 290; surplus
E) 230; shortage

Accepted Answer

At a price of $11, the quantity demanded is 290 units and the quantity supplied is 215 units, resulting in a shortage of 290 - 215 = 75 units.

Question 4

Exhibit 3-13
 
-Refer to Exhibit 3-13. Fill in blanks (E)and (F)respectively with the market quantity demanded at each given price.
A) 12; 6.75
B) 25; 19
C) 75; 64
D) 48; 27
E) none of the above

Accepted Answer

The answer of Exhibit 3-13
 
-Refer to Exhibit 3-13. Fill...

Question 5

If the government increased licensing requirements for beauty salons,the supply curve for salon services would shift to the left.

Accepted Answer

This is because with increased licensing requirements, it becomes more difficult and costly for beauty salons to obtain and maintain their licenses, thus reducing the number of salons in the market and shifting the supply curve to the left.

Question 6

Exhibit 3-14
 
-Refer to Exhibit 3-14. At a price of $12,there is a ____________ unit ____________ of good X.
A) 195; shortage
B) 230; shortage
C) 195; surplus
D) 230; surplus
E) 180; shortage

Accepted Answer

At a price of $12, the quantity demanded of good X is 320 units (point A) and the quantity supplied is 90 units (point B). Therefore, there is a shortage of 230 units (320-90=230) of good X.

Question 7

In moving along a demand curve,everything is held constant except the prices of related goods.

Accepted Answer

In moving along a demand curve, everything is held constant except the price of the good in question, not the prices of related goods. The prices of related goods would affect the position of the entire demand curve, not just movement along it.

Question 8

Exhibit 3-14
 
-Refer to Exhibit 3-14. At a price of $15,there is a ____________ unit ____________ of good X.
A) 40; shortage
B) 90; surplus
C) 40; surplus
D) 20; shortage
E) 20; surplus

Accepted Answer

At a price of $15, there is a 40 unit surplus of good X, meaning the quantity supplied exceeds the quantity demanded by 40 units.

Question 9

Exhibit 3-14
 
-Refer to Exhibit 3-14. At a price of $10,there is a ____________ unit ____________ of good X.
A) 340; surplus
B) 230; shortage
C) 60; surplus
D) 340; shortage
E) 270; shortage

Accepted Answer

The answer of Exhibit 3-14
 
-Refer to Exhibit 3-14. At...

Question 10

Exhibit 3-13
 
-Refer to Exhibit 3-13. Each individual consumer's demand curve is ________________ sloping and the market demand curve is _________________ sloping.
A) upward; also upward
B) downward; also downward
C) upward; downward
D) downward; upward

Accepted Answer

Individual consumer demand curves and the market demand curve both slope downward due to the law of demand, which states that as the price of a good decreases, the quantity demanded increases, and vice versa.

Question 11

A change in price will lead to a change in __________ and to a change in __________,while a change in government subsidies will lead to a change in __________ and a change in the number of buyers will lead to a change in __________.
A) quantity demanded; quantity supplied; supply; demand
B) demand; quantity supplied; supply; quantity demanded
C) quantity demanded; supply; quantity supplied; demand
D) quantity supplied; quantity demanded; demand; supply
E) quantity demanded; demand; quantity supplied; supply

Accepted Answer

A change in price affects the quantity demanded and quantity supplied directly, while a change in government subsidies affects supply, and a change in the number of buyers affects demand.

Question 12

Exhibit 3-17
 
-Refer to Exhibit 3-17. At a price of $16,the quantity demanded of good X is ____________ than the quantity supplied of good X,and economists would use this information to predict that the price of good X would soon ______________. This would push the price __________ the equilibrium price.
A) greater; fall; toward
B) greater; rise; toward
C) less; fall; toward
D) less; rise; away from
E) greater; rise; away from

Accepted Answer

The answer of Exhibit 3-17
 
-Refer to Exhibit 3-17. At...

Question 13

When the price of Toyota Corollas rises,ceteris paribus,the demand for Corollas falls.

Accepted Answer

The answer of When the price of Toyota Corollas rises,ceteris...

Question 14

Economists use the terms neutral good and normal good interchangeably.

Accepted Answer

Neutral good refers to a good for which the income elasticity of demand is exactly zero, while normal good refers to a good for which the income elasticity of demand is positive. These terms are not interchangeable.

Question 15

Supply curves are always upward sloping.

Accepted Answer

Supply curves are generally upward sloping, indicating that as the price increases, the quantity supplied increases. However, there are exceptions, such as in the case of a perfectly inelastic supply curve, where the quantity supplied remains constant regardless of price changes.

Question 16

Exhibit 3-14
 
-Refer to Exhibit 3-14. At a price of $13,there is a ____________ unit ____________ of good X.
A) 140; shortage
B) 160; shortage
C) 140; surplus
D) 20; surplus
E) 100; surplus

Accepted Answer

At a price of $13, the quantity demanded of good X is 160, while the quantity supplied is only 20. This creates a shortage of 140 units, as the quantity demanded exceeds the quantity supplied.

Question 17

Equilibrium and disequilibrium
A) are real world states.
B) are mental constructs used by economists.
C) foreshadow what is about to happen in a market.
D) a and b
E) a, b and c

Accepted Answer

The answer of Equilibrium and disequilibrium
A) are real world states.
B)...

