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172.
You notice that the price of Blu-ray players falls and the quantity of Blu-ray players
sold increases. You suspect that _____ Blu-ray players shifts to the _____.
A)
demand for; right.
B)
demand for; left.
C)
supply of; right.
D)
supply of; left.
173.
If the United States increases tariffs on imports of lumber from Canada (which raises the
price of lumber in the United States), the equilibrium price of new homes in the United
States will _____ and the equilibrium quantity of new homes in the United States will
_____.
A)
increase; increase
B)
increase; decrease
C)
decrease; increase
D)
decrease; decrease
174.
Customers used to pay inside before pumping gas. When gas stations introduced paying
at the pump, thus decreasing production costs, there was a shift to the _____ in the
_____ curve and gas prices _____.
A)
right; supply; decreased
B)
left; supply; increased
C)
right; demand; increased
D)
left; demand; decreased
175.
Many public utilities burn oil to generate electricity. If the price of oil increases, we
expect a shift to the _____ in the _____ curve for _____ and a _____ price for
electricity.
A)
right; supply; electricity; lower
B)
left; supply; electricity; higher
C)
right; demand; oil; higher
D)
left; demand; oil; lower
176.
The market for milk is initially in equilibrium. Milk producers successfully advertise to
encourage milk drinking. At the same time, more milk producers enter the market.
Standard demand and supply analysis tells us that the:
A)
equilibrium price and quantity of milk will rise.
B)
equilibrium price and quantity of milk will fall.
C)
equilibrium quantity of milk will rise, but we can’t determine how the equilibrium
price will be affected.
D)
equilibrium price of milk will rise, but we can’t determine how the equilibrium
quantity will be affected.
Page 42
177.
Consider the market for iPads. What happens if a fantastic new alternative tablet is
developed by Samsung and, at the same time, a boat carrying a large shipment of iPads
is attacked by pirates and sunk?
A)
Price decreases and quantity increases.
B)
Price increases and quantity increases.
C)
The change in price is indeterminate and quantity decreases.
D)
Price increases and the change in quantity is indeterminate.
178.
Consider the market for corn. What happens if there is an increased demand for corn
tortillas and, at the same time, a new corn seed becomes available that dramatically
increases the yield per acre?
A)
Price and quantity decrease.
B)
The change in price is indeterminate; quantity decreases.
C)
The change in price is indeterminate; quantity increases.
D)
Price increases; the change in quantity is indeterminate.
179.
In the local market for coffee, a normal good, the price will _____ and the quantity will
_____ if new coffee shops open and consumers’ incomes decrease because of a
recession.
A)
increase; be indeterminate
B)
decrease; be indeterminate
C)
be indeterminate; increase
D)
be indeterminate; decrease
180.
Suppose the local real estate market is in equilibrium. A recession causes local
household incomes to decline. At the same time, construction of a large subdivision of
new homes has just been completed. Given these two changes and assuming that real
estate is a normal good, we can predict that the price of real estate will _____ and the
quantity of real estate bought and sold will _____.
A)
fall; fall
B)
fall; rise
C)
fall; rise or fall
D)
rise; fall or rise
Page 43
181.
Suppose the market for gasoline is in equilibrium. You have heard that the price of
crude oil is falling because of new oil discoveries. You are also aware that the number
of car and truck drivers is steadily rising. Knowing this, you predict that the price of
gasoline will _____ and the quantity of gasoline bought and sold will _____.
A)
rise; rise
B)
rise; fall
C)
rise or fall; rise
D)
rise or fall; fall
182.
A recent news story reported that the Organization of Petroleum Exporting Countries is
expected to decrease the supply of oil next summer. Summer is traditionally a time of
increased demand for oil because of vacation travel. What would be the combined effect
of these two events on the summer market for gasoline?
A)
an increase in the price and the quantity
B)
an increase in the price and an unpredictable change in the quantity
C)
an unpredictable change in both the price and the quantity
D)
an unpredictable change in the price and a decrease in the quantity
183.
Suppose that more police and security workers become aware that wearing bulletproof
vests can protect them from injury and decide to start wearing bulletproof vests. At the
same time, the price of ceramics used to produce the vests falls. The equilibrium price
of bulletproof vests _____ and the equilibrium quantity produced _____.
A)
increases; increases
B)
decreases; decreases
C)
probably changes, but in an ambiguous direction; probably changes, but in an
ambiguous direction
D)
probably changes, but in an ambiguous direction; increases
184.
An increase in the price and an ambiguous change in quantity is MOST likely caused
by:
A)
a shift to the left in demand and no shift in supply.
