Question 1

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 2

Other things being equal, the effect of a decrease in the price of grapes would be illustrated by

Accepted Answer

A)  a rightward shift in the demand curve for grapes. 
B)  an increase in the quantity demanded for grapes. 
C)  a leftward shift in the demand curve for grapes. 
D)  a decrease in the quantity demanded grapes. 
A)  a rightward shift in the demand curve for grapes. 
B)  an increase in the quantity demanded for grapes. 
C)  a leftward shift in the demand curve for grapes. 
D)  a decrease in the quantity demanded grapes.

Question 3

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 4

The law of demand refers to the

Accepted Answer

A)  inverse relationship between the price of a good and the willingness of consumers to buy it. 
B)  price increase 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 offered for sale. 
D)  increase in the quantity of a good available when its price increases. 
A)  inverse relationship between the price of a good and the willingness of consumers to buy it. 
B)  price increase 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 offered for sale. 
D)  increase in the quantity of a good available when its price increases.

Question 5

If the demand for coffee makers increases,

Accepted Answer

A)  the quantity demanded will decrease. 
B)  equilibrium price will increase and equilibrium quantity will decrease. 
C)  equilibrium price will decrease and equilibrium quantity will increase. 
D)  quantity supplied will increase. 
E)  quantity supplied will decrease. 
A)  the quantity demanded will decrease. 
B)  equilibrium price will increase and equilibrium quantity will decrease. 
C)  equilibrium price will decrease and equilibrium quantity will increase. 
D)  quantity supplied will increase. 
E)  quantity supplied will decrease.

Question 6

Assume that eggnog and cookies are complements. If the price of eggnog goes up, what happens to the demand for cookies?

Accepted Answer

A)  demand for cookies increases 
B)  demand for cookies decreases 
C)  demand for cookies remains unchanged 
D)  the shift in demand will depend on the original price of cookies 
A)  demand for cookies increases 
B)  demand for cookies decreases 
C)  demand for cookies remains unchanged 
D)  the shift in demand will depend on the original price of cookies

Question 7

In a competitive market economy, a resource in short supply will be allocated

Accepted Answer

A)  so that each firm gets enough to keep producing some portion of its output. 
B)  according to how much each firm purchased before the shortage. 
C)  to those firms that can make the most profitable use of it. 
D)  by government regulation. 
A)  so that each firm gets enough to keep producing some portion of its output. 
B)  according to how much each firm purchased before the shortage. 
C)  to those firms that can make the most profitable use of it. 
D)  by government regulation.

Question 8

Which of the following would be the best strategy for a long-term investor wanting to earn an attractive rate of return?

Accepted Answer

A)  Pick stocks that have done well in the past. 
B)  Buy shares of an equity mutual fund indexed to the S&P 500. 
C)  Purchase shares of a money market mutual fund. 
D)  Buy shares of an actively managed equity mutual fund. 
A)  Pick stocks that have done well in the past. 
B)  Buy shares of an equity mutual fund indexed to the S&P 500. 
C)  Purchase shares of a money market mutual fund. 
D)  Buy shares of an actively managed equity mutual fund.

Question 9

According to Adam Smith, what is the primary source of a nation's wealth?

Accepted Answer

A)  The amount of gold and silver in the government's possession. 
B)  A spirit of cooperation in which people share according to their means. 
C)  Strong central planning authorities. 
D)  The people's ability to produce products and trade in free markets. 
A)  The amount of gold and silver in the government's possession. 
B)  A spirit of cooperation in which people share according to their means. 
C)  Strong central planning authorities. 
D)  The people's ability to produce products and trade in free markets.

Question 10

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 11

Figure 3-22        
-Refer to Figure 3-22. Which of the four graphs represents the market for pizza delivery in a college town as we go from summer to the beginning of the fall semester?

Accepted Answer

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

Question 12

Suppose that monetary policy becomes more expansionary, and as a result, the future rate of inflation is higher. Will this be good for the stock market?

Accepted Answer

A)  Yes; the inflation will lead to higher wages, and this will be good for both the economy and the stock market. 
B)  No; the inflation will lead to higher nominal interest rates, and this will reduce the present value of the future net earnings derived from stocks. 
C)  Yes; the inflation rate will reduce the long-run rate of unemployment, and this will be good for the stock market. 
D)  No; the expansionary monetary policy will lead to lower real interest rates, and this is generally bad for both the economy and the stock market. 
A)  Yes; the inflation will lead to higher wages, and this will be good for both the economy and the stock market. 
B)  No; the inflation will lead to higher nominal interest rates, and this will reduce the present value of the future net earnings derived from stocks. 
C)  Yes; the inflation rate will reduce the long-run rate of unemployment, and this will be good for the stock market. 
D)  No; the expansionary monetary policy will lead to lower real interest rates, and this is generally bad for both the economy and the stock market.

