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1.
10.00
points
A factor market is any place or process where
C:.'
_.r,
Finished goods are bought and sold .
Land, labor, or capital is bought and sold.
{
Finished services are bought and sold.
<:,
None of the choices are correct.
A factor market is where the factors of production (land , labor, or capital) are bought and sold .
Multiple Choice
Difficulty: 1 Easy
Learning Objective: 03-03 How
market prices and quantities are
established.
award:
2.
10.00
points
·····susiness
firms.sup.ply .goods.and seiVices. to·= . and. purchase 'iactors.ofp.roduction in=:. . . ..
r
factor markets; product markets
n national markets; factor markets
-.G
C:.
product markets; factor markets
factor markets; national markets
A factor market is where the factors of production (land , labor, or capital) are bought and sold. A product
market is where finished goods and services are bought and sold. A pair of shoes is a finished good.
Multiple Choice
Difficulty: 1 Easy
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Learning Objective: 03~03 How
market prices and quantities are
established.
9/17/2013
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lndividuai 'cons'umers supply ·= ·anifj)li'rchase"~~ .................................................. .
_,Q
factors of production; final goods and services
Ca intermediate goods; final goods and services
(" final goods and services; factors of production
(:'jj national goods and services; factors of production
Individual consumers supply factors of production such as their own labor and purchase final goods and
services such as groceries.
Multiple Choice
Difficulty: 1 Easy
Learning Objective: 03-03 How
market prices and quantities are
established .
award:
4.
10.00
points
r;..
_,CJ
C
0
Increases as its price rises, ceteris paribus.
Increases as its price falls, ceteris paribus.
Decreases as its price falls, ceteris paribus.
Does not change when price changes.
Quantity demanded of an item and price of the same item are inversely related.
Multiple Choice
Difficulty: 1 Easy
Learning Objective: 03-01 The
nature and determinants of
market demand.
award:
5.
10.00
points
According to the law of demand, a demand curve
_.c.;
C
Has a negative slope.
Is a horizontal or flat line.
[' Has a positive slope.
C
Exceeds the economy's ability to produce.
Because price and quantity demanded are inversely related, the demand curve is downward-sloping (has a
negative slope) .
Multiple Choice
Difficulty: 1 Easy
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Learning Objective: 03-01 The
nature and determinants of
market demand.
9117/2013
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an . in.crease.Tii.. the·q·uiinii't}i.d'eman'ded ofpeifu·m-e?
Ceteiis.paribus;··which ..ot.iilli.toliowing.is ..m.osi.iii<eiy to ..eause..
- C
A decrease in the price of perfume.
Q
A decrease in tastes for perfume.
CJ
An increase in income.
CJ
An increase in the price of electricity.
Quantity demanded and price are inversely related . Tastes and income changes would cause a change in
demand (a shift), and the price of electricity would impact the supply of perfume.
Multiple Choice
Difficulty: 2 Medium
Learning Objective: 03-01 The
nature and determinants of
market demand.
award:
7.
10.00
points
. .....................VVhiCh···ot the··fOfiOW·i·ng··is··n·OfheiCfCtii-iStanF·aiOfiQ··a··giV·en demand ·cliiVe·tor a good?
_r::;,
Price.
( ' Consumer's income.
CJ
The price of substitutes.
Consumer tastes.
The demand curve reflects the quantity demanded at different price levels, which therefore cannot be held
constant.
Multiple Choice
Difficulty: 2 Medium
Learning Objective: 03-01 The
nature and determinants of
market demand.
award:
8.
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·····ceieiis./:>ari6us;··wi1·i·ci1.oi.ii1e.toliowin·9-woi:i'icf.9eii.eraiiy..calis·e--an ..increase.rn·ii1·e·-aemand··c:uiVe .ior··r;ew·--····
automobiles?
Q
A decrease in the price of new automobiles.
-+W An increase in consumers' income.
0 The new models being perceived as ugly compared with old models.
Q Consumer expectations that the price of new automobiles will be lower next year.
A decrease in the price of new automobiles would cause a movement along the demand curve. Perceived
ugliness and expectations of lower prices would decrease the demand. An increase in consumers' income
would increase the demand for goods.
