Question 1

Other things constant, which of the following would most likely cause the supply of garden hoses to decrease?

Accepted Answer

A) an increase in the price of plastic used to make garden hoses 
B) a technological advance that lowers the cost of producing garden hoses 
C) the occurrence of a very dry year with little rain 
D) a decrease in the price of grass seed 
A) an increase in the price of plastic used to make garden hoses 
B) a technological advance that lowers the cost of producing garden hoses 
C) the occurrence of a very dry year with little rain 
D) a decrease in the price of grass seed

Question 2

Figure 3-22        
-Refer to Figure 3-22. Suppose the events depicted in graphs A and C were illustrated together on a single graph. A definitive result of the two events would be

Accepted Answer

A) an increase in the equilibrium quantity. 
B) an increase in the equilibrium price. 
C) an instance in which the law of demand fails to hold. 
D) All of the above are correct. 
A) an increase in the equilibrium quantity. 
B) an increase in the equilibrium price. 
C) an instance in which the law of demand fails to hold. 
D) All of the above are correct.

Question 3

Figure 3-18  
-Refer to Figure 3-18. Which area represents the increase in consumer surplus when the price falls from P1 to P2?

Accepted Answer

A) ABD 
B) ACF 
C) DEF 
D) BCFD 
A) ABD 
B) ACF 
C) DEF 
D) BCFD

Question 4

Assume that corn and soybeans are alternatives that could be grown by most farmers. An increase in the price of corn will

Accepted Answer

A) increase the supply of corn. 
B) increase the supply of soybeans. 
C) decrease the supply of soybeans. 
D) decrease the supply of corn. 
E) have no effect on the supplies of corn and soybeans. 
A) increase the supply of corn. 
B) increase the supply of soybeans. 
C) decrease the supply of soybeans. 
D) decrease the supply of corn. 
E) have no effect on the supplies of corn and soybeans.

Question 5

At a price of $5, Tyrone buys 10 units of a product; when the price increases to $6, Tyrone buys 8 units. Which of the following is correct about Tyrone's behavior?

Accepted Answer

A) Tyrone's demand has decreased. 
B) Tyrone's demand has increased. 
C) Tyrone's quantity demanded has decreased, and his demand has not changed. 
D) Tyrone's quantity demanded has increased, and his demand has increased. 
E) Tyrone's demand has increased, and his quantity demanded has decreased. 
A) Tyrone's demand has decreased. 
B) Tyrone's demand has increased. 
C) Tyrone's quantity demanded has decreased, and his demand has not changed. 
D) Tyrone's quantity demanded has increased, and his demand has increased. 
E) Tyrone's demand has increased, and his quantity demanded has decreased.

Question 6

If a major hurricane were to destroy the sugarcane crop in Louisiana, there would be

Accepted Answer

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

Question 7

Figure 3-23  
-Refer to Figure 3-23. The movement from point A to point B on the graph shows

Accepted Answer

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

Question 8

When economists say the demand for a product has increased, they mean the

Accepted Answer

A) demand curve has shifted to the right. 
B) price of the product has fallen, and consequently, consumers are buying more of it. 
C) cost of producing the product has risen. 
D) amount of the product that consumers are willing to purchase at various prices has decreased. 
A) demand curve has shifted to the right. 
B) price of the product has fallen, and consequently, consumers are buying more of it. 
C) cost of producing the product has risen. 
D) amount of the product that consumers are willing to purchase at various prices has decreased.

Question 9

When economists say that market equilibrium is consistent with economic efficiency, they mean

Accepted Answer

A) the total gains from trade (the combined area of producer and consumer surplus) are smaller than potentially could be the case at a different price and quantity. 
B) all units creating more benefit than cost have been produced. 
C) some units have been produced that cost more than the benefits they create. 
D) consumers and producers have made decisions without properly taking into account the market price. 
A) the total gains from trade (the combined area of producer and consumer surplus) are smaller than potentially could be the case at a different price and quantity. 
B) all units creating more benefit than cost have been produced. 
C) some units have been produced that cost more than the benefits they create. 
D) consumers and producers have made decisions without properly taking into account the market price.

