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Suppose the graph shown depicts the demand for a normal good. A shift from A to B might be caused by: A) a decrease in the price of a substitute. B) a decrease in the price of a complement. C) an increase in the price of a complement. D) an increase in the good's price. Suppose the graph shown depicts the demand for a normal good. A shift from A to B might be caused by:


A) a decrease in the price of a substitute.
B) a decrease in the price of a complement.
C) an increase in the price of a complement.
D) an increase in the good's price.

E) C) and D)
F) A) and D)

Correct Answer

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The table shows individual demand schedules for a market. What is the equilibrium price in this market? A) $0.50 B) $1.50 C) $2.00 D) The equilibrium price cannot be determined without more information. The table shows individual demand schedules for a market. What is the equilibrium price in this market?


A) $0.50
B) $1.50
C) $2.00
D) The equilibrium price cannot be determined without more information.

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

Correct Answer

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Which of the following is not a non-price determinant of demand?


A) Consumer preferences
B) Income of the consumers
C) The number of sellers in the market
D) The prices of related goods

E) A) and C)
F) B) and C)

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An expectation that the price of a good will increase in the future is likely to:


A) increase current demand.
B) decrease current demand.
C) have no impact on current demand.
D) only affect the seller's decisions.

E) All of the above
F) A) and D)

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The prices of related goods matter when determining supply because they affect:


A) the opportunity cost of production.
B) whether or not a good will sell.
C) the competition in the market.
D) the availability of substitute goods.

E) A) and B)
F) A) and C)

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Suppose the advancement of computers has decreased the productivity of a paper mill. This will likely cause _______ the supply curve for paper.


A) a rightward shift of
B) a leftward shift of
C) a shift straight up of
D) a movement along

E) C) and D)
F) A) and D)

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B

The graph shown depicts the market for a good. Suppose the government sets the price of this good at $36. At this price, there is: A) a surplus (excess supply) of 9,000 units. B) a shortage (excess demand) of 2,000 units. C) a shortage (excess demand) of 7,000 units. D) a surplus (excess supply) of 7,000 units. The graph shown depicts the market for a good. Suppose the government sets the price of this good at $36. At this price, there is:


A) a surplus (excess supply) of 9,000 units.
B) a shortage (excess demand) of 2,000 units.
C) a shortage (excess demand) of 7,000 units.
D) a surplus (excess supply) of 7,000 units.

E) C) and D)
F) A) and C)

Correct Answer

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The graph shown depicts the market for a good. Assume the market was originally in equilibrium where the demand curve (D) and supply curve (S) intersect. Something changes in the market, and the demand curve for the good shifts to D<sub>2</sub>. Which of the following is true? A) The equilibrium price will increase by $5. B) The equilibrium quantity will increase by 20 units. C) The equilibrium price will increase by $15. D) The equilibrium quantity will increase by 30 units. The graph shown depicts the market for a good. Assume the market was originally in equilibrium where the demand curve (D) and supply curve (S) intersect. Something changes in the market, and the demand curve for the good shifts to D2. Which of the following is true?


A) The equilibrium price will increase by $5.
B) The equilibrium quantity will increase by 20 units.
C) The equilibrium price will increase by $15.
D) The equilibrium quantity will increase by 30 units.

E) A) and D)
F) B) and C)

Correct Answer

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What is likely to happen if a producer incorrectly sets the price of its product too low?


A) A shortage (excess demand) will result, and consumers will bid the price down to equilibrium.
B) A surplus (excess supply) will result, and the additional goods in inventory will prompt the producer to raise the price.
C) A shortage (excess demand) will result, and consumers will bid the price up to equilibrium.
D) A surplus (excess supply) will result, and the additional goods in inventory will prompt the producer to restrict output until sales increase.

E) None of the above
F) A) and C)

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Equilibrium takes place where:


A) supply and demand intersect.
B) supply is highest.
C) demand is highest.
D) prices are maximized.

