Preview Extract
CHAPTER 3—SUPPLY AND DEMAND
MULTIPLE CHOICE
1) When individuals come together to buy and sell goods and services, they form a(n)
a. economy
b. market
c. production possibilities frontier
d. supply curve
e. demand curve
Answer: B
2) Which of the following statements about markets is false?
a. markets are used to allocate resources in market systems
b. markets can vary in geographical size
c. prices are used to allocate goods in markets
d. markets are used to allocate resources in centrally-planned socialist economic systems
e. supply and demand explains how prices are set in competitive markets
Answer: D
3) In a perfectly competitive market,
a. there can be few or many buyers and sellers
b. the price is driven upward when suppliers hold back on goods and services
c. each participant is too small to affect the market price
d. government intervention is needed to ensure that prices are fair for consumers
e. resources are allocated by a central authority
Answer: C
4) Suppose that a large dairy farmer is able to raise the market price of milk by withholding
milk supply from the market. In this instance,
a. the milk market is perfectly competitive
b. buyers will decrease their demand for milk
c. buyers will increase their demand for milk
d. the milk market is imperfectly competitive
e. the milk market will collapse in the long run
Answer: D
5) A group of buyers and sellers with the potential to trade with each other is known as a(n)
a. trading bloc
b. cartel
c. market
d. industry
e. sector
Answer: C
6) The market for General Motors' bonds
a. exists only within the geographical boundaries of the United States
b. is not defined by its geographic location
c. is at the New York Stock Exchange
d. is at the U.S. Treasury
e. is in London, England
Answer: B
7) The market for a particular good is more likely to be local
a. the lower the cost of transporting the good and the greater the ease of communication
between buyers and sellers
b. the higher the cost of transporting the good and the greater the ease of communication
between buyers and sellers
c. the lower the cost of transporting the good and the greater the ease of determining the
good's quality
d. the lower the cost of transporting the good and the more difficult the communication
between buyers and sellers
e. the higher the cost of transporting the good and the more difficult the communication
between buyers and sellers
Answer: E
8) In analyzing the market for a particular good, the most appropriate size of the market to
consider
a. is the global market
b. is a local market
c. is a national market
d. is a state-wide market
e. depends on the purpose of the analysis
Answer: E
9) In a market system, prices are determined by
a. corporate executives
b. government bureaucrats
c. supply and demand
d. total market demand
e. production costs
Answer: C
10) In a circular flow diagram of the economy, households and businesses interact
a. in both product markets and resource markets
b. in neither product markets and resource markets
c. in product markets but not resource markets
d. in resource markets but not product markets
e. very rarely
Answer: A
11) When households and businesses interact in resource markets money
a. is not exchanged
b. is flowing toward businesses
c. is flowing toward households
d. is not used at all
e. is flowing to both businesses and households
Answer: C
12) When households and businesses interact in product markets money
a. is not exchanged
b. is flowing toward businesses
c. is flowing toward households
d. is not used at all
e. is flowing to both businesses and households
Answer: B
13) When households and businesses interact in product markets goods and services are
a. not exchanged
b. flowing toward businesses
c. flowing toward households
d. not used at all
e. flowing to both businesses and households
Answer: C
14) When households and businesses interact in product markets resources are
a. not exchanged
b. flowing toward businesses
c. flowing toward households
d. not used at all
e. flowing to both businesses and households
Answer: B
15) The law of demand says that as the price of a good rises, the quantity demanded of the
good tends to fall.
a. True
b. False
Answer: A
16) The amount of a good or service that buyers would be willing and able to purchase at a
specific price is known as
a. quantity demanded
b. demand
c. supply
d. quantity supplied
e. opportunity cost
Answer: A
17) The term quantity demanded
a. can refer to either an individual or all buyers in a market
b. only refers to all buyers in a specific market
c. only refers to individual buyers in a market
d. refers to how many units of a good a buyer would be willing and able to purchase at a
series of prices
e. determines price when it intersects with the supply curve
Answer: A
18) Because price and quantity demanded are inversely related,
a. the demand curve is usually upward-sloping
b. buyers purchase more of the good as the price rises
c. the supply curve must be rising
d. price and quantity supplied must be positively related
e. the demand curve is usually downward-sloping
Answer: E
19) The demand curve for dolls shows the quantity of dolls demanded
a. by suppliers of those dolls
b. by U.S. consumers
c. at the equilibrium price for dolls
d. at each level of income
e. at each possible price of dolls
Answer: E
20) The amount of a commodity that buyers in the market would like to purchase at a
particular price is
a. equilibrium
b. quantity supplied
c. quantity produced
d. infinite
e. quantity demanded
Answer: E
21) According to the law of demand,
a. there is a positive relationship between quantity demanded and price
b. as the price rises, demand will shift to the left
c. there is a negative relationship between quantity demanded and price
d. as the price rises, demand will shift to the right
e. as the price rises, consumers will continue to purchase the same quantity of the good
Answer: C
22) Each point along the market demand curve shows
a. the quantity of the good that firms would be willing and able to supply at a specific price
b. the relationship between the price of the good and total quantity demanded at a series of
prices
c. the opportunity cost of supplying a given quantity of goods to the market
d. the quantity of the good that consumers would be willing and able to purchase at a specific
price
e. how population changes affect the quantity demanded at a specific price
Answer: D
23) The law of demand states that the quantity demanded of a good and
a. the price of a substitute are positively related
b. its price are inversely related
c. its price are positively related if it is an inferior good
d. the wealth of buyers are positively related
e. its price are inversely related if it is a normal good
Answer: B
24) The demand curve for a particular good indicates the various quantities
a. demanded at various prices, other things equal
b. demanded at different income levels, other things equal
c. actually purchased at various prices, other things equal
d. actually purchased at different income levels, other things equal
e. demanded at various prices and income levels, other things equal
Answer: A
25) The law of demand says that
a. the customer is always right
b. quantity supplied equals quantity demanded
c. price and quantity supplied are inversely related
d. price and quantity demanded are inversely related
e. income and quantity demanded are directly related
Answer: D
26) The demand curve for apples slopes downward
a. because supply and demand are equal in equilibrium
b. since producers supply more when consumers demand more
c. because people are assumed to be basically greedy
d. because the law of demand holds in the market for apples
e. because apples are preferred to all other goods
Answer: D
27) Figure 3-1 shows the market demand schedule for compact disks. If the price per disk
rises from $10 to $12, the
a. demand will decrease by 2.2 million disks
b. quantity demanded will decrease by 2.2 million disks
c. supply will rise by 2.8 million disks
d. quantity demanded will decrease by 3.5 million disks
e. demand curve will shift to the left
Answer: B
28) Which of the following statements about demand is correct?
a. A change in the price of bicycles will not lead to a shift of the demand curve for bicycles.
b. A change in the price of automobiles will lead to a shift of the demand curve for
motorcycles.
c. A change in demand is equivalent to a movement along a given demand curve.
d. When price falls, so does the quantity demanded.
e. When the demand curve shifts to the right, so will the supply curve.
