Question 1

Which of the following is most likely to be an inferior good?

Accepted Answer

A) fur coats 
B) Porsches 
C) used clothing 
D) steak 
A) fur coats 
B) Porsches 
C) used clothing 
D) steak

Question 2

Because of unseasonably cold weather, the supply of oranges has substantially decreased.This statement indicates that:

Accepted Answer

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. 
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.

Question 3

Refer to the above diagram.The highest price that buyers will be willing and able to pay for 100 units of this product is:

Accepted Answer

A) $30 
B) $60 
C) $40 
D) $20 
A) $30 
B) $60 
C) $40 
D) $20

Question 4

In which of the following instances will the effect on equilibrium price be dependent on the magnitude of the shifts in supply and demand?

Accepted Answer

A) demand rises and supply rises 
B) supply falls and demand remains constant 
C) demand rises and supply falls 
D) supply rises and demand falls 
A) demand rises and supply rises 
B) supply falls and demand remains constant 
C) demand rises and supply falls 
D) supply rises and demand falls

Question 5

Other things equal, an excise tax on a product will:

Accepted Answer

A) increase its supply. 
B) increase its price. 
C) increase the quantity sold. 
D) increase its demand. 
A) increase its supply. 
B) increase its price. 
C) increase the quantity sold. 
D) increase its demand.

Question 6

The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q.Refer to the above information.The equilibrium price for X is:

Accepted Answer

A) $2 
B) $4 
C) $6 
D) $7 
A) $2 
B) $4 
C) $6 
D) $7

Question 7

When the price of a product increases, a consumer is able to buy less of it with a given money income.This describes:

Accepted Answer

A) the cost effect. 
B) the inflationary effect. 
C) the income effect. 
D) the substitution effect. 
A) the cost effect. 
B) the inflationary effect. 
C) the income effect. 
D) the substitution effect.

Question 8

An increase in the price of corn:

Accepted Answer

A) will eventually increase the cost of corn-fed beef and, the price of hamburgers. 
B) will eventually decrease the price of corn syrup and, the price of soft drinks. 
C) will eventually reduce the price of corn-tortillas. 
D) will eventually decrease the cost of corn-fed beef and, increase the price of steak. 
A) will eventually increase the cost of corn-fed beef and, the price of hamburgers. 
B) will eventually decrease the price of corn syrup and, the price of soft drinks. 
C) will eventually reduce the price of corn-tortillas. 
D) will eventually decrease the cost of corn-fed beef and, increase the price of steak.

Question 9

Which of the above diagrams illustrate(s) the effect of an increase in automobile worker wages on the market for automobiles?

Accepted Answer

A) A only 
B) B only 
C) C only 
D) D only 
A) A only 
B) B only 
C) C only 
D) D only

Question 10

If the price of product L increases, the demand curve for close-substitute product J will:

Accepted Answer

A) shift downward toward the horizontal axis. 
B) shift to the left. 
C) shift to the right. 
D) remain unchanged. 
A) shift downward toward the horizontal axis. 
B) shift to the left. 
C) shift to the right. 
D) remain unchanged.

Question 11

As a result of a decrease in the price of a hamburger, consumers buy more hamburgers and fewer frankfurters.This is an illustration of:

Accepted Answer

A) consumer sovereignty. 
B) the income effect. 
C) the substitution effect. 
D) changing tastes and preferences. 
A) consumer sovereignty. 
B) the income effect. 
C) the substitution effect. 
D) changing tastes and preferences.

Question 12

Which would cause an increase in quantity supplied of product A?

Accepted Answer

A) an improvement in technology affecting the production of A 
B) an increase in the price of product B, a complement in the production of A 
C) a decrease in the price of resources used in producing A 
D) an increase in the price of A 
A) an improvement in technology affecting the production of A 
B) an increase in the price of product B, a complement in the production of A 
C) a decrease in the price of resources used in producing A 
D) an increase in the price of A

Question 13

Refer to the diagram.The equilibrium price and quantity in this market will be:

Accepted Answer

A) $1.00 and 200. 
B) $1.60 and 130. 
C) $.50 and 130. 
D) $1.60 and 290. 
A) $1.00 and 200. 
B) $1.60 and 130. 
C) $.50 and 130. 
D) $1.60 and 290.

Question 14

You are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product Xupon (1) the demand (D) for, or supply (S) of, X, (2) the equilibrium price (P) of X and (3) the equilibrium quantity (Q) of X.Refer to the above.An increase in the tastes and preferences for X will:

Accepted Answer

A) increase S, decrease P, and increase Q. 
B) decrease S, decrease P, and decrease Q. 
C) increase D, increase P, and increase Q. 
D) decrease D, decrease P, and decrease Q. 
A) increase S, decrease P, and increase Q. 
B) decrease S, decrease P, and decrease Q. 
C) increase D, increase P, and increase Q. 
D) decrease D, decrease P, and decrease Q.

Question 15

Which of the following would most likely cause a decrease in current consumer demand for normal good X?

Accepted Answer

A) a decline in the price of product X 
B) an increase in consumer income 
C) a decrease in the prices of goods which are close substitutes for X 
D) an increase in the price which consumers expect will prevail for product X in the future 
A) a decline in the price of product X 
B) an increase in consumer income 
C) a decrease in the prices of goods which are close substitutes for X 
D) an increase in the price which consumers expect will prevail for product X in the future

Question 16

Suppose product X is an input in the production of product Y.Product Y in turn is a substitute in production for product Z.An increase in the price of X can be expected to:

Accepted Answer

A) decrease the quantity demanded for Z. 
B) increase the quantity demanded for Z. 
C) have no effect on the quantity demanded for Z. 
D) decrease the supply of Z. 
A) decrease the quantity demanded for Z. 
B) increase the quantity demanded for Z. 
C) have no effect on the quantity demanded for Z. 
D) decrease the supply of Z.