Multiple Choice
Difficulty: 2 Medium
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Learning Objective: 03-01 The
nature and determinants of
market demand.
9/17/2013
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· ········ceieris'parlbus;wtiich ofttiefoliowii19''wouid you expect to have 'no.effecfon'ifle..demarid cuiVi:do'r new···············.. ··
automobiles?
rei A rise in the price of gasoline.
C
G
_.r
Consumer expectations that the price of new automobiles will be lower next year.
Consumer expectations that a significant recession will develop and last for a year.
An increase in the price of new automobiles.
An increase in the price of new automobiles will cause a movement along the demand curve. The entire curve
would not change.
Multiple Choice
Difficulty: 2 Medium
Learning Objective: 03-01 The
nature and determinants of
market demand.
award :
10.
10.00
points
···-··················· ·······ceterrs·panEus·;·w·t;-uye·rs··ex·p·ect·the··price··ot··ai·rl·in·e·tic·kets·· to··raii. i.n·th'e·tutu·re:··thfin···riQht··naw·th·ere··sho'i.i·ia·· b'e················
(:_. An increase in the demand for airline tickets.
C::
A decrease in the supply of airline tickets.
->L;;~ A decrease in the demand for airline tickets.
<:
No change in the supply of or demand for airline tickets because the price is not changing right
now.
Expectations that prices will fall will cause consumers to buy fewer tickets now and wait to purchase airline
tickets later, when the price actually falls.
Multiple Choice
Difficulty: 2 Medium
Learning Objective: 03-01 The
nature and determinants of
market demand.
award :
11.
10.00
points
··························· ···Whlch··determl·r;-ant··ot· ciema·r,-a··chan·ge·s·· ~·r;- ·th·e ··p·erso·;;·ai··co·m·puter··rriarket··as ··m·ore·· i·n·dr~i'idU·a·is··be·cc;me··inte·restea ······
in "surfing the Internet"?
r- Cost of factors of production.
0
r
_.,r;;
Income.
Expectations.
Number of buyers.
As individuals become interested in "surfing the Internet," more people will be willing and able to buy personal
computers.
Multiple Choice
Difficulty: 3 Hard
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Learning Objective: 03-01 The
nature and determinants of
market demand.
9/17/2013
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Assume that pencils and pens are substitutes. If the price of pencils rises, then we will see
-+C.
An increase in the demand for pens .
.0
A decrease in the demand for pens.
r
An increase in the supply of pens.
('"., A decrease in the supply of pens.
Consumers will substitute the relatively cheaper pens when the price of pencils rises, thereby causing the
demand for pens to increase.
Multiple Choice
Difficulty: 3 Hard
Learning Objective: 03-01 The
nature and determinants of
market demand.
award:
13.
10.00
points
. . . .H.itiere. are··c;il·iy.two.airi'iries.ttiat fly.'betwe·e·n·oa'iias·a·ii·a·New. brleails;·:wilai·:w·iii. hai'il.en iil. tile ma.ri<ei.tor. oile. . . ...
airline if the other one goes out of business?
-+r
The demand curve will shift to the right.
Q;
C
There will be a movement to the right along the initial demand curve.
r
There will be a movement to the left along the initial demand curve.
The demand curve will shift to the left.
If one airline goes out of business, the number of consumers willing and able to buy from the other airline will
increase, causing demand to increase.
Multiple Choice
Difficulty: 3 Hard
Learning Objective: 03-01 The
nature and determinants of
market demand.
award:
14.
10.00
points
Assume a series of forest fires reduces the supply of lumber, which is an input in the production of wooden bats.
Baseballs and wooden bats are complements. If the price of wooden bats increases, we can expect the
---+(" Demand for baseballs to decrease.
G
Supply of baseballs to decrease.
C
Demand for baseballs to increase.
G
Supply of baseballs to increase.
Bats and baseballs are complements. When the price of bats increases, the demand for baseballs will
decrease.
Multiple Choice
Difficulty: 3 Hard
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Learning Objective: 03-01 The
nature and determinants of
market demand.
9117/2013
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A change in demand means there.ha·s been' a sti'iffin.the. demand .C'urve·,.. and a"ctiang'e in.quantitY ..dema.nded ....... . .
