Question 1

(Advanced analysis) The equation for the supply curve in the diagram shown is approximately

Accepted Answer

A)  P = 4 + 0.3Q. 
B)  P = 4 + 2Q. 
C)  P = 4 + 0.5Q. 
D)  P = 4 - 3Q. 
A)  P = 4 + 0.3Q. 
B)  P = 4 + 2Q. 
C)  P = 4 + 0.5Q. 
D)  P = 4 - 3Q.

Question 2

If a price ceiling is set below the equilibrium price in a market,

Accepted Answer

A)  rationing will be unnecessary. 
B)  surpluses of the commodity will develop. 
C)  the quantity demanded will exceed the quantity supplied. 
D)  the quantity supplied will exceed the quantity demanded. 
A)  rationing will be unnecessary. 
B)  surpluses of the commodity will develop. 
C)  the quantity demanded will exceed the quantity supplied. 
D)  the quantity supplied will exceed the quantity demanded.

Question 3

Allocative eﬃciency is concerned with

Accepted Answer

A)  producing the combination of goods most desired by society. 
B)  achieving the full employment of all available resources. 
C)  producing every good with the least-cost combination of inputs. 
D)  reducing the concavity of the production possibilities curve. 
A)  producing the combination of goods most desired by society. 
B)  achieving the full employment of all available resources. 
C)  producing every good with the least-cost combination of inputs. 
D)  reducing the concavity of the production possibilities curve.

Question 4

Refer to the ﬁgure above, which shows three supply curves for corn. Which of the following would cause the supply of corn to shift from S1 to S2?

Accepted Answer

A)  an increase in the price of fertilizer 
B)  a change in consumer tastes away from cornbread 
C)  a decrease in consumer incomes, assuming corn is a normal good 
D)  the development of a more effective insecticide against corn rootworm 
A)  an increase in the price of fertilizer 
B)  a change in consumer tastes away from cornbread 
C)  a decrease in consumer incomes, assuming corn is a normal good 
D)  the development of a more effective insecticide against corn rootworm

Question 5

The ﬁgure below shows three demand curves for coffee.   An increase in the price of coffee, other factors constant, would cause a

Accepted Answer

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

Question 6

(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 price for X is

Accepted Answer

A)  $2. 
B)  $4. 
C)  $6. 
D)  $7. 
A)  $2. 
B)  $4. 
C)  $6. 
D)  $7.

Question 7

(Consider This) Suppose that salsa manufacturers sell 2 million bottles at $3.50 in one year and 3 million bottles at $3 in the next year. Based on this information, we can conclude that the

Accepted Answer

A)  law of supply has been violated. 
B)  law of demand has been violated. 
C)  demand for salsa has increased. 
D)  supply of salsa has increased. 
A)  law of supply has been violated. 
B)  law of demand has been violated. 
C)  demand for salsa has increased. 
D)  supply of salsa has increased.

Question 8

Refer to the above diagram of the market for corn. If the price in this market is at $4 per bushel, then there will be a

Accepted Answer

A)  surplus and the price will tend to rise. 
B)  shortage and the price will tend to rise. 
C)  surplus and the price will tend to fall. 
D)  shortage and the price will tend to fall. 
A)  surplus and the price will tend to rise. 
B)  shortage and the price will tend to rise. 
C)  surplus and the price will tend to fall. 
D)  shortage and the price will tend to fall.

Question 9

An inferior good is

Accepted Answer

A)  one whose demand curve will shift rightward as incomes rise. 
B)  one whose price and quantity demanded vary directly. 
C)  one that has not been approved by the U.S. Food and Drug Administration. 
D)  not accurately deﬁned by any of these statements. 
A)  one whose demand curve will shift rightward as incomes rise. 
B)  one whose price and quantity demanded vary directly. 
C)  one that has not been approved by the U.S. Food and Drug Administration. 
D)  not accurately deﬁned by any of these statements.

Question 10

A news story states that "DVDs lose their appeal as consumers switch to online streaming for movies." In a competitive market for DVDs, this situation would lead to a(n)

Accepted Answer

A)  increase in the price and the quantity sold of DVDs. 
B)  decrease in the price and the quantity sold of DVDs. 
C)  increase in the price and a decrease in the quantity sold of DVDs. 
D)  decrease in the price and an increase in the quantity sold of DVDs. 
A)  increase in the price and the quantity sold of DVDs. 
B)  decrease in the price and the quantity sold of DVDs. 
C)  increase in the price and a decrease in the quantity sold of DVDs. 
D)  decrease in the price and an increase in the quantity sold of DVDs.