Question 17

If peanut butter and cheese spread are substitute products, which diagram above illustrates the effect on the peanut butter market of a decrease in the price of cheese spread?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 18

Refer to the above graph, which shows the supply and demand for rental housing in a city.Given the demand D1 and the supply S1 for rental housing, if the government established rent controls in the city at below the equilibrium, then the price of housing would most likely be at:

Accepted Answer

A) P1 and there would be a shortage of rental housing. 
B) P2 and there would be a shortage of rental housing. 
C) P3 and there would be a surplus of rental housing. 
D) P4 and there would be a surplus of rental housing. 
A) P1 and there would be a shortage of rental housing. 
B) P2 and there would be a shortage of rental housing. 
C) P3 and there would be a surplus of rental housing. 
D) P4 and there would be a surplus of rental housing.

Question 19

What combination of changes would most likely decrease the equilibrium quantity?

Accepted Answer

A) when supply increases and demand decreases 
B) when demand increases and supply decreases 
C) when demand decreases and supply decreases 
D) when supply increases and demand increases 
A) when supply increases and demand decreases 
B) when demand increases and supply decreases 
C) when demand decreases and supply decreases 
D) when supply increases and demand increases

Question 20

The law of demand states that:

Accepted Answer

A) price and quantity demanded are inversely related. 
B) the larger the number of buyers in a market, the lower will be product price. 
C) price and quantity demanded are directly related. 
D) consumers will buy more of a product at high prices than at low prices. 
A) price and quantity demanded are inversely related. 
B) the larger the number of buyers in a market, the lower will be product price. 
C) price and quantity demanded are directly related. 
D) consumers will buy more of a product at high prices than at low prices.

Exam 3: B: Demand, Supply, and Market Equilibrium

Which of the following is most likely to be an inferior good?

Because of unseasonably cold weather, the supply of oranges has substantially decreased.This statement indicates that:

Refer to the above diagram.The highest price that buyers will be willing and able to pay for 100 units of this product is:

In which of the following instances will the effect on equilibrium price be dependent on the magnitude of the shifts in supply and demand?

Other things equal, an excise tax on a product will:

The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q.Refer to the above information.The equilibrium price for X is:

When the price of a product increases, a consumer is able to buy less of it with a given money income.This describes:

An increase in the price of corn:

Which of the above diagrams illustrate(s) the effect of an increase in automobile worker wages on the market for automobiles?

If the price of product L increases, the demand curve for close-substitute product J will:

As a result of a decrease in the price of a hamburger, consumers buy more hamburgers and fewer frankfurters.This is an illustration of:

Which would cause an increase in quantity supplied of product A?

Refer to the diagram.The equilibrium price and quantity in this market will be:

Which of the following would most likely cause a decrease in current consumer demand for normal good X?

Suppose product X is an input in the production of product Y.Product Y in turn is a substitute in production for product Z.An increase in the price of X can be expected to:

If peanut butter and cheese spread are substitute products, which diagram above illustrates the effect on the peanut butter market of a decrease in the price of cheese spread?

Refer to the above graph, which shows the supply and demand for rental housing in a city.Given the demand D1 and the supply S1 for rental housing, if the government established rent controls in the city at below the equilibrium, then the price of housing would most likely be at:

What combination of changes would most likely decrease the equilibrium quantity?

The law of demand states that:

B: Limits, Alternatives, and Choices

A: - Limits, Alternatives, and Choices

B: The Market System and the Circular Flow

A: - The Market System and the Circular Flow

A: - Demand, Supply, and Market Equilibrium

B: Market Failures: Public Goods and Externalities

A: - Market Failures: Public Goods and Externalities

B: Governments Role and Government Failure

A: Governments Role and Government Failure

B: an Introduction to Macroeconomics

A: an Introduction to Macroeconomics

B: Measuring the Economys Output

A: Measuring the Economys Output

B: Economic Growth

A: Economic Growth

B: Business Cycles, Unemployment, and Inflation

A: Business Cycles, Unemployment, and Inflation

B: Basic Macroeconomic Relationships

A: Basic Macroeconomic Relationships

B: The Aggregate Expenditures Model

A: The Aggregate Expenditures Model

B: Aggregate Demand and Aggregate Supply

A: Aggregate Demand and Aggregate Supply

B: Fiscal Policy, Deficits, Surpluses, and Debt

A: Fiscal Policy, Deficits, Surpluses, and Debt

B: Money, Banking, and Money Creation

A: Money, Banking, and Money Creation

B: Interest Rates and Monetary Policy

A: Interest Rates and Monetary Policy

C: Financial Economics

A: Long-Run Macroeconomic Adjustments

B: Long-Run Macroeconomic Adjustments

A: International Trade

B: International Trade

A: The Balance of Payments and Exchange Rates

B: The Balance of Payments and Exchange Rates

The Economics of Developing Countries

Filters

Refer to the above graph, which shows the supply and demand for rental housing in a city.Given the demand D₁ and the supply S₁ for rental housing, if the government established rent controls in the city at below the equilibrium, then the price of housing would most likely be at: