Question 1

If the quantity of a good supplied is not very sensitive to the price of the good, economists say the supply of the good is relatively

Accepted Answer

A) inelastic. 
B) elastic. 
C) robust. 
D) inverse. 
A) inelastic. 
B) elastic. 
C) robust. 
D) inverse.

Question 2

In a typical college town, when students go home for the summer, the demand for many items such as pizza and textbooks

Accepted Answer

A) decreases, which is a shift to the left of the demand curves for these goods. 
B) decreases, which is a shift to the right of the demand curves for these goods. 
C) increases, which is a shift to the left of the demand curves for these goods. 
D) increases, which is a shift to the right of the demand curves for these goods. 
A) decreases, which is a shift to the left of the demand curves for these goods. 
B) decreases, which is a shift to the right of the demand curves for these goods. 
C) increases, which is a shift to the left of the demand curves for these goods. 
D) increases, which is a shift to the right of the demand curves for these goods.

Question 3

The maximum price that consumers are willing to pay for the hundredth unit of a good can be found as

Accepted Answer

A) the height of the supply curve at a quantity of 100. 
B) the height of the demand curve at a quantity of 100. 
C) the difference between the height of the supply and demand curves at a quantity of 100. 
D) none of the above. 
A) the height of the supply curve at a quantity of 100. 
B) the height of the demand curve at a quantity of 100. 
C) the difference between the height of the supply and demand curves at a quantity of 100. 
D) none of the above.

Question 4

If Georgia experiences a late frost that damages the peach crop, we should expect the

Accepted Answer

A) supply curve for peaches to shift to the right and the price of peaches to fall. 
B) supply curve for peaches to shift to the left and the price of peaches to rise. 
C) demand curve for peaches to shift to the left and the price of peaches to fall. 
D) demand curve for peaches to shift to the right and the price of peaches to rise. 
A) supply curve for peaches to shift to the right and the price of peaches to fall. 
B) supply curve for peaches to shift to the left and the price of peaches to rise. 
C) demand curve for peaches to shift to the left and the price of peaches to fall. 
D) demand curve for peaches to shift to the right and the price of peaches to rise.

Question 5

Which of the following most accurately describes the invisible hand concept?

Accepted Answer

A) Wise central planning by government is necessary for the efficient use of resources. 
B) In a democratic setting, majority rule will result in the efficient use of resources. 
C) In a market setting, when individuals pursue their own interests, they simultaneously tend to promote the public interest. 
D) In a market setting, when individuals pursue their own interests, they tend to engage in activities that lower the overall economic welfare of society. 
A) Wise central planning by government is necessary for the efficient use of resources. 
B) In a democratic setting, majority rule will result in the efficient use of resources. 
C) In a market setting, when individuals pursue their own interests, they simultaneously tend to promote the public interest. 
D) In a market setting, when individuals pursue their own interests, they tend to engage in activities that lower the overall economic welfare of society.

Question 6

How would a decrease in consumer income affect the market for lawn mowers?

Accepted Answer

A) Demand would decrease, leading to an increase in price and a reduction in quantity sold. 
B) Demand would decrease, leading to a reduction in price and a reduction in quantity sold. 
C) Demand would increase, leading to an increase in price and an increase in quantity sold. 
D) Demand would increase, leading to a reduction in price and an increase in quantity sold. 
A) Demand would decrease, leading to an increase in price and a reduction in quantity sold. 
B) Demand would decrease, leading to a reduction in price and a reduction in quantity sold. 
C) Demand would increase, leading to an increase in price and an increase in quantity sold. 
D) Demand would increase, leading to a reduction in price and an increase in quantity sold.

Question 7

If the demand for 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 8

Price is important in a market economy because it

Accepted Answer

A) eliminates imbalances between supply and demand. 
B) serves as the rationing mechanism for the limited supplies of goods and services. 
C) coordinates the choices of consumers and producers and brings them into harmony. 
D) is all of the above. 
A) eliminates imbalances between supply and demand. 
B) serves as the rationing mechanism for the limited supplies of goods and services. 
C) coordinates the choices of consumers and producers and brings them into harmony. 
D) is all of the above.

Question 9

Figure 3-22        
-Refer to Figure 3-22. Graph C shows which of the following?

Accepted Answer

A) An increase in demand and an increase in quantity supplied. 
B) An increase in demand and an increase in supply. 
C) An increase in quantity demanded and an increase in quantity supplied. 
D) An increase in supply and an increase in quantity demanded. 
A) An increase in demand and an increase in quantity supplied. 
B) An increase in demand and an increase in supply. 
C) An increase in quantity demanded and an increase in quantity supplied. 
D) An increase in supply and an increase in quantity demanded.

Question 10

If we observe an increase in the price of a good and a decrease in the amount of the good bought and sold, this could be explained by

Accepted Answer

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

Question 11

Suppose demand decreases and supply increases. Which of the following will happen?

Accepted Answer

A) Equilibrium price will rise, fall, or stay the same while equilibrium quantity will decrease. 
B) Equilibrium price will rise, fall, or stay the same while equilibrium quantity will increase. 
C) Equilibrium quantity will rise, fall, or stay the same and equilibrium price will increase. 
D) Equilibrium quantity will rise, fall, or stay the same while equilibrium price will decrease. 
E) The change in equilibrium price and quantity cannot be determined. 
A) Equilibrium price will rise, fall, or stay the same while equilibrium quantity will decrease. 
B) Equilibrium price will rise, fall, or stay the same while equilibrium quantity will increase. 
C) Equilibrium quantity will rise, fall, or stay the same and equilibrium price will increase. 
D) Equilibrium quantity will rise, fall, or stay the same while equilibrium price will decrease. 
E) The change in equilibrium price and quantity cannot be determined.

Question 12

Figure 3-20  
-Refer to Figure 3-20. If 40 units of the good are being bought and sold, then

Accepted Answer

A) cost to sellers is equal to the value to buyers. 
B) the value to buyers is greater than the cost to sellers. 
C) the cost to sellers is greater than the value to buyers. 
D) producer surplus would be greater than consumer surplus. 
A) cost to sellers is equal to the value to buyers. 
B) the value to buyers is greater than the cost to sellers. 
C) the cost to sellers is greater than the value to buyers. 
D) producer surplus would be greater than consumer surplus.

Question 13

When a conflict arises in a major oil-exporting area of the world, such as the Middle East, the price of gasoline already in the storage tanks at local gas stations usually increases. Which of the following best explains this occurrence?

Accepted Answer

A) Gas station owners anticipate consumers will buy more gasoline as gasoline prices increase. 
B) Gas station owners are attempting to repeal the laws of supply and demand. 
C) Gas station owners anticipate higher replacement costs for their supply of gasoline and, therefore, raise their prices in response to this higher expected cost. 
D) A decline in consumer demand generally causes gas station owners to raise their prices. 
A) Gas station owners anticipate consumers will buy more gasoline as gasoline prices increase. 
B) Gas station owners are attempting to repeal the laws of supply and demand. 
C) Gas station owners anticipate higher replacement costs for their supply of gasoline and, therefore, raise their prices in response to this higher expected cost. 
D) A decline in consumer demand generally causes gas station owners to raise their prices.

Question 14

Isabella buys a new camera for $80. She receives consumer surplus of $35 on her purchase if her willingness to pay is

Accepted Answer

A) $35. 
B) $45. 
C) $80. 
D) $115. 
A) $35. 
B) $45. 
C) $80. 
D) $115.

Question 15

Which of the following about demand is true?

Accepted Answer

A) The height of the demand curve for a product at a given quantity represents the marginal value derived by the consumption of that unit. 
B) The height of the demand curve for a product at a given quantity reflects the total value consumers derive from all units of the good consumed. 
C) The total area above the demand curve for a product is equal to consumer surplus. 
D) At every quantity, the height of the demand curve for a product represents the cost of producing that unit. 
A) The height of the demand curve for a product at a given quantity represents the marginal value derived by the consumption of that unit. 
B) The height of the demand curve for a product at a given quantity reflects the total value consumers derive from all units of the good consumed. 
C) The total area above the demand curve for a product is equal to consumer surplus. 
D) At every quantity, the height of the demand curve for a product represents the cost of producing that unit.

Question 16

If a small percentage increase in the price of a good results in a rather large percentage increase in the quantity supplied of the good, supply is said to be

Accepted Answer

A) vertical. 
B) relatively inelastic. 
C) relatively elastic. 
D) robust. 
A) vertical. 
B) relatively inelastic. 
C) relatively elastic. 
D) robust.

Question 17

Graphically, what impact would an increase in the price of jet fuel have on the market for air travel?

Accepted Answer

A) It would shift the supply curve for air travel to the right. 
B) It would shift the supply curve for air travel to the left. 
C) It would shift the demand curve for air travel to the right. 
D) It would shift the demand curve for air travel to the left. 
A) It would shift the supply curve for air travel to the right. 
B) It would shift the supply curve for air travel to the left. 
C) It would shift the demand curve for air travel to the right. 
D) It would shift the demand curve for air travel to the left.

Question 18

Which of the following would increase the supply of laptop computers?

