# ECON 2105 Exam 2 Chapters – 3, 4 and 8 (FALL 2014)

1. What is the difference between an “increase in demand” and an “increase in quantity demanded”?A) There is no difference between the two terms; they both refer to a shift of the demand curve.B) An “increase in demand” is represented by a rightward shift of the demand curve while an “increase in quantity demanded” is represented by a movement along a given demand curve.C) There is no difference between the two terms; they both refer to a movement downward along a given demand curve.D) An “increase in demand” is represented by a movement along a given demand curve, while an “increase in quantity demanded” is represented by a rightward shift of the demand curve.2. If, in response to an increase in the price of chocolate, the quantity demanded of chocolate decreases economists would describe this asA) a decrease in demand.B) a decrease in quantity demanded.C) a change in consumer income.D) a decrease in consumers’ taste for chocolate.3. By drawing a demand curve with ________ on the vertical axis and ________ on the horizontal axis, economists assume that the most important determinant of the demand for a good is the ________ of the good.A) quantity; price; quantityB) price; quantity; quantityC) price; quantity; priceD) quantity; price; price4. If a demand curve shifts to the right, thenA) demand has increased.B) quantity demanded has increased.C) demand has decreased.D) quantity demanded has decreased.5. Holding everything else constant, an increase in the price of MP3 players will result inA) a decrease in the quantity of MP3 players supplied.B) a decrease in the demand for MP3 players.C) an increase in the supply of MP3 players.D) a decrease in the quantity of MP3 players demanded.6. A change in all of the following variables will change the market demand for a product exceptA) the price of the product.B) population and demographics.C) income.D) tastes.7. Which of the following will shift the demand curve for a good?A) a change in the technology used to produce the goodB) an increase in the price of the goodC) a decrease in the price of a complementary goodD) a decrease in the price of the good8. A movement along the demand curve for toothpaste would be caused byA) a change in the price of toothbrushes.B) a change in consumer income.C) a change in the price of toothpaste.D) a change in population.9. The ________ effect refers to the change in quantity demanded for a good that results from the effect of a change in the good’s price on consumer’s purchasing power.A) ceteris paribusB) populationC) substitutionD) income10. If an increase in income leads to in an increase in the demand for peanut butter, then peanut butter isA) a neutral good.B) a normal good.C) a necessity.D) a complement.11. If an increase in income leads to a decrease in the demand for popcorn, then popcorn isA) an inferior good.B) a neutral good.C) a necessity.D) a normal good.Figure 3-112. Refer to Figure 3-1. An increase in population would be represented by a movement fromA) A to B.B) B to A.C) D1 to D2.D) D2 to D1.13. Refer to Figure 3-1. A decrease in taste or preference would be represented by a movement fromA) A to B.B) B to A.C) D1 to D2.D) D2 to D1.14. Refer to Figure 3-1. If the product represented is an inferior good, an increase in income would be represented by a movement fromA) A to B.B) B to A.C) D1 to D2.D) D2 to D1.15. Refer to Figure 3-1. A decrease in the price of the product would be represented by a movement fromA) A to B.B) B to A.C) D1 to D2.D) D2 to D1.16. Elvira decreased her consumption of bananas when the price of peanut butter increased. For Elvira, peanut butter and bananas areA) substitutes in consumption.B) both inferior goods.C) complements in consumption.D) both luxury goods.17. Suppose that when the price of raspberries increases, Lonnie increases his purchases of papayas. To Lonnie,A) raspberries and papayas are complements.B) raspberries and papayas are inferior goods.C) raspberries and papayas are normal goods.D) raspberries and papayas are substitutes.18. In January, buyers of gold expect that the price of gold will rise in February. What happens in the gold market in January, holding all else constant?A) The supply curve shifts to the right.B) The demand curve shifts to the left.C) The demand curve shifts to the right.D) The quantity demanded increases.19. Chips and salsa are complements. If the price of salsa decreases, the demand for chips will increase.A) TRUE B) FALSE20. A normal good is a good for which the demanded increases as income decreases, holding everything else constant.A) TRUE B) FALSE21. If in the market for peaches, the supply curve has shifted to the left,A) the supply of peaches has increased.B) the supply of peaches has decreased.C) the quantity of peaches supplied has increased.D) the quantity of peaches supplied has decreased.22. What is the difference between an “increase in supply” and an “increase in quantity supplied”?A) There is no difference between the two terms; they both refer to a shift of the supply curve.B) There is no difference between the two terms; they both refer to a movement along a given supply curve.C) An “increase in supply” means the supply curve has shifted to the right while an “increase in quantity supplied” means at any given price supply has increased.D) An “increase in supply” means the supply curve has shifted to the right while an “increase in quantity supplied” refers to a movement along a given supply curve in response to an increase in price.Figure 3-223. Refer to Figure 3-2. An increase in price of inputs would be represented by a movement fromA) A to B.B) B to A.C) S1 to S2.D) S2 to S1.24. Refer to Figure 3-2. An increase in the number of firms in the market would be represented by a movement fromA) A to B.B) B to A.C) S1 to S2.D) S2 to S1.25. Refer to Figure 3-2. An increase in the price of substitutes in production would be represented by a movement fromA) A to B.B) B to A.C) S1 to S2.D) S2 to S1.26. Refer to Figure 3-2. A decrease in the price of the product would be represented by a movement fromA) A to B.B) B to A.C) S1 to S2.D) S2 to S1.27. ) If a firm expects that the price of its product will be higher in the future than it is todayA) the firm will go out of business.B) the firm has an incentive to increase supply now and decrease supply in the future.C) the firm has an incentive to decrease quantity supplied now and increase quantity supplied in the future.D) the firm has an incentive to decrease supply now and increase supply in the future.28. A decrease in the price of GPS systems will result inA) a smaller quantity of GPS systems supplied.B) a larger quantity of GPS systems supplied.C) a decrease in the demand for GPS systems.D) an increase in the supply of GPS systems.29. A change in supply is represented by a shift of the supply curve.A) TRUE B) FALSE30. An increase in the quantity of a product supplied is caused by an increase in the price of the product.A) TRUE B) FALSE31. Which of the following is the correct way to describe equilibrium in a market?A) At equilibrium, demand equals supply.B) At equilibrium, quantity demanded equals quantity supplied.C) At equilibrium, market forces no longer apply.D) At equilibrium, scarcity is eliminated.Figure 3-532. Refer to Figure 3-5. At a price of \$15,A) there would be a surplus of 4 units.B) there would be a shortage of 2 units.C) there would be a surplus of 6 units.D) there would be a shortage of 4 units.33. Refer to Figure 3-5. At a price of \$5, the quantity soldA) is 2 units.B) is 4 units.C) is 6 units.D) cannot be determined.34. Refer to Figure 3-5. In a free market such as that depicted above, a surplus is eliminated byA) a price increase, increasing the supply and decreasing the demand.B) a price decrease, decreasing the supply and increasing the demand.C) a price decrease, decreasing the quantity supplied and increasing the quantity demanded.D) a price increase, increasing the quantity supplied and decreasing the quantity demanded.35. A successful marketing campaign will increase the demand for Red Bull. This will ________ the equilibrium price and ________ the equilibrium quantity o