Question 1

Which of the following would usually be an inferior good?

Accepted Answer

A) French wines 
B) generic beer 
C) theatre tickets 
D) steak 
A) French wines 
B) generic beer 
C) theatre tickets 
D) steak

Question 2

Graphically, the market supply curve is:

Accepted Answer

A) steeper than any individual producer's supply curve which comprises it. 
B) greater than the sum of the individual producers' supply curves. 
C) the horizontal sum of individual producers' supply curves. 
D) the vertical sum of individual producers' supply curves. 
A) steeper than any individual producer's supply curve which comprises it. 
B) greater than the sum of the individual producers' supply curves. 
C) the horizontal sum of individual producers' supply curves. 
D) the vertical sum of individual producers' supply curves.

Question 3

Surpluses drive market prices up; shortages drive them down.

Accepted Answer

A) True 
 B)False

Question 4

A headline reads "Gasoline Prices Are Higher." A likely explanation for this event would be a(n):

Accepted Answer

A) increase in the demand for and the supply of gasoline. 
B) decrease in the demand for and the supply of gasoline. 
C) increase in the supply of gasoline and a decrease in the demand for gasoline. 
D) decrease in the supply of gasoline and an increase in the demand for gasoline. 
A) increase in the demand for and the supply of gasoline. 
B) decrease in the demand for and the supply of gasoline. 
C) increase in the supply of gasoline and a decrease in the demand for gasoline. 
D) decrease in the supply of gasoline and an increase in the demand for gasoline.

Question 5

Refer to the above diagram, which shows three supply curves for corn.Which of the following would cause the change in the supply of corn illustrated by the shift from S1 to S2?

Accepted Answer

A) an increase in the price of fertilizer 
B) a change in consumer tastes away from cornbread 
C) a decrease in consumer incomes 
D) the development of a more effective insecticide for corn rootworm 
A) an increase in the price of fertilizer 
B) a change in consumer tastes away from cornbread 
C) a decrease in consumer incomes 
D) the development of a more effective insecticide for corn rootworm

Question 6

Which is most likely to be observed in a community where legal ceilings are imposed on residential rents?

Accepted Answer

A) Poor people will be able to find adequate housing. 
B) Tenants will reduce their use of housing space, making more available for others. 
C) Those whose needs for housing are most urgent will be able to obtain the space they want. 
D) People moving into the community will have difficulty locating residential space to rent. 
A) Poor people will be able to find adequate housing. 
B) Tenants will reduce their use of housing space, making more available for others. 
C) Those whose needs for housing are most urgent will be able to obtain the space they want. 
D) People moving into the community will have difficulty locating residential space to rent.

Question 7

The upward slope of the supply curve reflects the:

Accepted Answer

A) principle of specialization in production. 
B) law of supply. 
C) fact that price and quantity supplied are inversely related. 
D) law of diminishing marginal utility. 
A) principle of specialization in production. 
B) law of supply. 
C) fact that price and quantity supplied are inversely related. 
D) law of diminishing marginal utility.

Question 8

An increase in the supply of product X, with demand held constant, will increase the price of product X.

Accepted Answer

A) True 
 B)False

Question 9

If products A and B are complements and the price of B decreases:

Accepted Answer

A) the demand curves for both A and B will shift to the left. 
B) the amount of B purchased will increase, but the demand curve for A will not shift. 
C) the demand for A will increase and the quantity demanded of B will increase. 
D) the demand for A will decline and the demand for B will increase. 
A) the demand curves for both A and B will shift to the left. 
B) the amount of B purchased will increase, but the demand curve for A will not shift. 
C) the demand for A will increase and the quantity demanded of B will increase. 
D) the demand for A will decline and the demand for B will increase.

Question 10

An effective price floor will:

Accepted Answer

A) force some firms in this industry to go out of business. 
B) result in a product surplus. 
C) result in a product shortage. 
D) clear the market. 
A) force some firms in this industry to go out of business. 
B) result in a product surplus. 
C) result in a product shortage. 
D) clear the market.

Question 11

If the market price is above the equilibrium price:

Accepted Answer

A) a shortage will occur and producers will produce more and lower prices. 
B) a surplus will occur and producers will produce less and lower prices. 
C) a surplus will result and consumers will bid prices up. 
D) producers will make extremely high profits. 
A) a shortage will occur and producers will produce more and lower prices. 
B) a surplus will occur and producers will produce less and lower prices. 
C) a surplus will result and consumers will bid prices up. 
D) producers will make extremely high profits.

