Question 1

The "voluntary bumping plan" used by airlines to resolve the problem of overbooked flights was developed by economist

Accepted Answer

A)  Adam Smith. 
B)  John Maynard Keynes. 
C)  Alan Greenspan. 
D)  Julian Simon. 
A)  Adam Smith. 
B)  John Maynard Keynes. 
C)  Alan Greenspan. 
D)  Julian Simon.

Question 2

If the U.S.government imposes a more restrictive import quota on Japanese video gaming systems,the ____________ curve for Japanese video gaming systems in the U.S.will shift ___________.

Accepted Answer

A)  supply; leftward 
B)  supply; rightward 
C)  demand; leftward 
D)  demand; rightward 
A)  supply; leftward 
B)  supply; rightward 
C)  demand; leftward 
D)  demand; rightward

Question 3

A surplus will occur in a market when the price of the product is above the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 4

If Max's demand for hot dogs falls as his income rises,then for Max hot dogs are

Accepted Answer

A)  a bad good. 
B)  an inferior good. 
C)  a preferential good. 
D)  a normal good. 
E)  a neutral good. 
A)  a bad good. 
B)  an inferior good. 
C)  a preferential good. 
D)  a normal good. 
E)  a neutral good.

Question 5

Tobacco production is one of the more heavily subsidized industries in the United States.Suppose that as a result of intense lobbying from health-related concerns,Congress repeals the tobacco firms' subsidies.Which of the following scenarios would likely occur?

Accepted Answer

A)  The tobacco firms' supply curve would shift rightward, as it would now be cheaper to produce each level of output. 
B)  The tobacco firms' supply curve would shift leftward, since it would now cost more to produce each level of output. 
C)  The tobacco firms would not experience any shift in their supply curves; subsidies don't affect output. 
D)  There would be a movement along the supply curve for tobacco, but the supply curve would not shift. 
A)  The tobacco firms' supply curve would shift rightward, as it would now be cheaper to produce each level of output. 
B)  The tobacco firms' supply curve would shift leftward, since it would now cost more to produce each level of output. 
C)  The tobacco firms would not experience any shift in their supply curves; subsidies don't affect output. 
D)  There would be a movement along the supply curve for tobacco, but the supply curve would not shift.

Question 6

Which of the following statements is false?

Accepted Answer

A)  The shift factors for the supply curve are: income, preferences, prices of related goods, the number of buyers, and expectations of future price. 
B)  A change in (own) price changes the quantity supplied of a good. 
C)  A change in demand is graphically represented by a shift in the demand curve. 
D)  A change in quantity demanded is represented by a movement along a given demand curve. 
A)  The shift factors for the supply curve are: income, preferences, prices of related goods, the number of buyers, and expectations of future price. 
B)  A change in (own) price changes the quantity supplied of a good. 
C)  A change in demand is graphically represented by a shift in the demand curve. 
D)  A change in quantity demanded is represented by a movement along a given demand curve.

Question 7

One reason that helps to explain the law of supply is the law of

Accepted Answer

A)  diminishing marginal utility. 
B)  diminishing marginal returns. 
C)  decreasing opportunity costs. 
D)  demand. 
A)  diminishing marginal utility. 
B)  diminishing marginal returns. 
C)  decreasing opportunity costs. 
D)  demand.

Question 8

Exhibit 3-6
  
-Refer to Exhibit 3-6.If D? is the relevant demand curve,an increase in the price of good X may cause

Accepted Answer

A)  demand to shift from D1 to D2. 
B)  demand to shift from D1 to D3. 
C)  a movement along D1 from point A to point B. 
D)  a movement along D1 from point A to point C. 
A)  demand to shift from D1 to D2. 
B)  demand to shift from D1 to D3. 
C)  a movement along D1 from point A to point B. 
D)  a movement along D1 from point A to point C.

Question 9

"As the price of apples goes up,the demand for apples goes down." The author of this statement

Accepted Answer

A)  implies that price and demand are unrelated. 
B)  uses the word "demand" when he should use the word "supply." 
C)  uses the word "demand" when he should use the words "quantity demanded." 
D)  implies that demand and price have a direct relationship. 
A)  implies that price and demand are unrelated. 
B)  uses the word "demand" when he should use the word "supply." 
C)  uses the word "demand" when he should use the words "quantity demanded." 
D)  implies that demand and price have a direct relationship.

