Question 1

The existence of a third party in the medical care market separates the buying of medical care from the paying for medical care.

Accepted Answer

A) True 
 B)False

Question 2

When the price of a good rises,the demand for its complements will tend to rise.

Accepted Answer

A) True 
 B)False

Question 3

If new legislation allowed patients to sue their health-maintenance organization (HMO),we would expect the supply curve for HMO-provided health care to shift to the right and the price of such coverage to fall.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements is false?

Accepted Answer

A)  People who live in cities with good weather receive that benefit for free. 
B)  People who own property in cities with good weather receive higher rents, ceteris paribus. 
C)  Housing prices are higher in cities with better weather, ceteris paribus. 
D)  The demand for housing is higher in cities with good weather, ceteris paribus. 
A)  People who live in cities with good weather receive that benefit for free. 
B)  People who own property in cities with good weather receive higher rents, ceteris paribus. 
C)  Housing prices are higher in cities with better weather, ceteris paribus. 
D)  The demand for housing is higher in cities with good weather, ceteris paribus.

Question 5

The higher the price of medical care in general,the lower the ____________________________ medical care and the ______________________ specific items that make up medical care (such as,x-rays).

Accepted Answer

A)  quantity demanded of; higher the demand for 
B)  demand for; higher the demand for 
C)  quantity demanded of; lower the demand for 
D)  demand for; higher the quantity demanded of 
A)  quantity demanded of; higher the demand for 
B)  demand for; higher the demand for 
C)  quantity demanded of; lower the demand for 
D)  demand for; higher the quantity demanded of

Question 6

If a college sets its tuition __________ the equilibrium tuition,then it will have to use some form of nonprice-rationing device to determine who will be accepted for admission to the college.

Accepted Answer

A)  above 
B)  below 
C)  equal to 
D)  all of the above 
A)  above 
B)  below 
C)  equal to 
D)  all of the above

Question 7

The NCAA rule governing the limits on the amount of a scholarship a college can offer an athlete is an effective price floor.

Accepted Answer

A) True 
 B)False

Question 8

Exhibit 5-1
  
-Refer to Exhibit 5-1,which shows supply and demand for freeway space at both 8a.m.and ________ at 11 p.m.

Accepted Answer

A)  shortage; a surplus 
B)  surplus; a shortage 
C)  surplus; equilibrium 
D)  shortage; equilibrium 
A)  shortage; a surplus 
B)  surplus; a shortage 
C)  surplus; equilibrium 
D)  shortage; equilibrium

Question 9

Good weather in cities such as San Diego

Accepted Answer

A)  is absolutely free for the residents of that city. 
B)  is allocated using a weather market. 
C)  imposes indirect payments for the residents of that city. 
D)  b and c 
E)  none of the above 
A)  is absolutely free for the residents of that city. 
B)  is allocated using a weather market. 
C)  imposes indirect payments for the residents of that city. 
D)  b and c 
E)  none of the above

Question 10

The actions of speculators make the speculators better off,but they necessarily make the rest of society worse off.

Accepted Answer

A) True 
 B)False

Question 11

Exhibit 5-5
  
-Refer to Exhibit 5-5.If the airline charges price P? for both aisle seats and middle seats,the result will be

Accepted Answer

A)  a surplus of middle seats and the equilibrium quantity of aisle seats. 
B)  a surplus of aisle seats and the equilibrium quantity of middle seats. 
C)  a shortage of middle seats and the equilibrium quantity of aisle seats. 
D)  a shortage of aisle seats and the equilibrium quantity of middle seats. 
A)  a surplus of middle seats and the equilibrium quantity of aisle seats. 
B)  a surplus of aisle seats and the equilibrium quantity of middle seats. 
C)  a shortage of middle seats and the equilibrium quantity of aisle seats. 
D)  a shortage of aisle seats and the equilibrium quantity of middle seats.

Question 12

The price of a given good is likely to be less variable with speculators than it would be without speculators.

Accepted Answer

A) True 
 B)False

Question 13

Exhibit 5-2
  
-Refer to Exhibit 5-2.If the tuition is set at $50 there will be

Accepted Answer

A)  a shortage at 10 a.m. and a surplus at 8 a.m. 
B)  a surplus at 10 a.m. and a shortage at 8 a.m. 
C)  equilibrium at 8 a.m. and a surplus of seats at 10 a.m. 
D)  equilibrium at 8 a.m. and a shortage of seats at 10 a.m. 
A)  a shortage at 10 a.m. and a surplus at 8 a.m. 
B)  a surplus at 10 a.m. and a shortage at 8 a.m. 
C)  equilibrium at 8 a.m. and a surplus of seats at 10 a.m. 
D)  equilibrium at 8 a.m. and a shortage of seats at 10 a.m.

Question 14

Suppose that television show A is much more popular than television show B. The equilibrium price for a ticket to view the taping of show A is $40 and the equilibrium price for a ticket to view the taping of show B is -$30. If free tickets are offered for the taping of both shows,it is likely that

Accepted Answer

A)  there will be a shortage of tickets for show A and a surplus of tickets for show B. 
B)  there will be a surplus of tickets for show A and a shortage of tickets for show B. 
C)  there will be a surplus of tickets for both shows. 
D)  there will be a shortage of tickets for both shows. 
A)  there will be a shortage of tickets for show A and a surplus of tickets for show B. 
B)  there will be a surplus of tickets for show A and a shortage of tickets for show B. 
C)  there will be a surplus of tickets for both shows. 
D)  there will be a shortage of tickets for both shows.

Question 15

Exhibit 5-3
  
-Refer to Exhibit 5-3 which shows the demand and supply of a college athlete. If the college is allowed to pay this student athlete its market equilibrium wage of $10,000,what is the consumers' surplus for the college that buys this one athlete's services at this wage?

