Question 1

Exhibit 3A-2 Comparison of Market Efficiency and Deadweight Loss  
-As shown in Exhibit 3A-2, if the market price falls from P2 to P3, then:

Accepted Answer

A)  consumer surplus increases. 
B)  producer surplus increases. 
C)  deadweight loss increases. 
D)  all of the above are true. 
E)  none of the above are true. 
A)  consumer surplus increases. 
B)  producer surplus increases. 
C)  deadweight loss increases. 
D)  all of the above are true. 
E)  none of the above are true.

Question 2

Producer surplus measures the value between the actual selling price and the:

Accepted Answer

A)  price sellers are willing to sell the product. 
B)  deadweight loss price. 
C)  lowest price sellers are willing to sell the product. 
D)  profit-maximization price. 
A)  price sellers are willing to sell the product. 
B)  deadweight loss price. 
C)  lowest price sellers are willing to sell the product. 
D)  profit-maximization price.

Question 3

In reference to Exhibit 3-5, assume the price of Tucker's Cola is $1.00 per gallon. If the price were to rise to $3.00 per gallon, and all other factors, such as taxes, etc. remained constant, the result would be a(n):

Accepted Answer

A)  decrease in supply. 
B)  increase in supply. 
C)  decrease in quantity supplied. 
D)  increase in quantity supplied. 
A)  decrease in supply. 
B)  increase in supply. 
C)  decrease in quantity supplied. 
D)  increase in quantity supplied.

Question 4

Assuming DVDs and DVD players are complements, the effect of an increase in the price of DVD players on the market for DVDs is a(n):

Accepted Answer

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

Question 5

Assuming that bus travel is an inferior good, an increase in consumer income, other things being equal, will cause a(n):

Accepted Answer

A)  upward movement along the demand curve for bus travel. 
B)  downward movement along the demand curve for bus travel. 
C)  rightward shift in the demand curve for bus travel. 
D)  leftward shift in the demand curve for bus travel. 
A)  upward movement along the demand curve for bus travel. 
B)  downward movement along the demand curve for bus travel. 
C)  rightward shift in the demand curve for bus travel. 
D)  leftward shift in the demand curve for bus travel.

Question 6

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 7

​Exhibit 3-14 Supply and demand curves  
-​In Exhibit 3-14, assume that the price of compact discs is $5 each. This price is:

Accepted Answer

A)  ​an equilibrium price. 
B)  ​not an equilibrium price because there is an excess quantity supplied at a price of $5. 
C)  ​not an equilibrium price because there is an excess quantity demanded at a price of $5. 
D)  ​not an equilibrium price because the quantity supplied of compact discs is greater than the quantity demanded. 
A)  ​an equilibrium price. 
B)  ​not an equilibrium price because there is an excess quantity supplied at a price of $5. 
C)  ​not an equilibrium price because there is an excess quantity demanded at a price of $5. 
D)  ​not an equilibrium price because the quantity supplied of compact discs is greater than the quantity demanded.

Question 8

Deadweight loss results from too few or too many resources used in a given market.

Accepted Answer

A) True 
 B)False

Question 9

A normal good is defined by economists to be a good:

Accepted Answer

A)  with a negatively-sloped demand curve. 
B)  that is purchased by at least 75 percent of the population. 
C)  that is bought by consumers with normal tastes. 
D)  whose demand increases when incomes increase. 
E)  whose demand decreases when incomes increase. 
A)  with a negatively-sloped demand curve. 
B)  that is purchased by at least 75 percent of the population. 
C)  that is bought by consumers with normal tastes. 
D)  whose demand increases when incomes increase. 
E)  whose demand decreases when incomes increase.

Question 10

The "other things being equal" clause in the law of demand does not allow which of the following factors to change?

Accepted Answer

A)  Consumer income. 
B)  The prices of other goods. 
C)  Consumer tastes and preferences. 
D)  All of these. 
A)  Consumer income. 
B)  The prices of other goods. 
C)  Consumer tastes and preferences. 
D)  All of these.

Question 11

Assume that a computer is a normal good. An increase in consumer income, other things being equal, would:

Accepted Answer

A)  cause an upward movement along the demand curve for computers. 
B)  cause a downward movement along the demand curve for computers. 
C)  shift the demand curve for computers to the left. 
D)  shift the demand curve for computers to the right. 
A)  cause an upward movement along the demand curve for computers. 
B)  cause a downward movement along the demand curve for computers. 
C)  shift the demand curve for computers to the left. 
D)  shift the demand curve for computers to the right.