Question 11

$$\begin{array} { | c | c | c | } 
\hline \text { Price Per Unit } & \text { Quantity Demanded Per Year } & \text { Quantity Supplied Per Year } \
\hline \$ 5 & 2,000 & 0 \
\hline 10 & 1,800 & 300 \
\hline 15 & 1,600 & 600 \
\hline 20 & 1,400 & 900 \
\hline 25 & 1,200 & 1,200 \
\hline 30 & 1,000 & 1,500 \
\hline
\end{array}$$ Refer to the above table. At a price of $15 per unit, which of the following would exist?

Accepted Answer

A)  a shortage of 1,600 units 
B)  a surplus of 1,000 units 
C)  a shortage of 1,000 units 
D)  a surplus of 600 units 
A)  a shortage of 1,600 units 
B)  a surplus of 1,000 units 
C)  a shortage of 1,000 units 
D)  a surplus of 600 units

Question 12

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.
Consumer expectations that the price of X will rise sharply in the future will

Accepted Answer

A)  increase S, increase P, and increase Q. 
B)  increase D, increase P, and increase Q. 
C)  decrease S, increase P, and increase Q. 
D)  increase D, decrease P, and increase Q. 
A)  increase S, increase P, and increase Q. 
B)  increase D, increase P, and increase Q. 
C)  decrease S, increase P, and increase Q. 
D)  increase D, decrease P, and increase Q.

Question 13

Which would best explain a decrease in both the price and the quantity of a product over a period of time?

Accepted Answer

A)  a decrease in people's incomes, and the product is an inferior good 
B)  a long strike by workers who make the product 
C)  a decrease in the price of a substitute good 
D)  a technological improvement in production methods 
A)  a decrease in people's incomes, and the product is an inferior good 
B)  a long strike by workers who make the product 
C)  a decrease in the price of a substitute good 
D)  a technological improvement in production methods

Question 14

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 15

Two months ago, the Maryville Shirt company sold 2,000 shirts at $30 per shirt. Last month the company raised its price to $35 per shirt and sold 3,000 shirts. Evidently the company experienced
A(n)

Accepted Answer

A)  decrease in demand. 
B)  increase in demand. 
C)  decrease in supply. 
D)  increase in supply. 
A)  decrease in demand. 
B)  increase in demand. 
C)  decrease in supply. 
D)  increase in supply.

Question 16

Refer to the above diagram illustrating the market for corn. If the price in this market is ﬁxed at $2 per bushel, then

Accepted Answer

A)  sellers will not be able to sell all the corn that they intended to sell. 
B)  sellers will quickly run out of corn that they bring to market. 
C)  buyers will ﬁnd too much corn in the market. 
D)  buyers will be able to get as much corn as they wish to buy. 
A)  sellers will not be able to sell all the corn that they intended to sell. 
B)  sellers will quickly run out of corn that they bring to market. 
C)  buyers will ﬁnd too much corn in the market. 
D)  buyers will be able to get as much corn as they wish to buy.

Question 17

Suppose that goods A and B are close substitutes. If the price of good A falls, then we would expect an

Accepted Answer

A)  increase in the demand for A and an increase in the quantity of B demanded. 
B)  increase in the demand for A and a decrease in the quantity of B demanded. 
C)  increase in the quantity of A demanded and a decrease in the demand for B. 
D)  increase in the demand for good A as well as for good B. 
A)  increase in the demand for A and an increase in the quantity of B demanded. 
B)  increase in the demand for A and a decrease in the quantity of B demanded. 
C)  increase in the quantity of A demanded and a decrease in the demand for B. 
D)  increase in the demand for good A as well as for good B.

Question 18

When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes the

Accepted Answer

A)  cost effect. 
B)  inﬂationary effect. 
C)  income effect. 
D)  substitution effect. 
A)  cost effect. 
B)  inﬂationary effect. 
C)  income effect. 
D)  substitution effect.

