Question 1

What impact would a severe drought that destroys the wheat crop in several areas of the United States have on the market for wheat?

Accepted Answer

A) The supply of wheat would fall. 
B) The supply of wheat would rise. 
C) The demand for wheat would fall. 
D) The demand for wheat would rise. 
A) The supply of wheat would fall. 
B) The supply of wheat would rise. 
C) The demand for wheat would fall. 
D) The demand for wheat would rise.

Question 2

When the market for a good is in equilibrium,

Accepted Answer

A) consumer surplus will equal producer surplus. 
B) the total value created for consumers will equal the total cost of production for business firms. 
C) all units valued more highly than the opportunity cost of production will be supplied. 
D) all units that have value will be produced, regardless of their cost of production. 
A) consumer surplus will equal producer surplus. 
B) the total value created for consumers will equal the total cost of production for business firms. 
C) all units valued more highly than the opportunity cost of production will be supplied. 
D) all units that have value will be produced, regardless of their cost of production.

Question 3

Figure 3-11  
-In Figure 3-11, suppose D1 and S1 indicate initial conditions in the market for kitchen cabinets. Which of the following would tend to cause the supply curve to shift from S1 to S2?

Accepted Answer

A) the invention of "folding" plates and cups that take up substantially less storage space in the kitchen 
B) a decrease in consumer income 
C) a decrease in the price of wood, a resource used to produce kitchen cabinets 
D) an increase in the price of steel hinges, a resource used to produce kitchen cabinets 
A) the invention of "folding" plates and cups that take up substantially less storage space in the kitchen 
B) a decrease in consumer income 
C) a decrease in the price of wood, a resource used to produce kitchen cabinets 
D) an increase in the price of steel hinges, a resource used to produce kitchen cabinets

Question 4

If the price of coffee decreases, the demand curve for tea (a substitute good) will

Accepted Answer

A) remain unchanged. 
B) shift to the right. 
C) shift to the left. 
D) do none of the above 
A) remain unchanged. 
B) shift to the right. 
C) shift to the left. 
D) do none of the above

Question 5

If price rises, what happens to quantity supplied of a product?

Accepted Answer

A) It increases. 
B) It decreases. 
C) It does not change. 
D) Quantity supplied is constant, but supply increases. 
A) It increases. 
B) It decreases. 
C) It does not change. 
D) Quantity supplied is constant, but supply increases.

Question 6

A demand curve for flowers would show the

Accepted Answer

A) number of flowers the floral shop is willing to sell at various prices. 
B) number of people who need flowers. 
C) quantity of people who want to buy these flowers. 
D) number of flowers that will be purchased at various prices. 
A) number of flowers the floral shop is willing to sell at various prices. 
B) number of people who need flowers. 
C) quantity of people who want to buy these flowers. 
D) number of flowers that will be purchased at various prices.

Question 7

If price falls, what happens to the quantity demanded for a product?

Accepted Answer

A) It increases. 
B) It decreases. 
C) It does not change. 
D) Uncertain--economic theory has no answer to this question. 
A) It increases. 
B) It decreases. 
C) It does not change. 
D) Uncertain--economic theory has no answer to this question.

Question 8

Market prices generally promote social cooperation because they

Accepted Answer

A) clarify the options available to people and encourage individuals to help others in exchange for income. 
B) encourage government officials to levy taxes to provide people with the necessities of life. 
C) eliminate scarcity by allowing prices to rise. 
D) reward only altruistic actions, whereby, people seek to help others without the expectation of personal gain. 
A) clarify the options available to people and encourage individuals to help others in exchange for income. 
B) encourage government officials to levy taxes to provide people with the necessities of life. 
C) eliminate scarcity by allowing prices to rise. 
D) reward only altruistic actions, whereby, people seek to help others without the expectation of personal gain.

Question 9

Sebastian drinks Mountain Dew. He can buy as many cans of Mountain Dew as he wishes at a price of $0.50 per can. On a particular day, he is willing to pay $0.95 for the first can, $0.80 for the second can, $0.60 for the third can, and $0.40 for the fourth can. Assume Sebastian is rational in deciding how many cans to buy. His consumer surplus is

Accepted Answer

A) $0.50. 
B) $0.85. 
C) $1.05. 
D) $1.20. 
A) $0.50. 
B) $0.85. 
C) $1.05. 
D) $1.20.

Question 10

Figure 3-22        
-Refer to Figure 3-22. Which of the four graphs represents the market for peanut butter after a major hurricane hits the peanut-growing south?

Accepted Answer

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

Question 11

Which of the following is the most likely effect of lower apple juice prices on the price and quantity purchased of orange juice, a substitute product?