Question 10

Exhibit 3-5
  
-Refer to Exhibit 3-5. In the market shown,if equilibrium was originally at point V and is now at point Z,the new equilibrium price is __________ it was originally and the new equilibrium quantity is ____________ it was originally.

Accepted Answer

A)  greater than; greater than 
B)  less than; greater than 
C)  greater than; less than 
D)  less than; less than 
A)  greater than; greater than 
B)  less than; greater than 
C)  greater than; less than 
D)  less than; less than

Question 11

A(n)_______________ good is one in which as income rises or falls,there is no change in the demand for the good.

Accepted Answer

A)  normal 
B)  inferior 
C)  neutral 
D)  substitute 
E)  complementary 
A)  normal 
B)  inferior 
C)  neutral 
D)  substitute 
E)  complementary

Question 12

A "decrease in demand" means that

Accepted Answer

A)  the demand curve has shifted to the left. 
B)  price has declined and consumers want to purchase more of the good. 
C)  the demand curve has shifted to the right. 
D)  the price of the good can be expected to decline, assuming supply stays constant. 
A)  the demand curve has shifted to the left. 
B)  price has declined and consumers want to purchase more of the good. 
C)  the demand curve has shifted to the right. 
D)  the price of the good can be expected to decline, assuming supply stays constant.

Question 13

A change in price will lead to a change in __________ and to a change in __________,while a change in preferences will lead to a change in __________ and a change in the prices of relevant resources will lead to a change in __________.

Accepted Answer

A)  quantity supplied; demand; income; supply 
B)  demand; quantity supplied; supply; quantity demanded 
C)  quantity supplied; supply; quantity supplied; demand 
D)  quantity supplied; quantity demanded; demand; supply 
E)  quantity supplied; quantity demanded; supply; demand 
A)  quantity supplied; demand; income; supply 
B)  demand; quantity supplied; supply; quantity demanded 
C)  quantity supplied; supply; quantity supplied; demand 
D)  quantity supplied; quantity demanded; demand; supply 
E)  quantity supplied; quantity demanded; supply; demand

Question 14

Which of the following pairs of goods would be most likely to be complements?

Accepted Answer

A)  butter and margarine. 
B)  peanuts and peanut butter. 
C)  DVD's and DVD players. 
D)  hiking boots and tennis shoes. 
E)  All of the above 
A)  butter and margarine. 
B)  peanuts and peanut butter. 
C)  DVD's and DVD players. 
D)  hiking boots and tennis shoes. 
E)  All of the above

Question 15

An advance in technology causes

Accepted Answer

A)  a rightward shift in the supply curve. 
B)  a leftward shift in the supply curve. 
C)  the supply curve to go from upward sloping to vertical. 
D)  the supply curve to go from vertical to upward sloping. 
A)  a rightward shift in the supply curve. 
B)  a leftward shift in the supply curve. 
C)  the supply curve to go from upward sloping to vertical. 
D)  the supply curve to go from vertical to upward sloping.

Question 16

Describe one of the two reasons given in the text to help explain why price and quantity demanded are inversely related.

Accepted Answer

One reason that price and quantity deman

Question 17

If the supply curve and the demand curve for lettuce both shift to the left by an equal amount,what can we say about the resulting changes in price and quantity?

Accepted Answer

A)  The price will increase, but the quantity may increase or decrease. 
B)  The price will increase, and the quantity will increase. 
C)  The price will decrease, and the quantity will increase. 
D)  The price will stay the same, but the quantity will increase. 
E)  The price will stay the same, but the quantity will decrease. 
A)  The price will increase, but the quantity may increase or decrease. 
B)  The price will increase, and the quantity will increase. 
C)  The price will decrease, and the quantity will increase. 
D)  The price will stay the same, but the quantity will increase. 
E)  The price will stay the same, but the quantity will decrease.