La Results from a change in price of other goods.
0 Means a shortage or surplus will result from holding prices constant.
Cj Also means demand has shifted.
- 0
Means that price has changed and there is movement along the demand curve.
Movements along a demand curve are a response to price changes for that good.
Multiple Choice
Difficulty: 2 Medium
Learning Objective: 03-01 The
nature and determinants of
market demand.
award :
16.
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··· . . ··............ ·.... 'A. ctiai19e. in.ttie.llrice ·c;ra··9c;o·a·.... · ............ · .............. · ............ · .............. · ............ · .............. · ............ · .............. · ............................ · ............ · .............. · ............ · .. ..
~
_ c;,
C.
Causes a shift in the supply curve.
Results in a change in quantity supplied.
Results in a change in supply.
Q Is a determinant of supply.
Because the supply curve shows the quantity supplied at different price levels, when the price changes, we
can track changes in quantity supplied along the supply curve.
Multiple Choice
Difficulty: 1 Easy
Learning Objective: 03-02 The
nature and determinants of
market supply.
award:
17.
10.00
points
···········ceieris.iJa'r iiiiis•.wtii'cil··c;i·tl1e.toHowin·9·is··n:;c;si ii'i<eiy .to ..calise.an ..iil.crease.. iii. iti'e.qua·nfiiY .sli'i>i>i.ieci"of perfume?
Q
An improvement in perfume-making technology.
An increase in the salaries paid to perfume makers.
- C.
An increase in the price of perfume.
An increase in the number of sellers of perfume.
If the price of a product is the only variable changing , then we can track changes in quantity supplied along the
supply curve.
Multiple Choice
Difficulty: 2 Medium
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Learning Objective: 03-02 The
nature and determinants of
market
9/17/2013
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···········c·eteris·paribUS, which ot the··fO.IiOWii19..iS'JTlOSi·i·i·keiy·to··cause··a·aecrease··in··the··su·p·piy··or··s·kateb·oa·ra·s·?·········
(d An increase in the price of skateboards.
-+U
An increase in the cost of materials used to produce skateboards.
l ' An improvement in skateboard-making technology.
G
All of the choices are correct.
An increase in costs of production causes supply to decrease. An increase in price causes a decrease in the
quantity supplied, whereas an improvement in skateboard-making technology would increase supply.
Multiple Choice
Difficulty: 2 Medium
Learning Objective: 03-02 The
nature and determinants of
market supply.
award :
19.
10.00
points
The law of supply implies that
C Supply curves are flat.
-+Cl
C
Supply curves are upward-sloping to the right.
Supply curves are downward-sloping to the right.
A change in a determinant of demand shifts the supply curve.
The law of supply says that larger quantities will be offered for sale at higher prices, thereby causing the supply
curve to be upward-sloping to the right.
Multiple Choice
Difficulty: 1 Easy
Learning Objective: 03-02 The
nature and determinants of
market supply.
award :
20.
10.00
points
· · · · · ceieris./JariEus;··it.the . s'lii>sidies. 9.iilen. to . corn.syrui> . i>roClucers··aecrease·;. iilen··-we·can. exii·ecf·· · · ·. . ·
C
-+C
A decrease in the demand for corn syrup.
A decrease in the supply of corn syrup.
(', An increase in the demand for corn syrup.
(j1 An increase in the supply of corn syrup.
A reduction in subsidies will reduce the incentive to produce corn syrup, thus decreasing the supply of corn
syrup.
Multiple Choice
Difficu lty: 2 Medium
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Learning Objective: 03-02 The
nature and determinants of
market supply.
9/17/2013
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······ · ·VJhicil..of ttiEdoiiowii19 ·a\ients ·wolilcfcause.. a ·ri9il!Ward ..shitt "iil"itie mai-kei"sup.i)iY"cuiVEdor ·ali'iomotiiles?.....
- G
A technological improvement that reduces the cost of production.
('] An increase in the wages of autoworkers.
0
G
A higher sales tax on automobiles.
A decrease in the number of sellers.
Technological improvements that reduce the cost of production will improve profit margins at every price level,
which increases supply. An increase in wages and a decrease in the number of sellers will decrease supply,
and a higher sales tax will decrease demand.