Accepted Answer

A) The price of orange juice will increase, and the quantity purchased will fall. 
B) The price of orange juice will fall, and the quantity purchased will increase. 
C) The price of orange juice will increase, and the quantity purchased will increase. 
D) The price of orange juice will fall, and the quantity purchased will fall. 
A) The price of orange juice will increase, and the quantity purchased will fall. 
B) The price of orange juice will fall, and the quantity purchased will increase. 
C) The price of orange juice will increase, and the quantity purchased will increase. 
D) The price of orange juice will fall, and the quantity purchased will fall.

Question 12

After a hurricane in Florida knocked out the regional water supply for several days, the demand for bottled water increased sharply. In a market economy, how will this increase in demand affect the equilibrium price and quantity of bottled water?

Accepted Answer

A) Price will increase, and quantity will decrease. 
B) Price will decrease, and quantity will decrease. 
C) Price will decrease, and quantity will increase. 
D) Price will increase, and quantity will increase. 
A) Price will increase, and quantity will decrease. 
B) Price will decrease, and quantity will decrease. 
C) Price will decrease, and quantity will increase. 
D) Price will increase, and quantity will increase.

Question 13

Which of the following would lead to an increase in the demand for fast food in Chicago?

Accepted Answer

A) An increase in Chicago's population 
B) A decrease in average consumer income in Chicago. 
C) A front page newspaper article in Chicago stating that fast food is very bad for your health. 
D) A decrease in the average price charged by sit-down restaurants. 
A) An increase in Chicago's population 
B) A decrease in average consumer income in Chicago. 
C) A front page newspaper article in Chicago stating that fast food is very bad for your health. 
D) A decrease in the average price charged by sit-down restaurants.

Question 14

Table 3-1
  
-Refer to Table 3-1. If the table represents the willingness to pay of four buyers and the price of the product is $15, then who would be willing to purchase the product?

Accepted Answer

A) Mike 
B) Mike and Sandy 
C) Mike, Sandy, and Jonathan 
D) Mike, Sandy, Jonathan, and Haley 
A) Mike 
B) Mike and Sandy 
C) Mike, Sandy, and Jonathan 
D) Mike, Sandy, Jonathan, and Haley

Question 15

Which of the following would most likely increase the supply of beef?

Accepted Answer

A) lower prices of grains used to feed cattle 
B) lower prices for chicken, a substitute for beef 
C) new medical research suggesting that beef causes more serious health problems than was previously thought 
D) an increase in the cost of transporting beef products to the consumer market 
A) lower prices of grains used to feed cattle 
B) lower prices for chicken, a substitute for beef 
C) new medical research suggesting that beef causes more serious health problems than was previously thought 
D) an increase in the cost of transporting beef products to the consumer market

Question 16

According to the invisible hand principle, competitive markets generally

Accepted Answer

A) bring the self-interest of individuals into harmony with the efficient allocation of resources, even though centralized planning of economic activities is absent. 
B) bring the self-interest of individuals into harmony with the efficient allocation of resources when the behavior of individuals is directed by democratic centralized planning. 
C) require central direction; otherwise, the actions of self-interested individuals will conflict with the general interests of society. 
D) promote the economic welfare of self-interested producers at the expense of unorganized groups such as consumers and taxpayers. 
A) bring the self-interest of individuals into harmony with the efficient allocation of resources, even though centralized planning of economic activities is absent. 
B) bring the self-interest of individuals into harmony with the efficient allocation of resources when the behavior of individuals is directed by democratic centralized planning. 
C) require central direction; otherwise, the actions of self-interested individuals will conflict with the general interests of society. 
D) promote the economic welfare of self-interested producers at the expense of unorganized groups such as consumers and taxpayers.

Question 17

In Atlanta, tickets for professional and college football games are substitutes. An increase in the ticket price for professional football, other things being equal, will

Accepted Answer

A) increase the demand for college football tickets. 
B) decrease the demand for college football tickets. 
C) not change the demand for college football tickets. 
D) decrease the demand for professional football games. 
A) increase the demand for college football tickets. 
B) decrease the demand for college football tickets. 
C) not change the demand for college football tickets. 
D) decrease the demand for professional football games.

Question 18

Laqueta buys a new GPS device for her car for $135. She receives consumer surplus of $25 on her purchase if her willingness to pay is

Accepted Answer

A) $25. 
B) $110. 
C) $135. 
D) $160. 
A) $25. 
B) $110. 
C) $135. 
D) $160.

Question 19

Andre decides that he would pay as much as $3,000 for a new laptop computer. He buys the computer and realizes consumer surplus of $700. How much did Andre pay for his computer?

