Question 1

If the producers' surplus is $50, and the consumers' surplus is $40, then what is the minimum selling price of the good?

Accepted Answer

A) $10 
B) $40 
C) $50 
D) $90 
E) There is not enough information to answer the question. 
A) $10 
B) $40 
C) $50 
D) $90 
E) There is not enough information to answer the question.

Question 2

Explain why the price of a good tends to fall when there is a surplus of the good. Give a hypothetical numerical example to help support your answer.

Accepted Answer

Surpluses always occur at prices that ar

Question 3

Demand takes into account goods, but not services.

Accepted Answer

A) True 
 B)False

Question 4

When the price of a good is $65, the quantity demanded of a good is 80 units, and the quantity supplied of the good is 40 units. For every $10 increase in the price of this good, quantity demanded falls by 10 units and quantity supplied rises by 10 units. The equilibrium price of this good is ___________and the equilibrium quantity of this good is _________ units.

Accepted Answer

A) $55; 30 
B) $75; 50 
C) $75; 70 
D) $85; 50 
E) $85; 60 
A) $55; 30 
B) $75; 50 
C) $75; 70 
D) $85; 50 
E) $85; 60

Question 5

The market demand curve for a given product may be downward sloping even if no person in that market has a downward sloping demand curve.

Accepted Answer

A) True 
 B)False

Question 6

Consider a point on a market demand curve. The point represents

Accepted Answer

A) a single price and the quantity demanded by an individual buyer. 
B) a single price and the sum of the quantities demanded by all buyers. 
C) various prices and various quantities demanded. 
D) a single price and the quantity demanded by an individual buyer at that price and all other prices. 
E) a and c 
A) a single price and the quantity demanded by an individual buyer. 
B) a single price and the sum of the quantities demanded by all buyers. 
C) various prices and various quantities demanded. 
D) a single price and the quantity demanded by an individual buyer at that price and all other prices. 
E) a and c

Question 7

According to the law of demand, the higher the price of an assigned textbook, the _______________ the quantity demanded of assigned textbooks will be, ceteris paribus, and the ______________ likely students will seek out an alternative to the assigned textbook.

Accepted Answer

A) lower; less 
B) lower; more 
C) higher; less 
D) higher; more 
A) lower; less 
B) lower; more 
C) higher; less 
D) higher; more

Question 8

Exhibit 3-12
---------------------------------------------------Quantity Supplied --------------------------------------------
   Assume that Aline, Bentley, Calvin, and Daniel are the only sellers in this market.
-Refer to Exhibit 3-12. Fill in blanks (C) and (D) respectively with the market quantity supplied at each given price.

Accepted Answer

A) 17.75; 21.00 
B) 9.13; 9.78 
C) 73; 88 
D) 71; 84 
E) none of the above 
A) 17.75; 21.00 
B) 9.13; 9.78 
C) 73; 88 
D) 71; 84 
E) none of the above

Question 9

Exhibit 3-3
   Good Y
​
​
-Refer to Exhibit 3-3. A movement from point V to point W could not have been the result of

Accepted Answer

A) a increase in the price of good Y. 
B) an increase in good Y buyers' income (assuming that good Y is an inferior good). 
C) an increase in the price of a complement to good Y. 
D) a decrease in the number of buyers of good Y. 
E) a decrease in good Y buyers' income (assuming that good Y is a normal good). 
A) a increase in the price of good Y. 
B) an increase in good Y buyers' income (assuming that good Y is an inferior good). 
C) an increase in the price of a complement to good Y. 
D) a decrease in the number of buyers of good Y. 
E) a decrease in good Y buyers' income (assuming that good Y is a normal good).

Question 10

Exhibit 3-9
  
-Refer to Exhibit 3-9. X is produced using input Z. If the price of Z rises, an economist would expect a movement in the market for X from

Accepted Answer

A) E to F. 
B) A to B. 
C) F to E. 
D) B to A. 
A) E to F. 
B) A to B. 
C) F to E. 
D) B to A.

Question 11

Which of the following statements represents a correct and sequentially accurate economic explanation?

