Question 1

If the cost of fertilizer rises, then the price of corn will:

Accepted Answer

A)  rise. 
B)  fall. 
C)  remain unchanged. 
D)  react unpredictably. 
A)  rise. 
B)  fall. 
C)  remain unchanged. 
D)  react unpredictably.

Question 2

A cost imposed on people other than the consumers of a good or service is a:

Accepted Answer

A)  price floor. 
B)  negative externality. 
C)  positive externality. 
D)  price externality. 
A)  price floor. 
B)  negative externality. 
C)  positive externality. 
D)  price externality.

Question 3

Exhibit 4-3 Supply and demand curves  
-The market shown in Exhibit 4-3 is initially in equilibrium at point E4. Union negotiations result in a wage increase. Other things being equal, which of the following is the new equilibrium after this wage increase is in effect?

Accepted Answer

A)  E1. 
B)  E2. 
C)  E3. 
D)  E4. 
A)  E1. 
B)  E2. 
C)  E3. 
D)  E4.

Question 4

If a chemical factory causes noxious fumes to be emitted in the neighborhood, a third party would be:

Accepted Answer

A)  workers at the factory. 
B)  factory managers. 
C)  chemical customers. 
D)  local homeowners. 
E)  owners of the factory. 
A)  workers at the factory. 
B)  factory managers. 
C)  chemical customers. 
D)  local homeowners. 
E)  owners of the factory.

Question 5

An increase in both supply and demand causes which of the following?

Accepted Answer

A)  Equilibrium price falls. 
B)  Equilibrium price rises. 
C)  Equilibrium price change is indeterminate. 
D)  Equilibrium quantity decreases. 
E)  Equilibrium quantity change is indeterminate. 
A)  Equilibrium price falls. 
B)  Equilibrium price rises. 
C)  Equilibrium price change is indeterminate. 
D)  Equilibrium quantity decreases. 
E)  Equilibrium quantity change is indeterminate.

Question 6

Which of the following is a property of a public good?

Accepted Answer

A)  A public good is free from externalities. 
B)  Many individuals benefit simultaneously. 
C)  A public good is not subject to free riders. 
D)  A public good is established by law. 
A)  A public good is free from externalities. 
B)  Many individuals benefit simultaneously. 
C)  A public good is not subject to free riders. 
D)  A public good is established by law.

Question 7

Which of the following is the best example of an action that imposes an external cost?

Accepted Answer

A)  Wear and tear on your car as the result of frequent use. 
B)  Deterioration in the average quality of a house you own as the result of poor maintenance. 
C)  Water pollution from an upstream factory that increases the cost of providing clean water to downstream residents. 
D)  A rose garden on your property from which your neighbor gets much enjoyment. 
A)  Wear and tear on your car as the result of frequent use. 
B)  Deterioration in the average quality of a house you own as the result of poor maintenance. 
C)  Water pollution from an upstream factory that increases the cost of providing clean water to downstream residents. 
D)  A rose garden on your property from which your neighbor gets much enjoyment.

Question 8

Price ceilings set below the equilibrium create:

Accepted Answer

A)  externalities. 
B)  unemployment. 
C)  shortages. 
D)  surpluses. 
A)  externalities. 
B)  unemployment. 
C)  shortages. 
D)  surpluses.

Question 9

Exhibit 4-10 Supply and demand data for apricots $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Bushels demanded } \
\text { per month }
\end{array} & \begin{array} { c } 
\text { Price per } \
\text { bushel }
\end{array} & \begin{array} { c } 
\text { Bushels supplied } \
\text { per month }
\end{array} \
\hline 50 & \$ 5 & 80 \
55 & 4 & 75 \
60 & 3 & 70 \
65 & 2 & 65 \
70 & 1 & 55 \
\hline
\end{array}$$
-In Exhibit 4-10, the equilibrium price is:

Accepted Answer

A)  $1. 
B)  $2. 
C)  $3. 
D)  $4. 
A)  $1. 
B)  $2. 
C)  $3. 
D)  $4.

Question 10

Tammy installed a set of wind chimes in her backyard. She enjoys listening to the musical tones when the breeze hits them. Her neighbor Steven also enjoys the chimes, but her other neighbor Sally hates the constant noise. Tammy's wind chimes:

Accepted Answer

A)  create a negative externality for Steven and a positive externality for Sally. 
B)  are not related to the issue of property rights since all parties are homeowners. 
C)  are an example of an efficient market since the benefits to one party are balanced by costs to another party. 
D)  are a public good because all three parties can hear the wind chimes. 
E)  create a positive externality for Steven and a negative externality for Sally. 
A)  create a negative externality for Steven and a positive externality for Sally. 
B)  are not related to the issue of property rights since all parties are homeowners. 
C)  are an example of an efficient market since the benefits to one party are balanced by costs to another party. 
D)  are a public good because all three parties can hear the wind chimes. 
E)  create a positive externality for Steven and a negative externality for Sally.

