Question 1

A decrease in the price of milk will

Accepted Answer

A)  increase the demand for milk. 
B)  reduce the demand for milk. 
C)  reduce the demand for orange juice, a substitute for milk. 
D)  do both a and c 
A)  increase the demand for milk. 
B)  reduce the demand for milk. 
C)  reduce the demand for orange juice, a substitute for milk. 
D)  do both a and c

Question 2

Figure 3-22        
-Refer to Figure 3-22. Which of the four graphs represents the market for peanut butter after a major hurricane hits the peanut-growing south?

Accepted Answer

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

Question 3

Which of the following about stock is true?

Accepted Answer

A)  The stock market provides investors with an opportunity to own a fractional share of the firm's future profits. 
B)  A new stock issue is often an excellent way for a firm to raise funds for future expansion. 
C)  Changes in stock prices provide information about what investors think of various business decisions. 
D)  All of the above are true. 
A)  The stock market provides investors with an opportunity to own a fractional share of the firm's future profits. 
B)  A new stock issue is often an excellent way for a firm to raise funds for future expansion. 
C)  Changes in stock prices provide information about what investors think of various business decisions. 
D)  All of the above are true.

Question 4

If price falls, 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 5

The random walk theory implies that stock prices

Accepted Answer

A)  go down, then up, and then down again. 
B)  go up and then down in a predictable pattern. 
C)  follow systematic trends. 
D)  are unpredictable based on past trends. 
A)  go down, then up, and then down again. 
B)  go up and then down in a predictable pattern. 
C)  follow systematic trends. 
D)  are unpredictable based on past trends.

Question 6

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 7

Other things constant, which of the following would most likely cause the supply of garden hoses to decrease?

Accepted Answer

A)  an increase in the price of plastic used to make garden hoses 
B)  a technological advance that lowers the cost of producing garden hoses 
C)  the occurrence of a very dry year with little rain 
D)  a decrease in the price of grass seed 
A)  an increase in the price of plastic used to make garden hoses 
B)  a technological advance that lowers the cost of producing garden hoses 
C)  the occurrence of a very dry year with little rain 
D)  a decrease in the price of grass seed

Question 8

Which of the following would most likely increase the demand for televisions?

Accepted Answer

A)  a decrease in the price of televisions 
B)  a decline in consumer income 
C)  a decrease in the price of home stereo systems, a substitute for televisions 
D)  a decrease in the price of DVD players, a product that is complementary with televisions 
A)  a decrease in the price of televisions 
B)  a decline in consumer income 
C)  a decrease in the price of home stereo systems, a substitute for televisions 
D)  a decrease in the price of DVD players, a product that is complementary with televisions

Question 9

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 10

How will an increase in the price of coffee affect the market for cocoa, a substitute good?

Accepted Answer

A)  The supply of cocoa will increase, leading to a reduction in the price of cocoa. 
B)  The supply of cocoa will decrease, leading to an increase in the price of cocoa. 
C)  The demand for cocoa will increase, leading to an increase in the price of cocoa. 
D)  The demand for cocoa will decrease, leading to a reduction in the price of cocoa. 
A)  The supply of cocoa will increase, leading to a reduction in the price of cocoa. 
B)  The supply of cocoa will decrease, leading to an increase in the price of cocoa. 
C)  The demand for cocoa will increase, leading to an increase in the price of cocoa. 
D)  The demand for cocoa will decrease, leading to a reduction in the price of cocoa.

Question 11

Table 3-2
  
-Refer to Table 3-2. If the price is $1,000,

Accepted Answer

A)  Denise is a willing supplier. 
B)  Catherine is a willing supplier. 
C)  Dale's producer surplus is $500. 
D)  All of the above are correct. 
A)  Denise is a willing supplier. 
B)  Catherine is a willing supplier. 
C)  Dale's producer surplus is $500. 
D)  All of the above are correct.

Question 12

Which of the following would lead to an increase in the demand for designer blue jeans?

Accepted Answer

A)  a decrease in the price of designer blue jeans 
B)  a reduction in the price of the cotton used to produce the jeans 
C)  an increase in the income of youthful Americans 
D)  an increase in the price of the cotton used to produce the jeans 
A)  a decrease in the price of designer blue jeans 
B)  a reduction in the price of the cotton used to produce the jeans 
C)  an increase in the income of youthful Americans 
D)  an increase in the price of the cotton used to produce the jeans

Question 13

Other things constant, a decrease in consumer income will

Accepted Answer

A)  decrease the demand for large-screen television sets. 
B)  increase the demand for large-screen television sets. 
C)  cause a movement along the demand curve for large-screen television sets, but it will not shift the demand curve. 
D)  have no impact on the quantity demanded or the demand curve for large-screen television sets. 
A)  decrease the demand for large-screen television sets. 
B)  increase the demand for large-screen television sets. 
C)  cause a movement along the demand curve for large-screen television sets, but it will not shift the demand curve. 
D)  have no impact on the quantity demanded or the demand curve for large-screen television sets.

Question 14

When economists say the quantity supplied of a product has increased, they mean the

Accepted Answer

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

Question 15

Susan says, "If the price of wool coats goes up, suppliers will offer more of the coats for sale." Brad replies, "It takes three months to harvest wool and employ all the steps necessary to produce a wool coat. Quantity supplied cannot possibly increase for three months." Is Brad correct? Why or why not?