Answer: A
29) A decrease in the price of a particular good, with all other variables constant, causes
a. a shift to a different demand schedule with higher quantities demanded
b. a shift to a different demand schedule with lower quantities demanded
c. a movement along a given demand curve to a lower quantity demanded
d. a movement along a given demand curve to a higher quantity demanded
e. no movement along a given demand curve unless supply also changes
Answer: D
30) Which of the following could explain a movement from point F to point G in Figure 3-2?
Assume that the good represented is an inferior good.
a. all of the following are correct
b. an increase in buyers' incomes
c. a decrease in the expected future price of the good
d. an increase in the price of the good
e. an increase in the price of a complement
Answer: D
31) If automobiles are like most goods and the price of automobiles rises, then holding all
else constant, the
a. demand for automobiles will rise
b. quantity demanded of automobiles will fall
c. demand for automobiles will fall
d. quantity demanded of automobiles will rise
e. supply of automobiles will fall
Answer: B
32) Suppose that initially the market for DVDs is at point A on demand curve D2 in Figure 33. If the price of cassette tapes decreased,
a. the demand curve will shift to D3
b. equilibrium will move to point B on demand curve D1
c. equilibrium will move to point C on demand curve D1
d. there will be no change from point A
e. the demand curve will shift to D2
Answer: C
33) An increase in the price of a good results in a(n)
a. decrease in demand
b. increase in demand
c. increase in quantity demanded
d. decrease in quantity demanded
e. increase in supply
Answer: D
34) In Figure 3-4, the equilibrium price is
a. $5
b. $4
c. $3
d. $1
e. $0
Answer: C
35) The demand curve for a product will shift rightward when the price of a substitute
decreases.
a. True
b. False
Answer: B
36) If the demand for new automobiles falls when income falls, automobiles are said to be
normal goods.
a. True
b. False
Answer: A
37) Both the supply and demand curves can shift due to changes in income.
a. True
b. False
Answer: B
38) If the price of jelly (a complement with peanut butter) decreases, both the demand and
supply curves of peanut butter will shift rightward.
a. True
b. False
Answer: B
39) The quantity demanded of a good
a. is the amount that would be purchased with an unlimited income
b. is the amount that would be demanded even if income were zero
c. is subject to the buyer’s income constraints
d. is a fixed amount unaffected by the buyer’s circumstances
e. must match the amount actually purchased in the market
Answer: C
40) All of the following, except one, would increase the demand for a particular model of a
Ford automobile. Assume that this model is a normal good. Which is the exception?
a. an increase in buyers' incomes
b. increased prices of other Ford models
c. an expected future increase in the price
d. an increase in the U.S. population
e. a decrease in the price of steel
Answer: E
41) Which of the following would not cause the demand curve for college football tickets to
shift?
a. an increase in the price of professional football tickets
b. a decrease in the price of college basketball tickets
c. an increase in the price of college football tickets
d. a drop in student incomes
e. an increase in student preferences for college football tickets
Answer: C
42) An increase in the population will lead to
a. a rightward shift in every individual's demand curve
b. no shift in the market demand curve
c. a rightward shift in the market demand curve
d. a rightward movement along every individual's demand curve
e. a rightward movement along the market demand curve
Answer: C
43) Which of the following could cause the market demand curve for hot dogs to shift to the
left?
a. an increase in the price of hot dogs
b. a decrease in the price of hamburgers
c. an increase in the size of the population
d. an increase in the price of hot dog buns or rolls
e. an increase in the price of mustard
Answer: D
44) If the price of orange juice rises, the demand for grapefruit juice will
a. increase because the two goods are substitutes
b. increase because it is a complement
c. decrease because the two goods are substitutes
d. decrease because the two goods are complements
e. not change unless the price of grapefruit juice also changes
Answer: A
45) If the price of ground beef falls, the demand for hamburger buns will
a. increase because the two goods are substitutes
b. decrease because the two goods are complements
c. decrease because the two goods are substitutes
d. increase because the two goods are complements
e. not change unless the price of hamburger buns also changes
Answer: D
46) An increase in buyers' incomes
a. increases the quantity demanded of a good
b. decreases the quantity demanded of a good
c. increases the demand for a normal good
d. increases the demand for an inferior good
e. decreases the quantity demanded of a normal good
Answer: C
47) Which of the following would increase the amount of an inferior good that buyers would
like to purchase?
a. an increase in buyers' incomes
b. an increase in the price of a complement
c. a decrease in the price of a substitute
d. a decrease in buyers' incomes
e. a decrease in its expected future price
Answer: D
48) The economic model of demand
a. explains the consequences of a change in buyers' tastes, but not the causes
b. explains the causes of a change in buyers' tastes, but not the consequences
c. explains both the causes and consequences of a change in buyers' tastes
d. explains neither the causes nor the consequences of a change in buyers' tastes
e. ignores buyers' tastes because they are too unstable to include in the model
Answer: A
49) Which of the following is assumed constant along the demand curve for gasoline?
a. the price of gasoline and the prices of related goods
b. the price of gasoline, buyers' incomes, and tastes
c. all variables affecting demand other than the price of gasoline
d. all variables affecting demand other than the supply of gasoline
e. buyers' incomes and tastes, but not the prices of related goods
Answer: C
50) Which of the following would shift the demand curve for new college textbooks to the
right?
a. an increase in the price of new college textbooks
b. a decrease in the price of new college textbooks
c. an increase in the price of used college textbooks
d. a decrease in the population of college students
e. a decrease in the wealth of college students
Answer: C
51) Which of the following would shift the demand curve for the normal good regular vanilla
ice cream to the left?
