Question 1

Other things being equal, the effect of an increase in the price of milk would be illustrated by

Accepted Answer

A)  an upward movement along the demand curve for milk. 
B)  a leftward shift in the demand curve for milk. 
C)  a downward movement along the demand curve for milk. 
D)  a rightward shift in the demand curve for milk. 
A)  an upward movement along the demand curve for milk. 
B)  a leftward shift in the demand curve for milk. 
C)  a downward movement along the demand curve for milk. 
D)  a rightward shift in the demand curve for milk.

Question 2

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 3

"He [the producer] intends only his gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention." What is the "invisible hand" referred to in this statement?

Accepted Answer

A)  the elasticity of the market demand curve 
B)  the power of government when decisions are made democratically 
C)  the guidelines and regulations set for his industry by the government 
D)  the incentive structure accompanying market prices 
A)  the elasticity of the market demand curve 
B)  the power of government when decisions are made democratically 
C)  the guidelines and regulations set for his industry by the government 
D)  the incentive structure accompanying market prices

Question 4

Figure 3-17.
-Refer to Figure 3-15. Which area represents the increase in producer surplus when the price rises from P1 to P2?

Accepted Answer

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

Question 5

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 6

Which of the following is true of investments?

Accepted Answer

A)  The stock market helps channel the savings of individuals into business activities that create wealth. 
B)  Individual investors can reduce their risk by holding a large share of their wealth in the form of the stock ownership of a single company. 
C)  Historically, the long-term real rate of return of stocks has generally been less than that of bonds. 
D)  Mutual funds that have done well in the past are more likely to outperform the market average in the future. 
A)  The stock market helps channel the savings of individuals into business activities that create wealth. 
B)  Individual investors can reduce their risk by holding a large share of their wealth in the form of the stock ownership of a single company. 
C)  Historically, the long-term real rate of return of stocks has generally been less than that of bonds. 
D)  Mutual funds that have done well in the past are more likely to outperform the market average in the future.

Question 7

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 8

If price rises, what happens to the demand for 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 9

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 10

A decrease in the expected future price of a good will cause the current demand for the good 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 11

A decrease in demand will cause

Accepted Answer

A)  an increase in supply. 
B)  a decrease in supply. 
C)  an increase in quantity supplied. 
D)  a decrease in quantity supplied. 
E)  an increase in equilibrium price. 
A)  an increase in supply. 
B)  a decrease in supply. 
C)  an increase in quantity supplied. 
D)  a decrease in quantity supplied. 
E)  an increase in equilibrium price.

Question 12

Each point on the demand curve indicates

Accepted Answer

A)  the demand for the product. 
B)  the quantity demanded at that price. 
C)  the amount that people need. 
D)  the amount people want to buy at different income levels. 
A)  the demand for the product. 
B)  the quantity demanded at that price. 
C)  the amount that people need. 
D)  the amount people want to buy at different income levels.

Question 13

A hotel in New Hampshire charges $150 per room in the winter ski season and $90 during the summer months. The number of rooms and operating costs are constant year round. These prices indicate

Accepted Answer

A)  a rightward shift in the demand in the summer. 
B)  a rightward shift in demand in the winter. 
C)  a leftward shift in the supply curve in the summer. 
D)  a leftward shift in demand in the winter. 
A)  a rightward shift in the demand in the summer. 
B)  a rightward shift in demand in the winter. 
C)  a leftward shift in the supply curve in the summer. 
D)  a leftward shift in demand in the winter.

Question 14

If the interest rate were 12.5 percent, how much would people be willing to pay for a stock that was certain to yield a $20 per share stream of net earnings continuously in the future?

Accepted Answer

A)  $20 
B)  $25 
C)  $160 
D)  $250 
A)  $20 
B)  $25 
C)  $160 
D)  $250

Question 15

Figure 3-17.
-Refer to Figure 3-16. When the price falls from P2 to P1, producer surplus

Accepted Answer

A)  decreases by an amount equal to C. 
B)  decreases by an amount equal to A + B. 
C)  decreases by an amount equal to A + C. 
D)  increases by an amount equal to A + B. 
A)  decreases by an amount equal to C. 
B)  decreases by an amount equal to A + B. 
C)  decreases by an amount equal to A + C. 
D)  increases by an amount equal to A + B.

