Question 1

If the supply of a good increased, what would be the effect on the equilibrium price and quantity?

Accepted Answer

A) Price would increase and quantity would decrease. 
B) Price would decrease and quantity would decrease. 
C) Price would increase and quantity would increase. 
D) Price would decrease and quantity would increase. 
A) Price would increase and quantity would decrease. 
B) Price would decrease and quantity would decrease. 
C) Price would increase and quantity would increase. 
D) Price would decrease and quantity would increase.

Question 2

A movement along a demand curve

Accepted Answer

A) is called a change in demand. 
B) is the result of a change in the price of the good. 
C) can be caused by many things. 
D) means the product is inelastic. 
A) is called a change in demand. 
B) is the result of a change in the price of the good. 
C) can be caused by many things. 
D) means the product is inelastic.

Question 3

When the quantity demanded and quantity supplied in a market are equal, the market is said to be in

Accepted Answer

A) fixation. 
B) excess supply. 
C) equilibrium. 
D) excess demand. 
A) fixation. 
B) excess supply. 
C) equilibrium. 
D) excess demand.

Question 4

When economists say the quantity demanded of a product has decreased, they mean the

Accepted Answer

A) demand curve has shifted to the left. 
B) demand curve has shifted to the right. 
C) price of the product has fallen, and consequently, consumers are buying more of it. 
D) price of the product has risen, and consequently, consumers are buying less of it. 
A) demand curve has shifted to the left. 
B) demand curve has shifted to the right. 
C) price of the product has fallen, and consequently, consumers are buying more of it. 
D) price of the product has risen, and consequently, consumers are buying less of it.

Question 5

If equilibrium is present in a market,

Accepted Answer

A) there is generally either a shortage or a surplus. 
B) quantity demanded equals quantity supplied. 
C) quantity demanded exceeds quantity supplied. 
D) quantity supplied exceeds quantity demanded. 
A) there is generally either a shortage or a surplus. 
B) quantity demanded equals quantity supplied. 
C) quantity demanded exceeds quantity supplied. 
D) quantity supplied exceeds quantity demanded.

Question 6

Which of the following is necessary for the invisible hand of market prices to work properly?

Accepted Answer

A) buyers and sellers who generally tend to disregard their own self-interest 
B) democratic political procedures and highly regulated markets 
C) price controls that restrict the movement of market prices 
D) competition and property rights that are well-defined and enforced 
A) buyers and sellers who generally tend to disregard their own self-interest 
B) democratic political procedures and highly regulated markets 
C) price controls that restrict the movement of market prices 
D) competition and property rights that are well-defined and enforced

Question 7

Assume that supply increases slightly and demand increases greatly. Which of the following will happen?

Accepted Answer

A) Equilibrium price will fall and equilibrium quantity will rise. 
B) Equilibrium price will rise and equilibrium quantity will fall. 
C) Equilibrium price will rise and equilibrium quantity will rise. 
D) Equilibrium price will fall and equilibrium quantity will fall. 
E) Neither equilibrium price nor equilibrium quantity will change. 
A) Equilibrium price will fall and equilibrium quantity will rise. 
B) Equilibrium price will rise and equilibrium quantity will fall. 
C) Equilibrium price will rise and equilibrium quantity will rise. 
D) Equilibrium price will fall and equilibrium quantity will fall. 
E) Neither equilibrium price nor equilibrium quantity will change.

Question 8

Willingness to pay

Accepted Answer

A) measures the value that a buyer places on a good. 
B) is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept. 
C) is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept. 
D) is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it. 
A) measures the value that a buyer places on a good. 
B) is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept. 
C) is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept. 
D) is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.

Question 9

Graphically, the area that represents the difference between the maximum price consumers were willing to pay for a good and the market price is called

Accepted Answer

A) consumer surplus. 
B) producer surplus. 
C) marginal cost. 
D) triangular arbitrage. 
A) consumer surplus. 
B) producer surplus. 
C) marginal cost. 
D) triangular arbitrage.

Question 10

A question on an economics exam asks, "What happens in the market for jelly when the price of peanut butter increases?" Allison, an excellent student, shows the demand for jelly increasing. Is she necessarily wrong? Why or why not?

