Chapter 3

ECON 140: CHAPTER 3
REVIEW QUESTIONS & ANSWERS
Tutorial Session
Instructor: Muna Alromaihi
Sections: 15, 16, 24, 32, 43, 44, 47, 48
MCQs
1. The "law of demand" states that changes in
A) demand are related directly to changes in supply.

B) the quantity demanded of a good are not related to changes in the quantity supplied.
C) the quantity demanded of a good are inversely related to changes in its price.
D) demand are inversely related to changes in supply.
2. The "law of demand" refers to the fact that, all other things remaining the same, when
the price of a good rises
A) the demand curve shifts rightward.

B) the demand curve shifts leftward.
C) there is a movement down along the demand curve to a larger quantity demanded.
D) there is a movement up along the demand curve to a smaller quantity demanded.
3. In the market for magazines, the "income effect" means that
A) magazines are usually purchased by people with higher-than-average incomes.

B) a decrease in the price of a substitute product like books will make magazine
readers feel a little poorer than they were before.
C) an increase in the price of magazines will reduce the total purchasing power of
magazine readers, making them able to afford fewer magazines.
D) an increase in the price of magazines will raise the relative price of magazines to
books, causing magazine readers to read more books and fewer magazines.
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4. If the price of an apple increases from 50¢ to 60¢, the quantity demanded will decrease
because of
A) the substitution effect only.
B) the income effect only.
C) a change in income.
D) the substitution and income effects.
5. Which of the following influences people's buying plans and does not shift the demand
curve?
A) the price of the good
B) the prices of related goods
C) income
D) preferences
6. What happens to the demand for DVDs if the price of a DVD player falls?
A) The demand for DVDs decreases because the price of a substitute falls.
B) The demand for DVDs increases because the price of a complement falls.
C) The demand for DVDs decreases because the price of a complement falls.
D) The demand for DVDs remains unchanged.
7. The demand curve for a normal good shifts leftward if income ________ or the expected
future price ________.
A) decreases; falls
B) decreases; rises
C) increases; falls
D) increases; rises
8. An increase in the number of consumers

A) results only in a movement along the demand curve.
B) shifts the supply curve leftward
C) shifts the demand curve rightward.
D) Both answers B and C are correct.
9. In the above figure, an increase in the quantity demanded is represented by a
movement from point d to
A) point b only.
B) point c only.
C) point a.
D) both points b and c.
10. In the figure above, which movement reflects an increase in demand?

A) from point a to point e
B) from point a to point b
C) from point a to point c
D) from point a to point d
11. Which of the following is NOT one of the factors that influences the supply of a
product?
A) technology
B) income
C) number of suppliers
D) expected future prices
12. The "law of supply" states that, other things remaining the same, firms produce
A) more of a good the less it costs to produce it.
B) less of a good the more it costs to produce it.
C) more of a good the higher its price.
D) less of a good as the required resources become scarcer.
13. Consider the figure above showing supply curves for soft drinks. Suppose the economy
is at point a. A movement to point c could be the result of
A) a decrease in technology.
B) a decrease in the relative price of a soft drink.
C) an increase in the relative price of a soft drink.
D) an increase in the money price of a soft drink.
14. The above table shows the demand schedule and supply schedule for chocolate chip
cookies. What is the equilibrium quantity and equilibrium price for chocolate chip
cookies?
A) 7 pounds, $3.00 per pound
B) 2 pounds, $3.00 per pound
C) 2 pounds, $6.00 per pound
D) 4 pounds, $5.00 per pound
15. The equilibrium price in the above figure is

A) $2.
B) $4.
C) $6.
D) $8.
16. The equilibrium quantity in the above figure is
A) 200 units.
B) 300 units.
C) 400 units.
D) 600 units.
17. At a price of $10 in the above figure, there is

A) a surplus of 200 units.
B) a shortage of 200 units.
C) a surplus of 400 units.
D) a shortage of 400 units
18. At a price of $4 in the above figure,

A) the equilibrium quantity is 400 units.
B) there is a surplus of 200 units.
C) the quantity supplied is 400 units.
D) there is a shortage of 200 units.
MCQ Answers:
1. C 2. D 3. C 4. D 5. A 6. B 7. A 8. C 9. C 10. D
11. B 12. C 13. B 14. D 15. C 16. B 17. C 18. D
END OF QUESTION REVIEW FOR CHAPTER THREE
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ECON 140: CHAPTER 3

REVIEW QUESTIONS & ANSWERS

1. The "law of demand" states that changes in

A) demand are related directly to changes in supply.

A) the demand curve shifts rightward.

3. In the market for magazines, the "income effect" means that

A) magazines are usually purchased by people with higher-than-average incomes.

8. An increase in the number of consumers

10. In the figure above, which movement reflects an increase in demand?

15. The equilibrium price in the above figure is

17. At a price of $10 in the above figure, there is

18. At a price of $4 in the above figure,

END OF QUESTION REVIEW FOR CHAPTER THREE

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