Question 1

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 2

Which of the following statements is correct?

Accepted Answer

A)  An increase in the price of C will decrease the demand for complementary product D. 
B)  A decrease in income will decrease the demand for an inferior good. 
C)  An increase in income will reduce the demand for a normal good. 
D)  A decline in the price of X will increase the demand for substitute product Y. 
A)  An increase in the price of C will decrease the demand for complementary product D. 
B)  A decrease in income will decrease the demand for an inferior good. 
C)  An increase in income will reduce the demand for a normal good. 
D)  A decline in the price of X will increase the demand for substitute product Y.

Question 3

Which of the following statements is true about price ceilings?

Accepted Answer

A)  Price ceilings create surpluses for goods but shortages for services. 
B)  Price ceilings cause goods to be rationed by some other means than legally determined market prices. 
C)  Ration coupons are the only way to ration goods when price ceilings are in place. 
D)  All of these choices are correct. 
A)  Price ceilings create surpluses for goods but shortages for services. 
B)  Price ceilings cause goods to be rationed by some other means than legally determined market prices. 
C)  Ration coupons are the only way to ration goods when price ceilings are in place. 
D)  All of these choices are correct.

Question 4

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 5

A market that is achieving allocative eﬃciency also is assumed to be achieving productive
eﬃciency.

Accepted Answer

A) True 
 B)False

Question 6

The table below shows the weekly demand for hamburgers in a market where there are just three buyers.
$$\begin{array} { | c | c | c | c | } 
\hline \text { Price } & \text { Buyer 1Qd 1 } & \text { Buyer 2 Qd 2 } & \text { Buyer 3 Qd 3 } \
\hline \$ 6 & 7 & 4 & 6 \
\hline 5 & 9 & 7 & 8 \
\hline 4 & 15 & 10 & 12 \
\hline 3 & 21 & 15 & 16 \
\hline
\end{array}$$ If the price of hamburger falls from $5 to $3, then the weekly market quantity demanded will

Accepted Answer

A)  increase from 24 to 52. 
B)  decrease from 52 to 24. 
C)  increase from 120 to 156. 
D)  increase from 29 to 55. 
A)  increase from 24 to 52. 
B)  decrease from 52 to 24. 
C)  increase from 120 to 156. 
D)  increase from 29 to 55.

Question 7

Which of the following will not cause a change in the demand for product A?

Accepted Answer

A)  a change in the number of buyers 
B)  a change in the price of A 
C)  a decline in consumer incomes 
D)  a decrease in the price of close-substitute product B 
A)  a change in the number of buyers 
B)  a change in the price of A 
C)  a decline in consumer incomes 
D)  a decrease in the price of close-substitute product B

Question 8

If product Y is an inferior good, a decrease in consumer incomes will

Accepted Answer

A)  make buyers want to buy less of Product Y. 
B)  not affect the sales of product Y. 
C)  shift the demand curve for product Y to the left. 
D)  shift the demand curve for product Y to the right. 
A)  make buyers want to buy less of Product Y. 
B)  not affect the sales of product Y. 
C)  shift the demand curve for product Y to the left. 
D)  shift the demand curve for product Y to the right.

Question 9

In a competitive market illustrated by the diagram above, for a price ﬂoor to be effective and alter the market situation, it must be set

Accepted Answer

A)  at $15. 
B)  below $15. 
C)  above $15. 
D)  at $10. 
A)  at $15. 
B)  below $15. 
C)  above $15. 
D)  at $10.

Question 10

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 11

(Advanced analysis) The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. The equilibrium price is

Accepted Answer

A)  $50. 
B)  $70. 
C)  $80. 
D)  $130. 
A)  $50. 
B)  $70. 
C)  $80. 
D)  $130.

Question 12

A market is in equilibrium

Accepted Answer

A)  provided there is no surplus of the product. 
B)  at all prices above that shown by the intersection of the supply and demand curves. 
C)  if the amount producers want to sell is equal to the amount consumers want to buy. 
D)  whenever the demand curve is downsloping and the supply curve is upsloping. 
A)  provided there is no surplus of the product. 
B)  at all prices above that shown by the intersection of the supply and demand curves. 
C)  if the amount producers want to sell is equal to the amount consumers want to buy. 
D)  whenever the demand curve is downsloping and the supply curve is upsloping.

Question 13

Refer to the diagram. A price of $20 in this market will result in a

Accepted Answer

A)  shortage of 50 units. 
B)  surplus of 50 units. 
C)  surplus of 100 units. 
D)  shortage of 100 units. 
A)  shortage of 50 units. 
B)  surplus of 50 units. 
C)  surplus of 100 units. 
D)  shortage of 100 units.