Question 18

Exhibit 3-11
  
-Refer to Exhibit 3-11. Fill in blanks (E)and (F)respectively with "Exchange" or "No Exchange"to indicate whether or not exchange would take place at the given prices.

Accepted Answer

A)  Exchange; Exchange 
B)  Exchange; No Exchange 
C)  No Exchange; Exchange 
D)  No Exchange; No Exchange 
A)  Exchange; Exchange 
B)  Exchange; No Exchange 
C)  No Exchange; Exchange 
D)  No Exchange; No Exchange

Question 19

An "increase in the quantity demanded" means that

Accepted Answer

A)  the demand curve has shifted to the right. 
B)  the supply curve has shifted to the left. 
C)  price has declined and consumers therefore want to purchase more of the good. 
D)  given supply, the price of the good can be expected to rise. 
A)  the demand curve has shifted to the right. 
B)  the supply curve has shifted to the left. 
C)  price has declined and consumers therefore want to purchase more of the good. 
D)  given supply, the price of the good can be expected to rise.

Question 20

Exhibit 3-3
  
-Refer to Exhibit 3-3.A shift in demand from D? to D? can NOT occur from a change in the

Accepted Answer

A)  population. 
B)  price of a substitute for good Y. 
C)  average income of good Y buyers. 
D)  price of good Y. 
A)  population. 
B)  price of a substitute for good Y. 
C)  average income of good Y buyers. 
D)  price of good Y.

Exam 3: Supply and Demand: Theory

The "voluntary bumping plan" used by airlines to resolve the problem of overbooked flights was developed by economist

If the U.S.government imposes a more restrictive import quota on Japanese video gaming systems,the ____________ curve for Japanese video gaming systems in the U.S.will shift ___________.

A surplus will occur in a market when the price of the product is above the equilibrium price.

If Max's demand for hot dogs falls as his income rises,then for Max hot dogs are

Tobacco production is one of the more heavily subsidized industries in the United States.Suppose that as a result of intense lobbying from health-related concerns,Congress repeals the tobacco firms' subsidies.Which of the following scenarios would likely occur?

Which of the following statements is false?

One reason that helps to explain the law of supply is the law of

Exhibit 3-6 -Refer to Exhibit 3-6.If D? is the relevant demand curve,an increase in the price of good X may cause

"As the price of apples goes up,the demand for apples goes down." The author of this statement

Exhibit 3-5 -Refer to Exhibit 3-5. In the market shown,if equilibrium was originally at point V and is now at point Z,the new equilibrium price is __________ it was originally and the new equilibrium quantity is ____________ it was originally.

A(n)_______________ good is one in which as income rises or falls,there is no change in the demand for the good.

A "decrease in demand" means that

A change in price will lead to a change in __________ and to a change in __________,while a change in preferences will lead to a change in __________ and a change in the prices of relevant resources will lead to a change in __________.

Which of the following pairs of goods would be most likely to be complements?

An advance in technology causes

Describe one of the two reasons given in the text to help explain why price and quantity demanded are inversely related.

If the supply curve and the demand curve for lettuce both shift to the left by an equal amount,what can we say about the resulting changes in price and quantity?

Exhibit 3-11 -Refer to Exhibit 3-11. Fill in blanks (E)and (F)respectively with "Exchange" or "No Exchange"to indicate whether or not exchange would take place at the given prices.

An "increase in the quantity demanded" means that

Exhibit 3-3 -Refer to Exhibit 3-3.A shift in demand from D? to D? can NOT occur from a change in the

What Economics Is About

Production Possibilities Frontier Framework

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Macroeconomic Measurements: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Agriculture: Problems, Policies, and Unintended Effects

Filters

If the U.S.government imposes a more restrictive import quota on Japanese video gaming systems,the __ curve for Japanese video gaming systems in the U.S.will shift _.

Exhibit 3-5 -Refer to Exhibit 3-5. In the market shown,if equilibrium was originally at point V and is now at point Z,the new equilibrium price is it was originally and the new equilibrium quantity is __ it was originally.

A change in price will lead to a change in and to a change in ,while a change in preferences will lead to a change in and a change in the prices of relevant resources will lead to a change in .