Question 18

Exhibit 3-17
 
-Refer to Exhibit 3-17. At a price of $20,the quantity demanded of good X is ____________ than the quantity supplied of good X,and economists would use this information to predict that the price of good X would soon ______________. This would push the price __________ the equilibrium price.
A) greater; fall; toward
B) greater; rise; toward
C) less; fall; toward
D) less; rise; away from
E) less; fall; away from

Accepted Answer

At a price of $20, the quantity demanded (400) is less than the quantity supplied (800), indicating an excess supply. This would lead to a decrease in price (fall) as producers would want to sell their excess supply. The price would move towards the equilibrium price which is below $20, based on the intersection of the demand and supply curves. Therefore, the correct choice is C: less; fall; toward.

Question 19

To an economist,an increase in demand means the same thing as an increase in quantity demanded.

Accepted Answer

An increase in demand refers to the entire demand curve shifting to the right, while an increase in quantity demanded refers to a movement along the demand curve due to a change in price.

Question 20

A surplus will occur in a market when the price of the product is above the equilibrium price.

Accepted Answer

When the price of the product is above the equilibrium price, the quantity supplied will exceed the quantity demanded, resulting in a surplus.

Quiz 3: Supply and Demand: Theory

If a market is in disequilibrium,economists would predict that the product's price would to reach equilibrium when the quantity demanded is than the quantity supplied.

Which of the following is an example of a service?

Exhibit 3-14 -Refer to Exhibit 3-14. At a price of $11,there is a unit of good X.

Exhibit 3-13 -Refer to Exhibit 3-13. Fill in blanks (E) and (F) respectively with the market quantity demanded at each given price.

If the government increased licensing requirements for beauty salons,the supply curve for salon services would shift to the left.

Exhibit 3-14 -Refer to Exhibit 3-14. At a price of $12,there is a unit of good X.

In moving along a demand curve,everything is held constant except the prices of related goods.

Exhibit 3-14 -Refer to Exhibit 3-14. At a price of $15,there is a unit of good X.

Exhibit 3-14 -Refer to Exhibit 3-14. At a price of $10,there is a unit of good X.

Exhibit 3-13 -Refer to Exhibit 3-13. Each individual consumer's demand curve is sloping and the market demand curve is _ sloping.

A change in price will lead to a change in and to a change in ,while a change in government subsidies will lead to a change in and a change in the number of buyers will lead to a change in .

Exhibit 3-17 -Refer to Exhibit 3-17. At a price of $16,the quantity demanded of good X is than the quantity supplied of good X,and economists would use this information to predict that the price of good X would soon . This would push the price the equilibrium price.

When the price of Toyota Corollas rises,ceteris paribus,the demand for Corollas falls.

Economists use the terms neutral good and normal good interchangeably.

Supply curves are always upward sloping.

Exhibit 3-14 -Refer to Exhibit 3-14. At a price of $13,there is a unit of good X.

Equilibrium and disequilibrium

Exhibit 3-17 -Refer to Exhibit 3-17. At a price of $20,the quantity demanded of good X is than the quantity supplied of good X,and economists would use this information to predict that the price of good X would soon . This would push the price the equilibrium price.

To an economist,an increase in demand means the same thing as an increase in quantity demanded.

A surplus will occur in a market when the price of the product is above the equilibrium price.

Quiz 3: Supply and Demand: Theory

If a market is in disequilibrium,economists would predict that the product's price would __________ to reach equilibrium when the quantity demanded is __________ than the quantity supplied.

Which of the following is an example of a service?

Exhibit 3-14 -Refer to Exhibit 3-14. At a price of $11,there is a ____________ unit ____________ of good X.

Exhibit 3-13 -Refer to Exhibit 3-13. Fill in blanks (E) and (F) respectively with the market quantity demanded at each given price.

If the government increased licensing requirements for beauty salons,the supply curve for salon services would shift to the left.

Exhibit 3-14 -Refer to Exhibit 3-14. At a price of $12,there is a ____________ unit ____________ of good X.

In moving along a demand curve,everything is held constant except the prices of related goods.

Exhibit 3-14 -Refer to Exhibit 3-14. At a price of $15,there is a ____________ unit ____________ of good X.

Exhibit 3-14 -Refer to Exhibit 3-14. At a price of $10,there is a ____________ unit ____________ of good X.

Exhibit 3-13 -Refer to Exhibit 3-13. Each individual consumer's demand curve is ________________ sloping and the market demand curve is _________________ sloping.

A change in price will lead to a change in __________ and to a change in __________,while a change in government subsidies will lead to a change in __________ and a change in the number of buyers will lead to a change in __________.

When the price of Toyota Corollas rises,ceteris paribus,the demand for Corollas falls.

Economists use the terms neutral good and normal good interchangeably.

Supply curves are always upward sloping.

Exhibit 3-14 -Refer to Exhibit 3-14. At a price of $13,there is a ____________ unit ____________ of good X.

Equilibrium and disequilibrium

To an economist,an increase in demand means the same thing as an increase in quantity demanded.

A surplus will occur in a market when the price of the product is above the equilibrium price.

If a market is in disequilibrium,economists would predict that the product's price would to reach equilibrium when the quantity demanded is than the quantity supplied.

Exhibit 3-14 -Refer to Exhibit 3-14. At a price of $11,there is a unit of good X.

Exhibit 3-14 -Refer to Exhibit 3-14. At a price of $12,there is a unit of good X.

Exhibit 3-14 -Refer to Exhibit 3-14. At a price of $15,there is a unit of good X.

Exhibit 3-14 -Refer to Exhibit 3-14. At a price of $10,there is a unit of good X.

Exhibit 3-13 -Refer to Exhibit 3-13. Each individual consumer's demand curve is sloping and the market demand curve is _ sloping.

A change in price will lead to a change in and to a change in ,while a change in government subsidies will lead to a change in and a change in the number of buyers will lead to a change in .

Exhibit 3-14 -Refer to Exhibit 3-14. At a price of $13,there is a unit of good X.