Question 1

Which of the following would result in an increase in equilibrium price and an ambiguous change in equilibrium quantity?

Select one:

a.a decrease in supply and an increase in demand

b.a decrease in supply and demand

c.an increase in supply and demand

d.an increase in supply and a decrease in demand

Question2

What would an early frost in the vineyards of the Okanagan Valley cause?

Select one:

a.an increase in the demand for wine, increasing price

b.an increase in the supply of wine, decreasing price

c.a decrease in the demand for wine, decreasing price

d.a decrease in the supply of wine, increasing price

Question3

What is the relationship between price and quantity supplied?

Select one:

a.nonexistent

b.positive, or direct

c.the same as the relationship between price and quantity demanded

d.negative, or inverse

Question4

Which of the following reflects the downward-sloping demand curve?

Select one:

a.When the price falls, buyers willingly buy less.

b.There is an inverse relationship between price and quantity demanded.

c.There is a direct relationship between price and quantity demanded.

d.Price is positively related to quantity supplied.

Question5

Suppose that the number of buyers in a market increases and a technological advancement occurs. What would we expect to happen in the market?

Select one:

a.The equilibrium price would decrease, but the impact on the amount sold in the market would be ambiguous.

b.Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

c.The equilibrium price would increase, but the impact on the amount sold in the market would be ambiguous.

d.Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.

Question 6

Suppose you wish to analyze the change in the equilibrium price of lumber as a result of fires that are destroying trees in the West. Your first step would be

Select one:

a.to decide whether the fires shift demand or supply.

b.to decide whether the fires affect the price.

c.to identify the new equilibrium point.

d.to decide whether the fires affect the quantity of lumber demanded.

Question7

How is a market supply curve constructed?

Select one:

a.by finding the average quantity supplied by the market's individual supply curves

b.by vertically summing individual supply curves

c.by horizontally summing individual supply curves

d.by summing a consumer's demands for all goods

Question8

Wheat is the main input in the production of flour. All other things being equal, if the price of wheat increases, we would expect

Select one:

a.the supply of flour to decrease.

b.the demand for flour to decrease.

c.the supply of flour to increase.

d.the demand for flour to increase.

Question9

If Francis receives an increase in his pay, we would expect

Select one:

a.Francis's demand for inferior goods to increase.

b.Francis's demand for normal goods to decrease.

c.Francis's demand for each good he purchases to remain unchanged.

d.Francis's demand for luxury goods to increase.

Question10

New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto workers accept lower wages, and automobile insurance becomes more expensive?

Select one:

a.the price change will be ambiguous

b.the price will rise

c.the price will stay exactly the same

d.the price will fall

Question 11

Market demand is given as Qd = 300 - 2P. Market supply is given as Qs = 2P + 100. In a perfectly competitive equilibrium, what will be price and quantity?

Select one:

a.Price will be $20, and quantity will be 140.

b.Price will be $50, and quantity will be 200.

c.Price will be $100, and quantity will be 300.

d.Price will be $140, and quantity will be 380.

Question12

Market demand is given as Qd = 200 - 6P. Market supply is given as Qs = 4P. What would result if the market price were $30?

Select one:

a.a surplus of 160

b.a shortage of 100

c.a shortage of 160

d.a surplus of 100

Question13

Which of the following would be most likely to increase the price of a new house?

Select one:

a.lower wages for carpenters, lower wood prices, decreases in consumer incomes, lower apartment rents, decreases in population, and expectations of lower house prices in the future

b.lower wages for carpenters, higher wood prices, decreases in consumer incomes, higher apartment rents, decreases in population, and expectations of higher house prices in the future

c.higher wages for carpenters, higher wood prices, increases in consumer incomes, higher apartment rents, increases in population, and expectations of higher house prices in the future

d.lower wages for carpenters, lower wood prices, increases in consumer incomes, higher apartment rents, increases in population, and expectations of higher house prices in the future

Question14

If the demand for a product decreases, we expect

Select one:

a.equilibrium price and equilibrium quantity to both increase.

b.equilibrium price to decrease and equilibrium quantity to increase.

c.equilibrium price and equilibrium quantity to both decrease.

d.equilibrium price to increase and equilibrium quantity to decrease.