Question 13

The price of a good will tend to fall when

Accepted Answer

A)  there is excess demand for the good. 
B)  there is excess supply of the good. 
C)  demand for the good increases. 
D)  the supply of the good decreases. 
A)  there is excess demand for the good. 
B)  there is excess supply of the good. 
C)  demand for the good increases. 
D)  the supply of the good decreases.

Question 14

The theory that stock prices reflect all available information and that the future movement of stock prices is unpredictable is called the

Accepted Answer

A)  random walk theory. 
B)  inefficient market theory. 
C)  technical analysis theory. 
D)  charting theory. 
A)  random walk theory. 
B)  inefficient market theory. 
C)  technical analysis theory. 
D)  charting theory.

Question 15

Two products that serve similar purposes for a consumer would be referred to as

Accepted Answer

A)  substitutes. 
B)  complements. 
C)  inferior goods. 
D)  unrelated goods. 
A)  substitutes. 
B)  complements. 
C)  inferior goods. 
D)  unrelated goods.

Question 16

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.

Question 17

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 18

Which person is more likely to have more wealth upon retirement?

Accepted Answer

A)  A person who has invested 5 percent of their income into an equity mutual fund beginning at age 22. 
B)  A employee who bought some of their company's stock beginning at age 30. 
C)  A person who has invested 5 percent of their income into a stock portfolio beginning at age 50. 
D)  A person who has invested 5 percent of their income into government bonds beginning at age 22. 
A)  A person who has invested 5 percent of their income into an equity mutual fund beginning at age 22. 
B)  A employee who bought some of their company's stock beginning at age 30. 
C)  A person who has invested 5 percent of their income into a stock portfolio beginning at age 50. 
D)  A person who has invested 5 percent of their income into government bonds beginning at age 22.

Question 19

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 20

The number of people willing to buy tickets to the Super Bowl is invariably greater than the number of tickets (and seats) available. This is evidence that the price of the tickets is

Accepted Answer

A)  higher than the equilibrium price. 
B)  equal to the equilibrium price since the number of tickets bought equals the number sold. 
C)  lower than the equilibrium price. 
D)  higher than the equilibrium price when the demand is inelastic but lower when the demand is elastic. 
A)  higher than the equilibrium price. 
B)  equal to the equilibrium price since the number of tickets bought equals the number sold. 
C)  lower than the equilibrium price. 
D)  higher than the equilibrium price when the demand is inelastic but lower when the demand is elastic.

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

Other things being equal, the effect of a decrease in the price of grapes would be illustrated by

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

The law of demand refers to the

If the demand for coffee makers increases,

Assume that eggnog and cookies are complements. If the price of eggnog goes up, what happens to the demand for cookies?

In a competitive market economy, a resource in short supply will be allocated

Which of the following would be the best strategy for a long-term investor wanting to earn an attractive rate of return?

According to Adam Smith, what is the primary source of a nation's wealth?

Price is important in a market economy because it

Figure 3-22 -Refer to Figure 3-22. Which of the four graphs represents the market for pizza delivery in a college town as we go from summer to the beginning of the fall semester?

Suppose that monetary policy becomes more expansionary, and as a result, the future rate of inflation is higher. Will this be good for the stock market?

The price of a good will tend to fall when

The theory that stock prices reflect all available information and that the future movement of stock prices is unpredictable is called the

Two products that serve similar purposes for a consumer would be referred to as

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

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

Which person is more likely to have more wealth upon retirement?

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

The number of people willing to buy tickets to the Super Bowl is invariably greater than the number of tickets (and seats) available. This is evidence that the price of the tickets is

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

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters

Exam 3: Demand, Supply, and the Market Process

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

Other things being equal, the effect of a decrease in the price of grapes would be illustrated by

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

The law of demand refers to the

If the demand for coffee makers increases,

Assume that eggnog and cookies are complements. If the price of eggnog goes up, what happens to the demand for cookies?

In a competitive market economy, a resource in short supply will be allocated

Which of the following would be the best strategy for a long-term investor wanting to earn an attractive rate of return?

According to Adam Smith, what is the primary source of a nation's wealth?

Price is important in a market economy because it

Figure 3-22 -Refer to Figure 3-22. Which of the four graphs represents the market for pizza delivery in a college town as we go from summer to the beginning of the fall semester?

Suppose that monetary policy becomes more expansionary, and as a result, the future rate of inflation is higher. Will this be good for the stock market?

The price of a good will tend to fall when

The theory that stock prices reflect all available information and that the future movement of stock prices is unpredictable is called the

Two products that serve similar purposes for a consumer would be referred to as

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

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

Which person is more likely to have more wealth upon retirement?

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

The number of people willing to buy tickets to the Super Bowl is invariably greater than the number of tickets (and seats) available. This is evidence that the price of the tickets is

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

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters