University of Bahrain
College of Business Administration
Department of Economics and Finance
Econ 140 - Microeconomics
Problem Set 3 (Chapter 3)
AlShawa
1. If we say that a price is "too high to clear the market," we mean that
a. the quantity demanded exceeds the quantity supplied.
b. the quantity supplied exceeds the quantity demanded.
c. the equilibrium price is above the current price.
d. the price of the good is likely to rise.
2. Which of the following will not cause a change in the demand for a product?
a. A change in consumers' income.
b. A change in consumers' tastes.
c. A change in the price of the product.
d. A change in the price of a substitute for the product.
3. Because of unseasonably cold weather, the supply of oranges has substantially decreased and
a. the demand for oranges will necessarily rise.
b. the equilibrium quantity of oranges will rise.
c. the amount of oranges that will be available at various prices has declined.
d. the price of oranges will fall.
4. Which of the following is the correct way to describe equilibrium in a market?
a. At equilibrium, demand equals supply.
b. At equilibrium, quantity demanded equals quantity supplied.
c. At equilibrium, market forces are no longer at work.
d. Equilibrium is the best combination of price and quantity.
5. If there is an increase in demand for personal computers and at the same time the cost of
making a personal computers goes down, we would expect that
a. price will rise, but the effect on quantity is uncertain.
b. price will fall, but the effect on quantity is uncertain.
c. the quantity will increase, but the effect on price is uncertain.
d. the quantity will decline, but the effect on price is uncertain.
6. Which of the following would most likely cause a reduction in the supply of video games?
a. An increase in the price of video games.
b. An increase in the demand for video games.
d. An increase in the price of computer chips used to make video games.
d. A decrease in the price of computer chips used to make video games.
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7. The bad weather in Central America has greatly reduced the number of cocoa trees. As a
result, you expect that the price of chocolate will be going up soon. A smart move on your
part would be to
a. increase your demand.
b. increase your quantity demanded.
c. decrease your demand.
d. decrease your quantity demand.
8. When the demand and supply of grapes increases at the same time, we can predict that
a. the price of grapes will rise.
b. the price of grapes will fall.
c. the quantity of grapes will rise.
d. the quantity of grapes will fall.
9. An increase in the price of steel used in making bicycles will lead to
a. higher prices of bicycles.
b. lower prices of bicycles.
c. no change in the price of bicycles.
d. a shift in the demand curve for bicycles.
10. Which of the following statements is correct?
a. An increase in supply with a decrease in demand will result in higher price.
b. An increase in supply with no change in demand will result in higher price.
c. An increase in supply with no change in demand will result in lower quantity.
d. An increase in demand with no change in supply will result in higher in quantity.
11. If the price of beef increased after decreases in supply and demand for beef, we know that
a. the demand curve decreased more than the supply curve.
b. the supply curve decreased more than the demand curve.
c. the supply and demand curves decreased by the same amount.
d. the supply and demand curves actually increased.
12. If QD = 20 - 2P, and QS = 5 + 3P, where QD is the quantity demanded, QS is the quantity
supplied, and P is the price, then the equilibrium price is
a. BD 1
b. BD 2
c. BD 3
d. BD 4
13. A market is most accurately characterized as
a. a set of laws that aids buying and selling.
b. a location where people meet to buy and sell.
c. any arrangement that facilitates buying and selling.
d. any means of reducing the problem of scarcity.
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14. If the price is below the equilibrium price, we can predict that
a. the price will increase, the quantity demanded will increase, and the quantity supplied
will decrease.
b. the price will increase, the quantity demanded will decrease, and the quantity supplied
will increase.
c. the price will decrease, the quantity demanded will increase, and the quantity supplied
will decrease.
d. the price will decrease, the quantity demanded will decrease, and the quantity supplied
will increase.
15. A rise in the price of a round of golf will shift the
a. demand curve for golf balls to the right.
b. demand curve for golf balls to the left.
c. supply curve for golf balls to the right.
d. supply curve for golf balls to the left.
16. An increase in the number of fast food restaurants will increase the
a. price of fast food meals.
b. demand for fast food meals.
c. supply for fast food meals.
d. demand for substitutes for fast food meals.
17. Which of the following is not held constant along a supply curve?
a. The price of the good itself
b. Number of sellers
c. Expected future prices
d. Factor prices
18. One reason why the quantity of a good demanded increases when its price falls is that the
a. price decline shifts the supply curve to the left.
b. lower price shifts the demand curve to the left.
c. lower price shifts the demand curve to the right.
d. lower price increases the real incomes of buyers, enabling them to buy more.
19. Assume the demand curve for product X shifts to the right. This might be caused by
a. a decline in income if X is an inferior good.
b. a decline in the price of Z if X and Z are substitute goods.
c. a change in consumer tastes which is unfavorable to X.
d. an increase in the price of Y if X and Y are complementary goods.
20. A decrease in factor prices will
a. increase equilibrium price and increase equilibrium quantity.
b. increase equilibrium price and decrease equilibrium quantity.
c. decrease equilibrium price and increase equilibrium quantity.
d. decrease equilibrium price and decrease equilibrium quantity.