Question15

A technological advancement will

Select one:

a.shift the supply curve to the right.

b.shift the demand curve to the left.

c.shift the supply curve to the left.

d.shift the demand curve to the right.

Question 16

If suppliers expect the price of their product to fall in the future, what will they normally do?

Select one:

a.increase supply now

b.increase supply in the future

c.decrease supply now

d.increase supply now and decrease it in the future

Question17

What does supply-and-demand analysis involve?

Select one:

a.comparing the old equilibrium and the new equilibrium

b.evaluating buyers' reluctance to pay the market price

c.evaluating the friction that develops between buyers and sellers

d.comparing products in different markets

Question18

When there is a surplus in a market,

Select one:

a.there are too many buyers chasing too few goods.

b.the market is operating below the equilibrium level.

c.there is upward pressure on price.

d.there is downward pressure on price.

Question19

What does the number of buyers affect?

Select one:

a.the market demand curve

b.all individual supply curves

c.the market supply curve

d.all individual demand curves

Question20

Which of the following will definitely cause equilibrium quantity to fall?

Select one:

a.demand increases and supply decreases

b.demand decreases and supply decreases

c.demand decreases and supply increases

d.demand increases and supply increases

Question 21

The market supply curve shows

Select one:

a.the average quantity supplied at any price.

b.a ratio between price and quantity supplied for the market.

c.the price that sellers will receive from consumers at given quantities.

d.the total quantity supplied at any price.

Question22

Recent pine beetle infestations that are destroying trees in the western provinces are expected to cause the price of lumber to rise in the next six months. As a result, what can we expect to happen to the supply of lumber?

Select one:

a.It will increase now to meet as much demand as possible.

b.It will fall now.

c.It will increase in six months when the price goes up.

d.It will fall in six months, but not now.

Question23

If a seller in a competitive market chooses to charge more than the market price, what is likely to happen?

Select one:

a.The owners of the raw materials used in production would raise the prices for the raw materials.

b.Buyers will tend to buy more from this seller.

c.Buyers will tend to make purchases from other sellers.

d.Other sellers will also raise their prices.

Question24

What is another term for equilibrium price?

Select one:

a.market-clearing price

b.balancing price

c.reservation price

d.cooperative price

Question25

Wheat is the main input in the production of flour. All other things being equal, if the price of wheat decreases, we would expect

Select one:

a.the demand for flour to increase.

b.the demand for flour to decrease.

c.the supply of flour to increase.

d.the supply of flour to decrease.

Question 26

What would happen if both supply and demand increased?

Select one:

a.Equilibrium price would definitely decrease.

b.Equilibrium price would definitely increase.

c.Equilibrium quantity would definitely decrease.

d.Equilibrium quantity would definitely increase.

Question27

If the number of buyers in the housing market decreases,

Select one:

a.demand in the market will increase.

b.demand in the market will decrease.

c.supply in the market will decrease.

d.supply in the market will increase.

Question28

Suppose you make jewellery. If the price of silver increases, we would expect you

Select one:

a.to be willing and able to produce more jewellery than before at each possible price.

b.to be willing and able to produce less jewellery than before at each possible price.

c.to face a greater demand for your jewellery.

d.to face a weaker demand for your jewellery.

Question29

The law of demand implies that

Select one:

a.price and quantity supplied are inversely related.

b.price and quantity demanded are positively related.

c.price and quantity demanded are inversely related.

d.price and quantity supplied are positively related.

Question30

Which of the following is an example of complementary goods?

Select one:

a.lawnmowers and automobiles

b.wine and beer

c.cereal and milk

d.hamburgers and hot dogs