Question 19

If a legal ceiling price is set above the equilibrium price,

Accepted Answer

A)  a shortage of the product will occur. 
B)  a surplus of the product will occur. 
C)  a black market will evolve. 
D)  neither the equilibrium price nor the equilibrium quantity will be affected. 
A)  a shortage of the product will occur. 
B)  a surplus of the product will occur. 
C)  a black market will evolve. 
D)  neither the equilibrium price nor the equilibrium quantity will be affected.

Question 20

An improvement in production technology will

Accepted Answer

A)  increase equilibrium price. 
B)  shift the supply curve to the left. 
C)  shift the supply curve to the right. 
D)  shift the demand curve to the left. 
A)  increase equilibrium price. 
B)  shift the supply curve to the left. 
C)  shift the supply curve to the right. 
D)  shift the demand curve to the left.

(Advanced analysis) The equation for the supply curve in the diagram shown is approximately

If a price ceiling is set below the equilibrium price in a market,

Allocative eﬃciency is concerned with

Refer to the ﬁgure above, which shows three supply curves for corn. Which of the following would cause the supply of corn to shift from S1 to S2?

The ﬁgure below shows three demand curves for coffee. An increase in the price of coffee, other factors constant, would cause a

(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 price for X is

(Consider This) Suppose that salsa manufacturers sell 2 million bottles at $3.50 in one year and 3 million bottles at $3 in the next year. Based on this information, we can conclude that the

Refer to the above diagram of the market for corn. If the price in this market is at $4 per bushel, then there will be a

An inferior good is

A news story states that "DVDs lose their appeal as consumers switch to online streaming for movies." In a competitive market for DVDs, this situation would lead to a(n)

Price Per Unit Quantity Demanded Per Year Quantity Supplied Per Year \ 5 2,000 0 10 1,800 300 15 1,600 600 20 1,400 900 25 1,200 1,200 30 1,000 1,500 Refer to the above table. At a price of $15 per unit, which of the following would exist?

Which would best explain a decrease in both the price and the quantity of a product over a period of time?

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 months ago, the Maryville Shirt company sold 2,000 shirts at $30 per shirt. Last month the company raised its price to $35 per shirt and sold 3,000 shirts. Evidently the company experienced A(n)

Refer to the above diagram illustrating the market for corn. If the price in this market is ﬁxed at $2 per bushel, then

Suppose that goods A and B are close substitutes. If the price of good A falls, then we would expect an

When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes the

If a legal ceiling price is set above the equilibrium price,

An improvement in production technology will

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

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Exam 3: Demand, Supply, and Market Equilibrium

(Advanced analysis) The equation for the supply curve in the diagram shown is approximately

If a price ceiling is set below the equilibrium price in a market,

Allocative eﬃciency is concerned with

Refer to the ﬁgure above, which shows three supply curves for corn. Which of the following would cause the supply of corn to shift from S1 to S2?

The ﬁgure below shows three demand curves for coffee. An increase in the price of coffee, other factors constant, would cause a

(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 price for X is

(Consider This) Suppose that salsa manufacturers sell 2 million bottles at $3.50 in one year and 3 million bottles at $3 in the next year. Based on this information, we can conclude that the

Refer to the above diagram of the market for corn. If the price in this market is at $4 per bushel, then there will be a

An inferior good is

A news story states that "DVDs lose their appeal as consumers switch to online streaming for movies." In a competitive market for DVDs, this situation would lead to a(n)

Price Per Unit Quantity Demanded Per Year Quantity Supplied Per Year \ 5 2,000 0 10 1,800 300 15 1,600 600 20 1,400 900 25 1,200 1,200 30 1,000 1,500 Refer to the above table. At a price of $15 per unit, which of the following would exist?

Which would best explain a decrease in both the price and the quantity of a product over a period of time?

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 months ago, the Maryville Shirt company sold 2,000 shirts at $30 per shirt. Last month the company raised its price to $35 per shirt and sold 3,000 shirts. Evidently the company experienced A(n)

Refer to the above diagram illustrating the market for corn. If the price in this market is ﬁxed at $2 per bushel, then

Suppose that goods A and B are close substitutes. If the price of good A falls, then we would expect an

When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes the

If a legal ceiling price is set above the equilibrium price,

An improvement in production technology will

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