Question 1

Jamal buys a new jacket for $50. If his willingness to pay is ____, he receives consumer surplus of $15 on his purchase

Accepted Answer

A) $15. 
B) $35. 
C) $50. 
D) $65. 
A) $15. 
B) $35. 
C) $50. 
D) $65.

Question 2

Suppose all of the major computer manufacturers announced that beginning next month there would be major price reductions on their computers. This would cause the current demand for computers to

Accepted Answer

A) increase. 
B) decrease. 
C) remain unchanged. 
D) increase if the demand for computers was relatively inelastic, but decrease if the demand for computers was relatively elastic. 
A) increase. 
B) decrease. 
C) remain unchanged. 
D) increase if the demand for computers was relatively inelastic, but decrease if the demand for computers was relatively elastic.

Question 3

When property rights are well defined and markets are competitive, the

Accepted Answer

A) market equilibrium violates the conditions for economic efficiency. 
B) market equilibrium is consistent with economic efficiency. 
C) conditions necessary for economic efficiency no longer apply. 
D) quantity supplied will rarely equal the quantity demanded. 
A) market equilibrium violates the conditions for economic efficiency. 
B) market equilibrium is consistent with economic efficiency. 
C) conditions necessary for economic efficiency no longer apply. 
D) quantity supplied will rarely equal the quantity demanded.

Question 4

Figure 3-22        
-Refer to Figure 3-22. Which of the four graphs illustrates a decrease in quantity demanded?

Accepted Answer

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

Question 5

For a typical product, a decrease in consumer income will cause the market demand for the product to

Accepted Answer

A) decrease, which is a shift to the left of the demand curve. 
B) decrease, which is a shift to the right of the demand curve. 
C) increase, which is a shift to the left of the demand curve. 
D) increase, which is a shift to the right of the demand curve. 
A) decrease, which is a shift to the left of the demand curve. 
B) decrease, which is a shift to the right of the demand curve. 
C) increase, which is a shift to the left of the demand curve. 
D) increase, which is a shift to the right of the demand curve.

Question 6

If the supply of a good is relatively inelastic, this means that the quantity supplied of the good is

Accepted Answer

A) not very sensitive to the price of the good. 
B) highly sensitive to the price of the good. 
C) unrelated to the price of the good. 
D) none of the above. 
A) not very sensitive to the price of the good. 
B) highly sensitive to the price of the good. 
C) unrelated to the price of the good. 
D) none of the above.

Question 7

The current demand for automobiles would decrease if

Accepted Answer

A) the price of gasoline fell. 
B) consumer income rose. 
C) consumers suddenly believed the price of automobiles would be sharply lower in the near future. 
D) consumers suddenly believed the price of automobiles would be sharply higher in the near future. 
A) the price of gasoline fell. 
B) consumer income rose. 
C) consumers suddenly believed the price of automobiles would be sharply lower in the near future. 
D) consumers suddenly believed the price of automobiles would be sharply higher in the near future.

Question 8

Which of the following is true of the interaction of supply and demand?

Accepted Answer

A) As the price increases, the quantity demanded and the quantity supplied will increase. 
B) As the price increases, the quantity demanded and the quantity supplied will decrease. 
C) As the price increases, the quantity demanded increases and the quantity supplied will decrease. 
D) As the price increases, the quantity demanded will decrease and the quantity supplied will increase. 
E) As the price increases, neither the quantity demanded nor quantity supplied will change. 
A) As the price increases, the quantity demanded and the quantity supplied will increase. 
B) As the price increases, the quantity demanded and the quantity supplied will decrease. 
C) As the price increases, the quantity demanded increases and the quantity supplied will decrease. 
D) As the price increases, the quantity demanded will decrease and the quantity supplied will increase. 
E) As the price increases, neither the quantity demanded nor quantity supplied will change.

Question 9

Figure 3-19  
-Refer to Figure 3-19. Sellers whose costs are greater than price are represented by segment

Accepted Answer

A) AC 
B) CE 
C) BC 
D) CD 
A) AC 
B) CE 
C) BC 
D) CD

Question 10

Which of the following events would decrease producer surplus?