Question 12

If consumers are willing to pay a higher price than previously for each level of output, we can say that there has occurred:

Accepted Answer

A) a decrease in demand. 
B) an increase in demand. 
C) a decrease in supply. 
D) an increase in supply. 
A) a decrease in demand. 
B) an increase in demand. 
C) a decrease in supply. 
D) an increase in supply.

Question 13

A headline reads "Lumber Prices Up Sharply." In a competitive market, this situation would lead to a(n):

Accepted Answer

A) increase in the price and quantity of new homes. 
B) decrease in the price and quantity of new homes. 
C) increase in the price of new homes and a decrease in the quantity of new homes. 
D) decrease in the price of new homes and an increase in the quantity of new homes. 
A) increase in the price and quantity of new homes. 
B) decrease in the price and quantity of new homes. 
C) increase in the price of new homes and a decrease in the quantity of new homes. 
D) decrease in the price of new homes and an increase in the quantity of new homes.

Question 14

The table below shows three individual buyers' demand for wheat.Assume that there are three buyers in the market for wheat (data are hypothetical).   Refer to the table above.The market demand for wheat is:

Accepted Answer

A) 17 bushels at $6 and 37 bushels at $5. 
B) 24 bushels at $5 and 52 bushels at $4. 
C) 37 bushels at $4 and 52 bushels at $3. 
D) 52 bushels at $5 and 37 bushels at $6. 
A) 17 bushels at $6 and 37 bushels at $5. 
B) 24 bushels at $5 and 52 bushels at $4. 
C) 37 bushels at $4 and 52 bushels at $3. 
D) 52 bushels at $5 and 37 bushels at $6.

Question 15

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 prices of resources used to produce X will:

Accepted Answer

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

Question 16

If the price of a product increases, we would expect:

Accepted Answer

A) demand to decrease. 
B) quantity supplied to increase. 
C) supply to decrease. 
D) quantity demanded to increase. 
A) demand to decrease. 
B) quantity supplied to increase. 
C) supply to decrease. 
D) quantity demanded to increase.

Question 17

An increase in supply and demand will lead to an increase in the equilibrium price and an indeterminate change in the equilibrium quantity.

Accepted Answer

A) True 
 B)False

Question 18

The law of demand states that, ceteris paribus, there is an inverse relationship between the price of a good and the quantity demanded of the good.

Accepted Answer

A) True 
 B)False

Question 19

An inferior good is one:

Accepted Answer

A) that doesn't work. 
B) that costs too much. 
C) that won't be purchased at any price. 
D) for which demand increases as income decreases. 
A) that doesn't work. 
B) that costs too much. 
C) that won't be purchased at any price. 
D) for which demand increases as income decreases.

Question 20

If producers must obtain higher prices than previously to produce various levels of output, there has occurred:

Accepted Answer

A) a decrease in demand. 
B) an increase in demand. 
C) a decrease in supply. 
D) an increase in supply. 
A) a decrease in demand. 
B) an increase in demand. 
C) a decrease in supply. 
D) an increase in supply.

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

Which of the following would usually be an inferior good?

Graphically, the market supply curve is:

Surpluses drive market prices up; shortages drive them down.

A headline reads "Gasoline Prices Are Higher." A likely explanation for this event would be a(n):

Refer to the above diagram, which shows three supply curves for corn.Which of the following would cause the change in the supply of corn illustrated by the shift from S1 to S2?

Which is most likely to be observed in a community where legal ceilings are imposed on residential rents?

The upward slope of the supply curve reflects the:

An increase in the supply of product X, with demand held constant, will increase the price of product X.

If products A and B are complements and the price of B decreases:

An effective price floor will:

If the market price is above the equilibrium price:

If consumers are willing to pay a higher price than previously for each level of output, we can say that there has occurred:

A headline reads "Lumber Prices Up Sharply." In a competitive market, this situation would lead to a(n):

The table below shows three individual buyers' demand for wheat.Assume that there are three buyers in the market for wheat (data are hypothetical). Refer to the table above.The market demand for wheat is:

If the price of a product increases, we would expect:

An increase in supply and demand will lead to an increase in the equilibrium price and an indeterminate change in the equilibrium quantity.

The law of demand states that, ceteris paribus, there is an inverse relationship between the price of a good and the quantity demanded of the good.

An inferior good is one:

If producers must obtain higher prices than previously to produce various levels of output, there has occurred:

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 diagram, which shows three supply curves for corn.Which of the following would cause the change in the supply of corn illustrated by the shift from S₁ to S₂?