Accepted Answer

A) Goods X and Y are substitutes.The price of X falls, the quantity demanded of X rises, and the demand for Y rises. 
B) Goods X and Y are substitutes.The price of X rises, the demand for X falls, and the demand for Y rises. 
C) Goods X and Y are substitutes.The price of X falls, the demand for X rises, and the quantity demanded of Y rises. 
D) Goods X and Y are substitutes.The price of X falls, the quantity demanded of X rises, and the demand for Y falls. 
E) Goods X and Y are complements.The price of X falls, the quantity demanded of X rises, and the demand for Y falls. 
A) Goods X and Y are substitutes.The price of X falls, the quantity demanded of X rises, and the demand for Y rises. 
B) Goods X and Y are substitutes.The price of X rises, the demand for X falls, and the demand for Y rises. 
C) Goods X and Y are substitutes.The price of X falls, the demand for X rises, and the quantity demanded of Y rises. 
D) Goods X and Y are substitutes.The price of X falls, the quantity demanded of X rises, and the demand for Y falls. 
E) Goods X and Y are complements.The price of X falls, the quantity demanded of X rises, and the demand for Y falls.

Question 12

An economist says, "Technological advances have the power to lower the prices of many of the goods we buy." Here is how this works:

Accepted Answer

A) Technological advances lead to lower demand, which leads to lower prices. 
B) Technological advances lead to greater supply, which leads to lower prices. 
C) Technological advances lead to greater quantity supplied, which leads to lower prices. 
D) Technological advances lead to lower taxes, which lead to greater supply, which leads to lower prices. 
E) Technological advances lead to higher taxes, which lead to fewer subsidies, which lead to greater supply, which leads to lower prices. 
A) Technological advances lead to lower demand, which leads to lower prices. 
B) Technological advances lead to greater supply, which leads to lower prices. 
C) Technological advances lead to greater quantity supplied, which leads to lower prices. 
D) Technological advances lead to lower taxes, which lead to greater supply, which leads to lower prices. 
E) Technological advances lead to higher taxes, which lead to fewer subsidies, which lead to greater supply, which leads to lower prices.

Question 13

If the demand for a good increases by more than the supply of the good increases, then the good's equilibrium price will __________ and its equilibrium quantity will __________.

Accepted Answer

A) rise; fall 
B) rise; rise 
C) fall; fall 
D) fall; rise 
A) rise; fall 
B) rise; rise 
C) fall; fall 
D) fall; rise

Question 14

Explain the difference between a change in supply and a change in quantity supplied. Be sure to state what causes each to change and how they differ when graphed.

Accepted Answer

A change in supply results from a change

Question 15

Exhibit 3-5
  
-Refer to Exhibit 3-5. In the market shown, a rightward shift in demand from D1 to D2 could have been caused by

Accepted Answer

A) an increase in the number of sellers in the market. 
B) an improvement in technology in the production of this good. 
C) a decrease in buyers' income (assuming the good is an inferior good). 
D) a decrease in buyers' income (assuming the good is a normal good). 
E) a and b 
A) an increase in the number of sellers in the market. 
B) an improvement in technology in the production of this good. 
C) a decrease in buyers' income (assuming the good is an inferior good). 
D) a decrease in buyers' income (assuming the good is a normal good). 
E) a and b

Question 16

At a price above the equilibrium price, there is

Accepted Answer

A) a shortage. 
B) a surplus. 
C) excess demand. 
D) super-equilibrium. 
E) none of the above 
A) a shortage. 
B) a surplus. 
C) excess demand. 
D) super-equilibrium. 
E) none of the above

Question 17

Good Y is an inferior good. If the average income of those who buy good Y rises, the _____________ curve for good Y will shift ____________ resulting in a(n) _____________ in the equilibrium price of Y and a(n) ____________ in the equilibrium quantity of Y.

Accepted Answer

A) supply; rightward; decrease; increase. 
B) demand; leftward; decrease; decrease 
C) demand; rightward; increase; increase 
D) supply; leftward; increase; decrease 
E) supply; leftward; increase; increase 
A) supply; rightward; decrease; increase. 
B) demand; leftward; decrease; decrease 
C) demand; rightward; increase; increase 
D) supply; leftward; increase; decrease 
E) supply; leftward; increase; increase

Question 18

Exhibit 3-6
  
-Refer to Exhibit 3-6. If D1 is the relevant demand curve, a decrease in the price of good X may cause

Accepted Answer

A) demand to shift from D1 to D2. 
B) demand to shift from D1 to D3. 
C) a movement along D1 from point A to point B. 
D) a movement along D1 from point A to point C. 
A) demand to shift from D1 to D2. 
B) demand to shift from D1 to D3. 
C) a movement along D1 from point A to point B. 
D) a movement along D1 from point A to point C.

