Question 1

Suppose demand increases 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 2

Figure 3-17.
-Refer to Figure 3-17. When the price is P1, consumer surplus is

Accepted Answer

A)  A. 
B)  A + B. 
C)  A + B + C. 
D)  A + B + D. 
A)  A. 
B)  A + B. 
C)  A + B + C. 
D)  A + B + D.

Question 3

Saccharin and aspartame are both low-calorie substitutes for sugar. If saccharin is found to cause cancer,

Accepted Answer

A)  the price of aspartame will increase. 
B)  the price of sugar will decrease. 
C)  the price of saccharin will increase. 
D)  the demand curves for aspartame and sugar will shift leftward. 
E)  aspartame and sugar will be complements. 
A)  the price of aspartame will increase. 
B)  the price of sugar will decrease. 
C)  the price of saccharin will increase. 
D)  the demand curves for aspartame and sugar will shift leftward. 
E)  aspartame and sugar will be complements.

Question 4

According to Adam Smith's invisible hand principle, productive actions that promote the general welfare of society will be undertaken when

Accepted Answer

A)  political representatives are elected democratically. 
B)  competitive markets direct the actions of self-interested individuals. 
C)  the selfish instincts of individuals are controlled. 
D)  workers are able to organize and develop strong unions. 
A)  political representatives are elected democratically. 
B)  competitive markets direct the actions of self-interested individuals. 
C)  the selfish instincts of individuals are controlled. 
D)  workers are able to organize and develop strong unions.

Question 5

The term market always refers to

Accepted Answer

A)  an arrangement in which buyers and sellers meet at a specific time and place. 
B)  an arrangement in which an auctioneer plays at least a limited role in setting prices. 
C)  a group of buyers and sellers of a particular good or service. 
D)  a single buyer and seller of a particular good or service. 
A)  an arrangement in which buyers and sellers meet at a specific time and place. 
B)  an arrangement in which an auctioneer plays at least a limited role in setting prices. 
C)  a group of buyers and sellers of a particular good or service. 
D)  a single buyer and seller of a particular good or service.

Question 6

Which of the following would cause an increase in the price of gasoline and an expansion in the equilibrium quantity?

Accepted Answer

A)  an increase in the price of crude oil, a key ingredient required for the production of gasoline 
B)  the introduction of a miracle carburetor that substantially improves the gas mileage of automobiles 
C)  a recession that substantially reduces the income of households 
D)  an increase in the popularity and use of Sport Utility Vehicles that consume a lot of gasoline per mile driven 
A)  an increase in the price of crude oil, a key ingredient required for the production of gasoline 
B)  the introduction of a miracle carburetor that substantially improves the gas mileage of automobiles 
C)  a recession that substantially reduces the income of households 
D)  an increase in the popularity and use of Sport Utility Vehicles that consume a lot of gasoline per mile driven

Question 7

Use the figure below to answer the following question(s).
Figure 3-13  
-Refer to Figure 3-13. The market for margarine was initially in equilibrium at point

Accepted Answer

A)  r. 
B)  s. 
C)  t. 
D)  u. 
E)  Other things constant, an increase in the price of soybean oil, an important ingredient used to produce margarine, would likely move the equilibrium in this market toward point 
A)  r. 
B)  s. 
C)  t. 
D)  u. 
E)  Other things constant, an increase in the price of soybean oil, an important ingredient used to produce margarine, would likely move the equilibrium in this market toward point

Question 8

Figure 3-17.
-Refer to Figure 3-17. When the price rises from P1 to P2, consumer surplus

Accepted Answer

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

Question 9

Which of the following is true of stocks?

Accepted Answer

A)  Stock ownership is risky because the investor can never be sure what return they will earn or what the value of their stock holdings will be in the future. 
B)  The riskiness of stocks is one reason why their average rate of return has been higher than investments like bonds that guarantee a specified nominal amount in the future. 
C)  Both a and b are true. 
D)  Neither a nor b is true. 
A)  Stock ownership is risky because the investor can never be sure what return they will earn or what the value of their stock holdings will be in the future. 
B)  The riskiness of stocks is one reason why their average rate of return has been higher than investments like bonds that guarantee a specified nominal amount in the future. 
C)  Both a and b are true. 
D)  Neither a nor b is true.

Question 10

Which of the following occurs when a shortage occurs in the market for a good?

Accepted Answer

A)  Quantity demanded exceeds quantity supplied and the market mechanism pushes the price up, which in turn encourages more production and less consumption. 
B)  Quantity supplied exceeds quantity demanded and the price falls, which encourages more production and less consumption. 
C)  Quantity demanded exceeds quantity supplied and the market mechanism pushes the price down, which encourages more production and less consumption. 
D)  Quantity supplied exceeds quantity demanded and the price rises, which encourages more production and less consumption. 
A)  Quantity demanded exceeds quantity supplied and the market mechanism pushes the price up, which in turn encourages more production and less consumption. 
B)  Quantity supplied exceeds quantity demanded and the price falls, which encourages more production and less consumption. 
C)  Quantity demanded exceeds quantity supplied and the market mechanism pushes the price down, which encourages more production and less consumption. 
D)  Quantity supplied exceeds quantity demanded and the price rises, which encourages more production and less consumption.

Question 11

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 12

Suppose the demand for tacos decreases. What will happen to producer surplus in the market for tacos?