Accepted Answer

A) Sellers' costs stay the same and the price of the good increases. 
B) Sellers' costs increase and the price of the good stays the same. 
C) Sellers' costs decrease and the price of the good increases. 
D) All of the above are correct. 
A) Sellers' costs stay the same and the price of the good increases. 
B) Sellers' costs increase and the price of the good stays the same. 
C) Sellers' costs decrease and the price of the good increases. 
D) All of the above are correct.

Question 11

When a firm is earning economic profit, this indicates the firm is

Accepted Answer

A) increasing the value of the resources that it is using. 
B) reducing the value of the resources that it is using. 
C) supplying the market with a low quality product. 
D) creating less value for consumers than another firm that is currently earning losses. 
A) increasing the value of the resources that it is using. 
B) reducing the value of the resources that it is using. 
C) supplying the market with a low quality product. 
D) creating less value for consumers than another firm that is currently earning losses.

Question 12

Figure 3-19  
-Refer to Figure 3-19. Buyers who value this good more than price are represented by which line segment?

Accepted Answer

A) AC 
B) CE 
C) BC 
D) CD 
A) AC 
B) CE 
C) BC 
D) CD

Question 13

An increase in the price of metal raises the cost of manufacturing dishwashers. As a result, the market changes to a new equilibrium because of

Accepted Answer

A) a surplus of dishwashers. 
B) an increase in the demand for dishwashers. 
C) a leftward shift in the demand curve for dishwashers. 
D) a leftward shift in the supply curve for dishwashers. 
A) a surplus of dishwashers. 
B) an increase in the demand for dishwashers. 
C) a leftward shift in the demand curve for dishwashers. 
D) a leftward shift in the supply curve for dishwashers.

Question 14

A decrease in the price of a good would

Accepted Answer

A) increase the demand for the good. 
B) increase the quantity demanded for the good. 
C) decrease the demand for the good. 
D) decrease the quantity supplied of the good. 
A) increase the demand for the good. 
B) increase the quantity demanded for the good. 
C) decrease the demand for the good. 
D) decrease the quantity supplied of the good.

Question 15

How will a reduction in the price of cotton influence the market for blue jeans?

Accepted Answer

A) The cost of producing blue jeans will fall, and the supply curve for blue jeans will shift to the left. 
B) The cost of producing blue jeans will fall, and the supply curve for blue jeans will shift to the right. 
C) The cost of producing blue jeans will rise, and the supply curve for blue jeans will shift to the left. 
D) The cost of producing blue jeans will rise, and the supply curve for blue jeans will shift to the right. 
A) The cost of producing blue jeans will fall, and the supply curve for blue jeans will shift to the left. 
B) The cost of producing blue jeans will fall, and the supply curve for blue jeans will shift to the right. 
C) The cost of producing blue jeans will rise, and the supply curve for blue jeans will shift to the left. 
D) The cost of producing blue jeans will rise, and the supply curve for blue jeans will shift to the right.

Question 16

Which of the following would reduce the price of basketballs and increase the quantity sold?

Accepted Answer

A) An increase in the demand for basketballs. 
B) A decrease in the demand for basketballs. 
C) A decrease in the supply of basketballs. 
D) An increase in the supply of basketballs. 
A) An increase in the demand for basketballs. 
B) A decrease in the demand for basketballs. 
C) A decrease in the supply of basketballs. 
D) An increase in the supply of basketballs.

Question 17

Figure 3-15  
-Refer to Figure 3-15. Which area represents producer surplus when the price is P2?

Accepted Answer

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

Question 18

The law of demand refers to the

Accepted Answer

A) decrease in price that can be expected as more units of a product are demanded. 
B) increase in price that results from an increase in demand for a good of limited supply. 
C) inverse relationship between the price of a good and the quantity demanded. 
D) increase in the quantity of a good available when its price increases. 
A) decrease in price that can be expected as more units of a product are demanded. 
B) increase in price that results from an increase in demand for a good of limited supply. 
C) inverse relationship between the price of a good and the quantity demanded. 
D) increase in the quantity of a good available when its price increases.

Question 19

A cold spell in Florida extensively reduced the orange crop, and as a result, California oranges commanded a higher price. Which of the following statements best explains the situation?