a. reports of health risks as a result of eating vanilla ice cream
b. an increase in the price of frozen yogurt
c. a decrease in the price of hot fudge sauce
d. an increase in the price of regular vanilla ice cream
e. an increase in buyers' incomes
Answer: A
52) In Figure 3-5, a movement from point G to point H would represent
a. a change in demand
b. the impact of a decrease in the price of a substitute good
c. higher prices for the inputs used to produce this product
d. a change in demand plus a change in quantity demanded
e. a change in quantity demanded
Answer: A
53) A substitute good is one that
a. appeals to a wide spectrum of consumers
b. is used together with another good
c. is exchanged on the black market
d. is produced by the same firm as another good
e. can be used in place of another good, fulfilling the same basic purpose
Answer: E
54) When there is a change in demand,
a. there is a rightward movement along the demand curve
b. there is a leftward movement along the demand curve
c. there is a shift of the supply curve
d. changes in price lead to different changes in quantity demanded
e. there is a shift of the demand curve
Answer: E
55) When demand increases,
a. consumers are willing and able to purchase more of the good at every price
b. consumers are willing and able to purchase less of the good at every price
c. there is a movement to the right along the demand curve
d. this is referred to as a change in quantity demanded
e. the price will tend to fall
Answer: A
56) Assuming that baseball and football cards are substitutes. What might explain the shift in
demand curve for baseball cards from D2 to D1 in Figure 3-6?
a. an increase in the price of baseball cards
b. a decrease in the price of baseball cards
c. an increase in income (assuming that baseball cards are a normal good)
d. an increase in the population
e. a decrease in the price of football cards
Answer: E
57) A good is said to be a normal good when
a. decreases in income lead to an increase in demand for the good
b. decreases in income lead to a decrease in demand for the good
c. increases in income lead to a decrease in demand for the good
d. increases in price lead to a decrease in the quantity demanded of the good
e. increases in price lead to a decrease in demand for the good
Answer: B
58) "As income rises, the demand for most goods also rises." This statement
a. is inconsistent with the law of demand
b. suggests that many goods are inferior goods
c. shows that the quantity demanded is inversely related to price
d. suggests that most goods are normal goods
e. does not apply to goods traded in competitive markets
Answer: D
59) Betsy graduates from college, where she earned $3,000 a year working part-time, and
takes a job as a third grade teacher, where she now earns $30,000 per year. About the same
time she received her first paycheck, her bicycle was stolen. With her old income she would
have purchased a new bike but with her new income she purchased a new car. Therefore,
a. bicycles are a normal good for Betsy
b. automobiles are an inferior good for Betsy
c. automobiles are a normal good for Betsy
d. Betsy's supply curve for automobiles is upward-sloping
e. bicycles and automobiles are complementary goods for Betsy
Answer: C
60) Income is to wealth as
a. hours are to minutes
b. inches are to feet
c. periods are to sentences
d. demand is to quantity demanded
e. learning is to knowledge
Answer: E
61) Which of the following could lead to a rightward shift of the demand curve for a good?
a. a decrease in the price of a substitute good
b. an increase in the price of a complementary good
c. a decrease in the price of the good, assuming it is a normal good
d. an increase in the price of the good, assuming it is an inferior good
e. expectations that the price of the good will rise in the future
Answer: E
62) Of the following, which is most likely to be a normal good?
a. hamburger
b. automobiles
c. used clothing
d. low-rent housing units
e. macaroni and cheese
Answer: B
63) Which of the following items is most likely to be an inferior good?
a. bus tickets
b. airline tickets
c. housing
d. stereo equipment
e. home computers
Answer: A
64) If Holly's demand for fast food decreases as her income rises, then
a. fast food is a normal good for her
b. the law of demand must apply
c. fast food is a complementary good
d. fast food is an inferior good for her
e. fast food is a substitute good
Answer: D
65) If two goods are often consumed together, they are
a. substitute goods
b. inferior goods
c. complementary goods
d. normal goods
e. unrelated goods
Answer: C
66) Which of the following are the best examples of substitute goods?
a. personal computers and computer software programs
b. milk and cookies
c. Packard Bell and IBM personal computers
d. hot dogs and mustard
e. contact lenses and lens cleaning solutions
Answer: C
67) Of the following, which could cause the demand curve for personal computers to shift to
the left?
a. a decrease in the price of personal computers
b. an increase in the price of computer software
c. a decrease in the price of computer software
d. an increase in wealth (assuming personal computers are a normal good)
e. expectations of an increase in the price of personal computers in the future
Answer: B
68) Complementary goods
a. are usually used in conjunction with each other
b. are usually used in place of one another
c. do not adhere to the law of demand
d. are goods whose demand rises as incomes rise
e. are goods whose demand falls as wealth falls
Answer: A
69) Which of the following sets of goods are most likely to be complementary goods?
a. shoes and pizza
b. automobiles and computers
c. baseballs and baseball gloves
d. football tickets and baseball tickets
e. Dell and Gateway computers
Answer: C
70) All else constant, if butter and margarine are substitute goods, then as the price of butter
rises,
a. the demand for margarine will fall
b. the quantity of butter demanded will fall
c. the demand for butter will fall
d. the demand for butter will rise
e. butter and margarine will become complementary goods, provided that butter is a normal
good
Answer: B
71) Which of the following would not lead to a shift of the demand curve for apples?
