Question 1

Refer to the diagram. The highest price that buyers will be willing and able to pay for 100 units of this product is

Accepted Answer

A)  $30. 
B)  $60. 
C)  $40. 
D)  $20. 
A)  $30. 
B)  $60. 
C)  $40. 
D)  $20.

Question 2

As a result of a fall in the price of gasoline, consumers can afford to buy more gasoline for more driving trips. This is an illustration of

Accepted Answer

A)  the income effect. 
B)  the substitution effect. 
C)  diminishing marginal utility. 
D)  consumer sovereignty. 
A)  the income effect. 
B)  the substitution effect. 
C)  diminishing marginal utility. 
D)  consumer sovereignty.

Question 3

The ﬁgure below shows three demand curves for coffee.   Which of the following would cause a shift in coffee demand from D1 to D3?

Accepted Answer

A)  a decrease in the cost of producing coffee 
B)  a scientiﬁc report stating that coffee improves memory 
C)  a decrease in the prices of cream and sugar 
D)  a decrease in the price of tea 
A)  a decrease in the cost of producing coffee 
B)  a scientiﬁc report stating that coffee improves memory 
C)  a decrease in the prices of cream and sugar 
D)  a decrease in the price of tea

Question 4

The location of the product supply curve depends on

Accepted Answer

A)  production technology. 
B)  the number of buyers in the market. 
C)  the tastes of buyers. 
D)  the location of the demand curve. 
A)  production technology. 
B)  the number of buyers in the market. 
C)  the tastes of buyers. 
D)  the location of the demand curve.

Question 5

Refer to the diagram. A decrease in quantity demanded is depicted by a

Accepted Answer

A)  move from point x to point y. 
B)  shift from D1 to D2. 
C)  shift from D2 to D1. 
D)  move from point y to point x. 
A)  move from point x to point y. 
B)  shift from D1 to D2. 
C)  shift from D2 to D1. 
D)  move from point y to point x.

Question 6

There is a shortage in a market for a product when

Accepted Answer

A)  the current price is higher than the equilibrium price. 
B)  supply is less than demand. 
C)  quantity demanded is less than quantity supplied. 
D)  quantity demanded is greater than quantity supplied. 
A)  the current price is higher than the equilibrium price. 
B)  supply is less than demand. 
C)  quantity demanded is less than quantity supplied. 
D)  quantity demanded is greater than quantity supplied.

Question 7

The ﬁgure below shows three demand curves for coffee.   Which of the following would cause a shift in coffee demand from D1 to D2?

Accepted Answer

A)  a decrease in the price of tea 
B)  an increase in consumer incomes 
C)  an increase in the prices of cream and sugar 
D)  a decrease in the price of coffee 
A)  a decrease in the price of tea 
B)  an increase in consumer incomes 
C)  an increase in the prices of cream and sugar 
D)  a decrease in the price of coffee

Question 8

There will be a surplus of a product when

Accepted Answer

A)  price is below the equilibrium level. 
B)  the supply curve is downward sloping and the demand curve is upward sloping. 
C)  the demand and supply curves fail to intersect. 
D)  consumers want to buy less than producers offer for sale. 
A)  price is below the equilibrium level. 
B)  the supply curve is downward sloping and the demand curve is upward sloping. 
C)  the demand and supply curves fail to intersect. 
D)  consumers want to buy less than producers offer for sale.

Question 9

Allocative eﬃciency involves determining

Accepted Answer

A)  which output mix will result in the most rapid rate of economic growth. 
B)  which production possibilities curve reﬂects the lowest opportunity costs. 
C)  the mix of output that will maximize society's satisfaction. 
D)  the optimal rate of technological progress. 
A)  which output mix will result in the most rapid rate of economic growth. 
B)  which production possibilities curve reﬂects the lowest opportunity costs. 
C)  the mix of output that will maximize society's satisfaction. 
D)  the optimal rate of technological progress.

Question 10

Plastics manufacturers can make either toys or plastic containers. If the prices and proﬁtability of plastic toys increase, then the

Accepted Answer

A)  demand for plastic containers will decrease. 
B)  supply of plastic containers will increase. 
C)  demand for plastic containers will increase. 
D)  supply of plastic containers will decrease. 
A)  demand for plastic containers will decrease. 
B)  supply of plastic containers will increase. 
C)  demand for plastic containers will increase. 
D)  supply of plastic containers will decrease.

