Question 1

Use the figure below to answer the following question(s).
Figure 3-14  
-Refer to Figure 3-14. The gasoline market was initially in equilibrium at point

Accepted Answer

A) r. 
B) s. 
C) t. 
D) u. 
E) Other things constant, a decrease in the price of crude oil, an important ingredient used to produce gasoline, would likely move the equilibrium in this market toward point 
A) r. 
B) s. 
C) t. 
D) u. 
E) Other things constant, a decrease in the price of crude oil, an important ingredient used to produce gasoline, would likely move the equilibrium in this market toward point

Question 2

Each point on the demand curve indicates

Accepted Answer

A) the demand for the product. 
B) the quantity demanded at that price. 
C) the amount that people need. 
D) the amount people want to buy at different income levels. 
A) the demand for the product. 
B) the quantity demanded at that price. 
C) the amount that people need. 
D) the amount people want to buy at different income levels.

Question 3

Figure 3-6  
-In Figure 3-6, suppose D1 and S1 indicate initial conditions in the market for ice cream. Which of the following changes would tend to cause a shift from S1 to S2 in the market for ice cream?

Accepted Answer

A) an increase in the price of sugar, an ingredient used to produce ice cream 
B) a decrease in the price of frozen yogurt, a substitute for ice cream 
C) abnormally hot weather that temporarily increases consumer desire for ice cream 
D) a decrease in the price of milk, an ingredient used to produce ice cream 
A) an increase in the price of sugar, an ingredient used to produce ice cream 
B) a decrease in the price of frozen yogurt, a substitute for ice cream 
C) abnormally hot weather that temporarily increases consumer desire for ice cream 
D) a decrease in the price of milk, an ingredient used to produce ice cream

Question 4

Figure 3-22        
-Refer to Figure 3-22. Which of the four graphs represents the market for winter coats as we progress from winter to spring?

Accepted Answer

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

Question 5

Assume that eggnog and cookies are complements. If the price of eggnog goes up, what happens to the demand for cookies?

Accepted Answer

A) demand for cookies increases 
B) demand for cookies decreases 
C) demand for cookies remains unchanged 
D) the shift in demand will depend on the original price of cookies 
A) demand for cookies increases 
B) demand for cookies decreases 
C) demand for cookies remains unchanged 
D) the shift in demand will depend on the original price of cookies

Question 6

Figure 3-15  
-Refer to Figure 3-15. Which area represents the increase in producer surplus when the price rises from P1 to P2?

Accepted Answer

A) BCE 
B) ACF 
C) ABED 
D) AFEB 
A) BCE 
B) ACF 
C) ABED 
D) AFEB

Question 7

Which of the following would most likely increase the demand for televisions?

Accepted Answer

A) a decrease in the price of televisions 
B) a decline in consumer income 
C) a decrease in the price of home stereo systems, a substitute for televisions 
D) a decrease in the price of DVD players, a product that is complementary with televisions 
A) a decrease in the price of televisions 
B) a decline in consumer income 
C) a decrease in the price of home stereo systems, a substitute for televisions 
D) a decrease in the price of DVD players, a product that is complementary with televisions

Question 8

If a surplus exists in a market we know that the actual price is

Accepted Answer

A) above equilibrium price and quantity supplied is greater than quantity demanded. 
B) above equilibrium price and quantity demanded is greater than quantity supplied. 
C) below equilibrium price and quantity demanded is greater than quantity supplied. 
D) below equilibrium price and quantity supplied is greater than quantity demanded. 
A) above equilibrium price and quantity supplied is greater than quantity demanded. 
B) above equilibrium price and quantity demanded is greater than quantity supplied. 
C) below equilibrium price and quantity demanded is greater than quantity supplied. 
D) below equilibrium price and quantity supplied is greater than quantity demanded.

Question 9

Sam lives in a town with a population of 3,000. He says, "This town really needs a pizza restaurant. People want pizza and would be willing to pay a lot for it, but no one will open a pizza place because they couldn't make any money." Evaluate Sam's statement.

Accepted Answer

His statement clearly conflicts with the

Question 10

Which of the following is true of profits and losses?

Accepted Answer

A) Profits direct entrepreneurs toward production of goods that are highly valued relative to their cost, while losses direct them away from wealth-reducing activities. 
B) Profits indicate that the firm is charging prices that are too high, while losses indicate that the firm needs to raise its prices. 
C) Profits indicate that the consumer is getting a bad deal, while losses indicate that the consumer values the product highly relative to its cost. 
D) Profits indicate that the suppliers of resources are underpaid, while losses indicate they are overpaid. 
A) Profits direct entrepreneurs toward production of goods that are highly valued relative to their cost, while losses direct them away from wealth-reducing activities. 
B) Profits indicate that the firm is charging prices that are too high, while losses indicate that the firm needs to raise its prices. 
C) Profits indicate that the consumer is getting a bad deal, while losses indicate that the consumer values the product highly relative to its cost. 
D) Profits indicate that the suppliers of resources are underpaid, while losses indicate they are overpaid.