a. an increase in the price of oranges
b. a decrease in incomes for consumers
c. a decrease in the supply of apples
d. an increased preference for apples
e. a decrease in the population
Answer: C
Figure 3-7
72) Suppose that the market for DVDs is initially at point A on demand curve D2 in Figure 37. If there is a decrease in the price of DVDs,
a. the demand curve will shift to D2
b. equilibrium will move to point B on demand curve D1
c. equilibrium will move to point C on demand curve D1
d. there will be no change from point A
e. the demand curve will shift to D3
Answer: E
73) Suppose that initially the market for DVDs is at point A on demand curve D2 in Figure 37. If the price of DVD players increases,
a. the demand curve will shift to D3
b. the market will move to point B on demand curve D1
c. the market will move to point C on demand curve D1
d. there will be no change from point A
e. the demand curve will shift to D2
Answer: A
74) If a good is a normal good then
a. other things equal, no consumer will buy it
b. a rise in income or wealth will increase the amount of the good that consumers will
purchase
c. a decline in income will increase the amount of it that consumers will purchase
d. abnormal goods are never substituted for it
e. normal consumers will always demand it
Answer: B
75) If an increase in a person's income causes that person to buy more apples, then apples are
a. neutral with respect to price
b. complements
c. inferior goods
d. normal goods
e. substitute goods
Answer: D
76) An increase in the number of buyers in the market causes
a. a decrease in equilibrium quantity
b. a decrease in equilibrium price
c. an increase in demand
d. a decrease in production
e. an increase in supply
Answer: C
77) If some piece of information causes buyers to expect the price of a good to rise in the
future, but sellers take the same information and believe it will have no impact on price, the
result is
a. a decrease in supply today
b. an increase in supply today
c. a decrease in quantity demanded today
d. an increase in demand today
e. an increase in quantity demanded today
Answer: D
78) If buyers' tastes and preferences shift in favor of a good, the result is
a. an increase in quantity demanded
b. an increase in demand
c. an increase in quantity demanded and an increase in supply
d. a decline in supply
e. an increase in supply
Answer: B
79) A decrease in demand for a normal good could be caused by a(n)
a. increase in price
b. decrease in price
c. decrease in consumer incomes
d. increase in consumer incomes
e. increase in production costs
Answer: C
80) Orange juice and cranberry juice are substitute goods. An increase in the price of orange
juice results in a(n)
a. increase in the demand for orange juice
b. increase in the supply of cranberry juice
c. increase in the quantity demanded of orange juice
d. increase in the demand for cranberry juice
e. decrease in the quantity demanded of cranberry juice
Answer: D
81) Bread and butter are complements. A decrease in the price of bread results in a(n)
a. decrease in the supply of break
b. increase in the demand for butter
c. increase in the demand for bread
d. increase in resource prices
e. violation of the law of demand
Answer: B
82) If two goods are substitutes, then
a. an increase in the demand for one of them will lead to an increase in demand for the other
b. an increase in the demand for one of them will lead to a decrease in demand for the other
c. an increase in the supply of one of them will lead to an increase in supply of the other
d. an increase in the supply of one of them will lead to a decrease in supply for the other
e. they cannot be produced at the same time
Answer: A
83) If two goods are substitutes, then a(n)
a. increase in the demand for one of them will cause its price to fall
b. increase the supply of one of them will cause its price to rise
c. increase in the price of one of them will cause the demand for the other to increase
d. increase in the price of one of them will cause the supply of the other to increase
e. decrease in the price of one of them will cause the demand for the other to increase
Answer: C
84) If the price of leather (an input for leather shoes) increases, the equilibrium price of
leather shoes will increase and the equilibrium quantity of leather shoes will decrease.
a. True
b. False
Answer: A
85) Supply curves usually slope upward because producers face increasing opportunity costs
when increasing output.
a. True
b. False
Answer: A
86) The quantity supplied of a good
a. is the amount that sellers would provide if the firms faced no constraints
b. is the amount that sellers would provide if input prices were zero
c. must match the amount actually purchased in the market
d. is a fixed amount unaffected by the sellers' circumstances
e. is subject to the constraints imposed by technology and input prices
Answer: E
87) Which of the following best defines quantity supplied?
a. the amount of a good sellers would choose to produce, in a given set of circumstances
b. the amount of a good sellers will be able to sell, in a given set of circumstances
c. the various amounts of a good sellers would like to sell over various sets of circumstances
d. the amount of a good sellers would like to sell if they could choose the price for which it
sold
e. the amount of a good that sellers would be able to sell if they could choose the price for
which it sold
Answer: A
88) Of the following, which is true of the relationship between the quantity of a good
supplied and its price?
a. As price increases, the quantity supplied usually decreases.
b. As price increases, the quantity supplied usually increases.
c. As price increases, supply increases.
d. When demand increases, so will supply.
e. They always meet at the point of equilibrium in the market.
Answer: B
89) Supply curves are usually assumed to slope upward because
a. profits fall as prices rise
b. a higher price leads to increases in demand
c. a higher price leads to decreases in demand
d. a higher price attracts resources from other less valued uses
e. firms drop out of the market as prices rise
Answer: D
90) Since producers must be compensated for the rising opportunity cost that accompanies
increases in output,
a. the law of demand applies to most markets
b. supply curves usually slope downward
c. demand curves usually slope downward
d. supply curves usually slope upward
e. technical inefficiency would not exist in the long run
Answer: D
91) What do supply and demand curves have in common?
a. They both usually slope upward.
b. They both show a relationship between quantity and price.
c. They both usually slope downward.
d. They can both shift in response to changes in income or wealth.
e. Neither of them is influenced by the size of the population.
Answer: B
92) The law of supply states that the quantity supplied of a good and
a. the price of a key input are inversely related
b. its price are inversely related
c. the price of a key input are positively related
d. its price are positively related
e. the price of an alternate good are positively related
Answer: D
93) With other things constant, the supply schedule for a particular good indicates the
quantities
a. actually sold with different productive capacities
b. supplied with different productive capacities
c. actually sold at various prices of the good
d. supplied at various prices of the good
e. supplied at various prices of the good and with various productive capacities
Answer: D
94) Which of the following statements is correct?
a. The demand curve typically slopes upward; the supply curve typically slopes downward.
b. The demand curve typically slopes downward; the supply curve typically slopes upward.
c. Both the demand and supply curves typically slope downward.
d. Both the demand and supply curve typically slope upward.
e. The demand curve is typically vertical; the supply curve is typically horizontal.
Answer: B
95) The law of supply says that
a. supply and income are inversely related
b. supply follows demand
c. quantity supplied equals quantity demanded
d. price and quantity supplied are inversely related
e. price and quantity supplied are directly related
Answer: E
96) “Supply curves are upward sloping” is a graphical way of saying
a. supply equals demand
b. price and quantity supplied are inversely related
c. price and quantity demanded are directly related
d. price and quantity supplied are directly related
e. price and quantity demanded are inversely related
Answer: D
97) An increase in the price of a particular good, with all other variables constant, causes
a. a movement along a given supply curve to a lower quantity supplied
b. a shift to a different supply curve with lower quantities supplied
c. a movement along a given supply curve to a higher quantity supplied
d. a shift to a different supply curve with higher quantities supplied
e. no movement along a given supply curve unless demand also changes
Answer: C
98) Which of the following is assumed constant along a given supply curve for pistachio ice
cream?
a. the price of pistachios and the price of pistachio ice cream
b. the price of pistachio ice cream and the price of alternate flavors of ice cream
c. the prices of alternate goods, but not the prices of inputs
d. all variables affecting supply other than the productive capacity of the industry
e. all variables affecting supply other than the price of pistachio ice cream
Answer: E
99) Holding everything else constant, as the price of natural gas rises, selling natural gas
becomes
a. more profitable, and the quantity supplied falls
b. less profitable, and the quantity supplied rises
c. less profitable, and the quantity supplied falls
d. more profitable, and the quantity supplied rises
e. more profitable, but the quantity supplied does not change
Answer: D
100) Procter & Gamble Co. is a major soap producer. All of the following, except one, would
shift its supply curve of liquid soap to left. Which is the exception?