B)
a shift to the left in supply and no shift in demand.
C)
a shift to the right in supply and a shift to the left in demand.
D)
a shift to the left in supply and a shift to the right in demand.
185.
Suppose that supply increases and demand decreases. What is the MOST likely effect
on price and quantity?
A)
The price will increase, but quantity may increase, decrease, or stay the same.
B)
The price will decrease, but quantity may increase, decrease, or stay the same.
C)
The price will decrease and quantity will decrease.
D)
The price will increase and quantity will increase.
Page 44
186.
An ambiguous change in price and a decrease in quantity are MOST likely caused by:
A)
no shift in supply and a shift to the left in demand.
B)
a shift to the left in supply and a shift to the left in demand.
C)
a shift to the right in supply and a shift to the left in demand.
D)
a shift to the left in supply and a shift to the right in demand.
187.
The cost of sensors used in making digital cameras falls, while a successful ad campaign
makes digital cameras more fashionable. As a result, the equilibrium price of digital
cameras _____ and the equilibrium quantity _____.
A)
increases; increases
B)
increases; may increase, decrease, or stay the same
C)
may increase, decrease, or stay the same; increases
D)
decreases; increases
188.
A decrease in demand and a decrease in supply will lead to a(n) _____ in equilibrium
quantity and a(n) _____ in equilibrium price.
A)
decrease; indeterminate change
B)
indeterminate change; increase
C)
indeterminate change; decrease
D)
increase; indeterminate change
189.
An increase in demand and a decrease in supply will lead to a(n) _____ in equilibrium
quantity and a(n) _____ in equilibrium price.
A)
decrease; decrease
B)
indeterminate change; increase
C)
indeterminate change; decrease
D)
increase; indeterminate change
190.
It is certain that the equilibrium price will fall when:
A)
the supply curve and the demand curve both shift to the right.
B)
the supply curve shifts to the right and the demand curve shifts to the left.
C)
supply and demand both increase.
D)
supply decreases and demand stays the same.
Page 45
191.
It is certain that the equilibrium price will rise when the supply curve shifts to the _____
and the demand curve shifts to the _____.
A)
right; right
B)
right; left
C)
left; left
D)
left; right
192.
It is almost certain that the equilibrium quantity will fall when:
A)
the supply curve and the demand curve both shift to the right.
B)
the supply curve shifts to the right and the demand curve shifts to the left.
C)
the supply curve shifts to the left and demand shifts to the right.
D)
supply shifts to the left and demand stays the same.
193.
It is certain that the equilibrium quantity will rise when:
A)
the supply curve and the demand curve both shift to the right.
B)
the supply curve shifts to the right and the demand curve shifts to the left.
C)
supply and demand both shift to the left.
D)
supply shifts to the left and demand stays the same.
194.
Equilibrium quantity will always increase if:
A)
supply and demand both increase.
B)
supply increases and demand decreases.
C)
supply and demand both decrease.
D)
supply decreases and demand remains unchanged.
Use the following to answer questions 195-198:
Page 46
195.
(Figure: Demand for Coconuts) Use Figure: Demand for Coconuts. If fish is a substitute
good for coconuts and the price of fish increases, it will be represented in the figure as a:
A)
shift from D1 to D2
B)
movement from point A to point B
C)
shift from D1 to D3
D)
movement from point B to point E
196.
(Figure: Demand for Coconuts) Use Figure: Demand for Coconuts. If coconuts are a
normal good and the income level of consumers falls, it will be represented in the figure
as a:
A)
shift from D1 to D2
B)
movement from point A to point B
C)
shift from D1 to D3
D)
movement from point B to point C
197.
(Figure: Demand for Coconuts) Use Figure: Demand for Coconuts. If there is an
increase in preference for coconuts, it will be represented in the figure as a:
A)
shift from D1 to D2
B)
movement from point A to point B
C)
shift from D1 to D3
D)
movement from point B to point E
198.
(Figure: Demand for Coconuts) Use Figure: Demand for Coconuts. If coconuts are a
normal good and consumers believe that the price of coconuts will rise significantly in
the near future, it will be represented in the figure as a:
A)
shift from D1 to D2
B)
movement from point B to point A
C)
shift from D1 to D3
D)
movement from point B to point E
Page 47
Use the following to answer questions 199-201:
199.
(Table: The Demand for Chocolate-Covered Peanuts) Use Table: The Demand for
Chocolate-Covered Peanuts. Barbara demands 20 bags of chocolate-covered peanuts per
month when the price of each bag is:
A)
$0.90.