Accepted Answer

A)  area 1 
B)  area 2 
C)  area 3 
D)  area 1 + 2 
A)  area 1 
B)  area 2 
C)  area 3 
D)  area 1 + 2

Question 16

The supply of seats for an economics class at 10 a.m.is the same as the supply of seats for the same class at 12 noon,but while every student who wants to attend this class at 12 noon can,not every student who wants to attend the 10 a.m.class can.Tuition does not vary by time.It follows that the demand for the 10 a.m.class is __________ the demand for the 12 noon class.

Accepted Answer

A)  lower than 
B)  the same as 
C)  greater than 
D)  either a or b 
E)  none of the above 
A)  lower than 
B)  the same as 
C)  greater than 
D)  either a or b 
E)  none of the above

Question 17

Which of the following is false?

Accepted Answer

A)  If Mexican restaurant owners provide free chips and salsa to their customers, the quantity demanded of chips and salsa will be greater than if customers had to pay for them. 
B)  If the price of a good falls, then the demand for its complements will increase. 
C)  If the price of a good rises, then the price of its complements will rise. 
D)  If chips and salsa are offered for free to Mexican restaurant customers, then restaurants can charge a higher price for products that are complements to chips and salsa (such as beer). 
A)  If Mexican restaurant owners provide free chips and salsa to their customers, the quantity demanded of chips and salsa will be greater than if customers had to pay for them. 
B)  If the price of a good falls, then the demand for its complements will increase. 
C)  If the price of a good rises, then the price of its complements will rise. 
D)  If chips and salsa are offered for free to Mexican restaurant customers, then restaurants can charge a higher price for products that are complements to chips and salsa (such as beer).

Question 18

The demand to attend a certain college is represented by a downward-sloping demand curve.The supply of spots at the college is represented by a vertical supply curve.At the tuition that students are charged,there is a shortage of spots at the college.If the demand to attend the college rises,but the tuition stays constant,it follows that the

Accepted Answer

A)  GPA required to attend the college will probably rise. 
B)  GPA required to attend the college will probably fall. 
C)  SAT score required to attend the college will probably not change. 
D)  a and c 
E)  There is not enough information to answer this question. 
A)  GPA required to attend the college will probably rise. 
B)  GPA required to attend the college will probably fall. 
C)  SAT score required to attend the college will probably not change. 
D)  a and c 
E)  There is not enough information to answer this question.

Question 19

In a given community,if the government builds more freeways,then the supply curve for freeway space shifts rightward and the demand curve for freeway space shifts leftward.

Accepted Answer

A) True 
 B)False

Question 20

If the purchase and sale of marijuana becomes legalized

Accepted Answer

A)  the equilibrium price and quantity will both rise. 
B)  the equilibrium price will fall, but the change in equilibrium quantity depends upon whether the demand curve shifts rightward more or the supply curve shifts rightward more. 
C)  the equilibrium quantity will rise, but the change in equilibrium price depends upon whether the demand curve shifts rightward more or the supply curve shifts rightward more. 
D)  the equilibrium price and quantity will both fall. 
A)  the equilibrium price and quantity will both rise. 
B)  the equilibrium price will fall, but the change in equilibrium quantity depends upon whether the demand curve shifts rightward more or the supply curve shifts rightward more. 
C)  the equilibrium quantity will rise, but the change in equilibrium price depends upon whether the demand curve shifts rightward more or the supply curve shifts rightward more. 
D)  the equilibrium price and quantity will both fall.

Exam 5: Supply, Demand, and Price: Applications

The existence of a third party in the medical care market separates the buying of medical care from the paying for medical care.

When the price of a good rises,the demand for its complements will tend to rise.

If new legislation allowed patients to sue their health-maintenance organization (HMO),we would expect the supply curve for HMO-provided health care to shift to the right and the price of such coverage to fall.

Which of the following statements is false?

The higher the price of medical care in general,the lower the ____________________________ medical care and the ______________________ specific items that make up medical care (such as,x-rays).

If a college sets its tuition __________ the equilibrium tuition,then it will have to use some form of nonprice-rationing device to determine who will be accepted for admission to the college.

The NCAA rule governing the limits on the amount of a scholarship a college can offer an athlete is an effective price floor.

Exhibit 5-1 -Refer to Exhibit 5-1,which shows supply and demand for freeway space at both 8a.m.and ________ at 11 p.m.

Good weather in cities such as San Diego

The actions of speculators make the speculators better off,but they necessarily make the rest of society worse off.

Exhibit 5-5 -Refer to Exhibit 5-5.If the airline charges price P? for both aisle seats and middle seats,the result will be

The price of a given good is likely to be less variable with speculators than it would be without speculators.

Exhibit 5-2 -Refer to Exhibit 5-2.If the tuition is set at $50 there will be

Suppose that television show A is much more popular than television show B. The equilibrium price for a ticket to view the taping of show A is $40 and the equilibrium price for a ticket to view the taping of show B is -$30. If free tickets are offered for the taping of both shows,it is likely that

Exhibit 5-3 -Refer to Exhibit 5-3 which shows the demand and supply of a college athlete. If the college is allowed to pay this student athlete its market equilibrium wage of $10,000,what is the consumers' surplus for the college that buys this one athlete's services at this wage?

Which of the following is false?

In a given community,if the government builds more freeways,then the supply curve for freeway space shifts rightward and the demand curve for freeway space shifts leftward.

If the purchase and sale of marijuana becomes legalized

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

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

The higher the price of medical care in general,the lower the ______ medical care and the specific items that make up medical care (such as,x-rays).