a. an increase in the price of bar soap
b. an increase in the price of a key ingredient of liquid soap
c. environmental regulations force Procter & Gamble to use a more costly technology to
produce liquid soap
d. a decrease in the price of liquid soap
e. an increase in the wage rate for factory workers who produce liquid soap
Answer: D
101) Which of the following would not lead to a change in the supply of chocolate ice cream?
a. a change in productive capacity
b. a change in the price of strawberry ice cream
c. a change in the price of milk
d. a change in the price of chocolate ice cream
e. a change in the expected future price of chocolate ice cream
Answer: D
102) An increase in quantity supplied can be caused by a(n)
a. decrease in quantity demanded
b. rise in resource input prices
c. increase in price
d. decrease in the number of firms in the market
e. tax levied on the producer
Answer: C
103) A decrease in the price of a commodity results in a(n)
a. decrease in supply
b. decrease in quantity demanded
c. increase in demand
d. decrease in quantity supplied
e. increase in supply
Answer: D
104) If a supply curve shifts rightward along a downward sloping demand curve
a. the quantity supplied will increase
b. the quantity supplied will decrease
c. it makes no sense to talk about a change in quantity supplied
d. the quantity demanded will decrease
e. the price will increase
Answer: C
105) If sellers decide to sell more calculators by mass producing them and lowering the price
so consumers will buy more, the supply and demand curves will both shift to the right.
a. True
b. False
Answer: B
106) Which of the following would cause a leftward shift of the supply curve for computers?
a. an increase in the price of printed circuit boards used to build computers
b. a decrease in the price of electricity
c. an increase in incomes of consumers
d. a decrease in the price of computers
e. a decrease in the size of the population
Answer: A
107) If steel manufacturers expected that the price of steel was going to rise in the next six
months, this would
a. have no change in the competitive market for steel
b. lead to a decreased demand for steel
c. lead to a decreased supply of steel
d. increase the future demand for automobiles
e. lead to a decrease in the quantity of steel supplied to the market
Answer: C
108) Studies show that the supply curve for bananas has shifted. All of the following could be
possible explanations for the shift, except one. Which is the exception?
a. The price of land for growing bananas has risen.
b. Weather conditions in banana-growing countries have worsened.
c. The price of apples has fallen.
d. The price of bananas has risen.
e. The salaries paid to banana growers has risen.
Answer: D
109) Which of the following would lead to a change in both the quantity of a good buyers
wish to purchase and in the quantity sellers wish to sell?
a. a change in the price of a substitute good
b. a change in buyers' incomes
c. a change in the price of a key input
d. a technological improvement
e. a change in the expected future price of the good
Answer: E
110) If the price of new automobiles rises in the U.S. market while prices remain unchanged
in foreign markets,
a. foreign firms will want to export fewer automobiles to the United States
b. foreign firms will want to export more automobiles to the United States
c. foreign firms will not change their exports to the United States since it is a different market
d. U.S. firms will want to export more automobiles to foreign markets
e. U.S. firms will not change their exports to foreign markets unless foreign prices also
change
Answer: B
111) Which of the following would shift the entire supply curve for electricity to the left?
a. a decrease in the price per unit of electricity
b. a decrease in the price of coal used to generate electricity
c. new EPA regulations that force the closing of the worst polluting coal-burning power
plants
d. a decrease in the price of alternative forms of energy
e. a technological improvement that reduces the cost of producing electricity
Answer: C
112) If the same dairy can produce either whole milk or skim milk, an increase in the
profitability of whole milk results in a(n)
a. decrease in the quantity supplied of whole milk
b. increase in the supply of whole milk
c. decrease in the supply of skim milk
d. increase in the supply of skim milk
e. decrease in the quantity supplied of skim milk
Answer: C
113) If the resource prices faced by a firm rise, the result is a(n)
a. decrease in supply
b. increase in supply
c. decrease in demand
d. increase in quantity demanded
e. decrease in quantity supplied
Answer: A
114) An increase in supply could be caused by a(n)
a. increase in price
b. government-imposed price ceiling
c. decrease in resource prices
d. decrease in consumer incomes
e. unfavorable shift in tastes and preferences
Answer: C
115) If an improvement in production technology causes a decrease in production costs, the
result is a(n)
a. decrease in quantity supplied
b. increase in demand
c. increase in supply
d. improvement is working conditions
e. increase in quantity supplied
Answer: C
116) When a market is in equilibrium,
a. quantity demanded equals quantity supplied
b. quantity demanded exceeds quantity supplied
c. the demand curve is identical to the supply curve
d. the economy must be at a point along the production possibilities frontier
e. the law of demand is equivalent to the law of supply
Answer: A
117) In Figure 3-8, using the supply and demand curves denoted S1 and D1, respectively, the
equilibrium price and quantity are
a. $100 and 50,000
b. $100 and 100,000
c. $120 and 50,000
d. $120 and 75,000
e. $120 and 100,000
Answer: A
118) In Figure 3-8, using the supply and demand curves denoted S1 and D2, respectively, the
equilibrium price and quantity are
a. $100 and 50,000
b. $100 and 100,000
c. $150 and 50,000
d. $150 and 75,000
e. $150 and 100,000
Answer: D
119) In Figure 3-8, using the supply and demand curves denoted S1 and D1, respectively, if
demand were to increase to D2 and the equilibrium price stayed the same there would be a
a. surplus
b. new equilibrium at 50,000
c. shortage
d. new equilibrium at 100,000
e. new equilibrium at 75,000
Answer: C
120) In a competitive market, when price is below the equilibrium level, the price will be
driven upward due to
a. excess supply
b. government intervention
c. competition among suppliers
d. excess demand
e. technical inefficiency
Answer: D
121) The equilibrium price and quantity of a good, once attained, will
a. change only if either supply or demand changes
b. change only if both supply and demand change
c. change only if supply changes
d. change only if demand changes
e. never change
Answer: A
122) Which of the following statements about the market represented by Figure 3-9 is
correct?
a. At a price of $50.00, there is an excess supply of 11 million units.
b. At a price of $50.00, there is an excess demand of 11 million units.
c. At a price of $50.00, there is an excess supply of 15 million units.
d. At a price of $50.00, there is an excess demand of 15 million units.
e. At a price of $50.00, there is an excess demand of 25 million units.
