Economics - Canadian Edition, 16e (Ragan)

Chapter 3 Demand, Supply, and Price

3.1 Demand

1) Which of the following best defines quantity demanded of a good?

A) The amount an individual purchases at the good's current price.
B) The amount an individual purchases at his or her current income.
C) The amount, per time period, that is desired at the most recent price.
D) The amount, per time period, an individual desires to purchase at any given price.
E) The various amounts that all individuals desire at all relevant prices.
Answer: D
Diff: 2 Type: MC
Topic: 3.1. demand
Skill: Recall
Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good.
Category: Qualitative

2) The time period to which quantity demanded refers when constructing demand curves is
A) a moment in time.
B) a long period of time.
C) one year.
D) any specified time period.
E) a period shorter than one year.
Answer: D
Diff: 2 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good.
Category: Qualitative

3) The term "quantity demanded" refers to the

A) total amount of a good that is actually purchased during a given period of time.
B) entire relationship between desired purchases and possible prices.
C) total amount of a good that purchasers wish to purchase at a given price during a given period
of time.
D) product of advertising, and is unrelated to price.
E) total amount of a good that people wish to buy, regardless of price.
Answer: C
Diff: 2 Type: MC
Topic: 3.1. demand
Skill: Recall
Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good.
Category: Qualitative

1
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4) Four of the five statements below contain a stock and a flow. Which statement describes
ONLY flow variables?
A) Chris earns $1500 per month and has $4000 in his savings account at the bank.
B) Nancy spends $400 per month on her credit card and has a balance owing of $2567.
C) The Transit Authority of Mytown collects $22 000 in fares per day and has an operating
budget of $2 million per year.
D) Country X spends an average of $1 million per year for flood relief and has an emergency
services fund of $20 million.
E) The Canadian Federal government has a debt of approximately $750 billion and an annual
deficit of over $25 billion dollars.
Answer: C
Diff: 2 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good.
Category: Qualitative

5) Four of the five statements below contain a stock and a flow. Which statement describes
ONLY stock variables?
A) Chris earns $1500 per month and has $4000 in his savings account at the bank.
B) Nancy has a balance owing on her credit card of $2567 and a debt on her line of credit of
$14,050.
C) The Transit Authority of Mytown collects $22 000 in fares per day and has an operating
budget of $2 million per year.
D) Country X spends an average of $1 million per year for flood relief and has an emergency
services fund of $20 million.
E) The Canadian Federal government has a debt of approximately $750 billion and an annual
deficit of over $25 billion dollars.
Answer: B
Diff: 2 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good.
Category: Qualitative

6) A variable that is a "stock"

A) is measured per unit of time.
B) has meaning only at a point in time.
C) has only to do with products where inventory is kept.
D) has the same units as a flow variable.
E) is used only in accounting.
Answer: B
Diff: 1 Type: MC
Topic: 3.1. demand
Skill: Recall
Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good.
Category: Qualitative
2
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7) Ceteris paribus means
A) other things being equal.
B) and so forth.
C) knowledge gained before the study of evidence is made.
D) among other things.
E) in a historical context.
Answer: A
Diff: 1 Type: MC
Topic: 3.1. demand
Skill: Recall
Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good.
Category: Qualitative

8) The "law of demand" hypothesizes that, other things being equal,

A) the lower the price, the greater the demand.
B) price and demand vary inversely.
C) the higher the price, the lower the quantity demanded.
D) the higher the income, the higher the quantity demanded.
E) price and quantity demanded are positively related.
Answer: C
Diff: 2 Type: MC
Topic: 3.1. demand
Skill: Recall
Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good.
Category: Qualitative

9) In a market for a good or service, the quantities demanded and supplied are
A) both stock variables.
B) both flow variables.
C) a flow variable and a stock variable, respectively.
D) a stock variable and a flow variable, respectively.
E) neither stock nor flow variables.
Answer: B
Diff: 2 Type: MC
Topic: 3.1. demand
Skill: Recall
Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good.
Category: Qualitative

3
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10) A demand curve is a representation of the relationship, ceteris paribus, between quantity
demanded of a product and
A) supply.
B) wealth.
C) its price.
D) income.
E) preferences.
Answer: C
Diff: 1 Type: MC
Topic: 3.1. demand
Skill: Recall
Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good.
Category: Qualitative

11) The "law of demand" describes

A) an inverse relationship between the price of a good and the quantity of the good demanded
per unit of time, other things being equal.
B) a positive relationship between the price of a good and the quantity of the good demanded per
unit of time, ceteris paribus.
C) an inverse relationship between the price of a good and the demand for the good, per unit of
time.
D) a direct relationship between the price of a good and the demand for the good.
E) any relationship between quantity demanded and demand for a good.
Answer: A
Diff: 1 Type: MC
Topic: 3.1. demand
Skill: Recall
Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good.
Category: Qualitative

12) Which statement best describes the "law of demand"? Other things being equal, the quantity
of tennis rackets demanded will be greater if the
A) incomes of tennis players are higher.
B) price of tennis rackets is lower.
C) price of badminton rackets is higher.
D) number of tennis players is higher.
E) demand for tennis rackets rises.
Answer: B
Diff: 2 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good.
Category: Qualitative

4
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13) Which statement best describes a "demand schedule"?
A) a functional statement of the demand relationship
B) a graph showing the inverse relationship between quantity demanded and price
C) a numerical table showing the quantities demanded at various prices
D) a timetable showing the quantity demanded at different time periods
E) an abstract concept underlying the graph of a demand curve
Answer: C
Diff: 1 Type: MC
Topic: 3.1. demand
Skill: Recall
Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good.
Category: Qualitative

14) An important assumption underlying a demand schedule is that

A) quantity demanded and demand mean the same thing.
B) everything else except the product's price is being held constant.
C) the numbers are not important; the general relationship between the variables is.
D) household tastes rarely change.
E) income has little significance to household demand.
Answer: B
Diff: 2 Type: MC
Topic: 3.1. demand
Skill: Recall
Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good.
Category: Qualitative

15) Which statement best describes a demand curve?

A) a functional statement of the demand relationship
B) a numerical table showing the inverse relationship between quantity demanded and price,
other things being equal
C) a graph showing the relationship between quantity demanded and the price of a commodity,
other things being equal
D) a timetable showing the quantity demanded at different time periods
E) an abstract concept underlying the graph of a demand curve
Answer: C
Diff: 1 Type: MC
Topic: 3.1. demand
Skill: Recall
Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good.
Category: Qualitative

5
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16) A demand curve represents graphically
A) a functional statement of the income-quantity relationship.
B) the timeless relationship between quantity demanded and price.
C) the quantity demanded per unit of time at various prices.
D) the available quantities at all possible prices for the product.
E) quantity demanded.
Answer: C
Diff: 1 Type: MC
Topic: 3.1. demand
Skill: Recall
Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good.
Category: Qualitative

17) To say that the demand curve for movies is negatively sloped means that
A) less quantity will be demanded at lower prices.
B) less quantity will be demanded as preferences change.
C) less quantity will be demanded at higher prices.
D) more quantity will be demanded as consumers' income increases.
E) less quantity will be demanded at the same price.
Answer: C
Diff: 1 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good.
Category: Qualitative

18) A change in demand is said to take place when there is a

A) movement along the demand curve.
B) shift of the demand curve.
C) shift of the supply curve.
D) price change.
E) quantity change.
Answer: B
Diff: 2 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

6
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19) What is a "normal" good?
A) a good that everyone normally consumes
B) a good that normal people consume
C) a good for which demand varies directly with household income
D) a good for which demand varies inversely with household income
E) a good for which demand does not vary with household income
Answer: C
Diff: 2 Type: MC
Topic: 3.1. demand
Skill: Recall
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

20) What is an inferior good?

