2/13/25, 2:33 PM Quiz

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Economics (McConnell) AP Edition, 19th Edition

Chapter 3: Demand, Supply, and Market Equilibrium (+ Appendix)

Quiz
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Out of 10 questions, you answered 5 correctly with a final grade of 50%
5 correct (50%)
5 incorrect (50%)
0 unanswered (0%)

Your Results:
The correct answer for each question is indicated by a .

1 When an economist says that the demand for a product has increased, this means that:
INCORRECT
A) quantity demanded is greater at each possible price

B) firms make less of the product available for sale

C) consumers respond to a lower price by buying more

D) the demand curve becomes steeper

Feedback: Demand is defined as the relationship between price and quantity demanded, all else equal.
An "increase in demand" occurs if this relationship exhibits greater quantity demanded at each possible
price.
2 CORRECT When movie ticket prices increase, families tend to spend less time watching movies and more time at home
watching videos instead. This best reflects:
A) diminishing marginal utility

B) the income effect

C) the rationing function of markets

D) the substitution effect

Feedback: The substitution effect is reflected in consumer responses to higher prices as they shift
purchases away from the good or service whose price has risen, purchasing other alternatives instead.
3 CORRECT If consumer incomes increase, the demand for product Y:

A) will necessarily remain unchanged

B) will shift to the right if Y is a complementary good

C) will shift to the right if Y is a normal good

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2/13/25, 2:33 PM Quiz
D) will shift to the right if Y is an inferior good
Feedback: The definition of a normal good is one for which demand increases (shifts to the right) when
income increases.
4 CORRECT When drawing demand and supply curves, economists are assuming that the primary influence on
production and purchasing decisions is:
A) price

B) the cost of production

C) the overall state of the economy

D) consumer incomes
Feedback: Although there are many determinants of quantity demanded and quantity supplied, the
demand and supply curves show the relationship between price and quantity, all other factors held
constant. The primary factor is assumed to be the price.
5 Refer to the following diagrams:
INCORRECT

Which one of the above diagrams best illustrates the effect of an increase in crude oil prices on the market
for gasoline?
A) A

B) B

C) C

D) D
Feedback: Crude oil is the primary input in the production of gasoline. An increase in crude oil prices
reduces the quantity of gasoline supplied at each price of gasoline. That is, it reduces the supply of
gasoline, as shown in panel D.
6 A decrease in the price of a product will increase the amount of it demanded because:
INCORRECT
A) supply curves are upsloping

B) the lower price will decrease real incomes

C) the lower price induces consumers to use this product instead of other products

D) firms produce more at lower prices

Feedback: A lower price makes this product a more desirable alternative relative to other products
whose prices have not changed. This is the "substitution effect."
7 CORRECT "Because of unusually good growing conditions, the supply of strawberries has substantially increased." This
statement indicates that:
A) the demand for strawberries will necessarily rise

B) the equilibrium quantity of strawberries will fall

C) the amount of strawberries that will be available at various prices has increased

D) the price of strawberries will rise

Feedback: An increase in supply occurs when more is made available at each price. All else equal, the
equilibrium price of strawberries will fall.
8 Goods X and Y are complements while goods X and Z are substitutes. If the supply of good X increases:
INCORRECT
A) the demand for both Y and Z will increase

B) the demand for Y will increase while the demand for Z will decrease

C) the demand for Y will decrease while the demand for Z will increase

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2/13/25, 2:33 PM Quiz
D) the demand for both Y and Z will decrease
Feedback: The increased supply of X will decrease its equilibrium price. This lower price increases the
demand for complementary good Y and decreases the demand for substitute good Z.
9 CORRECT The following data show the supply and demand schedule for a competitively produced good.

Refer to the above data. At the equilibrium price, the quantity exchanged in this market will be:
A) 190

B) 220

C) 245

D) 250
Feedback: At the price of $13, the quantity supplied and the quantity demanded are both 220.
10 An improvement in production technology for a specific good will cause a(n):
INCORRECT
A) increase in demand and an increase in price

B) increase in demand and a drop in price

C) drop in price and increase in quantity demanded

D) increase in supply and an increase in price

Feedback: The improved technology will increase the supply of the product, thereby lowering the
equilibrium price and increasing the quantity demanded.

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