Accepted Answer

Brad is correct in noting the supply of

Question 16

Use the figure below to answer the following question(s).
Figure 3-3  
-In Figure 3-3, if the initial demand for margarine were D1, the impact of an increase in the price of margarine from $0.35 to $0.40 per pound on consumer purchases would be illustrated as

Accepted Answer

A)  a shift in the demand curve to D2. 
B)  a shift in the demand curve to D3. 
C)  a movement upward to the left along the original demand curve D1. 
D)  none of the above. 
A)  a shift in the demand curve to D2. 
B)  a shift in the demand curve to D3. 
C)  a movement upward to the left along the original demand curve D1. 
D)  none of the above.

Question 17

When economists say the demand for a product has increased, they mean the

Accepted Answer

A)  demand curve has shifted to the right. 
B)  price of the product has fallen, and consequently, consumers are buying more of it. 
C)  cost of producing the product has risen. 
D)  amount of the product that consumers are willing to purchase at various prices has decreased. 
A)  demand curve has shifted to the right. 
B)  price of the product has fallen, and consequently, consumers are buying more of it. 
C)  cost of producing the product has risen. 
D)  amount of the product that consumers are willing to purchase at various prices has decreased.

Question 18

Which of the following about the stock market is true?

Accepted Answer

A)  Investment in the stock market is a relatively foolproof method for an investor to earn a high rate of return during the next five years. 
B)  Current stock prices already reflect information that is known with a high degree of certainty. 
C)  Experts are able to predict changes in the direction of the broad stock market indexes with a high degree of accuracy. 
D)  While changes in the prices of specific stocks are difficult to predict, it is relatively easy to predict the future direction of the broad stock market. 
E)  Both c and d are true. 
A)  Investment in the stock market is a relatively foolproof method for an investor to earn a high rate of return during the next five years. 
B)  Current stock prices already reflect information that is known with a high degree of certainty. 
C)  Experts are able to predict changes in the direction of the broad stock market indexes with a high degree of accuracy. 
D)  While changes in the prices of specific stocks are difficult to predict, it is relatively easy to predict the future direction of the broad stock market. 
E)  Both c and d are true.

Question 19

Table 3-2
  
-Refer to Table 3-2. If the market price is $1,100, the combined total cost of all participating sellers is

Accepted Answer

A)  $3,700. 
B)  $2,700. 
C)  $2,250. 
D)  $1,500. 
A)  $3,700. 
B)  $2,700. 
C)  $2,250. 
D)  $1,500.

Question 20

The opportunity cost of production differs from an accounting definition of a firm's costs because it includes

Accepted Answer

A)  expenditures the firm undertakes for research and development. 
B)  the opportunity cost of assets and financial resources owned by the firm. 
C)  the direct monetary cost of purchasing resources. 
D)  the firm's revenue as a cost. 
A)  expenditures the firm undertakes for research and development. 
B)  the opportunity cost of assets and financial resources owned by the firm. 
C)  the direct monetary cost of purchasing resources. 
D)  the firm's revenue as a cost.

A decrease in the price of milk will

Figure 3-22 -Refer to Figure 3-22. Which of the four graphs represents the market for peanut butter after a major hurricane hits the peanut-growing south?

Which of the following about stock is true?

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

The random walk theory implies that stock prices

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?

Other things constant, which of the following would most likely cause the supply of garden hoses to decrease?

Which of the following would most likely increase the demand for televisions?

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

How will an increase in the price of coffee affect the market for cocoa, a substitute good?

Table 3-2 -Refer to Table 3-2. If the price is $1,000,

Which of the following would lead to an increase in the demand for designer blue jeans?

Other things constant, a decrease in consumer income will

When economists say the quantity supplied of a product has increased, they mean the

Use the figure below to answer the following question(s). Figure 3-3 -In Figure 3-3, if the initial demand for margarine were D₁, the impact of an increase in the price of margarine from $0.35 to $0.40 per pound on consumer purchases would be illustrated as

When economists say the demand for a product has increased, they mean the

Which of the following about the stock market is true?

Table 3-2 -Refer to Table 3-2. If the market price is $1,100, the combined total cost of all participating sellers is

The opportunity cost of production differs from an accounting definition of a firm's costs because it includes

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

A decrease in the price of milk will

Figure 3-22 -Refer to Figure 3-22. Which of the four graphs represents the market for peanut butter after a major hurricane hits the peanut-growing south?

Which of the following about stock is true?

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

The random walk theory implies that stock prices

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?

Other things constant, which of the following would most likely cause the supply of garden hoses to decrease?

Which of the following would most likely increase the demand for televisions?

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

How will an increase in the price of coffee affect the market for cocoa, a substitute good?

Table 3-2 -Refer to Table 3-2. If the price is $1,000,

Which of the following would lead to an increase in the demand for designer blue jeans?

Other things constant, a decrease in consumer income will

When economists say the quantity supplied of a product has increased, they mean the

Use the figure below to answer the following question(s). Figure 3-3 -In Figure 3-3, if the initial demand for margarine were D1, the impact of an increase in the price of margarine from $0.35 to $0.40 per pound on consumer purchases would be illustrated as

When economists say the demand for a product has increased, they mean the

Which of the following about the stock market is true?

Table 3-2 -Refer to Table 3-2. If the market price is $1,100, the combined total cost of all participating sellers is

The opportunity cost of production differs from an accounting definition of a firm's costs because it includes

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

Use the figure below to answer the following question(s). Figure 3-3 -In Figure 3-3, if the initial demand for margarine were D₁, the impact of an increase in the price of margarine from $0.35 to $0.40 per pound on consumer purchases would be illustrated as