A) a good that everyone normally consumes
B) a good that inferior people consume
C) a good for which demand varies directly with household income
D) a good for which demand varies inversely with household income
E) a good for which demand does not vary with household income
Answer: D
Diff: 2 Type: MC
Topic: 3.1. demand
Skill: Recall
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

21) Consider butter and margarine, which are substitutes. When the price of butter falls, the
demand curve for margarine is likely to
A) shift to the right.
B) shift to the left.
C) remain stationary.
D) remain stationary, although its price will fall.
E) remain stationary, although its price will rise.
Answer: B
Diff: 2 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

7
Copyright © 2020 Pearson Canada Inc.
22) Goods X and Y are defined to be substitutes in consumption if
A) the supply of Y varies inversely with the price of X.
B) the two goods are virtually the same.
C) the supply of Y varies directly with the price of X.
D) the demand for Y varies directly with the price of X.
E) the demand for Y varies inversely with the price of X.
Answer: D
Diff: 3 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

23) If the price of tea falls and as a consequence the demand for sugar rises, then tea and sugar
are
A) substitute goods.
B) complementary goods.
C) luxury goods.
D) neutral goods.
E) independent goods.
Answer: B
Diff: 1 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

24) If goods X and Y are substitutes and the price of X falls, all other things being equal, the
demand curve for Y will
A) shift to the left.
B) shift to the right.
C) not shift at all.
D) be indeterminate.
Answer: A
Diff: 2 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

8
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25) If goods X and Y are complements and the price of X rises, ceteris paribus, the demand
curve for Y will
A) be indeterminate.
B) shift to the right.
C) shift to the left.
D) not shift at all.
Answer: C
Diff: 2 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

26) If goods X and Y are complements and the price of X falls, all other things being equal, the
demand curve for Y will
A) shift to the left.
B) shift to the right.
C) not shift at all.
D) be indeterminate.
Answer: B
Diff: 2 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

27) Which of the following pairs of goods are likely to be substitutes for a large group of
consumers?
A) eggs and toast
B) coffee and cream
C) green beans and peas
D) wieners and buns
E) pancakes and syrup
Answer: C
Diff: 1 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

9
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28) Which of the following pairs of goods are likely to be complements for a large group of
consumers?
A) televisions and radios
B) cars and trucks
C) tea and coffee
D) e-readers and e-books
E) tents and tent-trailers
Answer: D
Diff: 1 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

29) If tastes change so that a particular style of winter boots is now considered more appealing,
the likely result is
A) a shift in the demand curve to the right.
B) a shift in the demand curve to the left.
C) a movement down the demand curve.
D) a movement up the demand curve.
E) no change in the demand curve.
Answer: A
Diff: 1 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

30) Cars and gasoline are likely to be

A) complementary goods.
B) substitute goods.
C) independent goods.
D) inferior goods.
E) luxury goods.
Answer: A
Diff: 1 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

10
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31) Consider cars and gasoline. Other things being equal, when the price of cars decreases, the
demand for gasoline is likely to
A) remain unchanged because cars and gasoline are produced independently of one another.
B) decrease because the two goods are complements.
C) remain unchanged.
D) increase because the two goods are complements.
E) remain unchanged because cars and gasoline are two distinct markets.
Answer: D
Diff: 2 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

32) Ceteris paribus, the position of the demand curve for apples will remain unchanged if there is
a change in the
A) income of apple eaters.
B) price of apples.
C) hourly wage rate of most workers.
D) price of pears.
E) knowledge regarding the health benefits of eating fresh fruit.
Answer: B
Diff: 2 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

33) A variable that is assumed to be constant along an individual's demand curve for good X is
the
A) price of good X.
B) quantity of X demanded per unit of time.
C) price of a substitute good, Y.
D) amount of X the individual wishes to purchase.
E) consumer's real purchasing power.
Answer: C
Diff: 3 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

11
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34) "Demand" in a particular market refers to
A) only the quantity demanded by households at current market prices.
B) the quantity purchased at the current market price.
C) the quantity that is desired but not satisfied by current supply.
D) the entire relationship between quantity demanded and price.
E) the relationship between demand and supply.
Answer: D
Diff: 1 Type: MC
Topic: 3.1. demand
Skill: Recall
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

35) A change in which of the following variables will result in NO change in the demand for a
given commodity?
A) average household income
B) the distribution of income
C) population
D) tastes in favour of the commodity
E) the price of the commodity
Answer: E
Diff: 2 Type: MC
Topic: 3.1. demand
Skill: Recall
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

36) When deriving the market demand curve for a commodity, the only variable(s) that can
change is (are) the
A) price of a related commodity.
B) income of consumers.
C) quantity of the commodity demanded.
D) price of the commodity.
E) both C and D.
Answer: E
Diff: 1 Type: MC
Topic: 3.1. demand
Skill: Recall
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

12
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37) Which of the following would cause a movement along the demand curve for ski-lift tickets,
other things being equal?
A) a change in tastes in favour of skiing
B) an increase in price as the supply curve for lift tickets shifts to the left
C) a rise in the price of ski boots and skis
D) a rise in average household income
E) an increase in population
Answer: B
Diff: 2 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

38) In which statement is the term "demand" used correctly? (1) An increase in the price of eggs
will lead to a decrease in the demand for eggs. (2) An increase in the price of eggs will lead to a
decrease in the demand for bacon.
A) neither statement
B) the first statement only
C) the second statement only
D) both statements
E) more information is needed
Answer: C
Diff: 3 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

39) In which statement is the term "demand" used correctly? (1) An increase in the price of
copper will lead to a decrease in the demand for copper. (2) An increase in the price of copper
will lead to an increase in the demand for aluminum (a substitute for copper).
A) neither statement
B) the first statement only
C) the second statement only
D) both statements
E) more information is needed
Answer: C
Diff: 3 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

13
Copyright © 2020 Pearson Canada Inc.
40) In which statement is the term "demand" used correctly? (1) A decrease in the price of airline
tickets led to an increase in quantity demanded for airline tickets. (2) A decrease in the price of
airline tickets led to an increase in the demand for airline tickets.
A) neither statement
B) the first statement only
C) the second statement only
D) both statements
E) more information is needed
Answer: B
Diff: 3 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

41) In which statement is the term "demand" used correctly? (1) An increase in the price of
copper will lead to an increase in the demand for aluminum (a substitute for copper). (2) An
increase in the price of aluminum will lead to a decrease in quantity demanded of aluminum.
A) neither statement
B) the first statement only
C) the second statement only
D) both statements
E) more information is needed
Answer: D
Diff: 3 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

42) Suppose new medical research suggests that consuming 200 grams of tofu everyday helps to
prevent heart disease. Widespread knowledge of this research, other things being equal, is likely
to have what impact on the market for tofu?
A) shift the whole demand curve to the right
B) shift the whole demand curve to the left
C) movement along the demand curve to the right
D) movement along the demand curve to the left
E) there would likely be no effect
Answer: A
Diff: 1 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative
14
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43) Economists say there has been a change in demand when there is
A) a movement along the demand curve.
B) a shift of the demand curve.
C) a shift of the supply curve.
D) a price change.
E) a quantity change.
Answer: B
Diff: 1 Type: MC
Topic: 3.1. demand
Skill: Recall
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

44) Which of the following events would result in a change in the quantity demanded for some
commodity but NOT a change in the demand for that commodity?
A) a change in average household income
B) a change in the distribution of income
C) a change in population
D) a change in tastes in favour of the commodity
E) a change in the price of the commodity
Answer: E
Diff: 2 Type: MC
Topic: 3.1. demand
Skill: Recall
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

45) Quantity demanded is a flow variable, which means that it must be expressed
A) as so much at a specific moment in time.
B) in units of the good per day.
C) in units of the good per week.
D) in units of the good per year.
E) in units of the good per period of time.
Answer: E
Diff: 2 Type: MC
Topic: 3.1. demand
Skill: Recall
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Qualitative

15
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46)

FIGURE 3-1

Refer to Figure 3-1. If demand is given by the curve D, the ________ energy-efficient light bulbs
is at a price of $9.
A) demand for
B) quantity purchased of
C) demand schedule for
D) quantity demanded of
E) quantity sold of
Answer: D
Diff: 2 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Graphics: Graph
Category: Qualitative

16
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47)

FIGURE 3-1

Refer to Figure 3-1. The movement along the demand curve, D, from point v to point x, could be
caused by
A) a change in preferences away from ordinary light bulbs to energy-efficient light bulbs.
B) a change in the price of energy-efficient light bulbs.
C) an increase in household income, which allows consumers to purchase more light bulbs.
D) a change in the price of ordinary light bulbs.
E) an expectation that new, government regulations will require the use of energy-efficient light
bulbs only.
Answer: B
Diff: 2 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Graphics: Graph
Category: Qualitative

17
Copyright © 2020 Pearson Canada Inc.
48)

FIGURE 3-1

Refer to Figure 3-1. A shift of the demand curve for energy-efficient light bulbs from D to D2
could be caused by
A) an increase in the price of ordinary light bulbs.
B) a change in preferences away from ordinary bulbs to energy-efficient bulbs.
C) an expectation that new government regulation will require the use of energy-efficient light
bulbs only.
D) a decrease in the price of energy-efficient light bulbs.
E) a news bulletin stating that energy-efficient light bulbs emit a harmful gas.
Answer: E
Diff: 3 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Graphics: Graph
Category: Qualitative

18
Copyright © 2020 Pearson Canada Inc.
49)

FIGURE 3-1

Refer to Figure 3-1. A shift of the demand curve for energy-efficient light bulbs from D to D1
could be caused by
A) a decrease in the price of ordinary light bulbs.
B) a news bulletin stating that energy-efficient light bulbs emit a harmful gas.
C) a decrease in the price of energy-efficient light bulbs.
D) an expectation that government regulation will soon prohibit the use of ordinary light bulbs.
E) a change in preferences toward ordinary light bulbs.
Answer: D
Diff: 2 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Graphics: Graph
Category: Qualitative

19
Copyright © 2020 Pearson Canada Inc.
50) Suppose that the demand curves for goods A, B, and C have the following functional forms:,
where Q denotes quantity demanded and P denotes price:
QA = 120 - 3.5 PA - 6PB
QB = 100 - 2PB + 3PC
QC = 1500 - 0.5PC.
Based on these demand curves, which of the following pairs of goods are known to be
complements?
A) B and C
B) A and C
C) A and B
D) A and C, and B and C
E) none of the pairs are complements
Answer: C
Diff: 3 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Quantitative