Accepted Answer

A) higher wage rates for the workers that produce laptop computers 
B) a technological improvement that lowers the cost of producing laptop computers 
C) an increase in the price of computer chips used to produce laptop computers 
D) all of the above 
A) higher wage rates for the workers that produce laptop computers 
B) a technological improvement that lowers the cost of producing laptop computers 
C) an increase in the price of computer chips used to produce laptop computers 
D) all of the above

Question 19

Figure 3-4  
-Figure 3-4 shows conditions in the market for beef. A reduction in the price of the grain used to feed cattle results in

Accepted Answer

A) the supply curve for beef shifting to the left resulting in higher beef prices and a lower quantity sold. 
B) the supply curve for beef shifting to the right resulting in lower beef prices and a higher quantity sold. 
C) the demand curve for beef shifting to the left resulting in lower beef prices and a lower quantity sold. 
D) the demand curve for beef shifting to the right resulting in higher beef prices and a higher quantity sold. 
A) the supply curve for beef shifting to the left resulting in higher beef prices and a lower quantity sold. 
B) the supply curve for beef shifting to the right resulting in lower beef prices and a higher quantity sold. 
C) the demand curve for beef shifting to the left resulting in lower beef prices and a lower quantity sold. 
D) the demand curve for beef shifting to the right resulting in higher beef prices and a higher quantity sold.

Question 20

Which one of the following factors would increase the demand for oranges?

Accepted Answer

A) an increase in the price of grapefruit, a substitute product 
B) a reduction in the price of bananas, a substitute product 
C) development of a line of high-yield orange trees that are also more freeze resistant 
D) a decrease in consumer income 
A) an increase in the price of grapefruit, a substitute product 
B) a reduction in the price of bananas, a substitute product 
C) development of a line of high-yield orange trees that are also more freeze resistant 
D) a decrease in consumer income

If the quantity of a good supplied is not very sensitive to the price of the good, economists say the supply of the good is relatively

In a typical college town, when students go home for the summer, the demand for many items such as pizza and textbooks

The maximum price that consumers are willing to pay for the hundredth unit of a good can be found as

If Georgia experiences a late frost that damages the peach crop, we should expect the

Which of the following most accurately describes the invisible hand concept?

How would a decrease in consumer income affect the market for lawn mowers?

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

Price is important in a market economy because it

Figure 3-22 -Refer to Figure 3-22. Graph C shows which of the following?

If we observe an increase in the price of a good and a decrease in the amount of the good bought and sold, this could be explained by

Suppose demand decreases and supply increases. Which of the following will happen?

Figure 3-20 -Refer to Figure 3-20. If 40 units of the good are being bought and sold, then

When a conflict arises in a major oil-exporting area of the world, such as the Middle East, the price of gasoline already in the storage tanks at local gas stations usually increases. Which of the following best explains this occurrence?

Isabella buys a new camera for $80. She receives consumer surplus of $35 on her purchase if her willingness to pay is

Which of the following about demand is true?

If a small percentage increase in the price of a good results in a rather large percentage increase in the quantity supplied of the good, supply is said to be

Graphically, what impact would an increase in the price of jet fuel have on the market for air travel?

Which of the following would increase the supply of laptop computers?

Figure 3-4 -Figure 3-4 shows conditions in the market for beef. A reduction in the price of the grain used to feed cattle results in

Which one of the following factors would increase the demand for oranges?

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 quantity of a good supplied is not very sensitive to the price of the good, economists say the supply of the good is relatively

In a typical college town, when students go home for the summer, the demand for many items such as pizza and textbooks

The maximum price that consumers are willing to pay for the hundredth unit of a good can be found as

If Georgia experiences a late frost that damages the peach crop, we should expect the

Which of the following most accurately describes the invisible hand concept?

How would a decrease in consumer income affect the market for lawn mowers?

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

Price is important in a market economy because it

Figure 3-22 -Refer to Figure 3-22. Graph C shows which of the following?

If we observe an increase in the price of a good and a decrease in the amount of the good bought and sold, this could be explained by

Suppose demand decreases and supply increases. Which of the following will happen?

Figure 3-20 -Refer to Figure 3-20. If 40 units of the good are being bought and sold, then

When a conflict arises in a major oil-exporting area of the world, such as the Middle East, the price of gasoline already in the storage tanks at local gas stations usually increases. Which of the following best explains this occurrence?

Isabella buys a new camera for $80. She receives consumer surplus of $35 on her purchase if her willingness to pay is

Which of the following about demand is true?

If a small percentage increase in the price of a good results in a rather large percentage increase in the quantity supplied of the good, supply is said to be

Graphically, what impact would an increase in the price of jet fuel have on the market for air travel?

Which of the following would increase the supply of laptop computers?

Figure 3-4 -Figure 3-4 shows conditions in the market for beef. A reduction in the price of the grain used to feed cattle results in

Which one of the following factors would increase the demand for oranges?

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