Question 11

Saccharin and aspartame are both low-calorie substitutes for sugar. If saccharin is found to cause cancer,

Accepted Answer

A) the price of aspartame will increase. 
B) the price of sugar will decrease. 
C) the price of saccharin will increase. 
D) the demand curves for aspartame and sugar will shift leftward. 
E) aspartame and sugar will be complements. 
A) the price of aspartame will increase. 
B) the price of sugar will decrease. 
C) the price of saccharin will increase. 
D) the demand curves for aspartame and sugar will shift leftward. 
E) aspartame and sugar will be complements.

Question 12

Use the figure below to answer the following question(s).
Figure 3-9  
-Given the demand (D) and supply (S) for gasoline in Figure 3-9, if the price of gasoline were $3 per gallon,

Accepted Answer

A) consumers would wish to purchase more than was being supplied. 
B) producers would be supplying more than consumers wished to purchase. 
C) the quantity consumers wished to purchase would equal the quantity that producers wished to supply. 
D) there would be a tendency for the price of gasoline to rise. 
A) consumers would wish to purchase more than was being supplied. 
B) producers would be supplying more than consumers wished to purchase. 
C) the quantity consumers wished to purchase would equal the quantity that producers wished to supply. 
D) there would be a tendency for the price of gasoline to rise.

Question 13

Consumers buy less of a good as its price increases because

Accepted Answer

A) production costs have risen. 
B) substitute goods are now relatively cheaper. 
C) the income of consumers has effectively risen. 
D) the higher price will make the good more valuable to each consumer. 
A) production costs have risen. 
B) substitute goods are now relatively cheaper. 
C) the income of consumers has effectively risen. 
D) the higher price will make the good more valuable to each consumer.

Question 14

Use the figure below to answer the following question(s).
Figure 3-9  
-In Figure 3-9, if D and S represent the demand and supply for gasoline, what is the equilibrium price and quantity?

Accepted Answer

A) price, $1; quantity, 20 
B) price, $2; quantity, 30 
C) price, $3; quantity, 40 
D) price, $4; quantity, 50 
A) price, $1; quantity, 20 
B) price, $2; quantity, 30 
C) price, $3; quantity, 40 
D) price, $4; quantity, 50

Question 15

Use the table below to choose the correct answer. The table is a schedule of the supply and demand for ground hamburger meat (both given in thousands of pounds per month).   The equilibrium market price of ground hamburger meat would be

Accepted Answer

A) $1 per pound. 
B) $2 per pound. 
C) $2.50 per pound. 
D) $3 per pound. 
A) $1 per pound. 
B) $2 per pound. 
C) $2.50 per pound. 
D) $3 per pound.

Question 16

The price of chicken increases as the result of higher beef prices. This indicates that

Accepted Answer

A) chicken and beef are substitutes. 
B) chicken and beef are complements. 
C) the market demand for beef is inelastic. 
D) the market demand for chicken is elastic. 
A) chicken and beef are substitutes. 
B) chicken and beef are complements. 
C) the market demand for beef is inelastic. 
D) the market demand for chicken is elastic.

Question 17

Which of the following would most likely cause both a decrease in the price of plasma screen TVs and a decrease in the number sold?

Accepted Answer

A) an increase in the supply of plasma screen TVs 
B) an increase in the demand for plasma screen TVs 
C) a decrease in the supply of plasma screen TVs 
D) a decrease in the demand for plasma screen TVs 
A) an increase in the supply of plasma screen TVs 
B) an increase in the demand for plasma screen TVs 
C) a decrease in the supply of plasma screen TVs 
D) a decrease in the demand for plasma screen TVs

Question 18

When economists say the supply of a product has increased, they mean the

Accepted Answer

A) supply curve has shifted to the right. 
B) price of the product has risen, and consequently, suppliers are producing more of it. 
C) supply curve has shifted to the left. 
D) amount of the product that consumers are willing to purchase at various prices has increased. 
A) supply curve has shifted to the right. 
B) price of the product has risen, and consequently, suppliers are producing more of it. 
C) supply curve has shifted to the left. 
D) amount of the product that consumers are willing to purchase at various prices has increased.

Question 19

Which of the following would lead to an increase in the demand for rental apartments in your area?

Accepted Answer

A) a reduction in the rental price of apartments 
B) a sharp increase in the number of out-of-town students attending the local college 
C) an increase in the cost of the materials used to construct apartment units. 
D) an increase in unemployment and reduction in the income of people in your area 
A) a reduction in the rental price of apartments 
B) a sharp increase in the number of out-of-town students attending the local college 
C) an increase in the cost of the materials used to construct apartment units. 
D) an increase in unemployment and reduction in the income of people in your area

Question 20

Two products that serve similar purposes for a consumer would be referred to as

Accepted Answer

A) substitutes. 
B) complements. 
C) inferior goods. 
D) unrelated goods. 
A) substitutes. 
B) complements. 
C) inferior goods. 
D) unrelated goods.