51) Consider the following equations for the demand for good A, where QA denotes quantity
demanded, PA denotes price, and M denotes income:
1. QA = 120 + 3.5 PA + 14M
2. QA = 120 - 3.5 PA + 14M
3. QA = 120 - 3.5 PA - 14M
Which of these equations represents a downward-sloping demand curve for a normal good?
A) 1 only
B) 2 only
C) 3 only
D) 1 and 2
E) none of the equations
Answer: B
Diff: 3 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Quantitative

20
Copyright © 2020 Pearson Canada Inc.
52) Consider the following equations for the demand for good A, where QA denotes quantity
demanded, PA denotes price, and M denotes income:
1. QA = 120 + 3.5 PA + 14M
2. QA = 120 - 3.5 PA + 14M
3. QA = 120 - 3.5 PA - 14M
Which of these equations represents a downward-sloping demand curve for an inferior good?
A) 1 only
B) 2 only
C) 3 only
D) 1 and 2
E) none of the equations
Answer: C
Diff: 3 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Quantitative

53) Suppose that the demand curves for goods A, B, and C have the following functional forms:,
where Q denotes quantity demanded and P denotes price:
QA = 120 - 3.5PA - 6PB
QB = 100 - 2PB + 3PC
QC = 1500 - 0.5PC.
Based on these demand curves, which of the following pairs of goods are known to be
substitutes?
A) A and C
B) A and B
C) B and C
D) A and C, and B and C
E) none of the pairs are substitutes
Answer: C
Diff: 3 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Quantitative

21
Copyright © 2020 Pearson Canada Inc.
54) Suppose the demand curves for goods A, B, and C have the following functional forms,
where Q denotes quantity demanded, P denotes price, and M denotes income:
QA = 120 - 3.5PA - 6PB + 14M
QB = 100 - 2PB + 3PC + 1.1M
QC = 1500 - 0.5PC - 300M.
Based on these demand curves, which of the following goods are known to be normal goods?
A) A
B) B
C) C
D) A and B only
E) A, B and C
Answer: D
Diff: 3 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Quantitative

55) Suppose the demand curves for goods A, B, and C have the following functional forms,
where Q denotes quantity demanded, P denotes price, and M denotes income:
QA = 120 - 3.5PA - 6PB + 14M
QB = 100 - 2PB + 3PC + 1.1M
QC = 1500 - 0.5PC - 300M.
Based on these demand curves, which of the following goods are known to be inferior goods?
A) A
B) B
C) C
D) A and B only
E) A, B and C
Answer: C
Diff: 3 Type: MC
Topic: 3.1. demand
Skill: Applied
Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the
demand curve.
Category: Quantitative

22
Copyright © 2020 Pearson Canada Inc.
3.2 Supply

1) The positive slope of a supply curve indicates that

A) as price goes up, quantity supplied will decrease.
B) consumers will want to buy less at higher prices.
C) as price goes up, quantity supplied will increase.
D) if the costs of production increase, the quantity supplied will increase.
E) as price goes up, quantity supplied will remain constant.
Answer: C
Diff: 2 Type: MC
Topic: 3.2. supply
Skill: Recall
Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good.
Category: Qualitative

2) A supply curve is a representation of the relationship, ceteris paribus, between quantity

supplied of a product and
A) demand.
B) quantity demanded.
C) the number of sellers.
D) preference of sellers.
E) the product's own price.
Answer: E
Diff: 2 Type: MC
Topic: 3.2. supply
Skill: Recall
Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good.
Category: Qualitative

3) Which statement best describes a "supply schedule"?

A) a functional statement of the supply relationship
B) a graph showing the positive relationship between quantity supplied and price
C) a timetable showing the quantity supplied at different time periods
D) a numerical table showing the quantities supplied at various prices
E) the graphical relationship between quantity supplied and price
Answer: D
Diff: 2 Type: MC
Topic: 3.2. supply
Skill: Recall
Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good.
Category: Qualitative

23
Copyright © 2020 Pearson Canada Inc.
4) Which of the following events would cause a change in the quantity supplied of some
agricultural commodity but would not cause a change in the supply of that same commodity?
A) a change in factor costs
B) a technological change
C) a change in the price of the commodity
D) a change in the number of suppliers of the commodity
E) a change in the price of substitute goods
Answer: C
Diff: 3 Type: MC
Topic: 3.2. supply
Skill: Recall
Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good.
Category: Qualitative

5) Suppose that many coal mines are shut for environmental reasons. This will cause
A) no change in the supply curve, only a change in price.
B) a movement up the supply curve.
C) an increase in the supply of coal (a rightward shift of the supply curve).
D) a decrease in the supply of coal (a leftward shift of the supply curve).
E) a movement down the supply curve.
Answer: D
Diff: 2 Type: MC
Topic: 3.2. supply
Skill: Applied
Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good.
Category: Qualitative

6) The market supply curve for wooden shipping crates would shift to the right
A) if a government subsidy for shipping crates is withdrawn.
B) if the price of lumber falls.
C) if a tax is applied to shipping crates.
D) if suppliers leave the industry.
E) if technological conditions for the production of crates deteriorates.
Answer: B
Diff: 2 Type: MC
Topic: 3.2. supply
Skill: Recall
Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good.
Category: Qualitative

24
Copyright © 2020 Pearson Canada Inc.
7) The term "quantity supplied" is the amount of a product that
A) firms wish to sell at a given price during a given period of time.
B) firms actually sell during a given period of time at a given price.
C) households wish firms would sell during a given period of time at a given price.
D) is exchanged between firms and consumers during a given period of time at a given price.
E) is supplied at a fair market price.
Answer: A
Diff: 1 Type: MC
Topic: 3.2. supply
Skill: Recall
Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good.
Category: Qualitative

8) Suppose there is a decrease in the quantity supplied of copper at each price. This change
would imply
A) a shift to the left of the supply curve.
B) a shift to the right of the supply curve.
C) a movement up the supply curve.
D) a movement down the supply curve.
Answer: A
Diff: 1 Type: MC
Topic: 3.2. supply
Skill: Applied
Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good.
Category: Qualitative

9) The term "supply" in a particular market refers to

A) the particular quantity supplied at the moment.
B) only one point on the supply curve.
C) only one entry in a supply schedule.
D) the entire relationship between quantity supplied and price.
E) the quantity actually sold to consumers.
Answer: D
Diff: 1 Type: MC
Topic: 3.2. supply
Skill: Recall
Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good.
Category: Qualitative

25
Copyright © 2020 Pearson Canada Inc.
10) A fall in the price of raw milk (which is used in the production of ice cream) will
A) decrease the supply of ice cream, causing the supply curve of ice cream to shift to the left.
B) increase the supply of ice cream, causing the supply curve of ice cream to shift to the right.
C) decrease the supply of ice cream, causing the supply curve to shift to the right.
D) have no effect on the supply curve of ice cream but cause a downward movement along the
supply curve of ice cream.
E) increase the supply of ice cream, causing the supply curve to shift to the left.
Answer: B
Diff: 2 Type: MC
Topic: 3.2. supply
Skill: Applied
Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good.
Category: Qualitative

11) To say that the supply curve is positively sloped means that
A) as price goes up, quantity supplied will decrease.
B) households will want to buy less at higher prices.
C) as price goes up, quantity supplied will increase.
D) if the costs of production increase, the quantity supplied will have to increase also.
E) as price goes up, quantity supplied will remain constant.
Answer: C
Diff: 1 Type: MC
Topic: 3.2. supply
Skill: Recall
Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good.
Category: Qualitative

12) A rightward shift in the supply curve indicates

A) a decrease in the quantity supplied at each price.
B) that an increase in income results in an increase in the quantity demanded at each price.
C) that more is demanded at each price.
D) an increase in the quantity supplied at each price.
E) a shift in the demand curve also (because demand must equal supply).
Answer: D
Diff: 1 Type: MC
Topic: 3.2. supply
Skill: Recall
Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good.
Category: Qualitative

26
Copyright © 2020 Pearson Canada Inc.
13) A "decrease in supply" refers to which of the following?
A) the likely result from a decrease in the price of a factor of production
B) a downward movement along a supply curve
C) a decrease in quantity supplied
D) a leftward shift in the supply curve
E) a drop in the quantity actually exchanged
Answer: D
Diff: 1 Type: MC
Topic: 3.2. supply
Skill: Recall
Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good.
Category: Qualitative

14) Suppose that a newer way to produce a good is discovered, which reduces production costs
for the good. This will cause
A) no change in the supply curve, only a change in price.
B) a decrease in supply (a leftward shift of the supply curve).
C) a movement up the supply curve.
D) a movement down the supply curve.
E) an increase in supply (a rightward shift of the supply curve).
Answer: E
Diff: 2 Type: MC
Topic: 3.2. supply
Skill: Applied
Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good.
Category: Qualitative

