14) If the demand for hamburgers decreases, the equilibrium price
A) rises and the equilibrium quantity increases.
B) falls and the equilibrium quantity increases.
C) rises and the equilibrium quantity decreases.
D) falls and the equilibrium quantity decreases.
15) Suppose that people find out that eating more fish improves their health, leading them to
increase their demand for fish. As a result, the equilibrium price of fish ________ and the
equilibrium quantity ________.
A) rises; decreases
B) rises; increases
C) falls; decreases
D) falls; increases
16) Doctors find that one aspirin per day reduces the risk of heart attacks. Demand for aspirin
will
A) increase, so that equilibrium price and equilibrium quantity will increase.
B) decrease, so that equilibrium price and equilibrium quantity will increase.
C) increase, so that equilibrium price will decrease and equilibrium quantity will increase.
D) increase, but the new equilibrium price and quantity are indeterminate.
17) Until 2007, the price of sport utility vehicles (SUVs) rose and each year more were
purchased. This experience suggests that
A) there must have been technological advances in the way SUVs are produced.
B) the “law of demand” does not hold true in this market.
C) there must have movement leftward along the supply curve for SUVs.
D) there must have been a rightward shift of the demand curve for SUVs.
18) Between 2001 and 2015, equilibrium college tuition rose from $15,000 to $27,000 and
equilibrium enrollment increased from 16 million to 21 million students. These changes could be
the result of
A) an increase in demand.
B) an increase in supply.
C) a decrease in demand.
D) a decrease in supply.
19) If the U.S. Surgeon General announced that increased grapefruit juice consumption could
help prevent heart attacks, what would happen to the equilibrium price and quantity of grapefruit
juice?
A) Price and quantity both increase.
B) Price and quantity both decrease.
C) Price increases but quantity decreases.
D) Price decreases but quantity increases.
20) If the price of a movie download falls, the rental rate of DVDs ________ and the equilibrium
quantity of DVDs rented ________.
A) rises; decreases
B) rises; increases
C) falls; decreases
D) falls; increases
21) What will happen to the equilibrium price and equilibrium quantity of ice cream cones when
consumers’ incomes decrease?
A) If ice cream cones are a normal good, then the equilibrium price and quantity of ice cream
cones will decrease.
B) If ice cream cones are a normal good, then the equilibrium price and equilibrium quantity of
ice cream cones will increase.
C) If ice cream cones are an inferior good, then the equilibrium price for an ice cream cone will
increase and the equilibrium quantity of ice cream cones will decrease.
D) If ice cream cones are an inferior good, then the equilibrium price and quantity of ice cream
cones will decrease.
22) Which of the following raises the price of a used car and increases the equilibrium quantity
sold?
A) a new 8 percent federal excise tax placed on all new car purchases
B) an increase in wages for used car salespeople
C) a special rebate program on all new cars
D) None of the above answers is correct
23) Coffee and sugar are complements. If the supply curve of coffee shifts leftward because of
poor weather, then there will be
A) an increase in the price of sugar.
B) a decrease in the price of sugar.
C) a leftward shift of the demand curve for coffee.
D) a leftward shift of the supply curve for sugar.
24) Peanut butter and jelly are complements for consumers. In 2015, the price of peanut butter
increased. As a result, the ________ which lead to ________ in the price of jelly and ________
in the quantity of jelly.
A) demand for jelly; a decrease; a decrease
B) supply of jelly; a decrease; an increase
C) supply of jelly; an increase; a decrease
D) demand for jelly; an increase; an increase
25) A decrease in the demand for beef because of concerns over cholesterol results in
A) lower beef prices.
B) higher beef prices.
C) an increase in the supply of beef.
D) an offsetting increase in the demand for beef if the price of beef falls.
26) If more people buy hybrid cars that have high gas mileage, the equilibrium price of gasoline
will ________ and the equilibrium quantity will ________.
A) rise; increase
B) rise; decrease
C) fall; increase
D) fall; decrease
27) During the last decade, the price of shoes rose substantially yet people bought more pairs of
new shoes each year. This experience suggests that the
A) supply curve of shoes shifted leftward.
B) demand curve for shoes shifted leftward.
C) supply curve of shoes shifted rightward.
D) demand curve for shoes shifted rightward.
28) Suppose we observe that both the equilibrium price of digital cameras and the equilibrium
quantity of digital cameras have increased. Which of the following events could be responsible
for this?
A) technological advances in digital camera production
B) consumers’ preferences changed in favor of digital cameras
C) the price of film cameras fell
D) workers who make digital cameras received a pay raise
29) Suppose we observe that both the equilibrium price of film cameras and the equilibrium
quantity of film cameras have fallen. Which of the following could be responsible for this?
A) Consumers’ preferences changed in favor of digital cameras.
B) technological advances in film camera production
C) Workers who make cameras received a pay raise.
D) The price of digital cameras increased.
30) During the past twenty years, the prices of prescription drugs, relative to the prices of other
goods, have risen, yet Americans buy more prescription drugs than ever. This might be because
A) with higher incomes and more older Americans, we have moved rightward along our demand
curve for drugs.
B) with higher incomes and more older Americans, the demand curve for prescription drugs has
shifted rightward.
C) more new firms entered the pharmaceutical industry each year, which caused a rightward shift
in the supply curve of prescription drugs.
D) Both answers A and C are correct.
31) You observe that in the market for coffee that both the equilibrium price of coffee and the
equilibrium quantity have increased. You predict that the demand for coffee
A) has increased with no change in the supply of coffee.
B) has increased but it is not as large as the increase in supply.
C) has not changed but that the supply of coffee has decreased.
D) has increased less than supply of coffee has decreased.
32) Every spring, motorists do more driving than during the winter months. Every spring, the
price of gasoline increases and the motorists buy more gasoline. This experience suggests that
the
A) “law of supply” does not always hold for necessities like gasoline.
B) “law of demand” does not always hold for necessities like gasoline.
C) laws of supply and demand are both contradicted for gasoline, though only during the spring
driving season.
D) None of the above answers are correct.
33) After the sugar substitute saccharin was found to cause cancer in laboratory mice, its price
dropped dramatically. This change in the price was because
A) the supply of saccharin decreased.
B) the demand for saccharin decreased.
C) the government ordered the price reduction.
D) saccharin producers felt sorry for their past customers and were making an honest attempt to
compensate them.
34) When supply decreases and demand does not change, the equilibrium quantity ________ and
the equilibrium price ________.
A) increases; rises
B) decreases; falls
C) increases; falls
D) decreases; rises
35) As a result of an increase in the supply of a good, the equilibrium quantity ________ and the
equilibrium price ________.
A) increases; falls
B) increases; rises
C) decreases; falls
D) decreases; rises
36) Beef and leather belts are complements in production. If people’s concern about health shifts
the demand curve for beef leftward, the result in the market for leather belts will be a
A) lower equilibrium price for a leather belt because there is an increase in the supply of leather
belts.
B) lower equilibrium price for a leather belt because there is a decrease in the supply of leather
belts.
C) higher equilibrium price for a leather belt because there is a decrease in the supply of leather
belts.
D) higher equilibrium price for a leather belt because there is an increase in the supply of leather
belts.
37) In 2015, the price of peanuts was rising, which lead peanut butter buyers to expect the price
of peanut butter would rise in the future. Consequently, in the current market for peanut butter
there was ________ which resulted in ________ in the price of peanut butter and ________ in
the quantity of peanut butter.
A) an increase in demand for peanut butter; an increase; an increase
B) an increase in supply of peanut butter; a decrease; an increase
C) a decrease in demand for peanut butter; a decrease; a decrease
D) a decrease in supply of peanut butter; an increase; a decrease
38) You observe that the price of a good rises and the quantity decreases. These observations can
be the result of the
A) demand curve shifting rightward.
B) demand curve shifting leftward.
C) supply curve shifting rightward.
D) supply curve shifting leftward.
39) Leather belts and leather shoes are substitutes in production. If style changes increase the
demand for leather belts, the supply curve of leather shoes will shift
A) leftward and the equilibrium price of leather shoes will fall.
B) leftward and the equilibrium price of leather shoes will rise.
C) rightward and the equilibrium price of leather shoes will fall.
D) rightward and the equilibrium price of leather shoes will rise.
40) If technological advances lower the cost of computer chips, in the market for computers the
equilibrium price will ________ and the equilibrium quantity will ________.
A) fall; increase
B) fall; decrease
C) rise; increase
D) rise; decrease
41) If the price of crude oil falls, the equilibrium price of gasoline ________ and the equilibrium
quantity ________.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
42) Which of the following statements is CORRECT?
A) When demand decreases, both the price and the quantity increase.
B) When demand increases, both the price and the quantity decrease.
C) When supply increases, the quantity increases and the price falls.
D) When supply decreases, both the price and the quantity decrease.
43) Bicycles are made out of steel. If the price of steel increases, there is a shift in the supply
curve of bicycles that leads to
A) a shift in the demand curve for bicycles.
B) a temporary surplus of bicycles.
C) a permanent surplus of bicycles.
D) an increase in the price of a bicycle.
44) If workers who make DVDs get a pay raise, the equilibrium price of a DVD ________ and
the equilibrium quantity of DVDs ________.
A) rises; increases
B) rises; decreases
C) falls; decreases
D) falls; increases
45) “The recent hurricanes in Florida are bringing financial gain to California citrus growers.
Due to extensive damage to the Florida citrus crop, California citrus products are commanding
their highest prices ever.” Which of the following statements best explains the economics of this
quotation?
A) The supply of Florida oranges decreased, causing their price to increase, which then increased
the demand for substitute California oranges.
B) The supply of Florida oranges decreased, causing the supply of California oranges to increase
and the price of California oranges to rise.
C) The demand for Florida oranges decreased because of the hurricanes, causing a greater
demand for California oranges and an increase in the price of California oranges.
D) The demand for Florida oranges decreased, causing their prices to rise, therefore increasing
the demand for California oranges.
46) In the market for bananas, the price is $2.00 a bunch. An increase in the supply of bananas
decreases the price of bananas and ________.
A) the quantity supplied increases because the price falls
B) increases the demand for bananas
C) increases the quantity of bananas demanded
D) creates a shortage of bananas
47) Crude oil can be refined into home heating oil or gasoline. If very cold weather caused the
price of home heating oil to increase then, the
A) supply of gasoline would increase.
B) demand for gasoline would increase.
C) equilibrium price of gasoline would rise.
D) Both answers A and C are correct.
48) A fall in the price of wheat fertilizer ________ the equilibrium price of wheat and ________
the equilibrium quantity of wheat.
A) raise; increase
B) raise; decrease
C) lower; increase
D) lower; decrease
49) There is a technological advance in the production of ice cream. As a result, the supply curve
of ice cream shifts ________ and ________.
A) leftward; both the equilibrium price and equilibrium quantity fall
B) rightward; both the equilibrium price and equilibrium quantity fall
C) rightward; the equilibrium price falls while the equilibrium quantity increases
D) rightward; both the equilibrium price and equilibrium quantity rise
50) If the price of aluminum used to make bicycles increases, the price of a bicycle rises because
of a
A) rightward shift of the demand curve for bicycles.
B) rightward shift of the supply curve of bicycles.
C) leftward shift of the demand curve for bicycles.
D) leftward shift of the supply curve of bicycles.
51) An increase in the price of jet fuel will ________ airline travel and the equilibrium quantity
of airline travel will ________.
A) decrease the supply of; decrease
B) increase the demand for; increase
C) decrease the supply of; increase
D) decrease the demand for; decrease
52) There is a technological advance in the production of a good and simultaneously also an
increase in the expected future price. Which of the following will happen?
A) The equilibrium price will rise because the supply curve shifts rightward.
B) The equilibrium price falls because the supply curve shifts leftward.
C) The technological improvement shifts the supply curve rightward while the increase in the
expected future price shifts the supply curve leftward. The net effect is not known.
D) The demand curve shifts rightward and the supply curve does not shift.
53) If a technological advance takes place in the computer industry, then the equilibrium price of
a computer will ________ and the equilibrium quantity will ________.
A) fall; increase
B) fall; decrease
C) rise; increase
D) rise; decrease
54) What is the effect on the price and quantity of wooden desks of a rise in the price of wood?
A) The equilibrium quantity of wooden desks increases and the equilibrium price falls.
B) The equilibrium quantity of wooden desks increases and the equilibrium price rises.
C) The equilibrium quantity of wooden desks decreases and the equilibrium price falls.
D) The equilibrium quantity of wooden desks decreases and the equilibrium price rises.
55) Which of the following increases the equilibrium price of a used car and decreases the
equilibrium quantity?
A) an announcement by the U.S. Attorney General that the windows on older cars were made
with cheaper glass that can explode at high speeds
B) new federal legislation that raises the legal driving age to twenty-four in all states
C) a new fee that used car dealers must pay to the government on all sales of used cars
D) all of the above because each is consistent with the “law of demand”
56) We observe that the equilibrium price of digital cameras has fallen and the equilibrium
quantity of digital cameras has increased. Which of the following events could be responsible for
this?
A) Technological advances in digital camera production.
B) Consumers’ preferences changed in favor of digital cameras.
C) The price of film cameras rose.
D) Workers who make digital cameras received a pay raise.
57) During the last decade, the price of a computer fell every year and the quantity sold increased
every year. This experience suggests that the
A) “law of demand” was definitely contradicted.
B) “law of supply” was definitely contradicted.
C) demand curve shifted rightward.
D) supply curve shifted rightward.
58) After 2009, the price of tablets fell each year and manufacturers of tablets produced and sold
more tablets each year. This result is because the
A) “law of supply” does not apply to companies in the “high-tech” sector of the economy.
B) “law of demand” does not apply to customers in the “high-tech” sector of the economy.
C) supply curve of tablets shifted rightward.
D) demand curve for tablets shifted leftward.
59) Suppose the equilibrium price of a gallon of gasoline drops from $3.00 to $2.85 and the
equilibrium quantity increases from 365 millions of gallons per week to 372 millions of gallons
per week. These changes can be the result of
A) an increase in supply.
B) an increase in demand.
C) a decrease in supply.
D) a decrease in demand.
60) Many Southern farmers face a choice between planting peanuts or cotton. In 2014, farmers
anticipated higher prices for cotton. In the market for peanuts in 2014, there would be ________
in the supply of peanuts, which leads to ________ in the price of peanuts and ________ in the
quantity of peanuts.
A) a decrease; an increase;a decrease
B) an increase; a decrease; a decrease
C) a decrease; an increase; an increase
D) an increase; an increase; a decrease
61) In 2014, the price of peanuts increased. In the market for peanut butter, this change lead to
________ and which therefore ________ the price of peanut butter and ________ the quantity of
peanut butter.
A) a decrease in the supply; increased; decreased
B) an increase in supply; decreased; increased
C) a decrease in demand; decreased; decreased
D) an increase in demand; increased; increased
62) In 2014, the price of peanuts was rising, which lead peanut butter sellers to expect the price
of peanut butter would rise in the future. Consequently, in the current market for peanut butter
there was ________ which resulted in ________ in the price of peanut butter and ________ in
the quantity of peanut butter.
A) an increase in demand for peanut butter; an increase; an increase
B) an increase in supply of peanut butter; a decrease; an increase
C) a decrease in demand for peanut butter; a decrease; a decrease
D) a decrease in supply of peanut butter; an increase; a decrease
63) If both demand and supply increase, what will be the effect on the equilibrium price and
quantity?
A) Both the price and the quantity will increase.