Multiple Choice
Difficulty: 2 Medium
Learning Objective: 03-02 The
nature and determinants of
market supply.
award:
22.
10.00
points
·················· · · · · ····rt·corn··iina··w·heat··are··aHernativ·e ··pursu·iis··tor··a··ta·rmer~·-·~i'-chan·ge··in··the··su·p·pi;;·ot··corrl"·wiii"·take··p·iacEi.W'hen·~·-ceteris·
paribus,
G
_g
The price of corn changes.
The price of wheat changes.
Q
The demand for corn changes.
C
Consumers want to buy more corn at the same price.
A change in the price of wheat will make corn production relatively more or less profitable, thereby causing the
supply of corn to change.
Multiple Choice
Difficulty: 2 Medium
Learning Objective: 03-02 The
nature and determinants of
market supply.
award :
23.
10.00
points
.......WifC'h"Of the··roiiOWhlQ . ca·n. C'hang·e. Without shlft'i·ng·ei-ther: d9111'8'rld"O'i su·ppi'~i~ . CeteriS"jj'Bfibus?
- C
G
G
The price of the good itself.
The prices of other goods.
Incomes.
(' Expectations.
A change in the price of a good causes a movement along the demand and the supply curves. It will not cause
the demand or supply to shift.
Multiple Choice
Difficulty: 2 Medium
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Learning Objective: 03-02 The
nature and determinants of
market supply.
9/17/2013
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..........ceieiis./Jaiiiilis;·wil.id1··c;ntie.toiiowin·9··is ·;n·c;·st iikei:Y .to ..stiifi.hotti.ifle··ae;m·ana ·a·na·tfle ..sup·p·i:y··c:uiVes?···············
(
Technology.
---+("• Expectations.
<:
The price of the good itself.
(". Income.
Expectations cause both demand and supply to change.
Multiple Choice
Difficulty: 2 Medium
Learning Objective: 03-02 The
nature and determinants of
market supply.
award:
10.00
25.
points
..............................................................................................................................................................................................................................................................................................................................................
When a surplus exists for a product,
O
r
Producers increase supply.
Consumers increase demand.
[" Government purchases decrease.
---+,C; Producers reduce the level of output and reduce price.
A surplus occurs when quantity supplied exceeds quantity demanded. Businesses will decrease their prices to
get rid of excess inventories and begin to reduce production.
Multiple Choice
Difficulty: 1 Easy
Learning Objective: 03-04 What
causes market prices to change.
----------~-----~~~·~----
award:
26.
10.00
points
(" There are too many tickets to the event.
---+r,. The price for the tickets is below the equilibrium price.
C
The tickets must be very expensive.
C";;; There is a surplus of tickets.
When a price is below equilibrium price, a shortage will occur. Tickets selling almost instantly imply that
everyone who is willing and able to go may not be able to obtain tickets.
Multiple Choice
Difficulty: 3 Hard
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Learning Objective: 03-04 What
causes market prices to change.
9/17/2013
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A riQhtwara·· shHl''in··a··aem·and''C'lJ'iVe ·an·a·a·lenwara·· shHl''iii''a··suppiy··cun;e·i)Oth''resu·lt'i'il''8'' ' '
[ ; Lower equilibrium price.
C
Lower equilibrium quantity.
~0 Higher equilibrium price.
G
Higher equilibrium quantity.
An increase in demand causes equilibrium price and equilibrium quantity to increase. A decrease in supply
causes equilibrium price to increase and equilibrium quantity to decrease.
Multiple Choice
Difficulty: 1 Easy
Learning Objective: 03-04 What
causes market prices to change.
award:
28.
10.00
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. ... . ·· ···· · · ······· ·ceieri.s··iJa.riEils.".an·T;;·c;:ease . i.n."ffle . iili.m"b.er. Cifseiiers··c;frliiliil"il9 ·s"ho.es·ca-use·s·e·Ci·uriib"rilim.i>ri"ce.to. .. ·· · ···· · ·
~C Decrease and equilibrium quantity to increase.
<::;
Decrease and equilibrium quantity to decrease.
r
Increase and equilibrium quantity to increase.
[l Increase and equilibrium quantity to decrease.
