Question 1

The price of pork may increase as a result of

Accepted Answer

A) a decrease in the cost of feed for pigs. 
B) decreased advertising of pork. 
C) an increase in the cost of producing beef. 
D) a subsidy to pork producers. 
A) a decrease in the cost of feed for pigs. 
B) decreased advertising of pork. 
C) an increase in the cost of producing beef. 
D) a subsidy to pork producers.

Question 2

A government-set price floor on a product

Accepted Answer

A) does not interfere with the rationing function of price in a market system. 
B) will drive resources away from the production of the product. 
C) will attract more resources toward the production of the product. 
D) is intended to benefit the buyers of the product. 
A) does not interfere with the rationing function of price in a market system. 
B) will drive resources away from the production of the product. 
C) will attract more resources toward the production of the product. 
D) is intended to benefit the buyers of the product.

Question 3

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q.The equilibrium quantity is

Accepted Answer

A) 10. 
B) 20. 
C) 15. 
D) 30. 
A) 10. 
B) 20. 
C) 15. 
D) 30.

Question 4

Suppose that in 2007, Ford sold 500,000 Mustangs at an average price of $18,800 per car; in 2008, 600,000 Mustangs were sold at an average price of $19,500 per car.These statements

Accepted Answer

A) suggest that the demand for Mustangs decreased between 2007 and 2008. 
B) suggest that the supply of Mustangs must have increased between 2007 and 2008. 
C) suggest that the demand for Mustangs increased between 2007 and 2008. 
D) constitute an exception to the law of demand in that they suggest an upsloping demand curve.Topic: Demand 
A) suggest that the demand for Mustangs decreased between 2007 and 2008. 
B) suggest that the supply of Mustangs must have increased between 2007 and 2008. 
C) suggest that the demand for Mustangs increased between 2007 and 2008. 
D) constitute an exception to the law of demand in that they suggest an upsloping demand curve.Topic: Demand

Question 5

Because successive units of a good produce less and less additional satisfaction, the price must fall to encourage a buyer to purchase more units of the good.This statement is most consistent with which explanation for the law of demand?

Accepted Answer

A) diminishing marginal utility 
B) the rationing function of prices 
C) the substitution effect 
D) the income effect 
A) diminishing marginal utility 
B) the rationing function of prices 
C) the substitution effect 
D) the income effect

Question 6

If the demand for steak (a normal good) shifts to the left, the most likely reason is that

Accepted Answer

A) consumer incomes have fallen. 
B) cattle production has declined. 
C) the price of steak has risen. 
D) the price of cattle feed has gone up. 
A) consumer incomes have fallen. 
B) cattle production has declined. 
C) the price of steak has risen. 
D) the price of cattle feed has gone up.

Question 7

Suppose that a more efficient way to produce a good is discovered, thus lowering production costs for the good.This will cause a(n)

Accepted Answer

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

Question 8

Suppose that corn prices rise significantly.If farmers expect the price of corn to continue rising relative to other crops, then we would expect

Accepted Answer

A) the supply of ethanol, a corn-based product, to increase. 
B) consumer demand for wheat to fall. 
C) the supply to increase as farmers plant more corn. 
D) the supply to fall as farmers plant more of other crops.Difficulty: 02 Medium 
A) the supply of ethanol, a corn-based product, to increase. 
B) consumer demand for wheat to fall. 
C) the supply to increase as farmers plant more corn. 
D) the supply to fall as farmers plant more of other crops.Difficulty: 02 Medium

Question 9

When an economist says that the demand for a product has increased, this means that

Accepted Answer

A) consumers are now willing to purchase more of this product at each possible price. 
B) the product has become particularly scarce for some reason. 
C) product price has fallen and, as a consequence, consumers are buying a larger quantity of the product. 
D) the demand curve has shifted to the left. 
A) consumers are now willing to purchase more of this product at each possible price. 
B) the product has become particularly scarce for some reason. 
C) product price has fallen and, as a consequence, consumers are buying a larger quantity of the product. 
D) the demand curve has shifted to the left.

Question 10

In competitive markets, a surplus or shortage will

Accepted Answer

A) never exist because the markets are always at equilibrium. 
B) cause changes in the quantities demanded and supplied that tend to eliminate the surplus or shortage. 
C) cause shifts in the demand and supply curves that tend to eliminate the surplus or shortage. 
D) cause changes in the quantities demanded and supplied that tend to intensify the surplus or shortage. 
A) never exist because the markets are always at equilibrium. 
B) cause changes in the quantities demanded and supplied that tend to eliminate the surplus or shortage. 
C) cause shifts in the demand and supply curves that tend to eliminate the surplus or shortage. 
D) cause changes in the quantities demanded and supplied that tend to intensify the surplus or shortage.