15) Suppose that some resource X is necessary to produce some good Y. If the price of X falls,
A) the supply curve of resource X shifts to the left.
B) the supply curve of good Y shifts to the right.
C) the supply curve of good Y is unaffected.
D) there is a movement along the supply curve of good Y.
E) the demand curve for X shifts to the right.
Answer: B
Diff: 2 Type: MC
Topic: 3.2. supply
Skill: Applied
Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good.
Category: Qualitative

27
Copyright © 2020 Pearson Canada Inc.
16) An improvement in the technology used to produce solar panels will
A) lead to a leftward shift in the supply curve.
B) lead to a leftward shift of the demand curve.
C) lead to a rightward shift of the demand curve.
D) have no effect on the supply curve for solar panels.
E) lead to a rightward shift in the supply curve.
Answer: E
Diff: 2 Type: MC
Topic: 3.2. supply
Skill: Applied
Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good.
Category: Qualitative

17) An increase in the number of firms wanting to provide accounting services will cause a
________ for accounting services.
A) leftward shift in the supply curve
B) rightward shift in the demand curve
C) leftward shift in the demand curve
D) rightward shift in the supply curve
E) simultaneous shift of both the demand and supply curves
Answer: D
Diff: 2 Type: MC
Topic: 3.2. supply
Skill: Applied
Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good.
Category: Qualitative

18) The supply for some good or service will decrease if

A) technology improves.
B) the prices of inputs fall.
C) the prices of inputs increase.
D) technology improves and the price of inputs falls.
E) more suppliers enter the industry.
Answer: C
Diff: 2 Type: MC
Topic: 3.2. supply
Skill: Applied
Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good.
Category: Qualitative

28
Copyright © 2020 Pearson Canada Inc.
19) In which statement is the term "supply" used correctly? (1) An increase in the price of leather
will lead to a decrease in the supply of leather. (2) An increase in the price of leather will lead to
a decrease in the supply of leather boots.
A) the second statement only
B) neither statement
C) the first statement only
D) both statements
E) not enough information to tell
Answer: A
Diff: 3 Type: MC
Topic: 3.2. supply
Skill: Applied
Learning Obj.: 3-4 Distinguish between a shift of the supply curve and a movement along the
supply curve.
Category: Qualitative

20) In which statement is the term "supply" used correctly? (1) An increase in the price of copper
will lead to an increase in the quantity supplied of copper. (2) An increase in the price of copper
will lead to an increase in the supply of copper.
A) neither statement
B) the first statement only
C) the second statement only
D) both statements
E) more information is needed
Answer: B
Diff: 2 Type: MC
Topic: 3.2. supply
Skill: Applied
Learning Obj.: 3-4 Distinguish between a shift of the supply curve and a movement along the
supply curve.
Category: Qualitative

21) In which statement is the term "supply" used correctly? (1) An increase in the number of
suppliers of copper will lead to an increase in the supply of copper. (2) An increase in the
number of suppliers of copper will likely lead to a decrease in the quantity supplied of copper.
A) neither statement
B) the first statement only
C) the second statement only
D) both statements
E) more information is needed
Answer: B
Diff: 2 Type: MC
Topic: 3.2. supply
Skill: Applied
Learning Obj.: 3-4 Distinguish between a shift of the supply curve and a movement along the
supply curve.
Category: Qualitative
29
Copyright © 2020 Pearson Canada Inc.
22) In which statement is the term "supply" used correctly? (1) A hurricane that destroys orange
groves in Florida will lead to a decrease in the quantity supplied of oranges. (2) A new
technology that prevents a fungus in Florida orange trees will lead to an increase in the supply of
oranges.
A) the first statement
B) the second statement
C) both statements
D) neither statement
E) more information is needed
Answer: C
Diff: 2 Type: MC
Topic: 3.2. supply
Skill: Applied
Learning Obj.: 3-4 Distinguish between a shift of the supply curve and a movement along the
supply curve.
Category: Qualitative

23) A fall in the price of potatoes, which are used in the production of french fries, will
A) lead to a decrease in the supply of french fries, causing the supply curve of french fries to
shift to the left.
B) have no effect on the supply of french fries.
C) have no effect on the supply of french fries but cause a movement along the supply curve of
french fries.
D) lead to a decrease in the demand for french fries.
E) lead to an increase in the supply of french fries, causing the supply curve of french fries to
shift to the right.
Answer: E
Diff: 2 Type: MC
Topic: 3.2. supply
Skill: Applied
Learning Obj.: 3-4 Distinguish between a shift of the supply curve and a movement along the
supply curve.
Category: Qualitative

24) A leftward shift in the supply curve indicates

A) a decrease in the quantity supplied at each price.
B) that an increase in income results in an increase in the quantity demanded at each price.
C) that more is demanded at each price.
D) an increase in the quantity supplied at each price.
E) that more suppliers have entered the industry.
Answer: A
Diff: 2 Type: MC
Topic: 3.2. supply
Skill: Recall
Learning Obj.: 3-4 Distinguish between a shift of the supply curve and a movement along the
supply curve.
Category: Qualitative
30
Copyright © 2020 Pearson Canada Inc.
25)

FIGURE 3-2

Refer to Figure 3-2. If the supply curve is given by S, the ________ energy-efficient light bulbs
is when the price is $9.
A) quantity supplied of
B) quantity purchased of
C) quantity sold of
D) supply schedule for
E) supply of
Answer: A
Diff: 2 Type: MC
Topic: 3.2. supply
Skill: Applied
Learning Obj.: 3-4 Distinguish between a shift of the supply curve and a movement along the
supply curve.
Graphics: Graph
Category: Qualitative

31
Copyright © 2020 Pearson Canada Inc.
26)

FIGURE 3-2

Refer to Figure 3-2. The movement along the supply curve, S, from point a to point c, could be
caused by
A) a decrease in the price of energy-efficient light bulbs.
B) a decrease in the price of glass, a major input in the production of energy-efficient light bulbs.
C) an increase in the number of suppliers of energy-efficient light bulbs.
D) an increase in the price of energy-efficient light bulbs.
E) a decrease in the price of ordinary light bulbs.
Answer: D
Diff: 2 Type: MC
Topic: 3.2. supply
Skill: Applied
Learning Obj.: 3-4 Distinguish between a shift of the supply curve and a movement along the
supply curve.
Graphics: Graph
Category: Qualitative

32
Copyright © 2020 Pearson Canada Inc.
27)

FIGURE 3-2

Refer to Figure 3-2. A shift of the supply curve from S to S1 could be caused by
A) an increase in the price of energy-efficient light bulbs.
B) a decrease in the price of energy-efficient light bulbs.
C) an expectation that new government regulations will ban the use of energy-efficient light
bulbs.
D) a change in consumers' preferences away from ordinary light bulbs toward energy-efficient
light bulbs.
E) a decrease in the price of glass, a major input in the production of energy-efficient light bulbs.
Answer: E
Diff: 2 Type: MC
Topic: 3.2. supply
Skill: Applied
Learning Obj.: 3-4 Distinguish between a shift of the supply curve and a movement along the
supply curve.
Graphics: Graph
Category: Qualitative

33
Copyright © 2020 Pearson Canada Inc.
28)

FIGURE 3-2

Refer to Figure 3-2. A shift of the supply curve for energy-efficient light bulbs from S to S2
could be caused by
A) an increase in the price of energy-efficient light bulbs.
B) a decrease in the price of energy-efficient light bulbs.
C) an increase in the number of suppliers.
D) the elimination of existing government subsidies to suppliers of energy-efficient light bulbs.
E) a change in consumers' preferences away from ordinary light bulbs.
Answer: D
Diff: 3 Type: MC
Topic: 3.2. supply
Skill: Applied
Learning Obj.: 3-4 Distinguish between a shift of the supply curve and a movement along the
supply curve.
Graphics: Graph
Category: Qualitative

34
Copyright © 2020 Pearson Canada Inc.
3.3 The Determination of Price

1) Choose the best description of an "equilibrium price."