Answer: C
123) Consider the market represented by Figure 3-9. If the price of the good is currently
$50.00, the price will
a. fall, causing the quantity demanded to fall
b. fall, causing the quantity supplied to fall
c. rise, causing the demand curve to shift to the right
d. rise, causing the supply curve to shift to the left
e. fall, causing the supply curve to shift to the right
Answer: B
124) In a competitive market, excess demand for a good exists whenever
a. the current price is below the equilibrium price
b. resources are scarce
c. the quantity supplied at the current price exceeds the quantity demanded
d. sellers are subject to the constraints imposed by input prices and technology
e. the current price is above the equilibrium price
Answer: A
125) An excess supply of rice in a competitive market would indicate that
a. the problem of scarcity has been solved in that market
b. buyers want to purchase more rice at the current price than the sellers want to sell
c. the market will not be able to approach equilibrium
d. the entire supply curve must shift to the left in order to attain equilibrium
e. the current price exceeds the equilibrium price
Answer: E
126) The supply and demand model
a. tries to include as many realistic details as possible in order to provide insights into realworld competitive markets
b. uses simplifying assumptions while still providing insights into real-world competitive
markets
c. uses simplifying assumptions that severely limit its usefulness in practice
d. is too complicated to be useful in practice
e. is unable to explain price movements in most real-world competitive markets
Answer: B
127) Market equilibrium occurs at that price for which
a. quantity supplied equals quantity demanded
b. cost equals the wages to labor
c. the surplus quantity drives increased demand
d. quantity supplied exceeds quantity demanded
e. quantity supplied is less than quantity demanded
Answer: A
128) At the market equilibrium
a. quantity exceeds price
b. excess demand equals excess supply (and both are zero)
c. price and quantity are equal
d. each seller produces at full capacity
e. everyone who is represented along the demand curve buys the good
Answer: B
129) Excess demand occurs when
a. the actual price is greater than the equilibrium price
b. equilibrium is undefined
c. consumer wants are unlimited
d. the actual price is less than the equilibrium price
e. the market is in equilibrium
Answer: D
130) In supply and demand schedules in Figure 3-10, the equilibrium price of a pair of socks
is
a. $4
b. $8
c. $6
d. $2
e. $10
Answer: B
131) In the supply and demand schedules in Figure 3-10, the equilibrium quantity of socks is
a. 15 pairs
b. 10 pairs
c. 13 pairs
d. 6 pairs
e. 1 pair
Answer: D
132) In the supply and demand for socks schedules in Figure 3-10, a price of $4 per pair
results in
a. equilibrium
b. excess supply of 10 pairs
c. excess demand of 5 pairs
d. excess demand of 13 pairs
e. excess demand of 10 pairs
Answer: E
133) In the supply and demand for socks schedules in Figure 3-10, a price of $10 per pair
results in
a. equilibrium
b. excess demand of 6 pairs
c. excess supply of 14 pairs
d. excess supply of 6 pairs
e. excess demand of 14 pairs
Answer: D
134) If the price of film increases, the demand for film processing would decrease; moreover,
the equilibrium price and quantity of film processing should also decrease.
a. True
b. False
Answer: A
135) If prices are free to rise and fall, and supply and demand cross at a positive price,
quantity combination, neither excess demand nor excess supply can persist in a market.
a. True
b. False
Answer: A
136) If both the demand and supply curves for computers shift to the right, the price of
computers may rise, fall, or remain unchanged.
a. True
b. False
Answer: A
137) Which of the following could lead to an increase in the equilibrium quantity of a good?
a. a decrease in supply and a decrease in demand
b. an increase in the price of an input
c. an increase in demand and an increase in supply
d. a decrease in demand regardless of supply
e. a decrease in technology
Answer: C
138) If the demand for baseball cards rises and the supply curve does not shift, then the price
a. will rise and quantity will fall
b. and quantity will rise
c. will fall and quantity will rise
d. and quantity will fall
e. will rise, but quantity may rise or fall
Answer: B
139) If the supply of coffee falls due to bad weather conditions in coffee-exporting countries,
then the
a. price and quantity will rise
b. price and quantity will fall
c. price will fall and quantity will rise
d. price will rise and quantity will fall
e. quantity will fall, but price may rise or fall
Answer: D
140) If the market for a good is initially in equilibrium and there is a rightward shift of the
demand curve, then
a. the equilibrium price will fall
b. there will be a rightward movement along the supply curve
c. the supply curve will also shift to the right
d. the supply curve will shift to the left
e. the demand curve will shift back as consumers react to the higher equilibrium price
Answer: B
141) Suppose that today the market for lima beans is in equilibrium. Tomorrow both the
supply and demand curves for lima beans will shift to the left. As a result, the equilibrium
price __________ and the equilibrium quantity will __________.
a. will fall; fall
b. will fall; rise
c. will rise; fall
d. cannot be determined; fall
e. cannot be determined; rise
Answer: D
142) If there is an increase in the demand for automobiles, and at the same time auto workers
receive a substantial raise, what will happen to equilibrium price and quantity in the
automobile market?
a. Price and quantity will rise.
b. Price and quantity will fall.
c. Price will rise; quantity will fall.
d. Quantity will rise; price change cannot be determined.
e. Price will rise; quantity change cannot be determined.
Answer: E
143) In Figure 3-11, suppose that initially the market is in equilibrium as defined by the
demand and supply curves D1 and S1. Which price/quantity combination could result from a
decrease in the wages paid to workers?
a. $100 and 50,000
b. $120 and 50,000
c. $75 and 75,000
d. $120 and 75,000
e. $120 and 100,000
Answer: C
144) In Figure 3-11, suppose that initially the market is in equilibrium as defined by the
demand and supply curves D1 and S1. Which price/quantity combination could result from
an increase in consumers' incomes coupled with an improvement in technology?
a. $100 and 75,000
b. $100 and 100,000
c. $100 and 50,000
d. $120 and 75,000
e. $120 and 100,000
Answer: B
145) Assuming the most typical shapes of the demand and supply curves, which of the
following could lead to an increase in the current equilibrium price for personal computers?