Question 12

Higher milk prices reduce the demand for milk. ​

Accepted Answer

A) True 
 B)False

Question 13

​Exhibit 3-11 Demand and supply curves  
-​In Exhibit 3-11, in Panel B the movement from A to C describes a (an):

Accepted Answer

A)  increase in demand and a decrease in supply, where the increase in demand is
Relatively bigger. 
B)  ​decrease in both demand and supply, where the decrease in supply is relatively bigger. 
C)  ​increase in demand and a decrease in supply, where the decrease in supply is
Relatively bigger. 
D)  ​decrease in demand and increase in supply, where the increase in supply is relatively bigger. 
E)  ​increase in both demand and supply, where the increase in supply is relatively bigger. 
A)  increase in demand and a decrease in supply, where the increase in demand is
Relatively bigger. 
B)  ​decrease in both demand and supply, where the decrease in supply is relatively bigger. 
C)  ​increase in demand and a decrease in supply, where the decrease in supply is
Relatively bigger. 
D)  ​decrease in demand and increase in supply, where the increase in supply is relatively bigger. 
E)  ​increase in both demand and supply, where the increase in supply is relatively bigger.

Question 14

At a quantity above the equilibrium quantity, which of the following does not exist? ​

Accepted Answer

A)  deadweight loss 
B)  ​underproduction. 
C)  ​overproduction 
D)  ​inefficient production 
A)  deadweight loss 
B)  ​underproduction. 
C)  ​overproduction 
D)  ​inefficient production

Question 15

Assuming compact discs and cassettes are substitute goods, a decrease in the price of cassettes will cause the demand curve for compact discs to:

Accepted Answer

A)  shift to the left as consumers switch from buying discs to cassettes. 
B)  shift to the right as consumers switch from buying discs to cassettes. 
C)  shift to the left as producers increase cassette production and reduce disc production. 
D)  remain unchanged since discs and cassettes are sold in separate markets. 
A)  shift to the left as consumers switch from buying discs to cassettes. 
B)  shift to the right as consumers switch from buying discs to cassettes. 
C)  shift to the left as producers increase cassette production and reduce disc production. 
D)  remain unchanged since discs and cassettes are sold in separate markets.

Question 16

​Other things being equal, a fall in the price of orange juice will decrease the quantity supplied.

Accepted Answer

A) True 
 B)False

Question 17

At the equilibrium price, deadweight loss is:

Accepted Answer

A)  minimized. 
B)  zero. 
C)  maximized. 
D)  equal to the equilibrium price multiplied by the quantity exchanged. 
A)  minimized. 
B)  zero. 
C)  maximized. 
D)  equal to the equilibrium price multiplied by the quantity exchanged.

Question 18

Exhibit 3-6 Milk market $$\begin{array} { | c | c | c | } 
\hline \text { Price per Quart } & \begin{array} { c } 
\text { Quantity Demanded } \
\text { (Quarts per week) }
\end{array} & \begin{array} { c } 
\text { Quantity Supplied } \
\text { (Quarts per week) }
\end{array} \
\hline 0.70 & 20 & 180 \
0.60 & 60 & 140 \
0.50 & 100 & 100 \
0.40 & 140 & 60 \
0.30 & 180 & 20 \
\hline
\end{array}$$ ​
​
-? In Exhibit 3-6, which of the following are the equilibrium price and equilibrium quantity in the milk market?

Accepted Answer

A)  ?$0.70 per quart and 200 quarts of milk. 
B)  ?$0.60 per quart and 100 quarts of milk. 
C)  ?$0.50 per quart and 100 quarts of milk. 
D)  ?$0.40 per quart and 60 quarts of milk. 
E)  ?$0.30 per quart and 20 quarts of milk. 
A)  ?$0.70 per quart and 200 quarts of milk. 
B)  ?$0.60 per quart and 100 quarts of milk. 
C)  ?$0.50 per quart and 100 quarts of milk. 
D)  ?$0.40 per quart and 60 quarts of milk. 
E)  ?$0.30 per quart and 20 quarts of milk.

Question 19

Exhibit 3A-2 Comparison of Market Efficiency and Deadweight Loss  
-As shown in Exhibit 3A-2, if the market price falls from P1 to P2, then area ____ disappears.

Accepted Answer

A)  ABEFD 
B)  BEG 
C)  EGH 
D)  BEF 
A)  ABEFD 
B)  BEG 
C)  EGH 
D)  BEF

Question 20

Deadweight loss results from a misallocation of resources.

Accepted Answer

A) True 
 B)False

Exhibit 3A-2 Comparison of Market Efficiency and Deadweight Loss -As shown in Exhibit 3A-2, if the market price falls from P₂ to P₃, then:

Producer surplus measures the value between the actual selling price and the:

In reference to Exhibit 3-5, assume the price of Tucker's Cola is $1.00 per gallon. If the price were to rise to $3.00 per gallon, and all other factors, such as taxes, etc. remained constant, the result would be a(n):

Assuming DVDs and DVD players are complements, the effect of an increase in the price of DVD players on the market for DVDs is a(n):

Assuming that bus travel is an inferior good, an increase in consumer income, other things being equal, will cause a(n):

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

Exhibit 3-14 Supply and demand curves -In Exhibit 3-14, assume that the price of compact discs is $5 each. This price is:

Deadweight loss results from too few or too many resources used in a given market.

A normal good is defined by economists to be a good:

The "other things being equal" clause in the law of demand does not allow which of the following factors to change?

Assume that a computer is a normal good. An increase in consumer income, other things being equal, would:

Higher milk prices reduce the demand for milk.

Exhibit 3-11 Demand and supply curves -In Exhibit 3-11, in Panel B the movement from A to C describes a (an):

At a quantity above the equilibrium quantity, which of the following does not exist?

Assuming compact discs and cassettes are substitute goods, a decrease in the price of cassettes will cause the demand curve for compact discs to:

Other things being equal, a fall in the price of orange juice will decrease the quantity supplied.

At the equilibrium price, deadweight loss is:

Exhibit 3-6 Milk market Price per Quart Quantity Demanded (Quarts per week) Quantity Supplied (Quarts per week) 0.70 20 180 0.60 60 140 0.50 100 100 0.40 140 60 0.30 180 20 -? In Exhibit 3-6, which of the following are the equilibrium price and equilibrium quantity in the milk market?

Exhibit 3A-2 Comparison of Market Efficiency and Deadweight Loss -As shown in Exhibit 3A-2, if the market price falls from P₁ to P₂, then area ____ disappears.

Deadweight loss results from a misallocation of resources.

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Markets in Action

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 3: Market Demand and Supply

Exhibit 3A-2 Comparison of Market Efficiency and Deadweight Loss -As shown in Exhibit 3A-2, if the market price falls from P2 to P3, then:

Producer surplus measures the value between the actual selling price and the:

In reference to Exhibit 3-5, assume the price of Tucker's Cola is $1.00 per gallon. If the price were to rise to $3.00 per gallon, and all other factors, such as taxes, etc. remained constant, the result would be a(n):

Assuming DVDs and DVD players are complements, the effect of an increase in the price of DVD players on the market for DVDs is a(n):

Assuming that bus travel is an inferior good, an increase in consumer income, other things being equal, will cause a(n):

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

​Exhibit 3-14 Supply and demand curves -​In Exhibit 3-14, assume that the price of compact discs is $5 each. This price is:

Deadweight loss results from too few or too many resources used in a given market.

A normal good is defined by economists to be a good:

The "other things being equal" clause in the law of demand does not allow which of the following factors to change?

Assume that a computer is a normal good. An increase in consumer income, other things being equal, would:

Higher milk prices reduce the demand for milk. ​

​Exhibit 3-11 Demand and supply curves -​In Exhibit 3-11, in Panel B the movement from A to C describes a (an):

At a quantity above the equilibrium quantity, which of the following does not exist? ​

Assuming compact discs and cassettes are substitute goods, a decrease in the price of cassettes will cause the demand curve for compact discs to:

​Other things being equal, a fall in the price of orange juice will decrease the quantity supplied.

At the equilibrium price, deadweight loss is:

Exhibit 3-6 Milk market Price per Quart Quantity Demanded (Quarts per week) Quantity Supplied (Quarts per week) 0.70 20 180 0.60 60 140 0.50 100 100 0.40 140 60 0.30 180 20 ​ ​ -? In Exhibit 3-6, which of the following are the equilibrium price and equilibrium quantity in the milk market?

Exhibit 3A-2 Comparison of Market Efficiency and Deadweight Loss -As shown in Exhibit 3A-2, if the market price falls from P1 to P2, then area ____ disappears.

Deadweight loss results from a misallocation of resources.

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Markets in Action

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 3A-2 Comparison of Market Efficiency and Deadweight Loss -As shown in Exhibit 3A-2, if the market price falls from P₂ to P₃, then:

Exhibit 3-14 Supply and demand curves -In Exhibit 3-14, assume that the price of compact discs is $5 each. This price is:

Higher milk prices reduce the demand for milk.

Exhibit 3-11 Demand and supply curves -In Exhibit 3-11, in Panel B the movement from A to C describes a (an):

At a quantity above the equilibrium quantity, which of the following does not exist?

Other things being equal, a fall in the price of orange juice will decrease the quantity supplied.

Exhibit 3-6 Milk market Price per Quart Quantity Demanded (Quarts per week) Quantity Supplied (Quarts per week) 0.70 20 180 0.60 60 140 0.50 100 100 0.40 140 60 0.30 180 20 -? In Exhibit 3-6, which of the following are the equilibrium price and equilibrium quantity in the milk market?

Exhibit 3A-2 Comparison of Market Efficiency and Deadweight Loss -As shown in Exhibit 3A-2, if the market price falls from P₁ to P₂, then area ____ disappears.