An increase in supply causes equilibrium price to fall and equilibrium quantity to increase.
Multiple Choice
Difficulty: 2 Medium
Learning Objective: 03-04 What
causes market prices to change.
award:
29.
10.00
points
. . . .Whe·r;··iti·e-<iemaiid.ior.coifee. iilcre~i's.es: · ceieris.iJarihlis·;·'ti1e. eCiliiii5rilim.i>rice.wTii .aiso.ii1cre.ase.tiecal.lse·· · ·
~r A shortage exists at the old equilibrium price.
[' There must be a surplus of the good.
C
The market supply and demand curves do not intersect.
C
Market demand must be upward-sloping.
When demand increases, if the equilibrium price doesn't change, quantity demanded will be greater than
quantity supplied, causing a shortage.
Multiple Choice
Difficulty: 2 Medium
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Learning Objective: 03-04 What
causes market prices to change.
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..Assume·mHi<"is.lisea··to .p.rodlice.. ice ..crea'iTi·:· ceie.ris.iJaribus:a··d'ecrease iil. tile·p·i ke"of rriiii<..wiil calise.til'e"
equilibrium price of ice cream to
C Increase and the equilibrium quantity of ice cream to increase.
0
Increase and the equilibrium quantity of ice cream to decrease.
--+G
Decrease and the equilibrium quantity of ice cream to increase.
Q Decrease and the equilibrium quantity of ice cream to decrease.
If the cost of producing ice cream decreases, the supply of ice cream will increase. An increase in supply
causes equilibrium price to fall and equilibrium quantity to increase.
Multiple Choice
Difficulty: 3 Hard
Learning Objective: 03-04 What
causes market prices to change.
award:
31.
10.00
points
If a price ceiling is to be binding or effective, it should be set
--+U
Below the equilibrium price, and it will create a market shortage.
u Below the equilibrium price, and it will create a market surplus.
Q Above the equilibrium price, and it will create a market shortage.
C
Above the equilibrium price, and it will create a market surplus.
Price ceilings set above the equilibrium price will not be binding or effective because the market price will tend
toward the equilibrium price. Therefore, in order for a price ceiling to be binding, it must be set below the
equilibrium price.
Multiple Choice
Difficulty: 2 Medium
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Learning Objective: 03-05 How
government price controls affect
market outcomes.
9/17/2013
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Assignment Print View
Choose the letter of the diagram in Figure 3.1 that best describes the type of shift that would occur in each
situation for the market listed on the left, ceteris paribus.
Supply ~curve
(leftward)
supply curve
(rightward)
LJJ
LJJ
0:
0:
u
u
0..
0..
QUANTITY
QUANTITY
(a)
(b)
Demand Curve
(rightward)
Demand Curve
(leftward)
w
w
u
u
a:
0:.
Q.
Q.
QUANTITY
QUANTITY
(c)
(d)
Figure 3.1
Shifts of Supply and Demand
Designer clothes: consumer confidence in the economy improves.
rA
Ct B.
c c.
--+\ D.
An improvement in consumer confidence increases demand for goods and services.
Multiple Choice
Difficulty: 2 Medium
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Learning Objective: 03-04 What
causes market prices to change.
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Choose the letter of the diagram in Figure 3.1 that best describes the type of shift that would occur in each
situation for the market listed on the left, ceteris paribus.
Suppl,y Curve
(rightward)
Supp'IY Curve
(leftward)
UJ
UJ
u
u
a:0..
0:::
0..
QUANTITY
QUANTITY
(a)
(b)
Demand Curve
Demand Curve
(leftward)
(rightward)
l.U
Ll.!
u
a::
u
-
lr
0..
0..
QUANTITY
'(d)
QUANTI TV
(c)
Figure 3.1
Shifts of Supply and Demand
Steel: the government introduces environmental restrictions on the dumping of wastes from producing steel.
. . . .c A.
r s.
[', C.
C::: D.
Environmental restrictions on dumping wastes will increase the cost of producing steel, which will cause the
supply of steel to decrease.
Multiple Choice
Difficulty: 2 Medium
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Learning Objective: 03-04 What
causes market prices to change.
9/17/2013
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........................................