Accepted Answer

If we consider Allison's answer wrong, w

Question 11

If the quantity of a good supplied is not very sensitive to the price of the good, this is illustrated by a

Accepted Answer

A) demand curve that is relatively flat (more horizontal). 
B) demand curve that is relatively steep (more vertical). 
C) supply curve that is relatively flat (more horizontal). 
D) supply curve that is relatively steep (more vertical). 
A) demand curve that is relatively flat (more horizontal). 
B) demand curve that is relatively steep (more vertical). 
C) supply curve that is relatively flat (more horizontal). 
D) supply curve that is relatively steep (more vertical).

Question 12

The demand schedule for a good

Accepted Answer

A) indicates the relationship between the price of the good and the price of other goods. 
B) indicates the quantities of the good that people will buy at various prices. 
C) illustrates the quantity producers will provide at alternative prices. 
D) is determined primarily by the cost of producing the good. 
A) indicates the relationship between the price of the good and the price of other goods. 
B) indicates the quantities of the good that people will buy at various prices. 
C) illustrates the quantity producers will provide at alternative prices. 
D) is determined primarily by the cost of producing the good.

Question 13

Use the figure below to answer the following question(s).
Figure 3-8  
-In Figure 3-8, if the initial demand and supply for soybeans were D1 and S1, how would a decrease in the cost of producing soybeans affect the market for soybeans?

Accepted Answer

A) Demand would increase to D2, price would increase to P2, and the quantity would increase to S. 
B) Supply would increase to S2, price would decrease to P0, and the quantity would increase to S. 
C) Both demand and supply would increase so the price would remain at P1, but the quantity would increase to T. 
D) None of the above would occur. 
A) Demand would increase to D2, price would increase to P2, and the quantity would increase to S. 
B) Supply would increase to S2, price would decrease to P0, and the quantity would increase to S. 
C) Both demand and supply would increase so the price would remain at P1, but the quantity would increase to T. 
D) None of the above would occur.

Question 14

Which of the following is most likely to lead to an increase in the rental price of apartments near your campus?

Accepted Answer

A) lower property taxes on apartment buildings 
B) an unexpected increase in enrollment at your college 
C) lower prices for the bricks used in the construction of apartments 
D) the building of a new large dormitory on the college campus 
A) lower property taxes on apartment buildings 
B) an unexpected increase in enrollment at your college 
C) lower prices for the bricks used in the construction of apartments 
D) the building of a new large dormitory on the college campus

Question 15

If price rises, what happens to supply of 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 16

Table 3-2
  
-Refer to Table 3-2. Suppose each of the five sellers can supply at most one unit of the good; then the market quantity supplied is exactly 3 if the price is

Accepted Answer

A) $670. 
B) $770. 
C) $970. 
D) $1,170. 
A) $670. 
B) $770. 
C) $970. 
D) $1,170.

Question 17

A shortage occurs whenever

Accepted Answer

A) quantity demanded exceeds quantity supplied at the equilibrium price. 
B) price is less than equilibrium price. 
C) quantity demanded is less than quantity supplied. 
D) goods are scarce. 
E) some of the people who need the product are not willing and able to buy it at the equilibrium price. 
A) quantity demanded exceeds quantity supplied at the equilibrium price. 
B) price is less than equilibrium price. 
C) quantity demanded is less than quantity supplied. 
D) goods are scarce. 
E) some of the people who need the product are not willing and able to buy it at the equilibrium price.

Question 18

Figure 3-22        
-Refer to Figure 3-22. Which of the four graphs illustrates an increase in quantity supplied?

Accepted Answer

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

Question 19

If Mateo is paid $25,000 to sell his crop of tomatoes even though he would have been willing to have sold the crop for as little as $20,000, this indicates that

Accepted Answer

A) Mateo received no producer surplus from the transaction. 
B) Mateo received $5,000 of producer surplus from the transaction. 
C) Mateo received $20,000 of producer surplus from the transaction. 
D) Mateo received $25,000 of producer surplus from the transaction. 
A) Mateo received no producer surplus from the transaction. 
B) Mateo received $5,000 of producer surplus from the transaction. 
C) Mateo received $20,000 of producer surplus from the transaction. 
D) Mateo received $25,000 of producer surplus from the transaction.