Question 16

Table 3-2
  
-Refer to Table 3-2. If the price is $775, who would be willing to supply the product?

Accepted Answer

A)  Dale and Jill 
B)  Dale, Jill and Denise 
C)  Denise, Catherine and Jackson 
D)  Catherine and Jackson 
A)  Dale and Jill 
B)  Dale, Jill and Denise 
C)  Denise, Catherine and Jackson 
D)  Catherine and Jackson

Question 17

Around Easter time, the price of eggs rises. Some consumers complain about this and claim stores are 'price gouging.' Are there any positive functions played by the higher price of eggs around Easter? What would happen if the price of eggs were not permitted to rise by law?

Accepted Answer

The price of eggs rises around Easter du

Question 18

If consumer purchases of a good are 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 19

Assume that supply decreases slightly and demand decreases 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 20

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.

Other things being equal, the effect of an increase in the price of milk would be illustrated by

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

"He [the producer] intends only his gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention." What is the "invisible hand" referred to in this statement?

Figure 3-17. -Refer to Figure 3-15. Which area represents the increase in producer surplus when the price rises from P₁ to P₂?

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

Which of the following is true of investments?

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

If price rises, what happens to the demand for a product?

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."

A decrease in the expected future price of a good will cause the current demand for the good to

A decrease in demand will cause

Each point on the demand curve indicates

A hotel in New Hampshire charges $150 per room in the winter ski season and $90 during the summer months. The number of rooms and operating costs are constant year round. These prices indicate

If the interest rate were 12.5 percent, how much would people be willing to pay for a stock that was certain to yield a $20 per share stream of net earnings continuously in the future?

Figure 3-17. -Refer to Figure 3-16. When the price falls from P₂ to P₁, producer surplus

Table 3-2 -Refer to Table 3-2. If the price is $775, who would be willing to supply the product?

Around Easter time, the price of eggs rises. Some consumers complain about this and claim stores are 'price gouging.' Are there any positive functions played by the higher price of eggs around Easter? What would happen if the price of eggs were not permitted to rise by law?

If consumer purchases of a good are not very sensitive to the price of the good, this is illustrated by a

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

Which of the following events would decrease producer surplus?

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

Other things being equal, the effect of an increase in the price of milk would be illustrated by

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

"He [the producer] intends only his gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention." What is the "invisible hand" referred to in this statement?

Figure 3-17. -Refer to Figure 3-15. Which area represents the increase in producer surplus when the price rises from P1 to P2?

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

Which of the following is true of investments?

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

If price rises, what happens to the demand for a product?

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."

A decrease in the expected future price of a good will cause the current demand for the good to

A decrease in demand will cause

Each point on the demand curve indicates

A hotel in New Hampshire charges $150 per room in the winter ski season and $90 during the summer months. The number of rooms and operating costs are constant year round. These prices indicate

If the interest rate were 12.5 percent, how much would people be willing to pay for a stock that was certain to yield a $20 per share stream of net earnings continuously in the future?

Figure 3-17. -Refer to Figure 3-16. When the price falls from P2 to P1, producer surplus

Table 3-2 -Refer to Table 3-2. If the price is $775, who would be willing to supply the product?

Around Easter time, the price of eggs rises. Some consumers complain about this and claim stores are 'price gouging.' Are there any positive functions played by the higher price of eggs around Easter? What would happen if the price of eggs were not permitted to rise by law?

If consumer purchases of a good are not very sensitive to the price of the good, this is illustrated by a

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

Which of the following events would decrease producer surplus?

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

Figure 3-17. -Refer to Figure 3-15. Which area represents the increase in producer surplus when the price rises from P₁ to P₂?

Figure 3-17. -Refer to Figure 3-16. When the price falls from P₂ to P₁, producer surplus