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Assignment Print View
Complete Table 3.1 . Then answer the indicated question.
Quantity Demanded by
Ben
Alejandro
Carl
4
2
8
4
12
4
Price
$8.00
6.00
4.00
2.00
20
22
4
4
Market
6
6
Quantity Supplied by
Avery
Brandon Cassandra
60
4
6
42
4
4
4
24
2
6
4
0
Price
$8.00
$6.00
$4.00
$2.00
Table 3.1
Individual Demand and Supply Schedules
In Table 3.1, if the price is $4, the market will
-.C.
G,
Be in equilibrium.
Experience a surplus of 30 units.
Q
Experience a shortage of 22 units.
(
Experience a surplus of 56 units.
Quantity demanded (30) is equal to quantity supplied (30) at a price of $4. Refer to Table 3.1 : Answer.
Price
Quantity Demanded by
Alejandro
Ben
Carl
$8.00
6.00
4.00
2.00
Price
8
12
20
22
4
4
2
4
4
6
6
4
Market
14
20
30
32
Quantity Supplied by
Avery
Brandon Cassandra
$8.00
$6.00
$4.00
$2.00
22
30
16
12
18
14
20
6
12
0
0
10
70
50
30
10
Table 3.1: Answer
Individual Demand and Supply Schedules
Multiple Choice
Difficulty: 2 Medium
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Learning Objective: 03-04 What
causes market prices to change.
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Assignment Print View
Complete Table 3.1. Then answer the indicated question.
Quantity Demanded by
Ale jandro
Ben
Carl
$8.00
6.00
8
12
4
4
2
4.00
20
22
4
4
6
6
Price
2.00
Market
4
Quantity Supplied by
Price
$8.00
$6.00
$4.00
$2.00
Avery
Brandon
Cassandra
60
42
24
6
4
4
4
4
6
4
2
0
Table 3.1
Individual Demand and Supply Schedules
In Table 3.1, if the price is $2 , the market will
G
Be in equilibrium.
("' Experience a surplus of 30 units.
~r
C:
Experience a shortage of 22 units.
Experience a surplus of 56 units.
Quantity demanded (32) is greater than quantity supplied (1 0) by 22 (32 - 10) when the price is $2 . Refer to
Table 3.1: Answer.
Quantity Demanded by
Market
Alejand ro
8
Ben
4
Carl
2
4.00
12
20
4
4
4
6
14
20
30
2.00
22
4
6
32
Price
$8.00
6.00
Quantity Supplied by
Price
$8.00
$6.00
Avery
30
Brandon
18
Cassandra
22
70
16
12
14
6
20
12
50
30
0
0
10
10
$4.00
$2.00
Table 3.1 : Answer
Individual Demand and Supply Schedules
Multiple Choice
Difficulty: 2 Medium
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Complete Table 3.1. Then answer the indicated question.
Quantity Demanded by
Alejandro
Ben
Carl
8
4
2
12
4
4
6
20
4
4
6
22
Price
$8.00
6.00
4.00
2.00
Market
Quantity Supplied by
Avery
Brandon Cassandra
60
4
6
4
4
42
24
4
2
4
6
0
Price
$8.00
$6.00
$4.00
$2.00
Table 3.1
Individual Demand and Supply Schedules
In Table 3.1, if the price is $8, the market will
Q
Be in equilibrium.
<::
Experience a surplus of 30 units.
C']
...... (
Experience a shortage of 22 units .
Experience a surplus of 56 units.
Quantity demanded (14) is less than quantity supplied (70) by 56 (70- 14) when the price is $8. Refer to Table
3.1: Answer.
Price
$8.00
6.00
4.00
2.00
Price
$8.00
$6.00
$4.00
$2.00
Quantity Demanded by
Alejandro
Ben
Carl
8
4
2
12
4
4
4
20
6
4
6
22
Ma~ket
14
20
30
32
Quantity Supplied by
Avery
Brandon Cassandra
30
16
12
0
18
14
6
0
22
20
1!2
10
70
50
30
10
Table 3.1 : Answer
Individual Demand and Supply Schedules
Multiple Choice
Difficulty: 2 Medium
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Assignment Print View
Complete Table 3.1. Then answer the indicated question.
Quantity Demanded by
Alejandro
Ben
Carl
Price
$8.00
6.00
4.00
2.00
8
12
4
4
2
4
20
4
4
6
6
22
Market
Quantity Supplied by
Price
$8.00
$6.00
$4.00
$2.00
Avery
Brandon
Cassandra
60
42
4
6
4
4
24
4
2
6
4
0
Table 3.1
Individual Demand and Supply Schedules
In Table 3.1, if government held the price at $3,
C:
The government would be setting an effective price floor.
c;;
The shortage would be the same as the quantity demanded .
........ [" There would be a shortage.
C
The market would be in equilibrium.
A price below equilibrium will create a shortage. Refer to Table 3.1: Answer.
Quantity Demanded by
Price
Alejandro
Ben
Carl
Market
8
12
20
22
4
2
4
14
20
6
6
30
$8.00
6.00
4.00
2.00
4
4
4
32
Quantity Supplied by
Price
$8.00
$6.00
$4.00
$2.00
Avery
30
16
12
0
Brandon
18
Cassandra
22
14
6
20
0
110
1i2
70
50
30
10
Table 3.1: Answer
Individual Demand and Supply Schedules
Multiple Choice
Difficulty: 2 Medium
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Learning Objective: 03-05 How
government price controls affect
market outcomes.
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----······------,-·-·······-······
$15
1-
-z
I
1
I
I
I
UJ
0..
'
I
I
I
I
I
.
I
I
I
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I
I
:
J
'
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-------.--------~
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:
t
I
I
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0
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f
--------,-------I
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t
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f
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$3
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--------~
:
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0
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$6
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--------·--------,--------·-------I
.
20
30
1
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I
0
10
J
I
•
I
I
I
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I
1
40
so
QUANTITY
Figure 3.2
Supply and Demand
---.Q
There would be a surplus of 40 units.
C
There would be a surplus of 20 units.
'[] There would be a shortage of 40 units.
There would be a shortage of 20 units.
At a price of $15, the quantity supplied is 50 while the quantity demanded is 10.
Multiple Choice
Difficulty: 2 Medium
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· · ···· · ··· · · · · · · · ·Whi.Ch . pane·i··ar··Fig·urti ·3-:3··re·prese·n"ts··the··chang·e·s··~n·Ihe··market··tor·'beef'·wh·en··the··price··ot·oo·rn···tcatti·e ··te·ed)··rise·s···
and the people become more fearful of mad cow disease?
!::
z
:::>
a::
UJ
a..
w
u
a::
-a..
QUANTITY
(b)
QUANTITY
(a)
z-
-f-z
1-
::>
a::
w
Q..
w
::>
a::
w
Q..
w
u
-a::
u
.......
a::
a..
a..
QUANTITY
QUANTfTY
(c)
(d)
Figure 3.3
Shifts of Supply and Demand
C A.
,C B.
c
-c
c.
D.
An increase in costs causes supply to decrease, and the fear of disease will cause the demand to decrease.
Multiple Choice
Difficulty: 2 Medium
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....WhiCii···panefof Figure·i3.re.prese.nts. the. changes in the market for.dga.rettes· when .tile .govern.menfincreases ··
subsidies for the production of tobacco and at the same time bans smoking in public buildings?
!:::
:z
::;)
a:::
w
c..
'
w
-
u
a:::
c..
,
.,
' ' ' ., ' '/
·
Jit., ·o·
,
'
l
QUANTITY
QUANTITY
(a)
(b)
s
t::
z
::>
a:
LU
,,
',, ,.~l·
'
,~
''
0...
w
z-
1-
:>
a::
w
a..
'
LLJ
u
a::
u
a::
a..
a..
QUANTITY
(c)
' ' ,,
,<
, ',
,,
''
QUANTITY
(d)
Figure 3.3
Shifts of Supply and Demand
A.
B.
C.
D.
A subsidy will encourage more production, causing supply to increase, and the ban on smoking will cause a
decrease in demand.
Multiple Choice
Difficulty: 2 Medium
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···VVilich'l>anei"Cii.i=i9ure.i3.re.i>reseiiis"tile·c:ilan9es.in.ihe··r:nari<ei.tor.stli'deni.tiou.sin9.wileil . unhiersiiY.enro.iime.ilf··
increases and at the same time the university destroys several older residence halls and apartment buildings?