Question 10

Consumer surplus

Accepted Answer

A) is the difference between total willingness to pay and the total amount actually paid. 
B) guarantees that the market value of a good in money is equal to the total economic value of the good. 
C) is always negative because of diminishing marginal utility. 
D) is the total area under a consumer's demand curve. 
A) is the difference between total willingness to pay and the total amount actually paid. 
B) guarantees that the market value of a good in money is equal to the total economic value of the good. 
C) is always negative because of diminishing marginal utility. 
D) is the total area under a consumer's demand curve.

Question 11

Which of the following would lead to an increase in the demand for computer software?

Accepted Answer

A) a decrease in the price of computer software 
B) a decrease in the price of personal computers 
C) an decrease in the cost of producing computer software 
D) an decrease in personal income 
A) a decrease in the price of computer software 
B) a decrease in the price of personal computers 
C) an decrease in the cost of producing computer software 
D) an decrease in personal income

Question 12

Consumer surplus is the area on the graph

Accepted Answer

A) above the supply curve and below the demand curve. 
B) below the demand curve and above the market price. 
C) that represents the gains that producers receive when they sell a product. 
D) that reflect the opportunity cost of producing the a good. 
A) above the supply curve and below the demand curve. 
B) below the demand curve and above the market price. 
C) that represents the gains that producers receive when they sell a product. 
D) that reflect the opportunity cost of producing the a good.

Question 13

Which of the following would cause an increase in the price of gasoline and an expansion in the equilibrium quantity?

Accepted Answer

A) an increase in the price of crude oil, a key ingredient required for the production of gasoline 
B) the introduction of a miracle carburetor that substantially improves the gas mileage of automobiles 
C) a recession that substantially reduces the income of households 
D) an increase in the popularity and use of Sport Utility Vehicles that consume a lot of gasoline per mile driven 
A) an increase in the price of crude oil, a key ingredient required for the production of gasoline 
B) the introduction of a miracle carburetor that substantially improves the gas mileage of automobiles 
C) a recession that substantially reduces the income of households 
D) an increase in the popularity and use of Sport Utility Vehicles that consume a lot of gasoline per mile driven

Question 14

In which statement(s) are "demand" and "quantity demanded" used correctly? (I) "An increase in the price of tea will reduce the quantity demanded of tea."
(II) "An increase in the price of tea will reduce the demand for sugar used in tea."

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

Question 15

The price elasticity of demand for a commodity is determined primarily by the

Accepted Answer

A) size of the consumer surplus. 
B) availability of good substitutes for the good. 
C) incomes of consumers. 
D) availability of complementary goods. 
A) size of the consumer surplus. 
B) availability of good substitutes for the good. 
C) incomes of consumers. 
D) availability of complementary goods.

Question 16

If a large percentage increase in the price of a good results in a small percentage reduction in the quantity demanded of the good, demand is said to be

Accepted Answer

A) horizontal. 
B) relatively inelastic. 
C) relatively elastic. 
D) income proof. 
A) horizontal. 
B) relatively inelastic. 
C) relatively elastic. 
D) income proof.

Question 17

Last year, 1,000 cases of bottled water were sold at $5; this year, 1,200 cases were sold at $7. These data could be explained by the

Accepted Answer

A) supply and demand curves shifting to the right. 
B) supply and demand curves shifting to the left. 
C) supply curve shifting to the left, with no change in demand. 
D) demand curve shifting to the right, with no change in supply. 
A) supply and demand curves shifting to the right. 
B) supply and demand curves shifting to the left. 
C) supply curve shifting to the left, with no change in demand. 
D) demand curve shifting to the right, with no change in supply.

Question 18

Economists maintain that the price of a product has no effect on demand. How can this be true?

Accepted Answer

When constructing the demand curve, pric

Question 19

Which of the following is the most likely effect of higher chicken prices on the price and quantity purchased of beef, a substitute product?