E) C) and D)
F) A) and B)

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A

Suppose the graph shown depicts the demand for a normal good. Pasua was originally consuming at point A, but after receiving a raise at work her demand may: A) be unaffected. B) increase to point B. C) increase to point C. D) drop to zero. Suppose the graph shown depicts the demand for a normal good. Pasua was originally consuming at point A, but after receiving a raise at work her demand may:


A) be unaffected.
B) increase to point B.
C) increase to point C.
D) drop to zero.

E) A) and B)
F) C) and D)

Correct Answer

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Consider a market that is in equilibrium. If the market experiences both an increase in demand and an increase in supply:


A) the equilibrium price and quantity will rise.
B) the equilibrium quantity will rise, but the change in the equilibrium price cannot be predicted.
C) the equilibrium price will rise, but the change in the equilibrium quantity cannot be predicted.
D) the equilibrium price and quantity will fall.

E) A) and B)
F) A) and C)

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The table shows individual demand schedules for a market. At a price of $1.00, how much of the good will be demanded by Betty? A) 16 B) 11 C) 46 D) 30 The table shows individual demand schedules for a market. At a price of $1.00, how much of the good will be demanded by Betty?


A) 16
B) 11
C) 46
D) 30

E) None of the above
F) All of the above

Correct Answer

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Wendell just read an article claiming scientists have proven that processed cheese food increases brain power. We would expect Wendell's demand for processed cheese food to _____ and his demand curve to shift to the _____.


A) increase; right
B) increase; left
C) decrease; right
D) decrease; left

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

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Consider the market for potato chips, which is currently in equilibrium. Now, suppose that two events happen simultaneously: (1) a new technology is invented that allows potato chip makers to produce potato chips at a lower cost and (2) the price of pretzels (a substitute in consumption) rises. What effect might these events have on the market for cupcakes?Supply will increase.Demand will increase.The change in equilibrium price cannot be determined.The change in equilibrium quantity cannot be determined.


A) I, II, and III only
B) II and III only
C) I and IV only
D) I, II, and IV only

E) None of the above
F) C) and D)

Correct Answer

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Suppose the graph shown depicts the demand for a normal good. A shift from B to A might be caused by: A) a decrease in the good's price. B) an increase in the good's price. C) a decrease in the price of a substitute. D) an increase in the price of a substitute. Suppose the graph shown depicts the demand for a normal good. A shift from B to A might be caused by:


A) a decrease in the good's price.
B) an increase in the good's price.
C) a decrease in the price of a substitute.
D) an increase in the price of a substitute.

E) A) and D)
F) A) and C)

Correct Answer

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The table shows individual demand schedules for a market. What can be said of Betty and Barney's demands for this good? A) Both of their demands follow the law of demand. B) Barney's demand follows the law of demand, but Betty's does not. C) Betty's demand follows the law of demand, but Barney's does not. D) Neither of their demands follows the law of demand. The table shows individual demand schedules for a market. What can be said of Betty and Barney's demands for this good?


A) Both of their demands follow the law of demand.
B) Barney's demand follows the law of demand, but Betty's does not.
C) Betty's demand follows the law of demand, but Barney's does not.
D) Neither of their demands follows the law of demand.

E) None of the above
F) B) and D)

Correct Answer

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The city of Burlington experiences very high temperatures each summer and very low temperatures each winter. We would expect the demand for ice cream to:


A) increase constantly.
B) decrease each summer and increase each winter.
C) increase each summer and decrease each winter.
D) decrease constantly.

E) None of the above
F) A) and D)

Correct Answer

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If a producer incorrectly sets the price of its product too high:


A) a shortage (excess demand) will result.
B) a surplus (excess supply) will result.
C) equilibrium will result.
D) the producer will soon shut down.

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

Correct Answer

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Suppose the graph shown depicts the demand for a normal good. A shift from A to B might be caused by: A) an increase in price. B) a decrease in price. C) an increase in income. D) a decrease in income. Suppose the graph shown depicts the demand for a normal good. A shift from A to B might be caused by:


A) an increase in price.
B) a decrease in price.
C) an increase in income.
D) a decrease in income.

E) B) and D)
F) A) and B)

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C

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