Question 14

An effective price ceiling will

Accepted Answer

A)  induce new ﬁrms to enter the industry. 
B)  result in a product surplus. 
C)  result in a product shortage. 
D)  clear the market. 
A)  induce new ﬁrms to enter the industry. 
B)  result in a product surplus. 
C)  result in a product shortage. 
D)  clear the market.

Question 15

Price ﬂoors and ceiling prices both

Accepted Answer

A)  cause shortages. 
B)  cause surpluses. 
C)  cause the supply and demand curves to shift until equilibrium is established. 
D)  interfere with the rationing function of prices. 
A)  cause shortages. 
B)  cause surpluses. 
C)  cause the supply and demand curves to shift until equilibrium is established. 
D)  interfere with the rationing function of prices.

Question 16

(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 - 0.2Q to P = 7 - 0.3Q, the new
Equilibrium quantity is

Accepted Answer

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

Question 17

Refer to the diagram, which shows demand and supply conditions in the competitive market for product X. Given D0, if the supply curve moved from S0 to S1, then

Accepted Answer

A)  supply has increased and equilibrium quantity has decreased. 
B)  supply has decreased and equilibrium quantity has decreased. 
C)  there has been an increase in the quantity supplied. 
D)  supply has increased and price has risen to G. 
A)  supply has increased and equilibrium quantity has decreased. 
B)  supply has decreased and equilibrium quantity has decreased. 
C)  there has been an increase in the quantity supplied. 
D)  supply has increased and price has risen to G.

Question 18

Refer to the four graphs above. In which graph would the indicated shifts cause equilibrium quantity to deﬁnitely rise, but the effect on price is indeterminate?

Accepted Answer

A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D 
A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D

Question 19

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 20

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. 
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.

In constructing a demand curve for product X,

Which of the following statements is correct?

Which of the following statements is true about price ceilings?

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

A market that is achieving allocative eﬃciency also is assumed to be achieving productive eﬃciency.

The table below shows the weekly demand for hamburgers in a market where there are just three buyers. Price Buyer 1Qd 1 Buyer 2 Qd 2 Buyer 3 Qd 3 \ 6 7 4 6 5 9 7 8 4 15 10 12 3 21 15 16 If the price of hamburger falls from $5 to $3, then the weekly market quantity demanded will

Which of the following will not cause a change in the demand for product A?

If product Y is an inferior good, a decrease in consumer incomes will

In a competitive market illustrated by the diagram above, for a price ﬂoor to be effective and alter the market situation, it must be set

The price of pork may increase as a result of

(Advanced analysis) The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. The equilibrium price is

A market is in equilibrium

Refer to the diagram. A price of $20 in this market will result in a

An effective price ceiling will

Price ﬂoors and ceiling prices both

(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 - 0.2Q to P = 7 - 0.3Q, the new Equilibrium quantity is

Refer to the diagram, which shows demand and supply conditions in the competitive market for product X. Given D₀, if the supply curve moved from S₀ to S₁, then

Refer to the four graphs above. In which graph would the indicated shifts cause equilibrium quantity to deﬁnitely rise, but the effect on price is indeterminate?

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?

The Market System and the Circular Flow

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

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

Filters

Exam 3: Demand, Supply, and Market Equilibrium

In constructing a demand curve for product X,

Which of the following statements is correct?

Which of the following statements is true about price ceilings?

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

A market that is achieving allocative eﬃciency also is assumed to be achieving productive eﬃciency.

The table below shows the weekly demand for hamburgers in a market where there are just three buyers. Price Buyer 1Qd 1 Buyer 2 Qd 2 Buyer 3 Qd 3 \ 6 7 4 6 5 9 7 8 4 15 10 12 3 21 15 16 If the price of hamburger falls from $5 to $3, then the weekly market quantity demanded will

Which of the following will not cause a change in the demand for product A?

If product Y is an inferior good, a decrease in consumer incomes will

In a competitive market illustrated by the diagram above, for a price ﬂoor to be effective and alter the market situation, it must be set

The price of pork may increase as a result of

(Advanced analysis) The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. The equilibrium price is

A market is in equilibrium

Refer to the diagram. A price of $20 in this market will result in a

An effective price ceiling will

Price ﬂoors and ceiling prices both

(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 - 0.2Q to P = 7 - 0.3Q, the new Equilibrium quantity is

Refer to the diagram, which shows demand and supply conditions in the competitive market for product X. Given D0, if the supply curve moved from S0 to S1, then

Refer to the four graphs above. In which graph would the indicated shifts cause equilibrium quantity to deﬁnitely rise, but the effect on price is indeterminate?

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?

The Market System and the Circular Flow

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

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

Filters

Refer to the diagram, which shows demand and supply conditions in the competitive market for product X. Given D₀, if the supply curve moved from S₀ to S₁, then