Accepted Answer

A) $700 
B) $2,300 
C) $3,000 
D) $3,700 
A) $700 
B) $2,300 
C) $3,000 
D) $3,700

Question 20

In which statement(s) is "demand" used correctly? (I) "An increase in the price of hamburgers will reduce the demand for hamburgers."
(II) "An increase in the price of hamburgers will reduce the demand for hamburger buns."

Accepted Answer

A) in both statements I and II 
B) in statement I only 
C) in statement II only 
D) in neither statements I nor II 
A) in both statements I and II 
B) in statement I only 
C) in statement II only 
D) in neither statements I nor II

What impact would a severe drought that destroys the wheat crop in several areas of the United States have on the market for wheat?

When the market for a good is in equilibrium,

Figure 3-11 -In Figure 3-11, suppose D₁ and S₁ indicate initial conditions in the market for kitchen cabinets. Which of the following would tend to cause the supply curve to shift from S₁ to S₂?

If the price of coffee decreases, the demand curve for tea (a substitute good) will

If price rises, what happens to quantity supplied of a product?

A demand curve for flowers would show the

If price falls, what happens to the quantity demanded for a product?

Market prices generally promote social cooperation because they

Figure 3-22 -Refer to Figure 3-22. Which of the four graphs represents the market for peanut butter after a major hurricane hits the peanut-growing south?

Which of the following is the most likely effect of lower apple juice prices on the price and quantity purchased of orange juice, a substitute product?

After a hurricane in Florida knocked out the regional water supply for several days, the demand for bottled water increased sharply. In a market economy, how will this increase in demand affect the equilibrium price and quantity of bottled water?

Which of the following would lead to an increase in the demand for fast food in Chicago?

Table 3-1 -Refer to Table 3-1. If the table represents the willingness to pay of four buyers and the price of the product is $15, then who would be willing to purchase the product?

Which of the following would most likely increase the supply of beef?

According to the invisible hand principle, competitive markets generally

In Atlanta, tickets for professional and college football games are substitutes. An increase in the ticket price for professional football, other things being equal, will

Laqueta buys a new GPS device for her car for $135. She receives consumer surplus of $25 on her purchase if her willingness to pay is

Andre decides that he would pay as much as $3,000 for a new laptop computer. He buys the computer and realizes consumer surplus of $700. How much did Andre pay for his computer?

In which statement(s) is "demand" used correctly? (I) "An increase in the price of hamburgers will reduce the demand for hamburgers." (II) "An increase in the price of hamburgers will reduce the demand for hamburger buns."

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

What impact would a severe drought that destroys the wheat crop in several areas of the United States have on the market for wheat?

When the market for a good is in equilibrium,

Figure 3-11 -In Figure 3-11, suppose D1 and S1 indicate initial conditions in the market for kitchen cabinets. Which of the following would tend to cause the supply curve to shift from S1 to S2?

If the price of coffee decreases, the demand curve for tea (a substitute good) will

If price rises, what happens to quantity supplied of a product?

A demand curve for flowers would show the

If price falls, what happens to the quantity demanded for a product?

Market prices generally promote social cooperation because they

Figure 3-22 -Refer to Figure 3-22. Which of the four graphs represents the market for peanut butter after a major hurricane hits the peanut-growing south?

Which of the following is the most likely effect of lower apple juice prices on the price and quantity purchased of orange juice, a substitute product?

After a hurricane in Florida knocked out the regional water supply for several days, the demand for bottled water increased sharply. In a market economy, how will this increase in demand affect the equilibrium price and quantity of bottled water?

Which of the following would lead to an increase in the demand for fast food in Chicago?

Table 3-1 -Refer to Table 3-1. If the table represents the willingness to pay of four buyers and the price of the product is $15, then who would be willing to purchase the product?

Which of the following would most likely increase the supply of beef?

According to the invisible hand principle, competitive markets generally

In Atlanta, tickets for professional and college football games are substitutes. An increase in the ticket price for professional football, other things being equal, will

Laqueta buys a new GPS device for her car for $135. She receives consumer surplus of $25 on her purchase if her willingness to pay is

Andre decides that he would pay as much as $3,000 for a new laptop computer. He buys the computer and realizes consumer surplus of $700. How much did Andre pay for his computer?

In which statement(s) is "demand" used correctly? (I) "An increase in the price of hamburgers will reduce the demand for hamburgers." (II) "An increase in the price of hamburgers will reduce the demand for hamburger buns."

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 3-11 -In Figure 3-11, suppose D₁ and S₁ indicate initial conditions in the market for kitchen cabinets. Which of the following would tend to cause the supply curve to shift from S₁ to S₂?