Question 1

A decrease in the price of multi-touch screens for electronic tablets will increase the supply of electronic tablets.

Accepted Answer

A) True 
 B)False

Question 2

In the market for sushi, an increase in supply and a greater decrease in demand will cause both the equilibrium price and quantity to decrease.

Accepted Answer

A) True 
 B)False

Question 3

In the market for gasoline, if the change in demand due to the start of the summer driving season is greater than the change in supply due to disruptions in the refinery operations in the Gulf, then the equilibrium quantity will increase.

Accepted Answer

A) True 
 B)False

Question 4

When central planners in a command economy end up having a huge surplus of shoes and widespread shortages of bread in their economy, they have failed to attain

Accepted Answer

A) productive efficiency. 
B) allocative efficiency. 
C) minimum opportunity costs. 
D) maximum process and revenues. 
A) productive efficiency. 
B) allocative efficiency. 
C) minimum opportunity costs. 
D) maximum process and revenues.

Question 5

Sometimes, we observe cases where the price of a product rose and the quantity bought by buyers also increased.Such cases occur due to a violation of the

Accepted Answer

A) Law of Demand. 
B) Law of Supply. 
C) allocative efficiency rule. 
D) ceteris paribus assumption. 
A) Law of Demand. 
B) Law of Supply. 
C) allocative efficiency rule. 
D) ceteris paribus assumption.

Question 6

If farmers withhold some of their current corn harvest from the market because they anticipate a higher price of corn in the near future, then this would cause a(n)

Accepted Answer

A) rightward shift in the current supply of corn. 
B) movement up along the current supply curve of corn. 
C) leftward shift in the current supply of corn. 
D) movement down along the current supply curve of corn. 
A) rightward shift in the current supply of corn. 
B) movement up along the current supply curve of corn. 
C) leftward shift in the current supply of corn. 
D) movement down along the current supply curve of corn.

Question 7

Two goods are considered to be related goods by many buyers: if the price of one increases, buyers buy more of the other.This indicates that the two goods are complements.

Accepted Answer

A) True 
 B)False

Question 8

In moving along a supply curve, which of the following is not held constant?

Accepted Answer

A) the number of firms producing this good 
B) expectations about the future price of the product 
C) techniques used in producing this product 
D) the price of the product itself. 
A) the number of firms producing this good 
B) expectations about the future price of the product 
C) techniques used in producing this product 
D) the price of the product itself.

Question 9

Suppose that at prices of $1, $2, $3, $4, and $5 for product Z, the corresponding quantities supplied are 3, 4, 5, 6, and 7 units, respectively.Which of the following would increase the quantities supplied of Z to, say, 6, 8, 10, 12, and 14 units at these prices?

Accepted Answer

A) improved technology for producing Z 
B) an increase in the prices of the resources used to make Z 
C) an increase in the excise tax on product Z 
D) increases in the incomes of the buyers of Z 
A) improved technology for producing Z 
B) an increase in the prices of the resources used to make Z 
C) an increase in the excise tax on product Z 
D) increases in the incomes of the buyers of Z

Question 10

A newspaper reports that the average price of new homes in a certain city had decreased, and the number of new homes sold had also decreased.This situation is probably caused by

Accepted Answer

A) declining costs of construction materials and services in that city. 
B) declining incomes of people in that city. 
C) higher government subsidies to new homebuyers in that city. 
D) a rising population in that city. 
A) declining costs of construction materials and services in that city. 
B) declining incomes of people in that city. 
C) higher government subsidies to new homebuyers in that city. 
D) a rising population in that city.

Question 11

In cases where the supply curve is vertical, any change in demand will cause only a change in price but no change in quantity.

Accepted Answer

A) True 
 B)False

Question 12

Other things equal, which of the following might shift the demand curve for gasoline to the left?

Accepted Answer

A) the discovery of vast new oil reserves in Montana 
B) the development of a low-cost electric automobile 
C) an increase in the price of train and air transportation 
D) a large decline in the price of automobiles 
A) the discovery of vast new oil reserves in Montana 
B) the development of a low-cost electric automobile 
C) an increase in the price of train and air transportation 
D) a large decline in the price of automobiles

Question 13

Suppose product X is an input in the production of product Y.Product Y in turn is a substitute for product Z.An increase in the price of X can be expected to

Accepted Answer

A) decrease the demand for Z. 
B) increase the demand for Z. 
C) have no effect on the demand for Z. 
D) decrease the supply of Z. 
A) decrease the demand for Z. 
B) increase the demand for Z. 
C) have no effect on the demand for Z. 
D) decrease the supply of Z.

Question 14

Producing a good in the least costly way is known as allocative efficiency.