A) the price in the middle of supply and demand
B) the price at which the quantity demanded is equal to the quantity supplied
C) the price that consumers are willing to pay
D) the price that producers want to charge
E) the price at which demand for the commodity is equal to supply
Answer: B
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Qualitative

2) An equilibrium price can be described as

A) the price at which excess demand equals excess supply.
B) an aggregate price.
C) the final price.
D) one at which there is neither excess demand nor excess supply.
E) a regulated price.
Answer: D
Diff: 1 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Recall
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Qualitative

3) "Excess demand" can also be described as

A) excess supply.
B) the area to the left of the equilibrium price on a supply and demand diagram.
C) quantity demanded exceeding quantity supplied.
D) quantity supplied exceeding quantity demanded.
E) the area to the right of the equilibrium price on a supply and demand diagram.
Answer: C
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Recall
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Qualitative

35
Copyright © 2020 Pearson Canada Inc.
4) A surplus exists in the market when
A) the quantity demanded exceeds the quantity supplied.
B) supply and demand are equal.
C) the quantity demanded is less than the quantity supplied.
D) the equilibrium price is too low.
E) the supply curve has shifted to the left.
Answer: C
Diff: 1 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Qualitative

5) At the market-clearing price for a commodity,

A) prices will remain unchanged, even if there is excess demand.
B) there may be excess demand for a product but not excess supply.
C) shifts in the supply or demand curves will not cause price changes.
D) the quantity supplied of the commodity equals quantity demanded.
E) there will never again be any pressure for prices to change, independent of what happens to
demand or supply.
Answer: D
Diff: 1 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Recall
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Qualitative

36
Copyright © 2020 Pearson Canada Inc.
6) The supply and demand schedules for dozens of roses are given below:

Quantity Supplied Quantity Demanded

Price per period per period
$10 200 500
$20 300 450
$30 400 400
$40 500 350
$50 600 300

TABLE 3-1

Refer to Table 3-1. The equilibrium price for a dozen roses is

A) $10.
B) $20.
C) $30.
D) $40.
E) $50.
Answer: C
Diff: 1 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Table
Category: Quantitative

37
Copyright © 2020 Pearson Canada Inc.
7) The supply and demand schedules for dozens of roses are given below:

Quantity Supplied Quantity Demanded

Price per period per period
$10 200 500
$20 300 450
$30 400 400
$40 500 350
$50 600 300

TABLE 3-1

Refer to Table 3-1. How many dozens of roses would actually be purchased if the price in this
market were $10?
A) 200
B) 300
C) 350
D) 400
E) 500
Answer: A
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Table
Category: Quantitative

38
Copyright © 2020 Pearson Canada Inc.
8) The supply and demand schedules for dozens of roses are given below:

Quantity Supplied Quantity Demanded

Price per period per period
$10 200 500
$20 300 450
$30 400 400
$40 500 350
$50 600 300

TABLE 3-1

Refer to Table 3-1. At a price of ________ there would be an excess ________ of 300 dozen
roses.
A) $10; supply
B) $30; supply
C) $10; demand
D) $50; demand
E) $30; demand
Answer: C
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Table
Category: Quantitative

39
Copyright © 2020 Pearson Canada Inc.
9) The supply and demand schedules for dozens of roses are given below:

Quantity Supplied Quantity Demanded

Price per period per period
$10 200 500
$20 300 450
$30 400 400
$40 500 350
$50 600 300

TABLE 3-1

Refer to Table 3-1. At a price of ________ there would be an excess ________ of 300 dozen
roses.
A) $30; supply
B) $50; demand
C) $10; demand
D) $50; supply
E) both C and D are correct
Answer: E
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Table
Category: Quantitative

40
Copyright © 2020 Pearson Canada Inc.
10) The supply and demand schedules for dozens of roses are given below:

Quantity Supplied Quantity Demanded

Price per period per period
$10 200 500
$20 300 450
$30 400 400
$40 500 350
$50 600 300

TABLE 3-1

Refer to Table 3-1. How many dozen of roses would actually be purchased if the price in this
market were $40?
A) 150
B) 350
C) 200
D) 500
E) 850
Answer: B
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Table
Category: Quantitative

41
Copyright © 2020 Pearson Canada Inc.
11) The supply and demand schedules for the umbrella market are given below:

Price Quantity Supplied Quantity Demanded

$10 400 700
$15 500 650
$20 600 600
$25 700 550
$30 800 500

TABLE 3-2

Refer to Table 3-2. The equilibrium price for umbrellas is

A) $10.
B) $15.
C) $20.
D) $25.
E) $30.
Answer: C
Diff: 1 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Table
Category: Quantitative

42
Copyright © 2020 Pearson Canada Inc.
12) The supply and demand schedules for the umbrella market are given below:

Price Quantity Supplied Quantity Demanded

$10 400 700
$15 500 650
$20 600 600
$25 700 550
$30 800 500

TABLE 3-2

Refer to Table 3-2. What number of umbrellas would actually be purchased if the price in this
market were $10?
A) 400
B) 500
C) 550
D) 650
E) 700
Answer: A
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Table
Category: Quantitative

43
Copyright © 2020 Pearson Canada Inc.
13) The supply and demand schedules for the umbrella market are given below:

Price Quantity Supplied Quantity Demanded

$10 400 700
$15 500 650
$20 600 600
$25 700 550
$30 800 500

TABLE 3-2

Refer to Table 3-2. At a price of ________ there would be an excess ________ of umbrellas.
A) $10; supply
B) $20; supply
C) $10; demand
D) $30; demand
E) $20; demand
Answer: C
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Table
Category: Quantitative

44
Copyright © 2020 Pearson Canada Inc.
14) The supply and demand schedules for the umbrella market are given below:

Price Quantity Supplied Quantity Demanded

$10 400 700
$15 500 650
$20 600 600
$25 700 550
$30 800 500

TABLE 3-2

Refer to Table 3-2. At a price of ________ there would be an excess ________ of umbrellas.
A) $10; supply
B) $15; supply
C) $20; supply
D) $25; supply
E) $30; demand
Answer: D
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Table
Category: Quantitative

45
Copyright © 2020 Pearson Canada Inc.
15) The supply and demand schedules for the umbrella market are given below:

Price Quantity Supplied Quantity Demanded

$10 400 700
$15 500 650
$20 600 600
$25 700 550
$30 800 500

TABLE 3-2

Refer to Table 3-2. At a price of ________ there would be an excess ________of 150 umbrellas.
A) $10; demand
B) $15; demand
C) $20; supply
D) $25; demand
E) $30; supply
Answer: B
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Table
Category: Quantitative

46
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16) The demand and supply schedules for a hypothetical Canadian market for barley are given
below:

Price Quantity Demanded Quantity Supplied

($ per tonne) (million tonnes) (million tonnes)
100 370 300
125 360 325
150 350 350
175 340 375
200 330 400
225 320 425

TABLE 3-3

Refer to Table 3-3. The equilibrium price of barley is

A) $125.
B) $150.
C) $175.
D) $200.
E) $225.
Answer: B
Diff: 1 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Table
Category: Quantitative

47
Copyright © 2020 Pearson Canada Inc.
17) The demand and supply schedules for a hypothetical Canadian market for barley are given
below:

Price Quantity Demanded Quantity Supplied

($ per tonne) (million tonnes) (million tonnes)
100 370 300
125 360 325
150 350 350
175 340 375
200 330 400
225 320 425

TABLE 3-3

Refer to Table 3-3. If the price in this market was $100 per tonne, then the amount of barley
actually purchased would be ________ million tonnes.
A) 70
B) -70
C) 670
D) 300
E) 370
Answer: D
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Table
Category: Quantitative

48
Copyright © 2020 Pearson Canada Inc.
18) The demand and supply schedules for a hypothetical Canadian market for barley are given
below:

Price Quantity Demanded Quantity Supplied

($ per tonne) (million tonnes) (million tonnes)
100 370 300
125 360 325
150 350 350
175 340 375
200 330 400
225 320 425

TABLE 3-3

Refer to Table 3-3. If the price in this market was $200 per tonne, then the amount of barley
actually purchased would be ________ million tonnes.
A) 70
B) -70
C) 330
D) 400
E) 730
Answer: C
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Table
Category: Quantitative

49
Copyright © 2020 Pearson Canada Inc.
19) The demand and supply schedules for a hypothetical Canadian market for barley are given
below:

Price Quantity Demanded Quantity Supplied

($ per tonne) (million tonnes) (million tonnes)
100 370 300
125 360 325
150 350 350
175 340 375
200 330 400
225 320 425

TABLE 3-3

Refer to Table 3-3. At a price of $125 per tonne there would be an excess ________ million
tonnes of barley.
A) supply of 325
B) demand of 360
C) supply of 35
D) demand of 35
E) supply of 125
Answer: D
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Table
Category: Quantitative

50
Copyright © 2020 Pearson Canada Inc.
20) The demand and supply schedules for a hypothetical Canadian market for barley are given
below:

Price Quantity Demanded Quantity Supplied

($ per tonne) (million tonnes) (million tonnes)
100 370 300
125 360 325
150 350 350
175 340 375
200 330 400
225 320 425

TABLE 3-3

Refer to Table 3-3. At a price of $200 per tonne there would be an excess ________ million
tonnes of barley.
A) supply of 200
B) demand of 330
C) supply of 400
D) demand of 70
E) supply of 70
Answer: E
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Table
Category: Quantitative

51
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21) The table below displays hypothetical demand and supply schedules for the market for
overnight parcel deliveries in Canada.

TABLE 3-4

Refer to Table 3-4. The equilibrium price and quantity for overnight parcel delivery in Year 1 is
________ and ________ million parcels.
A) $30; 80
B) $14; 120
C) $22; 115
D) $10; 115
E) $22; 130
Answer: B
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Table
Category: Quantitative

52
Copyright © 2020 Pearson Canada Inc.
22) The table below displays hypothetical demand and supply schedules for the market for
overnight parcel deliveries in Canada.

