Question 1

The objective of speculators is to buy at one price and sell at a lower price.

Accepted Answer

A) True 
 B)False

Question 2

Exhibit 5-1
  
-Refer to Exhibit 5-1,which shows supply and demand for freeway space at both 8a.m.and 11 p.m.Which toll creates equilibrium at 11 p.m.?

Accepted Answer

A)  P2 
B)  P1 
C)  0 
D)  It is not constant. 
A)  P2 
B)  P1 
C)  0 
D)  It is not constant.

Question 3

If the demand curve for tickets to a television show taping intersects the supply curve for tickets to that show at a negative price,then in order to put that market in equilibrium the producers would need to pay people to view the show being taped.

Accepted Answer

A) True 
 B)False

Question 4

Using proper economic terminology,describe why Mexican restaurants often provide chips and salsa for free to their customers.

Accepted Answer

When restaurant owners provide chips and

Question 5

Economists perceive a college applicant's grade point average and standardized test scores (such as SAT and ACT scores)to be rationing devices.

Accepted Answer

A) True 
 B)False

Question 6

Exhibit 5-2
  
-Refer to Exhibit 5-2.If the tuition is set at $70 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 10 a.m. and a surplus of seats at 8 a.m. 
D)  equilibrium at 10 a.m. and a shortage of seats at 8 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 10 a.m. and a surplus of seats at 8 a.m. 
D)  equilibrium at 10 a.m. and a shortage of seats at 8 a.m.

Question 7

Exhibit 5-3
  
-Refer to Exhibit 5-3 which shows the demand and supply of a college athlete. Suppose that NCAA rules limit the amount that the college can pay this athlete,such that their payment can not exceed the cost of attending the college (currently,$8,000). What is the consumers' surplus for the college (with respect to this one athlete)?

Accepted Answer

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

Question 8

The price of good B has a pattern such that P = $20 on Monday through Thursday of every week,and P = $25 on Fridays. If speculators begin participating in the market for good B,their actions will likely lead to a(n)______________ in the price of good B on Monday through Thursday and a(n)_______________ in the price of good B on Friday.

Accepted Answer

A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease 
A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease

Question 9

If the supply of aisle seats equals the supply of middle seats on an airplane,and the demand for aisle seats is _____________ than the demand for middle seats,then the equilibrium price of aisle seats will be ______________ the equilibrium price of middle seats.

Accepted Answer

A)  greater; higher than 
B)  less; higher than 
C)  greater; lower than 
D)  less; the same as 
A)  greater; higher than 
B)  less; higher than 
C)  greater; lower than 
D)  less; the same as

Question 10

Exhibit 5-1
  
-Refer to Exhibit 5-1,which shows supply and demand for freeway space at both 8a.m.and 11 p.m.A toll of P? creates __________ at 8 a.m.and __________ at 11 p.m.

Accepted Answer

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

Question 11

Exhibit 5-1
  
-Refer to Exhibit 5-1,which shows supply and demand for freeway space at both 8a.m. Graphically,the result of the increase in freeway space would be shown bya.m.and 11 p.m.Suppose that the government decides to set the money price of driving on the freeway at zero,but builds more freeways to eliminate the shortage of freeway space at 8

Accepted Answer

A)  shifting the supply of freeway space curve rightward. 
B)  shifting the demand for freeway space curve leftward from D8a.m. to D11p.m. 
C)  a movement up along D8a.m. to the point where D8a.m. intersects the supply curve. 
D)  shifting the supply of freeway space curve leftward. 
A)  shifting the supply of freeway space curve rightward. 
B)  shifting the demand for freeway space curve leftward from D8a.m. to D11p.m. 
C)  a movement up along D8a.m. to the point where D8a.m. intersects the supply curve. 
D)  shifting the supply of freeway space curve leftward.