Question 20

Figure 3-23  
-Refer to Figure 3-23. It is apparent from the figure that

Accepted Answer

A) the good is inferior. 
B) the demand for the good decreases as income increases. 
C) the demand for the good conforms to the law of demand. 
D) All of the above are correct. 
A) the good is inferior. 
B) the demand for the good decreases as income increases. 
C) the demand for the good conforms to the law of demand. 
D) All of the above are correct.

If the supply of a good increased, what would be the effect on the equilibrium price and quantity?

A movement along a demand curve

When the quantity demanded and quantity supplied in a market are equal, the market is said to be in

When economists say the quantity demanded of a product has decreased, they mean the

If equilibrium is present in a market,

Which of the following is necessary for the invisible hand of market prices to work properly?

Assume that supply increases slightly and demand increases greatly. Which of the following will happen?

Willingness to pay

Graphically, the area that represents the difference between the maximum price consumers were willing to pay for a good and the market price is called

A question on an economics exam asks, "What happens in the market for jelly when the price of peanut butter increases?" Allison, an excellent student, shows the demand for jelly increasing. Is she necessarily wrong? Why or why not?

If the quantity of a good supplied is not very sensitive to the price of the good, this is illustrated by a

The demand schedule for a good

Use the figure below to answer the following question(s). Figure 3-8 -In Figure 3-8, if the initial demand and supply for soybeans were D₁ and S₁, how would a decrease in the cost of producing soybeans affect the market for soybeans?

Which of the following is most likely to lead to an increase in the rental price of apartments near your campus?

If price rises, what happens to supply of a product?

Table 3-2 -Refer to Table 3-2. Suppose each of the five sellers can supply at most one unit of the good; then the market quantity supplied is exactly 3 if the price is

A shortage occurs whenever

Figure 3-22 -Refer to Figure 3-22. Which of the four graphs illustrates an increase in quantity supplied?

If Mateo is paid $25,000 to sell his crop of tomatoes even though he would have been willing to have sold the crop for as little as $20,000, this indicates that

Figure 3-23 -Refer to Figure 3-23. It is apparent from the figure that

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

If the supply of a good increased, what would be the effect on the equilibrium price and quantity?

A movement along a demand curve

When the quantity demanded and quantity supplied in a market are equal, the market is said to be in

When economists say the quantity demanded of a product has decreased, they mean the

If equilibrium is present in a market,

Which of the following is necessary for the invisible hand of market prices to work properly?

Assume that supply increases slightly and demand increases greatly. Which of the following will happen?

Willingness to pay

Graphically, the area that represents the difference between the maximum price consumers were willing to pay for a good and the market price is called

A question on an economics exam asks, "What happens in the market for jelly when the price of peanut butter increases?" Allison, an excellent student, shows the demand for jelly increasing. Is she necessarily wrong? Why or why not?

If the quantity of a good supplied is not very sensitive to the price of the good, this is illustrated by a

The demand schedule for a good

Use the figure below to answer the following question(s). Figure 3-8 -In Figure 3-8, if the initial demand and supply for soybeans were D1 and S1, how would a decrease in the cost of producing soybeans affect the market for soybeans?

Which of the following is most likely to lead to an increase in the rental price of apartments near your campus?

If price rises, what happens to supply of a product?

Table 3-2 -Refer to Table 3-2. Suppose each of the five sellers can supply at most one unit of the good; then the market quantity supplied is exactly 3 if the price is

A shortage occurs whenever

Figure 3-22 -Refer to Figure 3-22. Which of the four graphs illustrates an increase in quantity supplied?

If Mateo is paid $25,000 to sell his crop of tomatoes even though he would have been willing to have sold the crop for as little as $20,000, this indicates that

Figure 3-23 -Refer to Figure 3-23. It is apparent from the figure that

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

Use the figure below to answer the following question(s). Figure 3-8 -In Figure 3-8, if the initial demand and supply for soybeans were D₁ and S₁, how would a decrease in the cost of producing soybeans affect the market for soybeans?