TABLE 3-4

Refer to Table 3-4. The equilibrium price and quantity for overnight parcel delivery in Year 2 is
________ and ________ million parcels.
A) $10; 100
B) $18; 110
C) $18; 125
D) $22; 115
E) $14; 120
Answer: D
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Table
Category: Quantitative

53
Copyright © 2020 Pearson Canada Inc.
23) The table below displays hypothetical demand and supply schedules for the market for
overnight parcel deliveries in Canada.

TABLE 3-4

Refer to Table 3-4. Which of the following statements describes a likely event in the market for
overnight parcel delivery? From Year 1 to Year 2,
A) there was a rise in the price of jet fuel.
B) there was a decrease in consumers' income.
C) there was an improvement in technology for tracking overnight parcels.
D) the price of regular parcel delivery decreased.
E) the number of suppliers of overnight parcel delivery service increased.
Answer: A
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Table
Category: Quantitative

54
Copyright © 2020 Pearson Canada Inc.
24) The table below displays hypothetical demand and supply schedules for the market for
overnight parcel deliveries in Canada.

TABLE 3-4

Refer to Table 3-4. If the price of overnight parcel delivery in Year 2 is $10, how many parcels
will actually be delivered?
A) 100
B) 115
C) 130
D) 145
E) 45
Answer: A
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Table
Category: Quantitative

55
Copyright © 2020 Pearson Canada Inc.
25) The table below displays hypothetical demand and supply schedules for the market for
overnight parcel deliveries in Canada.

TABLE 3-4

Refer to Table 3-4. Suppose the price of overnight parcel delivery in Year 1 is $22. Which of the
following statements is correct? In Year 1,
A) there is an excess demand of 15 million deliveries.
B) there is an excess demand of 30 million deliveries.
C) 115 million parcels will be delivered.
D) there is an excess supply of 15 million deliveries.
E) there is an excess supply of 30 million deliveries.
Answer: E
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Table
Category: Quantitative

56
Copyright © 2020 Pearson Canada Inc.
26) The table below displays hypothetical demand and supply schedules for the market for
overnight parcel deliveries in Canada.

TABLE 3-4

Refer to Table 3-4. Which of the following events could explain the change in the market for
overnight parcel delivery between Year 1 And Year 2?
A) There was a decrease in the price of jet fuel.
B) The price of regular parcel delivery decreased.
C) Consumer preferences changed toward a desire for overnight delivery.
D) The number of suppliers of overnight parcel delivery service increased.
E) The government introduced a subsidy for overnight parcel delivery.
Answer: C
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Table
Category: Quantitative

57
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27) The table below displays hypothetical demand and supply schedules for the market for
overnight parcel deliveries in Canada.

TABLE 3-4

Refer to Table 3-4. Which of the following statements best describes the change in equilibrium
price and quantity in this market between Year 1 and Year 2?
A) The demand curve has shifted to the left, the supply curve has shifted to the right; as a result
equilibrium price is lower and equilibrium quantity is higher.
B) The demand curve has shifted to the left, the supply curve has shifted to the left; as a result
equilibrium price is higher and equilibrium quantity is lower.
C) The demand curve has shifted to the right, the supply curve has shifted to the left; as a result
equilibrium price is higher and equilibrium quantity is lower.
D) The demand curve has shifted to the left, the supply curve has shifted to the right; as a result
equilibrium price is higher and equilibrium quantity is lower.
E) There is no change in equilibrium price or quantity from Year 1 to Year 2.
Answer: C
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Table
Category: Quantitative

58
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28)

FIGURE 3-3

Refer to Figure 3-3. At a price of P2 there would be excess demand equal to

A) 0.
B) Q1Q5.
C) Q2Q4.
D) Q1Q3.
E) Q3 Q5.
Answer: A
Diff: 1 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Graph
Category: Qualitative

59
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29)

FIGURE 3-3

Refer to Figure 3-3. At a price of P1 there would be excess supply equal to

A) 0.
B) Q1Q5.
C) Q2Q4.
D) Q1Q2.
E) Q4Q5.
Answer: C
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Graph
Category: Qualitative

60
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30)

FIGURE 3-3

Refer to Figure 3-3. At a price of P1 there would be excess demand equal to

A) Q1Q5.
B) Q2Q4.
C) Q1Q2.
D) Q4Q5.
E) There is no excess demand at P1.
Answer: E
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Graph
Category: Quantitative

61
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31)

FIGURE 3-3

Refer to Figure 3-3. At a price of P3 there is excess ________ in the market for X and pressure
for the price to ________.
A) supply; fall
B) supply; rise
C) demand; fall
D) demand; rise
Answer: D
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Graph
Category: Qualitative

62
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32)

FIGURE 3-3

Refer to Figure 3-3. At a price of P1 there is excess ________ in the market for X and pressure
for the price to ________.
A) supply; fall
B) supply; rise
C) demand; fall
D) demand; rise
Answer: A
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Graph
Category: Qualitative

63
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33)

FIGURE 3-4

Refer to Figure 3-4. The market for 1-bedroom apartments in Collegetown will be in equilibrium
at a price and quantity combination of
A) $1000; 300 apartments.
B) $1400; 450 apartments.
C) $1000; 350 apartments.
D) $600; 250 apartments.
E) $800; 300 apartments.
Answer: E
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Graph
Category: Quantitative

64
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34)

FIGURE 3-4

Refer to Figure 3-4. If the price of 1-bedroom apartments in Collegetown were $600, there
would be a ________ of ________ apartments.
A) surplus; 100
B) shortage; 50
C) shortage; 100
D) surplus; 50
E) surplus; 150
Answer: C
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Graph
Category: Quantitative

65
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35)

FIGURE 3-4

Refer to Figure 3-4. If the price of 1-bedroom apartments in Collegetown were $1400, there
would be a ________ of ________ apartments.
A) surplus; 150
B) shortage; 300
C) shortage; 150
D) surplus; 300
E) surplus; 100
Answer: D
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Graph
Category: Quantitative

66
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36)

FIGURE 3-5

Refer to Figure 3-5. The price at which there would be a shortage in this market is
A) P1.
B) P2.
C) P3.
D) both P1 and P3.
E) both P2 and P3.
Answer: C
Diff: 1 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Graph
Category: Qualitative

67
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37)

FIGURE 3-5

Refer to Figure 3-5. A price at which there would be a surplus in this market is
A) P1.
B) P2.
C) P3.
D) both P1 and P2.
E) both P1 and P3.
Answer: A
Diff: 1 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Graph
Category: Qualitative

68
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38)

FIGURE 3-5

Refer to Figure 3-5. Ceteris paribus, if supply were to increase, this would lead to
A) an increase in both equilibrium price and quantity.
B) a decrease in both equilibrium price and quantity.
C) an increase in equilibrium price and a decrease in equilibrium quantity.
D) a decrease in equilibrium price and an increase in equilibrium quantity.
E) no change in equilibrium price or quantity.
Answer: D
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Graph
Category: Qualitative

69
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39)

FIGURE 3-5

Refer to Figure 3-5. Ceteris paribus, if demand were to decrease, this would lead to
A) an increase in equilibrium price and an increase in equilibrium quantity.
B) a decrease in equilibrium price and a decrease in equilibrium quantity.
C) an increase in equilibrium price and a decrease in equilibrium quantity.
D) a decrease in equilibrium price and an increase in equilibrium quantity.
E) no change in equilibrium price or quantity.
Answer: B
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Graph
Category: Qualitative

70
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40)

FIGURE 3-5

Refer to Figure 3-5. If supply and demand were to increase simultaneously, this would lead to
A) an increase in both equilibrium price and quantity.
B) a decrease in both equilibrium price and quantity.
C) an increase in equilibrium quantity and an indeterminate change in price.
D) an increase in equilibrium price and an indeterminate change in equilibrium quantity.
E) no change in equilibrium price or quantity.
Answer: C
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Graph
Category: Qualitative

71
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41)

FIGURE 3-5

Refer to Figure 3-5. If supply were to increase and demand were to decrease simultaneously, this
would lead to
A) a decrease in equilibrium price and an indeterminate change in quantity.
B) a decrease in equilibrium quantity and an indeterminate change in price.
C) an increase in equilibrium quantity and a decrease in equilibrium price.
D) an increase in equilibrium quantity and an increase in equilibrium price.
E) no change in equilibrium price or quantity.
Answer: A
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Graph
Category: Qualitative

42) The term "comparative statics" describes the

A) analysis of the path from one equilibrium to another.
B) comparison of one equilibrium point with another.
C) comparison of a demand curve with a supply curve.
D) analysis of the process of price and quantity adjustments that leads to an equilibrium.
E) analysis of excess demand and excess supply.
Answer: B
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Recall
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Qualitative

72
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43) Suppose we observe an increase in the price of good A and an increase in the quantity of
good A exchanged. Which of the following is a likely explanation?
A) The "law of demand" is violated.
B) The "law of supply" is violated.
C) The supply of good A has increased.
D) There is an excess supply of good A.
E) The demand for good A has increased.
Answer: E
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Qualitative