Accepted Answer

A) The supply of Florida oranges fell, causing the supply of California oranges to increase as well as their price. 
B) The supply of Florida oranges fell, causing the supply of California oranges to decrease and their price to increase. 
C) The supply of Florida oranges fell, causing their price to increase and the demand for California oranges to increase. 
D) The demand for Florida oranges was reduced by the freeze, causing an increase in the price of California oranges and a greater demand for them. 
A) The supply of Florida oranges fell, causing the supply of California oranges to increase as well as their price. 
B) The supply of Florida oranges fell, causing the supply of California oranges to decrease and their price to increase. 
C) The supply of Florida oranges fell, causing their price to increase and the demand for California oranges to increase. 
D) The demand for Florida oranges was reduced by the freeze, causing an increase in the price of California oranges and a greater demand for them.

Question 20

The height of the demand curve for a product indicates the

Accepted Answer

A) minimum price consumers are willing to pay for an additional unit of it. 
B) minimum quantity consumers are willing to purchase at the current price. 
C) maximum price consumers are willing to pay for an additional unit of it. 
D) minimum price required to induce suppliers to produce an additional unit of it. 
A) minimum price consumers are willing to pay for an additional unit of it. 
B) minimum quantity consumers are willing to purchase at the current price. 
C) maximum price consumers are willing to pay for an additional unit of it. 
D) minimum price required to induce suppliers to produce an additional unit of it.

Jamal buys a new jacket for $50. If his willingness to pay is ____, he receives consumer surplus of $15 on his purchase

Suppose all of the major computer manufacturers announced that beginning next month there would be major price reductions on their computers. This would cause the current demand for computers to

When property rights are well defined and markets are competitive, the

Figure 3-22 -Refer to Figure 3-22. Which of the four graphs illustrates a decrease in quantity demanded?

For a typical product, a decrease in consumer income will cause the market demand for the product to

If the supply of a good is relatively inelastic, this means that the quantity supplied of the good is

The current demand for automobiles would decrease if

Which of the following is true of the interaction of supply and demand?

Figure 3-19 -Refer to Figure 3-19. Sellers whose costs are greater than price are represented by segment

Which of the following events would decrease producer surplus?

When a firm is earning economic profit, this indicates the firm is

Figure 3-19 -Refer to Figure 3-19. Buyers who value this good more than price are represented by which line segment?

An increase in the price of metal raises the cost of manufacturing dishwashers. As a result, the market changes to a new equilibrium because of

A decrease in the price of a good would

How will a reduction in the price of cotton influence the market for blue jeans?

Which of the following would reduce the price of basketballs and increase the quantity sold?

Figure 3-15 -Refer to Figure 3-15. Which area represents producer surplus when the price is P₂?

The law of demand refers to the

A cold spell in Florida extensively reduced the orange crop, and as a result, California oranges commanded a higher price. Which of the following statements best explains the situation?

The height of the demand curve for a product indicates the

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

Jamal buys a new jacket for $50. If his willingness to pay is ____, he receives consumer surplus of $15 on his purchase

Suppose all of the major computer manufacturers announced that beginning next month there would be major price reductions on their computers. This would cause the current demand for computers to

When property rights are well defined and markets are competitive, the

Figure 3-22 -Refer to Figure 3-22. Which of the four graphs illustrates a decrease in quantity demanded?

For a typical product, a decrease in consumer income will cause the market demand for the product to

If the supply of a good is relatively inelastic, this means that the quantity supplied of the good is

The current demand for automobiles would decrease if

Which of the following is true of the interaction of supply and demand?

Figure 3-19 -Refer to Figure 3-19. Sellers whose costs are greater than price are represented by segment

Which of the following events would decrease producer surplus?

When a firm is earning economic profit, this indicates the firm is

Figure 3-19 -Refer to Figure 3-19. Buyers who value this good more than price are represented by which line segment?

An increase in the price of metal raises the cost of manufacturing dishwashers. As a result, the market changes to a new equilibrium because of

A decrease in the price of a good would

How will a reduction in the price of cotton influence the market for blue jeans?

Which of the following would reduce the price of basketballs and increase the quantity sold?

Figure 3-15 -Refer to Figure 3-15. Which area represents producer surplus when the price is P2?

The law of demand refers to the

A cold spell in Florida extensively reduced the orange crop, and as a result, California oranges commanded a higher price. Which of the following statements best explains the situation?

The height of the demand curve for a product indicates the

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 3-15 -Refer to Figure 3-15. Which area represents producer surplus when the price is P₂?