Question 11

The scalping of tickets for an event is a sign that the stated price on the ticket is

Accepted Answer

A) equal to the quantity demanded. 
B) equal to the market clearing price. 
C) below the market clearing price. 
D) above the market clearing price. 
A) equal to the quantity demanded. 
B) equal to the market clearing price. 
C) below the market clearing price. 
D) above the market clearing price.

Question 12

If the price of Pepsi decreases, other factors constant, then we'd expect to see a consequent shift of the demand curve for

Accepted Answer

A) Coke to the left. 
B) Coke to the right. 
C) Pepsi to the left. 
D) Pepsi to the right. 
A) Coke to the left. 
B) Coke to the right. 
C) Pepsi to the left. 
D) Pepsi to the right.

Question 13

In constructing a demand curve for product X,

Accepted Answer

A) consumer preferences are allowed to vary. 
B) the prices of other goods are assumed constant. 
C) money incomes are allowed to vary. 
D) the supply curve of product X is assumed constant. 
A) consumer preferences are allowed to vary. 
B) the prices of other goods are assumed constant. 
C) money incomes are allowed to vary. 
D) the supply curve of product X is assumed constant.

Question 14

Blu-ray players and Blu-ray discs are

Accepted Answer

A) complementary goods. 
B) substitute goods. 
C) independent goods. 
D) inferior goods. 
A) complementary goods. 
B) substitute goods. 
C) independent goods. 
D) inferior goods.

Question 15

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q.If demand changes from P = 10 - .2Q to P = 7 - .3Q, the new equilibrium quantity is

Accepted Answer

A) 10. 
B) 20. 
C) 15. 
D) 30. 
A) 10. 
B) 20. 
C) 15. 
D) 30.

Question 16

A headline reads, "Lumber Prices Up Sharply." In a competitive market, this situation would lead to a(n)

Accepted Answer

A) increase in the price and quantity of new homes. 
B) decrease in the price and quantity of new homes. 
C) increase in the price of new homes and decrease in quantity. 
D) decrease in the price of new homes and increase in quantity. 
A) increase in the price and quantity of new homes. 
B) decrease in the price and quantity of new homes. 
C) increase in the price of new homes and decrease in quantity. 
D) decrease in the price of new homes and increase in quantity.

Question 17

If the demand and supply curves for product X are stable, a government-mandated increase in the price of X will

Accepted Answer

A) increase the supply of X and decrease the demand for X. 
B) increase the demand for X and decrease the supply of X. 
C) increase the quantity supplied of X and decrease the quantity demanded of X. 
D) decrease the quantity supplied of X and increase the quantity demanded of X. 
A) increase the supply of X and decrease the demand for X. 
B) increase the demand for X and decrease the supply of X. 
C) increase the quantity supplied of X and decrease the quantity demanded of X. 
D) decrease the quantity supplied of X and increase the quantity demanded of X.

Question 18

A price floor in a competitive market will result in persistent shortages of a product.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following goods would most probably be an inferior good?

Accepted Answer

A) French wines 
B) generic beer 
C) theater tickets 
D) steak 
A) French wines 
B) generic beer 
C) theater tickets 
D) steak

Question 20

All of the following are assumed to be constant when the supply curve for a product is drawn, except the

Accepted Answer

A) price of the product. 
B) production technology used by the firm. 
C) number of producers. 
D) price of inputs used to make the product. 
A) price of the product. 
B) production technology used by the firm. 
C) number of producers. 
D) price of inputs used to make the product.

Exam 3: Demand, Supply, and Market Equilibrium

The price of pork may increase as a result of

A government-set price floor on a product

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q.The equilibrium quantity is

Suppose that in 2007, Ford sold 500,000 Mustangs at an average price of $18,800 per car; in 2008, 600,000 Mustangs were sold at an average price of $19,500 per car.These statements

Because successive units of a good produce less and less additional satisfaction, the price must fall to encourage a buyer to purchase more units of the good.This statement is most consistent with which explanation for the law of demand?

If the demand for steak (a normal good) shifts to the left, the most likely reason is that

Suppose that a more efficient way to produce a good is discovered, thus lowering production costs for the good.This will cause a(n)

Suppose that corn prices rise significantly.If farmers expect the price of corn to continue rising relative to other crops, then we would expect

When an economist says that the demand for a product has increased, this means that

In competitive markets, a surplus or shortage will

The scalping of tickets for an event is a sign that the stated price on the ticket is

If the price of Pepsi decreases, other factors constant, then we'd expect to see a consequent shift of the demand curve for

In constructing a demand curve for product X,

Blu-ray players and Blu-ray discs are

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q.If demand changes from P = 10 - .2Q to P = 7 - .3Q, the new equilibrium quantity is

A headline reads, "Lumber Prices Up Sharply." In a competitive market, this situation would lead to a(n)

If the demand and supply curves for product X are stable, a government-mandated increase in the price of X will

A price floor in a competitive market will result in persistent shortages of a product.

Which of the following goods would most probably be an inferior good?

All of the following are assumed to be constant when the supply curve for a product is drawn, except the

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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