44) Suppose that supply for some good increases and that simultaneously the demand for the
same good decreases. The result would be
A) a decrease in P and an indeterminate change in Q.
B) a decrease in Q and an indeterminate change in P.
C) an increase in Q and a decrease in P.
D) an increase in Q and an increase in P.
E) no change in either P or Q.
Answer: A
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Qualitative

45) The quantity exchanged in the market will be below the equilibrium quantity
A) only if there is excess supply.
B) only if there is excess demand.
C) if there is either excess supply or demand.
D) in no imaginable situation.
E) only if price is below the equilibrium price.
Answer: C
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Qualitative

73
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46) Given a positively sloped supply curve, a rise in the demand for that commodity causes
A) a shortage of other goods.
B) a fall in sales of that commodity.
C) an increase in both the equilibrium price and the equilibrium quantity exchanged.
D) a decrease in the equilibrium price and an increase in the equilibrium quantity exchanged.
E) a decrease in both the equilibrium price and the equilibrium quantity exchanged.
Answer: C
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Qualitative

47) Which of the following could lead to a rise in the quantity demanded of lemons?
A) a leftward shift in the supply curve of lemons
B) a rightward shift in the supply curve of lemons
C) a decline in the number of people drinking lemonade
D) a decrease in the price of artificial lemon flavouring
E) a cold spell which makes people want less lemonade
Answer: B
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Qualitative

48) Weekend train travel costs less than weekday train travel. If the supply of train service
remains the same between weekdays and weekends, then the most likely explanation for this
difference in price is that the weekend
A) demand curve is to the left of the weekday demand curve.
B) demand curve is to the right of the weekday demand curve.
C) demand curve is random.
D) supply curve is to the right of the weekday supply curve.
E) supply curve is to the left of the weekday supply curve.
Answer: A
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Qualitative

74
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49) Suppose we observe that movie theatre prices are less during the daytime than in the
evening. If the supply of movies does not change between daytime and evening, then the most
likely explanation for this difference in price is
A) the evening demand curve is to the left of the daytime demand curve.
B) the evening demand curve is to the right of the daytime demand curve.
C) the evening supply curve is to the left of the daytime supply curve.
D) the evening supply curve is to the right of the daytime supply curve.
Answer: B
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Qualitative

50) Tickets for music concerts that are sold on the Internet are often sold out within minutes and
many unsatisfied customers are unable to get tickets (in the legitimate market). One explanation
for this is that
A) concert goers are not rational.
B) prices for purchasing digital music have increased.
C) the market price for concert tickets may be set above its equilibrium price.
D) the market price for concert tickets may be set below its equilibrium price.
E) the market price for concert tickets is at its equilibrium level.
Answer: D
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Qualitative

51) Suppose that in Montreal in December, 2018, 10 000 ski helmets were sold at a price of $60
each. And in Montreal in December, 2019, 20 000 ski helmets were sold at a price of $80 each.
One possible explanation for the change is that, ceteris paribus, from 2018 to 2019 the ________
curve for ski helmets shifted to the ________.
A) supply; left
B) supply; right
C) demand; left
D) demand; right
E) supply or demand; right
Answer: D
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Qualitative
75
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52) Consider a local market for 4-litre containers of windshield-wiper fluid. In January 2019, 100
000 containers were sold at a price of $3 each. In March 2019, 120 000 containers are sold at a
price of $8 each. Does this change in equilibrium price and quantity violate the "law of
demand"?
A) Not necessarily, because the supply curve could have shifted to the right, leading to an
increase in equilibrium price and quantity.
B) Not necessarily, because the demand curve could have shifted to the right, leading to an
increase in equilibrium price and quantity.
C) Not necessarily, because the demand curve could have shifted to the left, leading to an
increase in equilibrium price and quantity.
D) Not necessarily, because the supply curve could have shifted to the left, leading to an increase
in equilibrium price and quantity.
E) No, because the "law of demand" is not valid.
Answer: B
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Quantitative

53) Consider a negatively sloped demand curve for natural gas. If the supply of natural gas
increases, the new equilibrium will have
A) a lower price and a greater quantity.
B) a lower price and a smaller quantity.
C) a higher price and a smaller quantity.
D) a higher price and a larger quantity.
E) the same price and larger quantity.
Answer: A
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Qualitative

76
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54) Which of the following statements is correct for a market with an upward-sloping supply
curve and a downward-sloping demand curve?
A) If the supply curve shifts left and demand remains constant, equilibrium quantity will rise.
B) If the supply curve shifts right and the demand curve remains constant, equilibrium price will
rise.
C) If the demand curve shifts left and the supply curve shifts right, equilibrium price will rise.
D) If the demand curve shifts right and the supply curve shifts left, equilibrium price will rise.
E) If the demand curve shifts left and the supply curve shifts left, equilibrium quantity will rise.
Answer: D
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Qualitative

77
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55)

FIGURE 3-6

Refer to Figure 3-6. If the initial demand and supply curves are D1 and S1, equilibrium price and
quantity are represented by point
A) A.
B) B.
C) C.
D) D.
E) Not shown in the figure.
Answer: A
Diff: 1 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Graph
Category: Qualitative

78
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56)

FIGURE 3-6

Refer to Figure 3-6. If the demand curve shifts from D1 to D2, while supply remains at S1, one
could say that
A) the quantity demanded has decreased to Q1 and price has fallen to P2.
B) there has been an increase in demand for X.
C) the price of a good which is a substitute for X must have fallen.
D) the price increase has caused an increase in quantity demanded.
E) there is now an excess demand at the new price of P1.
Answer: B
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Graph
Category: Qualitative

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57)

FIGURE 3-6

Refer to Figure 3-6. If the initial demand and supply curves are D1 and S1, and demand shifts to
D2, then
A) a permanent shortage of X will result.
B) a surplus of Q1Q3 will occur.
C) a shortage will occur at any price above P3.
D) if price remained at P2, a shortage of Q1Q3 would exist.
E) all of the above
Answer: D
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Graph
Category: Qualitative

80
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58)

FIGURE 3-6

Refer to Figure 3-6. A shift in the supply curve from S2 to S1 might be caused by
A) a rise in the costs of producing good X.
B) a decrease in the price of X.
C) a decrease in demand for X.
D) an improvement in the technology of producing good X.
E) additional suppliers entering the industry.
Answer: A
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Graph
Category: Qualitative

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59) With a given upward-sloping supply curve for restaurant meals (a normal good), a rise in
household income will cause the
A) equilibrium price and equilibrium quantity to both increase.
B) equilibrium price to increase and equilibrium quantity to decrease.
C) equilibrium price and equilibrium quantity to both decrease.
D) equilibrium price to decrease and equilibrium quantity to increase.
E) equilibrium price to increase and equilibrium quantity to remain constant.
Answer: A
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Qualitative

60) If the legal beer-drinking age is raised from 18 to 21, the changes to the equilibrium price
and quantity of beer are likely to be that
A) price rises and quantity rises.
B) price falls and quantity rises.
C) price rises and quantity falls.
D) price falls and quantity falls.
E) no change in price or quantity occurs.
Answer: D
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Qualitative

61) Steel is an important input to the production of cars. Tires and cars are used together by
consumers. What will occur in the market for tires when there is an increase in the price of steel?
A) Price rises; quantity rises.
B) Price falls; quantity rises.
C) Price rises; quantity falls.
D) Price falls; quantity falls.
E) No change in price or quantity occurs.
Answer: D
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Qualitative

82
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62) Aeronautical engineers are a factor of production for airplanes. What will happen in the
world market for airplanes when there is a worldwide shortage of aeronautical engineers?
A) Price will increase; quantity exchanged will decrease.
B) Price will increase; quantity exchanged will increase.
C) Price will decrease; quantity exchanged will decrease.
D) Price will decrease; quantity exchanged will increase.
E) There will be no change in price or quantity exchanged.
Answer: A
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Graphics: Table
Category: Qualitative

63) Assume that apples and oranges are substitute goods. Given the initial supply and demand
curves for apples, a reduction in the price of oranges will tend to
A) increase the price of apples.
B) increase the demand for apples.
C) increase the demand for oranges.
D) decrease the demand for oranges.
E) decrease the price of apples.
Answer: E
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Qualitative

64) Given a positively sloped supply curve, when market demand increases,
A) the new equilibrium will have a lower price and a greater quantity.
B) the new equilibrium will have a lower price and a smaller quantity.
C) the new equilibrium will have a higher price and a smaller quantity.
D) the new equilibrium will have a higher price and a larger quantity.
E) the new equilibrium will have the same price and larger quantity.
Answer: D
Diff: 2 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Qualitative

83
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65) Consider the global market for some mineral, X. In January, 2017, the equilibrium price and
quantity were P = $27 per unit and Q = 140 million units. In January, 2019, the equilibrium price
and quantity were P = $45 per unit and Q = 175 million units. Which of the following is the best
possible explanation for this change in market equilibrium?
A) There has been a decrease in supply of mineral X.
B) There has been an increase in demand for mineral X.
C) There has been an increase in supply of mineral X.
D) There has been a decrease in demand for mineral X.
E) There has been a simultaneous decrease in demand for, and increase in supply of, mineral X.
Answer: B
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Quantitative