a. a decrease is the price of computer chips
b. a decrease in buyers' incomes, assuming that computers are a normal good
c. a technological improvement that reduces manufacturing costs
d. expectations of a higher future price
e. an increase in the price of computer software
Answer: D
146) Assume the typical shapes of the demand and supply curves. If both demand and supply
increase in a competitive market, the equilibrium price will
a. always rise
b. always fall
c. rise if demand increases more than supply increases
d. fall if demand increases more than supply increases
e. remain unchanged
Answer: C
147) Consider the market for ground beef represented by Figure 3-12, which is initially in
equilibrium at point J. Assume that ground beef is an inferior good. Which of the following
could explain a movement to a new equilibrium at point M?
a. a change in tastes away from hamburgers combined with an increased price for cattle feed
b. an increase in buyers' incomes combined with a cost-saving technological improvement
c. a decrease in the price of hot dogs combined with an increased price for labor
d. a decrease in buyers' incomes combined with a decrease in the number of acres owned by
cattle ranches
e. a drop in the population combined with a increased price for an alternate form of packaged
beef
Answer: D
148) Consider the market for ground beef represented by Figure 3-12, which is initially in
equilibrium at point J. Which of the following is correct if equilibrium shifts to point K?
a. There is an excess supply of 50,000 pounds at the price of $1.00.
b. The demand decreased due to a lower price substitute.
c. There is an excess demand of 25,000 pounds at the price of $1.00.
d. The shift in supply will cause a temporary shortage, which will disappear when the price
rises to $1.50.
e. Both demand and the quantity demanded have dropped.
Answer: D
149) Assume the most typical shapes for the demand and supply in a competitive market.
Suppose that demand falls and supply increases. Which of the following statements is
correct?
a. The equilibrium price will fall; the equilibrium quantity may rise or fall.
b. The equilibrium price will rise; the equilibrium quantity may rise or fall.
c. The equilibrium quantity will fall; the equilibrium price may rise or fall.
d. The equilibrium quantity will rise; the equilibrium price may rise or fall.
e. The equilibrium price will fall; the equilibrium quantity will not change.
Answer: A
150) Consider the competitive market for oil. Which of the following would result from the
discovery of new oil fields that can be profitably accessed at the current price?
a. both b and d
b. an increase in the demand for oil
c. an excess demand for oil as oil companies shift resources to developing the new fields
d. an excess supply of oil if the price of oil fails to drop sufficiently
e. an increase in the expected future price of oil
Answer: D
151) Economists view shifts of supply and demand as
a. unusual events that call for government intervention
b. unusual events resulting from the failure of the price to fall
c. normal and frequent events
d. normal and frequents events that do not affect equilibrium prices
e. normal and frequent events that result from government intervention
Answer: C
152) Oil and Natural Gas can each be used as a source of energy and are, for many purposes
interchangeable. Which of the following best explains the increase in the price of natural gas
that accompanied the increase in the price of oil during the 1990-1991 Persian Gulf War?
a. Increased oil prices raised demand for natural gas, a substitute good.
b. Increased oil prices raised the quantity demanded of natural gas by movement along the
natural gas demand curve.
c. Increased oil prices reduced supply of natural gas, a substitute good.
d. Increased oil prices reduced supply of natural gas, an alternate good.
e. Increased oil prices raised supply of natural gas, a substitute good.
Answer: A
153) If the supply curve does not shift, an increase in demand results in a(n)
a. increase in equilibrium price and a decrease in equilibrium quantity
b. decrease in equilibrium price and a decrease in equilibrium quantity
c. increase in equilibrium price and an increase in equilibrium quantity
d. decrease in equilibrium price and an increase in equilibrium quantity
e. increase in supply
Answer: C
154) An increase in both equilibrium price and quantity could be produced by a(n)
a. decrease in supply, with demand constant
b. increase in supply, with demand constant
c. decrease in demand, with supply constant
d. increase in demand, with supply constant
e. rise in resource prices
Answer: D
155) A decrease in demand, with supply constant, results in a(n)
a. increase in equilibrium price and a decrease in equilibrium quantity
b. decrease in equilibrium price and a decrease in equilibrium quantity
c. increase in equilibrium price and an increase in equilibrium quantity
d. increase in equilibrium price and an ambiguous effect on equilibrium quantity
e. decrease in supply
Answer: B
156) A decrease in both equilibrium price and quantity could be produced by a(n)
a. decrease in supply, with demand constant
b. increase in supply, with demand constant
c. decrease in demand, with supply constant
d. increase in demand, with supply constant
e. improvement in technology
Answer: C
157) An increase in supply results in a(n)
a. increase in demand
b. decrease in equilibrium quantity and an increase in equilibrium price
c. decrease in equilibrium quantity and a decrease in equilibrium price
d. decrease in equilibrium price and an increase in equilibrium quantity
e. unfavorable shift in tastes and preferences
Answer: D
158) A decrease in equilibrium price and an increase in equilibrium quantity could be brought
about by a(n)
a. increase in demand
b. decrease in demand
c. increase in resource prices
d. improvement in production technology
e. favorable shift in tastes and preferences
Answer: D
159) A decrease in supply results in a(n)
a. decrease in demand
b. increase in equilibrium quantity and a decrease in equilibrium price
c. decrease in equilibrium quantity and a decrease in equilibrium price
d. increase in demand
e. increase in equilibrium price and a decrease in equilibrium quantity
Answer: E
160) An increase in equilibrium price and a decrease in equilibrium quantity could be caused
by a(n)
a. increase in resource prices
b. increase in demand
c. increase in supply
d. favorable shift in tastes and preferences
e. improvement in production technology
Answer: A
161) An increase in demand coupled with an increase in supply results in a(n)
a. increase in price and an ambiguous effect on equilibrium quantity
b. increase in equilibrium quantity and a decrease in equilibrium price
c. decrease in equilibrium quantity and an ambiguous effect on equilibrium price
d. increase in economic rent
e. ambiguous effect on equilibrium price and an increase in equilibrium quantity
Answer: E
162) An increase in demand coupled with a decrease in supply results in a(n)
a. increase in equilibrium price and an ambiguous effect on equilibrium quantity
b. increase in equilibrium quantity and a decrease in equilibrium price
c. decrease in equilibrium quantity and an ambiguous effect on equilibrium price
d. surplus
e. decrease in the equilibrium price and quantity
Answer: A
163) A decrease in demand coupled with a decrease in supply results in a(n)
a. increase in equilibrium price and a decrease in equilibrium quantity
b. decrease in equilibrium price and a decrease in equilibrium quantity
c. increase in equilibrium price and a increase in equilibrium quantity