B)
$0.80.
C)
$0.70.
D)
$0.60.
200.
(Table: The Demand for Chocolate-Covered Peanuts) Use Table: The Demand for
Chocolate-Covered Peanuts. If George, Barbara, and Dan are the only three buyers in
the market and the price of a bag of chocolate-covered peanuts is $0.80, the total market
quantity demanded is _____ bags per month.
A)
70
B)
80
C)
105
D)
280
201.
(Table: The Demand for Chocolate-Covered Peanuts) Use Table: The Demand for
Chocolate-Covered Peanuts. If George, Barbara, and Dan are the only three buyers in
the market and the price of a bag of chocolate-covered peanuts is $0.50, the total market
quantity demanded is _____ bags per month.
A)
80
B)
105
C)
210
D)
280
Page 48
Use the following to answer questions 202-203:
202.
(Figure: Demand for Online Movie Rentals) Use Figure: Demand for Online Movie
Rentals. A decrease in the price of Google Chromecast adapters (a complement good)
would result in a change illustrated by the move from:
A)
f to g in Panel A.
B)
h to i in Panel B.
C)
j to k in Panel C.
D)
l to m in Panel D.
203.
(Figure: Demand for Online Movie Rentals) Use Figure: Demand for Online Movie
Rentals. A decrease in the price of movie tickets (a substitute) would result in a change
illustrated by the move from:
A)
f to g in Panel A.
B)
h to i in Panel B.
C)
j to k in Panel C.
D)
l to m in Panel D.
Page 49
204.
When milk consumption decreased, a survey firm wanted to know what was going on,
so they interviewed people and found that people thought that rising milk prices were
making it hard to justify their milk purchases. This suggests that what is going on is a:
A)
movement along the demand curve for milk.
B)
movement along the supply curve for milk.
C)
shift of the demand curve for milk.
D)
shift of the supply curve for milk.
205.
A decrease in the price of eggs will result in a(n):
A)
increase in the demand for eggs.
B)
increase in the supply of eggs.
C)
shift in the supply curve for eggs.
D)
movement along the demand curve for eggs.
206.
A decrease in the price of a good will generally result in a(n):
A)
increase in demand.
B)
increase in supply.
C)
increase in the quantity demanded.
D)
increase in the quantity supplied.
207.
If the price of corn rises, we generally expect the:
A)
quantity of corn demanded to rise.
B)
quantity of corn supplied to rise.
C)
demand for corn to shift inward.
D)
supply of corn to shift outward.
208.
Assume that corn is an input in the production of beef but not in the production of pork.
Further, beef and pork are substitutes in consumption. A decrease in the price of corn
will _____ the supply of beef and _____ the demand for pork.
A)
increase; increase
B)
decrease; increase
C)
decrease; decrease
D)
increase; decrease
Page 50
209.
The market for soybeans is initially in equilibrium, with an upward-sloping supply
curve and a downward-sloping demand curve. Because of mad cow disease, producers
decide to replace bone meal with soybeans in cattle feed. The likely effect is that the:
A)
equilibrium price and quantity of soybeans will rise.
B)
equilibrium price and quantity of soybeans will fall.
C)
equilibrium quantity of soybeans will rise, but we can’t determine what will happen
to the equilibrium price.
D)
equilibrium price of soybeans will rise, but we can’t determine what will happen to
the equilibrium quantity.
210.
An increase in _____ will have an ambiguous (uncertain) effect on price.
A)
tastes and preferences
B)
the price of a substitute
C)
the price of a complement
D)
income
211.
Which factor would result in a movement along the demand curve?
A)
a change in preferences
B)
an increase in the number of buyers
C)
an increase in the number of suppliers
D)
a decrease in income
212.
A competitive market occurs when there are many buyers and sellers of the same good.
A)
True
B)
False
213.
The demand curve for season tickets for the Miami Dolphins is the graphical
representation of the number of season tickets consumers want to buy at any given
price.
A)
True
B)
False
214.
An increase in demand for good X can be caused by a decrease in the price of X.
A)
True
B)
False
Page 51
215.
The terms decrease in demand and decrease in quantity demanded can be used
interchangeably.
A)
True
B)
False
216.
According to the law of demand, if the price of steak increases in Rhode Island, the
demand for steak will decrease in Rhode Island.
A)
True
B)
False
217.
An increase in income will always shift the demand curve to the right.
A)
True
B)
False
218.
If coffee and tea are viewed as substitutes in consumption, then an increase in the price
of coffee will increase the demand for tea.