Question 11

​If the demand curve increases while the supply curve remains unchanged, the equilibrium price would decrease.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is the best example of a public good?

Accepted Answer

A)  Apples. 
B)  Cars. 
C)  Education. 
D)  National defense. 
A)  Apples. 
B)  Cars. 
C)  Education. 
D)  National defense.

Question 13

Exhibit 4-11 Data on supply and demand
​ $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Bushels demanded } \
\text { per month }
\end{array} & \begin{array} { c } 
\text { Price per } \
\text { bushel }
\end{array} & \begin{array} { c } 
\text { Bushels supplied } \
\text { per month }
\end{array} \
\hline 45 & \$ 5 & 77 \
50 & 4 & 73 \
56 & 3 & 68 \
61 & 2 & 61 \
67 & 1 & 57 \
\hline
\end{array}$$
-In Exhibit 4-11, the equilibrium price per bushel of wheat is:

Accepted Answer

A)  $1. 
B)  $2. 
C)  $3. 
D)  $4. 
A)  $1. 
B)  $2. 
C)  $3. 
D)  $4.

Question 14

Discuss the impact of demand and supply changes on market equilibrium price and quantity. Express this graphically.

Accepted Answer

An increase in demand will increase equi

Question 15

​Either an increase in demand with the supply curve held constant or a decrease in supply with the demand curve held constant will raise a market's equilibrium price.

Accepted Answer

A) True 
 B)False

Question 16

​Negative externalities result in unfair, excessively high prices.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements is true of a market?

Accepted Answer

A)  An increase in demand, with no change in supply, will increase the equilibrium price and quantity. 
B)  An increase in supply, with no change in demand, will decrease the equilibrium price and the equilibrium quantity. 
C)  A decrease in supply, with no change in demand, will decrease the equilibrium price and increase the equilibrium quantity. 
D)  All of these. 
A)  An increase in demand, with no change in supply, will increase the equilibrium price and quantity. 
B)  An increase in supply, with no change in demand, will decrease the equilibrium price and the equilibrium quantity. 
C)  A decrease in supply, with no change in demand, will decrease the equilibrium price and increase the equilibrium quantity. 
D)  All of these.

Question 18

John paints the exterior of his house and, as a result, his neighbor Christine is able to sell her home for $5,000 more than she could have before. John's house painting:

Accepted Answer

A)  creates a negative externality for Christine. 
B)  shows John is a free rider. 
C)  results in an efficient market outcome for both. 
D)  creates a positive externality for Christine. 
E)  was poorly done. 
A)  creates a negative externality for Christine. 
B)  shows John is a free rider. 
C)  results in an efficient market outcome for both. 
D)  creates a positive externality for Christine. 
E)  was poorly done.

Question 19

If you were a government official and wanted to raise the price of wheat, which of the following actions would you take?

Accepted Answer

A)  Take wheat from government storage and sell it. 
B)  Encourage farmers to use more fertilizer. 
C)  Lower the price of rye. 
D)  Subsidize purchases of farm equipment. 
E)  Encourage farmers to grow less wheat. 
A)  Take wheat from government storage and sell it. 
B)  Encourage farmers to use more fertilizer. 
C)  Lower the price of rye. 
D)  Subsidize purchases of farm equipment. 
E)  Encourage farmers to grow less wheat.

Question 20

​An economic justification for government providing public goods and services is that many people can benefit regardless of whether they pay or not.

Accepted Answer

A) True 
 B)False

If the cost of fertilizer rises, then the price of corn will:

A cost imposed on people other than the consumers of a good or service is a:

Exhibit 4-3 Supply and demand curves -The market shown in Exhibit 4-3 is initially in equilibrium at point E₄. Union negotiations result in a wage increase. Other things being equal, which of the following is the new equilibrium after this wage increase is in effect?

If a chemical factory causes noxious fumes to be emitted in the neighborhood, a third party would be:

An increase in both supply and demand causes which of the following?

Which of the following is a property of a public good?

Which of the following is the best example of an action that imposes an external cost?