Accepted Answer

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

Question 20

An increase in supply will cause

Accepted Answer

A) an increase in demand. 
B) a decrease in demand. 
C) an increase in quantity demanded. 
D) a decrease in quantity demanded. 
E) an increase in equilibrium price. 
A) an increase in demand. 
B) a decrease in demand. 
C) an increase in quantity demanded. 
D) a decrease in quantity demanded. 
E) an increase in equilibrium price.

Other things constant, which of the following would most likely cause the supply of garden hoses to decrease?

Figure 3-22 -Refer to Figure 3-22. Suppose the events depicted in graphs A and C were illustrated together on a single graph. A definitive result of the two events would be

Figure 3-18 -Refer to Figure 3-18. Which area represents the increase in consumer surplus when the price falls from P₁ to P₂?

Assume that corn and soybeans are alternatives that could be grown by most farmers. An increase in the price of corn will

At a price of $5, Tyrone buys 10 units of a product; when the price increases to $6, Tyrone buys 8 units. Which of the following is correct about Tyrone's behavior?

If a major hurricane were to destroy the sugarcane crop in Louisiana, there would be

Figure 3-23 -Refer to Figure 3-23. The movement from point A to point B on the graph shows

When economists say the demand for a product has increased, they mean the

When economists say that market equilibrium is consistent with economic efficiency, they mean

Consumer surplus

Which of the following would lead to an increase in the demand for computer software?

Consumer surplus is the area on the graph

Which of the following would cause an increase in the price of gasoline and an expansion in the equilibrium quantity?

In which statement(s) are "demand" and "quantity demanded" used correctly? (I) "An increase in the price of tea will reduce the quantity demanded of tea." (II) "An increase in the price of tea will reduce the demand for sugar used in tea."

The price elasticity of demand for a commodity is determined primarily by the

If a large percentage increase in the price of a good results in a small percentage reduction in the quantity demanded of the good, demand is said to be

Last year, 1,000 cases of bottled water were sold at $5; this year, 1,200 cases were sold at $7. These data could be explained by the

Economists maintain that the price of a product has no effect on demand. How can this be true?

Which of the following is the most likely effect of higher chicken prices on the price and quantity purchased of beef, a substitute product?

An increase in supply will cause

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

Other things constant, which of the following would most likely cause the supply of garden hoses to decrease?

Figure 3-22 -Refer to Figure 3-22. Suppose the events depicted in graphs A and C were illustrated together on a single graph. A definitive result of the two events would be

Figure 3-18 -Refer to Figure 3-18. Which area represents the increase in consumer surplus when the price falls from P1 to P2?

Assume that corn and soybeans are alternatives that could be grown by most farmers. An increase in the price of corn will

At a price of $5, Tyrone buys 10 units of a product; when the price increases to $6, Tyrone buys 8 units. Which of the following is correct about Tyrone's behavior?

If a major hurricane were to destroy the sugarcane crop in Louisiana, there would be

Figure 3-23 -Refer to Figure 3-23. The movement from point A to point B on the graph shows

When economists say the demand for a product has increased, they mean the

When economists say that market equilibrium is consistent with economic efficiency, they mean

Consumer surplus

Which of the following would lead to an increase in the demand for computer software?

Consumer surplus is the area on the graph

Which of the following would cause an increase in the price of gasoline and an expansion in the equilibrium quantity?

In which statement(s) are "demand" and "quantity demanded" used correctly? (I) "An increase in the price of tea will reduce the quantity demanded of tea." (II) "An increase in the price of tea will reduce the demand for sugar used in tea."

The price elasticity of demand for a commodity is determined primarily by the

If a large percentage increase in the price of a good results in a small percentage reduction in the quantity demanded of the good, demand is said to be

Last year, 1,000 cases of bottled water were sold at $5; this year, 1,200 cases were sold at $7. These data could be explained by the

Economists maintain that the price of a product has no effect on demand. How can this be true?

Which of the following is the most likely effect of higher chicken prices on the price and quantity purchased of beef, a substitute product?

An increase in supply will cause

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 3-18 -Refer to Figure 3-18. Which area represents the increase in consumer surplus when the price falls from P₁ to P₂?