B) The quantity will increase but the price could either rise, fall, or remain the same.
C) The price will fall but the quantity will increase.
D) The price will rise but the quantity could either increase, decrease, or remain the same.
64) If both the demand and supply increase, the equilibrium quantity ________ and the
equilibrium price ________.
A) increases; falls
B) decreases; might rise, fall, or not change
C) decreases; rises
D) increases; might rise, fall, or not change
65) The equilibrium quantity of a good will increase and its equilibrium price might rise, fall, or
stay the same when
A) its demand and supply both increase.
B) its demand increases and supply decreases.
C) its demand decreases and supply increases.
D) its demand and supply both decrease.
66) If good growing conditions increase the supply of strawberries and hot weather increases the
demand for strawberries, the quantity of strawberries bought ________.
A) increases and the price might rise, fall or not change
B) increases and the price rises
C) doesn’t change and the price falls
D) doesn’t change and the price rises
67) Suppose a medical study reveals new benefits to consuming beef and at the same time a
bumper corn crop reduces the cost of feeding steers. The equilibrium price of beef will
A) fall.
B) perhaps rise, fall, or stay the same, but more information is needed to determine which it
does.
C) stay the same.
D) rise.
68) Beef is a normal good and people’s incomes fall. At the same time a bumper corn crop
reduces the cost of feeding steers. These changes result in
A) an increase in the equilibrium quantity of beef.
B) an increase in the equilibrium quantity of beef if the shift in the demand curve is smaller than
the shift in the supply curve.
C) an increase in the equilibrium quantity of beef if the shift in the demand curve is larger than
the shift in the supply curve.
D) no change in the equilibrium quantity of beef.
69) When supply and demand both increase, the
A) quantity definitely decreases.
B) quantity definitely increases.
C) price definitely increases.
D) price definitely decreases.
70) Between 2000 and 2015, advances in PC production technology increased the supply of PCs
sharply. The demand for PCs also increased, but not nearly as much as the supply did. As a
result, the price of a PC ________ and the quantity of PCs sold ________.
A) rose; decreased
B) rose; increased
C) fell; decreased
D) fell; increased
71) Between 2000 and 2015, the price of a PC fell and the quantity of PCs sold increased. Which
of the explanations below is consistent with these facts?
A) The demand for PCs increased by more then the supply of PCs increased.
B) The supply of PCs increased by more than the demand for PCs increased.
C) The demand for PCs decreased by more than the supply of PCs increased.
D) Both the supply of PCs and the demand for PCs decreased.
72) If the demand curve for bottled water shifts rightward and the supply curve of bottled water
shifts rightward, the equilibrium
A) price of bottled water definitely increases.
B) price of bottled water definitely decreases.
C) quantity of bottled water definitely increases.
D) quantity of bottled water definitely decreases.
73) Which of the following statements is CORRECT?
A) When both demand and supply increase, the quantity decreases and the price might rise, fall,
or remain the same.
B) When both demand and supply increase, the price rises and the quantity might increase,
decrease, or remain the same.
C) When both demand and supply decrease, the quantity increases and the price might rise, fall,
or remain the same.
D) When both demand and supply decrease, the quantity decreases and the price might rise, fall,
or remain the same.
74) If the demand for bathing suits and supply of bathing suits both decrease, then definitely the
equilibrium
A) price will decrease.
B) price will increase.
C) quantity will increase.
D) quantity will decrease.
75) The equilibrium quantity will decrease and the price might rise, fall, or stay the same when
the
A) demand and the supply of a good both increase.
B) demand for a good increases and the supply of it decreases.
C) demand for a good decreases and the supply of it increases.
D) demand and the supply of a good both decrease.
76) If the demand curve for bottled water shifts leftward and the supply curve of bottled water
shifts leftward, the equilibrium
A) price of bottled water definitely increases.
B) price of bottled water definitely decreases.
C) quantity of bottled water definitely increases.
D) quantity of bottled water definitely decreases.