Use the figure below to answer the following question(s). Figure 3-14 -Refer to Figure 3-14. The gasoline market was initially in equilibrium at point

Each point on the demand curve indicates

Figure 3-6 -In Figure 3-6, suppose D₁ and S₁ indicate initial conditions in the market for ice cream. Which of the following changes would tend to cause a shift from S₁ to S₂ in the market for ice cream?

Figure 3-22 -Refer to Figure 3-22. Which of the four graphs represents the market for winter coats as we progress from winter to spring?

Assume that eggnog and cookies are complements. If the price of eggnog goes up, what happens to the demand for cookies?

Figure 3-15 -Refer to Figure 3-15. Which area represents the increase in producer surplus when the price rises from P₁ to P₂?

Which of the following would most likely increase the demand for televisions?

If a surplus exists in a market we know that the actual price is

Sam lives in a town with a population of 3,000. He says, "This town really needs a pizza restaurant. People want pizza and would be willing to pay a lot for it, but no one will open a pizza place because they couldn't make any money." Evaluate Sam's statement.

Which of the following is true of profits and losses?

Saccharin and aspartame are both low-calorie substitutes for sugar. If saccharin is found to cause cancer,

Use the figure below to answer the following question(s). Figure 3-9 -Given the demand (D) and supply (S) for gasoline in Figure 3-9, if the price of gasoline were $3 per gallon,

Consumers buy less of a good as its price increases because

Use the figure below to answer the following question(s). Figure 3-9 -In Figure 3-9, if D and S represent the demand and supply for gasoline, what is the equilibrium price and quantity?

Use the table below to choose the correct answer. The table is a schedule of the supply and demand for ground hamburger meat (both given in thousands of pounds per month). The equilibrium market price of ground hamburger meat would be

The price of chicken increases as the result of higher beef prices. This indicates that

Which of the following would most likely cause both a decrease in the price of plasma screen TVs and a decrease in the number sold?

When economists say the supply of a product has increased, they mean the

Which of the following would lead to an increase in the demand for rental apartments in your area?

Two products that serve similar purposes for a consumer would be referred to as

The Economic Approach

Some Tools of the Economist

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters

Exam 3: Demand, Supply, and the Market Process

Use the figure below to answer the following question(s). Figure 3-14 -Refer to Figure 3-14. The gasoline market was initially in equilibrium at point

Each point on the demand curve indicates

Figure 3-6 -In Figure 3-6, suppose D1 and S1 indicate initial conditions in the market for ice cream. Which of the following changes would tend to cause a shift from S1 to S2 in the market for ice cream?

Figure 3-22 -Refer to Figure 3-22. Which of the four graphs represents the market for winter coats as we progress from winter to spring?

Assume that eggnog and cookies are complements. If the price of eggnog goes up, what happens to the demand for cookies?

Figure 3-15 -Refer to Figure 3-15. Which area represents the increase in producer surplus when the price rises from P1 to P2?

Which of the following would most likely increase the demand for televisions?

If a surplus exists in a market we know that the actual price is

Sam lives in a town with a population of 3,000. He says, "This town really needs a pizza restaurant. People want pizza and would be willing to pay a lot for it, but no one will open a pizza place because they couldn't make any money." Evaluate Sam's statement.

Which of the following is true of profits and losses?

Saccharin and aspartame are both low-calorie substitutes for sugar. If saccharin is found to cause cancer,

Use the figure below to answer the following question(s). Figure 3-9 -Given the demand (D) and supply (S) for gasoline in Figure 3-9, if the price of gasoline were $3 per gallon,

Consumers buy less of a good as its price increases because

Use the figure below to answer the following question(s). Figure 3-9 -In Figure 3-9, if D and S represent the demand and supply for gasoline, what is the equilibrium price and quantity?

Use the table below to choose the correct answer. The table is a schedule of the supply and demand for ground hamburger meat (both given in thousands of pounds per month). The equilibrium market price of ground hamburger meat would be

The price of chicken increases as the result of higher beef prices. This indicates that

Which of the following would most likely cause both a decrease in the price of plasma screen TVs and a decrease in the number sold?

When economists say the supply of a product has increased, they mean the

Which of the following would lead to an increase in the demand for rental apartments in your area?

Two products that serve similar purposes for a consumer would be referred to as

The Economic Approach

Some Tools of the Economist

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters

Figure 3-6 -In Figure 3-6, suppose D₁ and S₁ indicate initial conditions in the market for ice cream. Which of the following changes would tend to cause a shift from S₁ to S₂ in the market for ice cream?

Figure 3-15 -Refer to Figure 3-15. Which area represents the increase in producer surplus when the price rises from P₁ to P₂?