Price ceilings set below the equilibrium create:

Exhibit 4-10 Supply and demand data for apricots Bushels demanded per month Price per bushel Bushels supplied per month 50 \ 5 80 55 4 75 60 3 70 65 2 65 70 1 55 -In Exhibit 4-10, the equilibrium price is:

Tammy installed a set of wind chimes in her backyard. She enjoys listening to the musical tones when the breeze hits them. Her neighbor Steven also enjoys the chimes, but her other neighbor Sally hates the constant noise. Tammy's wind chimes:

If the demand curve increases while the supply curve remains unchanged, the equilibrium price would decrease.

Which of the following is the best example of a public good?

Exhibit 4-11 Data on supply and demand Bushels demanded per month Price per bushel Bushels supplied per month 45 \ 5 77 50 4 73 56 3 68 61 2 61 67 1 57 -In Exhibit 4-11, the equilibrium price per bushel of wheat is:

Discuss the impact of demand and supply changes on market equilibrium price and quantity. Express this graphically.

Either an increase in demand with the supply curve held constant or a decrease in supply with the demand curve held constant will raise a market's equilibrium price.

Negative externalities result in unfair, excessively high prices.

Which of the following statements is true of a market?

John paints the exterior of his house and, as a result, his neighbor Christine is able to sell her home for $5,000 more than she could have before. John's house painting:

If you were a government official and wanted to raise the price of wheat, which of the following actions would you take?

An economic justification for government providing public goods and services is that many people can benefit regardless of whether they pay or not.

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

Filters

Exam 4: Markets in Action

If the cost of fertilizer rises, then the price of corn will:

A cost imposed on people other than the consumers of a good or service is a:

Exhibit 4-3 Supply and demand curves -The market shown in Exhibit 4-3 is initially in equilibrium at point E4. Union negotiations result in a wage increase. Other things being equal, which of the following is the new equilibrium after this wage increase is in effect?

If a chemical factory causes noxious fumes to be emitted in the neighborhood, a third party would be:

An increase in both supply and demand causes which of the following?

Which of the following is a property of a public good?

Which of the following is the best example of an action that imposes an external cost?

Price ceilings set below the equilibrium create:

Exhibit 4-10 Supply and demand data for apricots Bushels demanded per month Price per bushel Bushels supplied per month 50 \ 5 80 55 4 75 60 3 70 65 2 65 70 1 55 -In Exhibit 4-10, the equilibrium price is:

Tammy installed a set of wind chimes in her backyard. She enjoys listening to the musical tones when the breeze hits them. Her neighbor Steven also enjoys the chimes, but her other neighbor Sally hates the constant noise. Tammy's wind chimes:

​If the demand curve increases while the supply curve remains unchanged, the equilibrium price would decrease.

Which of the following is the best example of a public good?

Exhibit 4-11 Data on supply and demand ​ Bushels demanded per month Price per bushel Bushels supplied per month 45 \ 5 77 50 4 73 56 3 68 61 2 61 67 1 57 -In Exhibit 4-11, the equilibrium price per bushel of wheat is:

Discuss the impact of demand and supply changes on market equilibrium price and quantity. Express this graphically.

​Either an increase in demand with the supply curve held constant or a decrease in supply with the demand curve held constant will raise a market's equilibrium price.

​Negative externalities result in unfair, excessively high prices.

Which of the following statements is true of a market?

John paints the exterior of his house and, as a result, his neighbor Christine is able to sell her home for $5,000 more than she could have before. John's house painting:

If you were a government official and wanted to raise the price of wheat, which of the following actions would you take?

​An economic justification for government providing public goods and services is that many people can benefit regardless of whether they pay or not.

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

Filters

Exhibit 4-3 Supply and demand curves -The market shown in Exhibit 4-3 is initially in equilibrium at point E₄. Union negotiations result in a wage increase. Other things being equal, which of the following is the new equilibrium after this wage increase is in effect?

If the demand curve increases while the supply curve remains unchanged, the equilibrium price would decrease.

Exhibit 4-11 Data on supply and demand Bushels demanded per month Price per bushel Bushels supplied per month 45 \ 5 77 50 4 73 56 3 68 61 2 61 67 1 57 -In Exhibit 4-11, the equilibrium price per bushel of wheat is:

Either an increase in demand with the supply curve held constant or a decrease in supply with the demand curve held constant will raise a market's equilibrium price.

Negative externalities result in unfair, excessively high prices.

An economic justification for government providing public goods and services is that many people can benefit regardless of whether they pay or not.