1--
z
::>
a:::
UJ
c..
UJ
u
a:::
c..
-
QUANTITY
QUANTITY
(a)
s
'
-z
1-
:J
a::
w
0..
w
u
a::
(b)
• l
.,,
'A."· ~
'
,
'
.,.
'
,
''
.
z-
1-
:::>
a::
w
0..
w
............
u
,.....
0..
0..
a:
,,
' ,<
' ,"
, ''
'
'
QUANTITY
QUANTITY
(c)
(d)
Figure 3.3
Shifts of Supply and Demand
A.
B.
--.t'J c.
D.
The increase in enrollment increases the number of buyers, causing demand to increase. The destruction of
residence halls and apartment buildings causes supply to decrease.
Multiple Choice
Difficulty: 2 Medium
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$15
1-
-z
$12
:J
a=
IJ,J
a..
$9
V')
a:
::s
_,
$6
0
0
$3
10
0
20
30
40
50
QUANTIITV
Figure 3.2
Supply and Demand
There would be a surplus of 40 units.
There would be a surplus of 20 units.
There would be a shortage of 40 units.
There would be a shortage of 20 units.
At a price of $6, quantity demanded will be 40 and quantity supplied will be 20, which will result in a shortage of
20 (40- 20).
Multiple .Choice
Difficulty: 2 Medium
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............Wilicti..
ot iile..toiiCiiN'ii19 .siateme.ii'is a·b'out .mari<ets..is iioi'true?
--.Q
C
rJ
Markets necessarily have a physical location.
Markets have both a demand side and a supply side.
The two types of markets include the factor and product markets .
.{] Every market transaction involves an exchange of money for goods or resources or a direct
exchange of goods or resources without money called barter.
Markets exist wherever and whenever an exchange takes place, even in cyberspace.
Multiple Choice
Difficulty: 2 Medium
Learning Objective: 03-03 How
market prices and quantities are
established .
awa rd :
44.
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······························
............................................................................................................
If the wages of corn farmers decrease, then the
--.C
Supply curve for corn will shift right.
(J Supply curve for corn will shift left.
G.
Demand curve for corn will shift left.
None of the choices are correct.
If the cost of production decreases, the supply of the good will increase.
Multiple Choice
Difficulty: 3 Hard
Learning Objective: 03-04 What
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award:
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If the price of "X" increases and you buy more "Y," then
G
CJi
--.C:
d
"X" and "Y" are complements, and the price of "Y" will increase.
"X" and "Y" are complements, and the price of "Y" will decrease.
"X" and "Y" are substitutes, and the price of "Y" will increase.
"X" and "Y" are substitutes, and the price of "Y" will decrease.
Substitutes are competitive goods. They will have similar prices if not the same price in the same location.
Multiple Choice
Difficulty: 3 Hard
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If the price of "X" increases and you buy less "Y," then
C
"X" and "Y" are complements, and the price of "Y" will increase.
~r:. "X" and "Y" are complements, and the price of "Y" will decrease.
f'i
"X" and "Y" are substitutes, and the price of "Y" will increase.
(" "X" and "Y" are substitutes, and the price of "Y" will decrease.
When the price of "X" goes up (such as cars) and you buy less "Y" (such as gasoline), that means these goods
are complements.
Multiple Choice
Difficulty: 3 Hard
Learning Objective: 03-04 What
causes market prices to change.
award:
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······················· ·······An·· ,·rl'crease··i·n·ih·e· price··ot·ga·soiine··wHi····················································· . ······· . ·····································..................................................................................................
l'; Shift the gasoline supply curve to the right.
C
Shift the gasoline demand curve to the right.
.(;. Shift the automobile supply curve to the left.
~C;;; Shift the automobile demand curve to the left.
A change in the price of gasoline will only move along the fixed gasoline supply and demand lines. However,
since gasoline and automobiles are complements, an increase in the price of gasoline will shift the demand
curve for cars to the left.
Multiple Choice
Difficulty: 3 Hard
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Learning Objective: 03-04 What
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