Accepted Answer

A) True 
 B)False

Question 15

A higher price reduces the quantity demanded for a product because

Accepted Answer

A) the purchasing power of individuals increases. 
B) the financial assets of individuals increase. 
C) individuals will buy more of the product and less of its substitutes. 
D) individuals can afford less of the product and will switch to substitutes. 
A) the purchasing power of individuals increases. 
B) the financial assets of individuals increase. 
C) individuals will buy more of the product and less of its substitutes. 
D) individuals can afford less of the product and will switch to substitutes.

Question 16

In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X.An increase in the price of a product that is a complement to X will

Accepted Answer

A) decrease S, decrease P, and decrease Q. 
B) decrease D, decrease P, and decrease Q. 
C) increase D, increase P, and increase Q. 
D) increase D, increase P, and decrease Q.Difficulty: 02 Medium 
A) decrease S, decrease P, and decrease Q. 
B) decrease D, decrease P, and decrease Q. 
C) increase D, increase P, and increase Q. 
D) increase D, increase P, and decrease Q.Difficulty: 02 Medium

Question 17

A leftward shift of a product supply curve might be caused by

Accepted Answer

A) an improvement in the relevant technique of production. 
B) a decline in the prices of needed inputs. 
C) an increase in consumer incomes. 
D) some firms leaving an industry. 
A) an improvement in the relevant technique of production. 
B) a decline in the prices of needed inputs. 
C) an increase in consumer incomes. 
D) some firms leaving an industry.

Question 18

An increase in the excise tax on cigarettes raises the price of cigarettes by shifting the

Accepted Answer

A) demand curve for cigarettes rightward. 
B) demand curve for cigarettes leftward. 
C) supply curve for cigarettes rightward. 
D) supply curve for cigarettes leftwarD. 
A) demand curve for cigarettes rightward. 
B) demand curve for cigarettes leftward. 
C) supply curve for cigarettes rightward. 
D) supply curve for cigarettes leftwarD.

Question 19

When the price of a product rises, consumers with a given money income shift their purchases to other products whose prices are now relatively lower.This statement describes

Accepted Answer

A) an inferior good. 
B) the rationing function of prices. 
C) the substitution effect. 
D) the income effect. 
A) an inferior good. 
B) the rationing function of prices. 
C) the substitution effect. 
D) the income effect.

Question 20

An increase in the demand for online streaming music indicates that more is

Accepted Answer

A) purchased even if prices of online streaming music stayed the same. 
B) demanded because online streaming music prices decreased. 
C) demanded because sellers are selling more online streaming music. 
D) purchased because sellers are putting online streaming music on sale. 
A) purchased even if prices of online streaming music stayed the same. 
B) demanded because online streaming music prices decreased. 
C) demanded because sellers are selling more online streaming music. 
D) purchased because sellers are putting online streaming music on sale.

Exam 3: Demand, Supply, and Market Equilibrium

A decrease in the price of multi-touch screens for electronic tablets will increase the supply of electronic tablets.

In the market for sushi, an increase in supply and a greater decrease in demand will cause both the equilibrium price and quantity to decrease.

In the market for gasoline, if the change in demand due to the start of the summer driving season is greater than the change in supply due to disruptions in the refinery operations in the Gulf, then the equilibrium quantity will increase.

When central planners in a command economy end up having a huge surplus of shoes and widespread shortages of bread in their economy, they have failed to attain

Sometimes, we observe cases where the price of a product rose and the quantity bought by buyers also increased.Such cases occur due to a violation of the

If farmers withhold some of their current corn harvest from the market because they anticipate a higher price of corn in the near future, then this would cause a(n)

Two goods are considered to be related goods by many buyers: if the price of one increases, buyers buy more of the other.This indicates that the two goods are complements.

In moving along a supply curve, which of the following is not held constant?

Suppose that at prices of $1, $2, $3, $4, and $5 for product Z, the corresponding quantities supplied are 3, 4, 5, 6, and 7 units, respectively.Which of the following would increase the quantities supplied of Z to, say, 6, 8, 10, 12, and 14 units at these prices?

A newspaper reports that the average price of new homes in a certain city had decreased, and the number of new homes sold had also decreased.This situation is probably caused by

In cases where the supply curve is vertical, any change in demand will cause only a change in price but no change in quantity.

Other things equal, which of the following might shift the demand curve for gasoline to the left?

Suppose product X is an input in the production of product Y.Product Y in turn is a substitute for product Z.An increase in the price of X can be expected to

Producing a good in the least costly way is known as allocative efficiency.

A higher price reduces the quantity demanded for a product because

A leftward shift of a product supply curve might be caused by

An increase in the excise tax on cigarettes raises the price of cigarettes by shifting the

When the price of a product rises, consumers with a given money income shift their purchases to other products whose prices are now relatively lower.This statement describes

An increase in the demand for online streaming music indicates that more is

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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