Question 19

Supply curves are usually upward sloping.

Accepted Answer

A) True 
 B)False

Question 20

If potential buyers of good X expect the price of good X will soon fall, then the current

Accepted Answer

A) demand for good X will rise. 
B) demand for good X will remain unchanged. 
C) demand for good X will fall. 
D) quantity demanded of good X will fall. 
E) quantity demanded of good X will rise. 
A) demand for good X will rise. 
B) demand for good X will remain unchanged. 
C) demand for good X will fall. 
D) quantity demanded of good X will fall. 
E) quantity demanded of good X will rise.

Exam 3: Supply and Demand Theory

If the producers' surplus is $50, and the consumers' surplus is $40, then what is the minimum selling price of the good?

Explain why the price of a good tends to fall when there is a surplus of the good. Give a hypothetical numerical example to help support your answer.

Demand takes into account goods, but not services.

The market demand curve for a given product may be downward sloping even if no person in that market has a downward sloping demand curve.

Consider a point on a market demand curve. The point represents

According to the law of demand, the higher the price of an assigned textbook, the _______________ the quantity demanded of assigned textbooks will be, ceteris paribus, and the ______________ likely students will seek out an alternative to the assigned textbook.

Exhibit 3-3 Good Y ​ ​ -Refer to Exhibit 3-3. A movement from point V to point W could not have been the result of

Exhibit 3-9 -Refer to Exhibit 3-9. X is produced using input Z. If the price of Z rises, an economist would expect a movement in the market for X from

Which of the following statements represents a correct and sequentially accurate economic explanation?

An economist says, "Technological advances have the power to lower the prices of many of the goods we buy." Here is how this works:

If the demand for a good increases by more than the supply of the good increases, then the good's equilibrium price will __________ and its equilibrium quantity will __________.

Explain the difference between a change in supply and a change in quantity supplied. Be sure to state what causes each to change and how they differ when graphed.

Exhibit 3-5 -Refer to Exhibit 3-5. In the market shown, a rightward shift in demand from D1 to D2 could have been caused by

At a price above the equilibrium price, there is

Good Y is an inferior good. If the average income of those who buy good Y rises, the _____________ curve for good Y will shift ____________ resulting in a(n) _____________ in the equilibrium price of Y and a(n) ____________ in the equilibrium quantity of Y.

Exhibit 3-6 -Refer to Exhibit 3-6. If D1 is the relevant demand curve, a decrease in the price of good X may cause

Supply curves are usually upward sloping.

If potential buyers of good X expect the price of good X will soon fall, then the current

What Economics Is About

Production Possibilities Frontier Framework

Prices Free Controlled and Relative

Supply Demand and Price Applications

Macroeconomic Measurements Part I Prices and Unemployment

Macroeconomic Measurements Part II Gdp and Real Gdp

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability a Critique of the Self Regulating Economy

Fiscal Policy and the Federal Budget

Money Banking and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth Resources Technology Ideas and Institutions

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition Oligopoly and Game Theory

Government and Product Markets Antitrust and Regulation

Factor Markets With Emphasis on the Labor Market

Wages Unions and Labor

The Distribution of Income and Poverty

Interest Rent and Profit

Market Failure Externalities Public Goods and Asymmetric Information

Public Choice and Special Interest Group Politics

Building Theories to Explain Everyday Life From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government Five Topics Considered

Stocks Bonds Futures and Options

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According to the law of demand, the higher the price of an assigned textbook, the _ the quantity demanded of assigned textbooks will be, ceteris paribus, and the likely students will seek out an alternative to the assigned textbook.

Exhibit 3-3 Good Y -Refer to Exhibit 3-3. A movement from point V to point W could not have been the result of

If the demand for a good increases by more than the supply of the good increases, then the good's equilibrium price will and its equilibrium quantity will .

Exhibit 3-5 -Refer to Exhibit 3-5. In the market shown, a rightward shift in demand from D₁ to D₂ could have been caused by

Good Y is an inferior good. If the average income of those who buy good Y rises, the _______ curve for good Y will shift resulting in a(n) _ in the equilibrium price of Y and a(n) ______ in the equilibrium quantity of Y.

Exhibit 3-6 -Refer to Exhibit 3-6. If D₁ is the relevant demand curve, a decrease in the price of good X may cause