Question 12

Exhibit 5-1
  
-Refer to Exhibit 5-1,which shows supply and demand for freeway space at both 8a.m.and 11 p.m.Suppose that the government decides to set the money price of driving on the freeway at zero,but creates programs that encourage drivers to carpool.If the carpooling program is sufficiently successful to eliminate the shortage of freeway space at 8 a.m.,graphically the result of the increase in carpooling would be a

Accepted Answer

A)  rightward shift of the supply of freeway space curve. 
B)  leftward shift of the demand for freeway space curve from D8a.m. to D11p.m. 
C)  movement up along D8a.m. to the point where D8a.m. intersects the supply curve. 
D)  leftward shift of the supply of freeway space curve. 
A)  rightward shift of the supply of freeway space curve. 
B)  leftward shift of the demand for freeway space curve from D8a.m. to D11p.m. 
C)  movement up along D8a.m. to the point where D8a.m. intersects the supply curve. 
D)  leftward shift of the supply of freeway space curve.

Question 13

Exhibit 5-1
  
-Refer to Exhibit 5-1,which shows supply and demand for freeway space at both 8a.m.and 11 p.m.A toll of P? creates __________ at 8 a.m.and __________ at 11 p.m.

Accepted Answer

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

Question 14

To an economist,freeway congestion is a sign that the price to drive on the freeway is

Accepted Answer

A)  below its equilibrium level. 
B)  at its equilibrium level. 
C)  above its equilibrium level. 
D)  either a or c 
E)  none of the above 
A)  below its equilibrium level. 
B)  at its equilibrium level. 
C)  above its equilibrium level. 
D)  either a or c 
E)  none of the above

Question 15

University A sets tuition at the equilibrium level based on price and then imposes entrance requirements in the form of minimum high school GPA and SAT scores.Enrollment at this school will likely be

Accepted Answer

A)  at equilibrium. 
B)  below equilibrium because of the non-price rationing. 
C)  above equilibrium because of the combination of price and non-price rationing. 
D)  none of the above 
A)  at equilibrium. 
B)  below equilibrium because of the non-price rationing. 
C)  above equilibrium because of the combination of price and non-price rationing. 
D)  none of the above

Question 16

If the government legalized the purchase and sale of marijuana,the equilibrium quantity would _________ and the price would ________ if the supply of marijuana increased by _______ than the demand for marijuana increased.

Accepted Answer

A)  rise; rise; more 
B)  fall; rise; more 
C)  rise; fall; more 
D)  rise; rise; less 
E)  none of the above 
A)  rise; rise; more 
B)  fall; rise; more 
C)  rise; fall; more 
D)  rise; rise; less 
E)  none of the above

Question 17

If there is freeway congestion at 8a.m.,we can reduce (or eliminate)the congestion by

Accepted Answer

A)  building more freeways. 
B)  raising the price to drive on the freeway at 8 
C)  encouraging workers to carpool.. 
D)  a and b 
E)  a, b, and c 
A)  building more freeways. 
B)  raising the price to drive on the freeway at 8 
C)  encouraging workers to carpool.. 
D)  a and b 
E)  a, b, and c

Question 18

If the government legalized the purchase and sale of marijuana,the equilibrium quantity would _________ and the price would ________ if the supply of marijuana increased by _______ than the demand for marijuana increased.

Accepted Answer

A)  fall; fall; more 
B)  fall; rise; more 
C)  rise; fall; more 
D)  rise; fall; less 
E)  none of the above 
A)  fall; fall; more 
B)  fall; rise; more 
C)  rise; fall; more 
D)  rise; fall; less 
E)  none of the above

Question 19

As the price of good Z falls,the quantity demanded of good Z rises,but the quantity supplied of good Z does not change. Based upon this information we can conclude that the demand curve for good Z is ________________ and the supply curve for good Z is ________________.