d. ambiguous effect of equilibrium price and a decrease in equilibrium quantity
e. ambiguous effect on equilibrium price and a increase in equilibrium quantity
Answer: D
164) A decrease in demand and an increase in supply results in a(n)
a. decrease in equilibrium price and an ambiguous effect on equilibrium quantity
b. increase in equilibrium price and an ambiguous effect on equilibrium quantity
c. ambiguous effect on equilibrium price and an increase in equilibrium quantity
d. ambiguous effect on equilibrium price and an decrease in equilibrium quantity
e. increase in equilibrium price and a decrease in equilibrium quantity
Answer: A
165) An increase in demand causes
a. a surplus
b. excess supply
c. an increase in supply
d. an increase in equilibrium price and equilibrium quantity
e. an improvement in technology
Answer: D
166) Defining a market involves deciding how to view
a. equilibrium supply and demand
b. normative economic analysis
c. the thing being traded, the decision makers, and the trading environment
d. suppliers, demanders, shortages, and surpluses
e. excess demand and excess supply
Answer: C
167) Characterizing a market involves
a. counting the number of demanders and measuring their quantity demanded
b. counting the number of suppliers and measuring their costs
c. equating the number of suppliers and the number of demanders
d. deciding which market best suits the problem being analyzed
e. deciding how to increase the degree of competition
Answer: D
168) One of the three Key Steps of economic analysis is
a. describing the conditions necessary for equilibrium and a method for determining that
equilibrium
b. determining who are the suppliers and a method for counting the number of suppliers
c. determining who are the demanders and a method for counting the number of demanders
d. pairing up each demander with a particular supplier
e. pairing up each suppliers with a particular demander
Answer: A
169) The three-step procedure for economic analysis
a. works better in macroeconomics than in microeconomics
b. begins with characterizing the market
c. helps governments decide how to change the market equilibrium
d. focuses on goals and constraints
e. is used only in microeconomics
Answer: B
170) Evan left a job in which he was earning $75,000 a year for one he liked better but pays
only $50,000 a year. Around the same time as the job switch, Evan needed to buy a new car.
Had he kept his old job he would have bought a new car but instead he was forced to buy a
used car. Therefore
a. used cars are normal goods for Evan
b. new cars are inferior goods for Evan
c. the supply curve for new cars shifted to the left
d. new and used cars are complements
e. used cars are inferior goods for Evan
Answer: E
171) Given the demand curve for laptop computers, if the government began to encourage
households to own a computer by providing a subsidy to each family that buys one,
a. both the equilibrium price and quantity of laptops will increase
b. both the equilibrium price and quantity of laptops will decrease
c. the equilibrium price of laptops will increase but the equilibrium quantity will decrease
d. the equilibrium price of laptops will decrease but the equilibrium quantity will increase
e. subsidies to households have no effect on either the supply or demand
Answer: A
172) If Greg uses a special glue to make model planes that he sells and the price of his model
planes increases, then one would expect that the equilibrium price of the special glue would
_______ and the equilibrium quantity would _________.
a. increase; decrease
b. decrease; increase
c. increase; increase
d. decrease; decrease
e. increase; indeterminant
Answer: C
173) Which of the following is the best definition of a spot market?
a. A market in which a good is bought or sold with the idea that the price will increase in the
future
b. A market in which a good is bought or sold with the hope that the price will decrease in the
future
c. A market in which prices do not fluctuate up or down very easily
d. A market in which a good is bought or sold for immediate delivery or consumption
e. A market in which the good being traded is used to remove spots on clothes
Answer: D
174) A speculator is someone who
a. buys a good for immediate consumption
b. buys a good for a low price, hoping to sell it in the future for a higher price
c. buys a good for one price and hopes to sell it for a lower price in the future
d. sells a good for a lower price than its original purchase price
e. sells all of his or her merchandise and then exits the market
Answer: B
175) Which of the following would be the best example of a spot market?
a. the market for fine art
b. the market for bananas
c. the market for stocks and bonds
d. the market for baseball cards
Answer: B
176) All of the following would be examples of a spot markets except one. Which would not
be a spot market?
a. The market for milk
b. The market for beauty salon services
c. The market for higher education
d. The market for basketball cards
e. The market for used cars
Answer: D
177) The most likely reason that oil prices spiked during 2007-2008 was because
a. suppliers drastically cut back on production
b. speculators heavily invested in the futures market
c. there was an increase in demand due to an increase in usage
d. there was an increase in demand as buyers began to hoard oil for future use
e. suppliers increased their production to match the increase in demand
Answer: C
178) The rapid rise in oil prices during 2007-2008 can be explained by noting the fact that
a. the supply of oil increased more rapidly than the demand for oil increased
b. the demand for oil increased more rapidly than the supply for oil increased
c. the demand for oil decreased at the same time that the supply of oil increased
d. the quantity demanded of oil increased more rapidly than the quantity supplied of oil
increased
e. the quantity supplied of oil increased more rapidly than the quantity demanded of oil
increased
Answer: B
179) Which of the following is the best example of a perfectly competitive market?
a. automobiles
b. postal service
c. disk operating system software
d. milk
e. breakfast cereals
Answer: D
180) Which of the following markets is more likely to be local in nature?
a. automobiles
b. television sets
c. jewelry
d. clothing
e. potato chips
Answer: E
181) An increase in the price of gasoline will cause a(n)
a. an increase in the quantity of gasoline demanded
b. decrease in the quantity of gasoline demanded
c. no change in the quantity of gasoline demanded
d. increase in the demand for gasoline
e. decrease in the demand for gasoline
Answer: B
182) Which of the following would most likely cause an increase in the demand for oatmeal?
a. An increase in the price of eggs
b. An increase in the price of orange juice
c. A fall in the price of corn flakes
d. A fall in the price of oatmeal
e. An increase in the price of cigarettes
Answer: C
183) An increase in the price of gasoline will lead to a(n)
a. increase in the supply of gasoline
b. decrease in the supply of gasoline
c. no change in the supply of gasoline
d. decrease in the quantity of gasoline supplied
e. increase in the quantity of gasoline supplied
Answer: D
184) When the price of gasoline is such that the quantity of gasoline demanded just equals the
quantity of gasoline supplied, we say that the market is
a. in equilibrium
b. in distress
c. in disequilibrium
d. in need of change
e. in dire straits
Answer: A
Test Bank for Microeconomics: Principles and Applications
Robert E. Hall, Marc Lieberman
9781111822569, 9781478405238, 9781478498056