A)
True
B)
False
219.
After graduation many students’ demand for used cars decreases. This may be because
used cars are considered a normal good to college graduates.
A)
True
B)
False
220.
The supply curve for apartments in Oregon reflects how many apartments landlords are
willing and able to offer for rent at various prices.
A)
True
B)
False
221.
An increase in the price of contact lenses will increase the supply of contact lenses.
A)
True
B)
False
222.
A major input into vanilla ice cream is cream. An increase in the price of cream will
reduce the quantity of vanilla ice cream supplied, but it will not reduce the supply of
vanilla ice cream.
A)
True
B)
False
Page 52
223.
If the input costs associated with supplying gasoline increases in Wisconsin, the supply
of gasoline in Wisconsin will decrease.
A)
True
B)
False
224.
If there is an excess supply of a good, the problem of scarcity does not apply to that
good.
A)
True
B)
False
225.
Suppose there is an excess supply of chemical engineers in India. Over time, the salaries
for chemical engineers will fall in India.
A)
True
B)
False
Use the following to answer questions 226-227:
226.
(Figure: Supply, Demand, and Equilibrium) Use Figure: Supply, Demand, and
Equilibrium. In the figure, there will be excess demand for the good at a price of P3.
A)
True
B)
False
227.
(Figure: Supply, Demand, and Equilibrium) Use Figure: Supply, Demand, and
Equilibrium. In the figure, there will be an excess supply of the good at a price of P1.
A)
True
B)
False
Page 53
228.
Suppose there is an excess demand for water in Florida. This means that we can expect
the price of water to increase in Florida over time.
A)
True
B)
False
229.
If consumer tastes for electric cars increase over the next 10 years and there is no
change in supply, we expect to see an increase in the demand for electric cars, higher
electric car prices, and an increase in the equilibrium quantity of electric cars.
A)
True
B)
False
230.
“In 2008, air travel decreased substantially, despite significant reductions in ticket
prices.” If this information is correct, it indicates that the law of demand did not apply to
air travel in 2008.
A)
True
B)
False
231.
If demand decreases and supply increases, the direction of change in the equilibrium
quantity is unpredictable unless the relative magnitudes of the demand and supply
changes are known.
A)
True
B)
False
232.
Apple and Samsung are large corporations that produce smartphones, the iPhone and the
Galaxy, respectively. They are constantly trying through expensive advertising and
product innovations to persuade customers to buy their brand. Is the smartphone market
a competitive one in an economic sense? Why or why not?
233.
Explain the law of demand. What does it tell us about the shape of a demand curve?
234.
Why are economists so particular about the difference between an increase in quantity
demanded and an increase in demand? Aren’t they the same thing?
235.
A small private college increases tuition while a large public university in the same state
does not. What will happen to the demand (enrollment) for both schools?
Page 54
236.
How would each of the listed events affect the demand for new textbooks?
I. The price of a used textbook rises.
II. The price of college tuition rises.
III. More high school graduates decide to attend college.
237.
In the following cases, explain what happens to demand or quantity demanded and how
the change would be shown on a graph of the demand schedule.
I. Assuming that tickets to an NFL game are normal goods, what is the effect of an
increase in the incomes of NFL fans?
II. Assuming that DIRECTV and Dish satellite are substitutes, what happens if the
price of a DIRECTV subscription increases?
III. Assuming that data plans and cell phones are complements, what happens if the
price of data plans decreases?
238.
Suppose the supply curve for soap bubbles has a slope of +1 and intersects the vertical
axis at a price of $2 per bottle. Further suppose that the horizontal axis unit is thousands
of soap bubble bottles. Interpret the meaning of both the y-intercept and the slope.
239.
How would each of the listed events affect the supply of compact cars?
I. The price of steel rises.
II. The production technology for car manufacturing improves.
III. The price of sport utility vehicles falls.
240.
Why do many stores have big after-Halloween sales on their Halloween merchandise?
241.
You read that college tuition is rising every year, and yet more students attend college
every year. Isn’t this a violation of the law of demand?
242.
In the Midwestern United States, the price of an ear of corn is always lowest in the
summer. This seems odd because consumers really enjoy eating ears of corn in the
summer. Can you explain this?
243.
In August 2005, Hurricane Katrina damaged or destroyed oil platforms in the Gulf of
Mexico, refineries along the Gulf coast, and the pipeline infrastructure that transports oil
and gas to customers across the eastern United States. The winter of 2006 was unusually
cold in many parts of the country. How did these events affect the market for natural
gas?