Accepted Answer

A)  downward sloping; upward sloping 
B)  upward sloping; downward sloping 
C)  upward sloping; vertical 
D)  downward sloping; vertical 
E)  vertical; downward sloping 
A)  downward sloping; upward sloping 
B)  upward sloping; downward sloping 
C)  upward sloping; vertical 
D)  downward sloping; vertical 
E)  vertical; downward sloping

Question 20

Exhibit 5-5
  
-Refer to Exhibit 5-5.If the airline charges price P1 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.

Exam 5: Supply, Demand, and Price: Applications

The objective of speculators is to buy at one price and sell at a lower price.

Exhibit 5-1 -Refer to Exhibit 5-1,which shows supply and demand for freeway space at both 8a.m.and 11 p.m.Which toll creates equilibrium at 11 p.m.?

If the demand curve for tickets to a television show taping intersects the supply curve for tickets to that show at a negative price,then in order to put that market in equilibrium the producers would need to pay people to view the show being taped.

Using proper economic terminology,describe why Mexican restaurants often provide chips and salsa for free to their customers.

Economists perceive a college applicant's grade point average and standardized test scores (such as SAT and ACT scores)to be rationing devices.

Exhibit 5-2 -Refer to Exhibit 5-2.If the tuition is set at $70 there will be

If the supply of aisle seats equals the supply of middle seats on an airplane,and the demand for aisle seats is _____________ than the demand for middle seats,then the equilibrium price of aisle seats will be ______________ the equilibrium price of middle seats.

Exhibit 5-1 -Refer to Exhibit 5-1,which shows supply and demand for freeway space at both 8a.m.and 11 p.m.A toll of P? creates __________ at 8 a.m.and __________ at 11 p.m.

Exhibit 5-1 -Refer to Exhibit 5-1,which shows supply and demand for freeway space at both 8a.m.and 11 p.m.A toll of P? creates __________ at 8 a.m.and __________ at 11 p.m.

To an economist,freeway congestion is a sign that the price to drive on the freeway is

University A sets tuition at the equilibrium level based on price and then imposes entrance requirements in the form of minimum high school GPA and SAT scores.Enrollment at this school will likely be

If the government legalized the purchase and sale of marijuana,the equilibrium quantity would _________ and the price would ________ if the supply of marijuana increased by _______ than the demand for marijuana increased.

If there is freeway congestion at 8a.m.,we can reduce (or eliminate)the congestion by

If the government legalized the purchase and sale of marijuana,the equilibrium quantity would _________ and the price would ________ if the supply of marijuana increased by _______ than the demand for marijuana increased.

As the price of good Z falls,the quantity demanded of good Z rises,but the quantity supplied of good Z does not change. Based upon this information we can conclude that the demand curve for good Z is ________________ and the supply curve for good Z is ________________.

Exhibit 5-5 -Refer to Exhibit 5-5.If the airline charges price P1 for both aisle seats and middle seats,the result will be

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

If the supply of aisle seats equals the supply of middle seats on an airplane,and the demand for aisle seats is _ than the demand for middle seats,then the equilibrium price of aisle seats will be __ the equilibrium price of middle seats.

Exhibit 5-1 -Refer to Exhibit 5-1,which shows supply and demand for freeway space at both 8a.m.and 11 p.m.A toll of P? creates at 8 a.m.and at 11 p.m.

Exhibit 5-1 -Refer to Exhibit 5-1,which shows supply and demand for freeway space at both 8a.m.and 11 p.m.A toll of P? creates at 8 a.m.and at 11 p.m.

If the government legalized the purchase and sale of marijuana,the equilibrium quantity would ___ and the price would if the supply of marijuana increased by _ than the demand for marijuana increased.

If the government legalized the purchase and sale of marijuana,the equilibrium quantity would ___ and the price would if the supply of marijuana increased by _ than the demand for marijuana increased.

As the price of good Z falls,the quantity demanded of good Z rises,but the quantity supplied of good Z does not change. Based upon this information we can conclude that the demand curve for good Z is and the supply curve for good Z is .

Exhibit 5-5 -Refer to Exhibit 5-5.If the airline charges price P₁for both aisle seats and middle seats,the result will be