Accepted Answer

A)  It increases. 
B)  It decreases. 
C)  It remains unchanged. 
D)  It may increase, decrease, or remain unchanged. 
A)  It increases. 
B)  It decreases. 
C)  It remains unchanged. 
D)  It may increase, decrease, or remain unchanged.

Question 13

If the interest rate were 10 percent, how much would people be willing to pay for a stock that was certain to yield a $2 per share stream of net earnings continuously in the future?

Accepted Answer

A)  $2 
B)  $10 
C)  $20 
D)  $100 
A)  $2 
B)  $10 
C)  $20 
D)  $100

Question 14

Suppose the demand for nachos increases. What will happen to producer surplus in the market for nachos?

Accepted Answer

A)  It increases. 
B)  It decreases. 
C)  It remains unchanged. 
D)  It may increase, decrease, or remain unchanged. 
A)  It increases. 
B)  It decreases. 
C)  It remains unchanged. 
D)  It may increase, decrease, or remain unchanged.

Question 15

Figure 3-23  
-Refer to Figure 3-23. The movement from point A to point B on the graph would be caused by

Accepted Answer

A)  an increase in price. 
B)  a decrease in price. 
C)  a decrease in the price of a substitute good. 
D)  an increase in income. 
A)  an increase in price. 
B)  a decrease in price. 
C)  a decrease in the price of a substitute good. 
D)  an increase in income.

Question 16

An increase in the price of a good would

Accepted Answer

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

Question 17

Which of the following is true of stock prices?

Accepted Answer

A)  An increase in the interest rate will tend to increase stock prices. 
B)  A reduction in the interest rate will tend to increase stock prices. 
C)  An increase in the inflation rate will tend to increase stock prices. 
D)  There is no reason to believe that changes in interest rates will influence stock prices. 
A)  An increase in the interest rate will tend to increase stock prices. 
B)  A reduction in the interest rate will tend to increase stock prices. 
C)  An increase in the inflation rate will tend to increase stock prices. 
D)  There is no reason to believe that changes in interest rates will influence stock prices.

Question 18

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 19

The height of the supply curve at a quantity of 100 represents the

Accepted Answer

A)  total value of all 100 units to consumers. 
B)  minimum price required to induce a producer to supply the hundredth unit. 
C)  equilibrium price of the good regardless of the position of the demand curve. 
D)  profit derived by producers from the sale of the hundredth unit. 
A)  total value of all 100 units to consumers. 
B)  minimum price required to induce a producer to supply the hundredth unit. 
C)  equilibrium price of the good regardless of the position of the demand curve. 
D)  profit derived by producers from the sale of the hundredth unit.

Question 20

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.

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

Figure 3-17. -Refer to Figure 3-17. When the price is P₁, consumer surplus is

Saccharin and aspartame are both low-calorie substitutes for sugar. If saccharin is found to cause cancer,

According to Adam Smith's invisible hand principle, productive actions that promote the general welfare of society will be undertaken when

The term market always refers to

Which of the following would cause an increase in the price of gasoline and an expansion in the equilibrium quantity?

Use the figure below to answer the following question(s). Figure 3-13 -Refer to Figure 3-13. The market for margarine was initially in equilibrium at point

Figure 3-17. -Refer to Figure 3-17. When the price rises from P₁ to P₂, consumer surplus

Which of the following is true of stocks?

Which of the following occurs when a shortage occurs in the market for a good?

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

Suppose the demand for tacos decreases. What will happen to producer surplus in the market for tacos?

If the interest rate were 10 percent, how much would people be willing to pay for a stock that was certain to yield a $2 per share stream of net earnings continuously in the future?

Suppose the demand for nachos increases. What will happen to producer surplus in the market for nachos?

Figure 3-23 -Refer to Figure 3-23. The movement from point A to point B on the graph would be caused by

An increase in the price of a good would

Which of the following is true of stock prices?

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

The height of the supply curve at a quantity of 100 represents the

Which of the following about demand is true?

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

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

Figure 3-17. -Refer to Figure 3-17. When the price is P1, consumer surplus is

Saccharin and aspartame are both low-calorie substitutes for sugar. If saccharin is found to cause cancer,

According to Adam Smith's invisible hand principle, productive actions that promote the general welfare of society will be undertaken when

The term market always refers to

Which of the following would cause an increase in the price of gasoline and an expansion in the equilibrium quantity?

Use the figure below to answer the following question(s). Figure 3-13 -Refer to Figure 3-13. The market for margarine was initially in equilibrium at point

Figure 3-17. -Refer to Figure 3-17. When the price rises from P1 to P2, consumer surplus

Which of the following is true of stocks?

Which of the following occurs when a shortage occurs in the market for a good?

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

Suppose the demand for tacos decreases. What will happen to producer surplus in the market for tacos?

If the interest rate were 10 percent, how much would people be willing to pay for a stock that was certain to yield a $2 per share stream of net earnings continuously in the future?

Suppose the demand for nachos increases. What will happen to producer surplus in the market for nachos?

Figure 3-23 -Refer to Figure 3-23. The movement from point A to point B on the graph would be caused by

An increase in the price of a good would

Which of the following is true of stock prices?

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

The height of the supply curve at a quantity of 100 represents the

Which of the following about demand is true?

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 3-17. When the price is P₁, consumer surplus is

Figure 3-17. -Refer to Figure 3-17. When the price rises from P₁ to P₂, consumer surplus