77) Flights to Paris are a normal good and people’s incomes rise. At the same time, the price of
jet fuel rises. The equilibrium price of a flight to Paris ________ and the equilibrium quantity of
flights to Paris ________.
A) might rise, fall, or not change; increases
B) falls; decreases.
C) rises; increases
D) rises; might increase, decrease, or not change
78) In the market for oranges, the demand and supply of oranges decrease by the same amount.
The equilibrium quantity will ________ and the equilibrium price will ________.
A) decrease; not change
B) decrease; fall
C) remain the same; either rise or fall
D) remain the same; rise
79) What will happen to the equilibrium price and quantity of coffee if it is discovered to help
prevent colds and, at the same time, Brazil and Vietnam emerge in the global market as massive
producers of coffee?
A) The price will fall and the effect on the quantity is uncertain.
B) The quantity will increase and the effect on the price is uncertain.
C) The quantity will decrease and the price will rise.
D) The quantity will increase and the price will remain unchanged.
80) Which of the following always raises the equilibrium price?
A) an increase in both demand and supply
B) a decrease in both demand and supply
C) an increase in demand combined with a decrease in supply
D) a decrease in demand combined with an increase in supply
81) The equilibrium price will rise and the equilibrium quantity might increase, decrease, or stay
the same when the
A) demand and the supply of a good both increase.
B) demand for a good increases and the supply of it decreases.
C) demand for a good decreases and the supply of it increases.
D) demand and the supply of a good both decrease.
82) If demand increases and supply decreases, what is the effect on equilibrium price and
equilibrium quantity?
A) The price falls and the quantity might increase, decrease, or remain the same.
B) The price rises and the quantity might increase, decrease or remain the same.
C) The quantity decreases and the price might rise, fall, or remain the same.
D) The quantity increases and the price might rise, fall, or remain the same.
83) If the supply of bottled water decreases and at the same time the demand for bottled water
increases, the equilibrium price ________ and the equilibrium quantity ________.
A) might rise, fall, or stay the same; decreases
B) might rise, fall, or stay the same; increases
C) falls; increases
D) rises; might increase, decrease, or stay the same
84) When the demand curve shifts rightward and the supply curve shifts leftward, then the
equilibrium price ________ and the equilibrium quantity ________.
A) rises; decreases
B) falls; increases
C) rises; probably changes but the direction of the change cannot be determined
D) probably changes but the direction of the change cannot be determined; increases
85) In 2014, the price of peanuts was rising, which lead peanut butter sellers and peanut butter
buyers to expect the price of peanut butter would rise in the future. Consequently, in the current
market for peanut butter there was ________ which resulted in a ________ in the price of peanut
butter and ________ in the quantity of peanut butter.
A) a decrease in supply of peanut butter and an increase in demand for peanut butter; rise; an
increase, decrease or possibly no change
B) a decrease in supply of peanut butter and a decrease in demand for peanut butter; rise, fall, or
possibly no change; a decrease
C) an increase in supply of peanut butter and a decrease in demand for peanut butter; fall; an
increase, decrease or possibly no change
D) a decrease in supply of peanut butter and an increase in demand for peanut butter; fall; an
increase, decrease or possibly no change
86) In 2014, the price of peanuts was rising, which lead peanut butter sellers and peanut butter
buyers to expect the price of peanut butter would rise in the future. Suppose the effect on the
buyers was larger than the effect on the sellers. Consequently, in the current market for peanut
butter there is a ________ in the price of peanut butter and ________ in the quantity of peanut
butter.
A) rise; an increase
B) rise; a decrease
C) fall; a decrease
D) fall; an increase
87) In 2014, the price of peanuts was rising, which lead peanut butter sellers and peanut butter
buyers to expect the price of peanut butter would rise in the future. Suppose the effect on the
sellers was larger than the effect on the buyers. Consequently, in the current market for peanut
butter there is a ________ in the price of peanut butter and ________ in the quantity of peanut
butter.
A) rise; an increase
B) rise; a decrease
C) fall; a decrease
D) fall; an increase