66) Consider the global market for some mineral, X. In January, 2017, the equilibrium price and
quantity were P = $27 per unit and Q = 140 million units. In January, 2019, the equilibrium price
and quantity were P = $27 per unit and Q = 175 million units. Which of the following is the best
possible explanation for this change in market equilibrium?
A) There has been a simultaneous increase in demand for, and increase in supply of, mineral X.
B) There has been an increase in demand for mineral X.
C) There has been an increase in quantity demanded for mineral X.
D) There has been an increase in supply of mineral X.
E) There has been an increase in quantity supplied of mineral X.
Answer: A
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Quantitative

84
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67) Consider the global market for some mineral, X. In January, 2017, the equilibrium price and
quantity were P = $27 per unit and Q = 140 million units. In January, 2019, the equilibrium price
and quantity were P = $35 per unit and Q = 110 million units. Which of the following is the best
possible explanation for this change in market equilibrium?
A) There has been an increase in demand for mineral X.
B) There has been a decrease in supply of mineral X.
C) There has been a decrease in global demand for mineral X.
D) There has been a simultaneous increase in demand and increase in supply for mineral X.
E) there has been a simultaneous increase in supply and decrease in demand for mineral X.
Answer: B
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Quantitative

68) Consider the global market for barley, an agricultural commodity. Suppose that in August,
2018, the equilibrium price and quantity were P = $150 per tonne and Q = 350 million tonnes. In
August, 2019, the equilibrium price and quantity were P = $168 per tonne and Q = 350 million
tonnes. Which of the following is the best possible explanation for this change in market
equilibrium?
A) There has been an increase in demand for barley.
B) There has been a decrease in supply of barley.
C) There has been a decrease in demand for barley.
D) There has been a simultaneous decrease in demand and increase in supply of barley.
E) There has been a simultaneous increase in demand and decrease in supply of barley.
Answer: E
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Quantitative

85
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69) Consider the global market for barley, an agricultural commodity. Suppose that in August,
2018, the equilibrium price and quantity were P = $150 per tonne and Q = 350 million tonnes. In
August, 2019, the equilibrium price and quantity were P = $150 per tonne and Q = 410 million
tonnes. Which of the following is the best possible explanation for this change in market
equilibrium?
A) There has been a decrease in supply of barley.
B) There has been an increase in demand for barley.
C) There has been a simultaneous increase in demand and increase in supply of barley.
D) There has been a simultaneous increase in demand and decrease in supply of barley.
E) There has been a decrease in demand for barley.
Answer: C
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Quantitative

70) Consider the global market for barley, an agricultural commodity. Suppose that in August,
2018, the equilibrium price and quantity were P = $150 per tonne and Q = 350 million tonnes. In
August, 2019, the equilibrium price and quantity were P = $159 per tonne and Q = 372 million
tonnes. Which of the following is the best possible explanation for this change in market
equilibrium?
A) There has been an increase in demand for barley.
B) There has been an increase in supply of barley.
C) There has been a simultaneous decrease in demand and increase in supply of barley.
D) There has been a decrease in supply of barley.
Answer: A
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Quantitative

86
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71) Consider the global market for barley, an agricultural commodity. Suppose that in August,
2018, the equilibrium price and quantity were P = $150 per tonne and Q = 350 million tonnes. In
August, 2019, the equilibrium price and quantity were P = $168 per tonne and Q = 290 million
tonnes. Which of the following is the best possible explanation for this change in market
equilibrium?
A) There has been an increase in demand for barley.
B) There has been an increase in supply of barley.
C) There has been a simultaneous increase in demand and increase in supply of barley.
D) There has been a decrease in supply of barley.
Answer: D
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Quantitative

72) Consider the global market for barley, an agricultural commodity. Suppose that in August,
2018, the equilibrium price and quantity were P = $150 per tonne and Q = 350 million tonnes. In
August, 2019, the equilibrium price and quantity were P = $140 per tonne and Q = 325 million
tonnes. Which of the following is the best possible explanation for this change in market
equilibrium?
A) There has been an increase in supply of barley.
B) There has been a decrease in supply of barley.
C) There has been a simultaneous increase in demand and increase in supply of barley.
D) There has been a decrease in demand for barley.
E) There has been an increase in demand for barley.
Answer: D
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Quantitative

87
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73) Consider the global market for barley, an agricultural commodity. Suppose that in August,
2018, the equilibrium price and quantity were P = $150 per tonne and Q = 350 million tonnes. In
August, 2019, the equilibrium price and quantity were P = $142 per tonne and Q = 335 million
tonnes. Which of the following is the best possible explanation for this change in market
equilibrium?
A) There has been an increase in supply of barley.
B) There has been a decrease in supply of barley.
C) There has been a simultaneous increase in demand and increase in supply of barley.
D) There has been a decrease in demand for barley.
E) There has been an increase in demand for barley.
Answer: D
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Quantitative

74) If a demand curve and a supply curve can be stated functionally as QD = 100 - 5p; and
QS = 90 + 5p, respectively, then the equilibrium quantity and price would be
A) Q = 95; p = 1.
B) Q = 1; p = 95.
C) Q = 190; p = 1.
D) Q = 95; p = 10.
E) Q = 190; p = 10.
Answer: A
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Quantitative

75) If a demand curve and a supply curve can be stated functionally as QD = 500 - 0.1p and
QS = 440 + 0.4p respectively, then the equilibrium quantity and price would be
A) Q = 150; p = 150.
B) Q = 50; p = 176.
C) Q = 150; p = 485.
D) Q = 488; p = 120.
E) Q = 940; p = 0.4.
Answer: D
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Quantitative
88
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76) Suppose that the demand and supply curves in the market for apples have the following
functional forms: QD = 250 - 4p and QS = 10 + p. The equilibrium quantity and price would
then be
A) Q = 48, p = 58.
B) Q = 58, p = 48.
C) Q = 68, p = 98.
D) Q = 68, p = 108.
E) Q = 92, p = 48.
Answer: B
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Quantitative

77) Suppose that the demand and supply curves in the market for apples have the following
functional form: QD = 250 - 4p and QS = 10 + p. If the prevailing price on the market is 50, then
A) the market is clearing.
B) the market exhibits an excess supply of 10 units.
C) the market exhibits an excess supply of 240 units.
D) the market exhibits an excess demand of 10 units.
E) the market exhibits an excess demand of 240 units.
Answer: B
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Quantitative

78) Suppose the demand and supply curves in the market for apples have the following
functional form: QD = 250 - 4p and QS = 10 + p. If the prevailing market price is 40, then
A) the market is clearing.
B) the market exhibits an excess supply of 50 units.
C) the market exhibits an excess supply of 40 units.
D) the market exhibits an excess demand of 50 units.
E) the market exhibits an excess demand of 40 units.
Answer: E
Diff: 3 Type: MC
Topic: 3.3a. equilibrium price and quantity
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Quantitative

89
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79) The price of one good divided by the price of another good is called a(n)
A) marginal price.
B) money price.
C) absolute price.
D) relative price.
E) ceteris paribus price.
Answer: D
Diff: 1 Type: MC
Topic: 3.3b. relative prices
Skill: Recall
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Qualitative

80) The relative price of a good

A) is always measured in current dollars.
B) is a measure of the relative share of the consumer's income devoted to its purchase.
C) is its price in terms of money.
D) is equal to the average price of the good over the last 5 years.
E) reflects its price in terms of units of other goods.
Answer: E
Diff: 2 Type: MC
Topic: 3.3b. relative prices
Skill: Recall
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Qualitative

81) Suppose the price of wheat has fallen from $3 to $2 per bushel and that the price of
newsprint has fallen from $200 to $100 per tonne. The relative price of wheat in terms of
newsprint
A) has fallen.
B) has risen.
C) remained constant.
D) cannot be determined from the above data.
E) is completely unrelated.
Answer: B
Diff: 3 Type: MC
Topic: 3.3b. relative prices
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Quantitative

90
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82) Suppose the price of good X increases from $3.00 to $4.00 while the price of good Y
increases from $150 to $200. The relative price of X (in terms of Y)
A) has fallen.
B) has risen.
C) remained constant.
D) cannot be determined from the above data.
E) is completely unrelated to the price of good Y.
Answer: C
Diff: 3 Type: MC
Topic: 3.3b. relative prices
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Quantitative

83) Suppose an index of average prices of imported goods in Canada indicates an increase in
price of 2.3% over a 12-month period. Over the same period the Consumer Price Index indicates
an increase in the general price level of 2.3%. What is the change in the price of imports relative
to the change in the overall price level?
A) an increase of 2.3%
B) an increase of 4.6%
C) a decrease of 2.3%
D) a decrease of 4.6%
E) no change
Answer: E
Diff: 2 Type: MC
Topic: 3.3b. relative prices
Skill: Applied
Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how
equilibrium price and quantity are affected by changes in demand and supply.
Category: Quantitative

91
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