Question 11

(Consider This) Uber's dynamic pricing

Accepted Answer

A)  prevents regulated taxi drivers from changing their fares. 
B)  keeps the market for rides in equilibrium by constantly adjusting fares to supply and demand conditions. 
C)  creates long wait times for consumers wanting rides at peak demand times. 
D)  results in ride pricing that is unfair to consumers. 
A)  prevents regulated taxi drivers from changing their fares. 
B)  keeps the market for rides in equilibrium by constantly adjusting fares to supply and demand conditions. 
C)  creates long wait times for consumers wanting rides at peak demand times. 
D)  results in ride pricing that is unfair to consumers.

Question 12

Refer to the above graph. An increase in price, other factors constant, would cause a change from

Accepted Answer

A)  point 5 to point 1. 
B)  point 4 to point 5. 
C)  point 1 to point 6. 
D)  point 3 to point 4. 
A)  point 5 to point 1. 
B)  point 4 to point 5. 
C)  point 1 to point 6. 
D)  point 3 to point 4.

Question 13

Assuming competitive markets with typical supply and demand curves, which of the following statements is correct?

Accepted Answer

A)  An increase in supply with a decrease in demand will result in an increase in price. 
B)  An increase in supply with no change in demand will result in an increase in price. 
C)  An increase in supply with no change in demand will result in a decline in revenue. 
D)  An increase in demand with no change in supply will result in an increase in revenue. 
A)  An increase in supply with a decrease in demand will result in an increase in price. 
B)  An increase in supply with no change in demand will result in an increase in price. 
C)  An increase in supply with no change in demand will result in a decline in revenue. 
D)  An increase in demand with no change in supply will result in an increase in revenue.

Question 14

Refer to the four graphs above. Select the graph that best shows the changes in demand and supply in the market speciﬁed in the following situation: the market for beef, if a new diet fad
Favoring beef consumption becomes hugely popular, while cattle producers see steeply rising costs
Of cattle feed.

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 15

$$\begin{array} { | c | c | c | c | c | } 
\hline ( 1 ) & ( 2 ) & ( 3 ) & ( 4 ) & \text { (5) } \
Q _ { d } & Q _ { d } & \text { Price } & Q _ { S } & Q _ { S } \
\hline 50 & 40 & \$ 10 & 70 & 80 \
\hline 60 & 50 & 9 & 60 & 70 \
\hline 80 & 60 & 8 & 50 & 60 \
\hline 90 & 70 & 7 & 40 & 50 \
\hline 100 & 80 & 6 & 30 & 40 \
\hline
\end{array}$$ Refer to the table. Suppose that demand is represented by columns (3) and (2) and supply is represented by columns (3) and (5). If the price were arti?cially set at $6,

Accepted Answer

A)  the market would clear. 
B)  a surplus of 40 units would occur. 
C)  a shortage of 40 units would occur. 
D)  demand would change from columns (3) and (2) to columns (3) and (1). 
A)  the market would clear. 
B)  a surplus of 40 units would occur. 
C)  a shortage of 40 units would occur. 
D)  demand would change from columns (3) and (2) to columns (3) and (1).

Question 16

A and B are substitute goods, but A and C are complementary goods. If the cost of producing A decreases, then the demand for

Accepted Answer

A)  both B and C will decrease. 
B)  both B and C will increase. 
C)  B will increase and the demand for C will decrease. 
D)  B will decrease and the demand for C will increase. 
A)  both B and C will decrease. 
B)  both B and C will increase. 
C)  B will increase and the demand for C will decrease. 
D)  B will decrease and the demand for C will increase.

Question 17

$$\begin{array} { | c | c | c | } 
\hline \text { Quantity Demanded } & \text { Price } & \text { Quantity Supplied } \
\hline 5 & \$ 7 & 9 \
\hline 6 & 6 & 8 \
\hline 7 & 5 & 7 \
\hline 8 & 4 & 6 \
\hline 9 & 3 & 5 \
\hline 10 & 2 & 4 \
\hline 11 & 1 & 3 \
\hline
\end{array}$$ Refer to the above table. If demand decreased by 4 units at each price, what would the new equilibrium price and quantity be?

Accepted Answer

A)  $3 and 5 units 
B)  $4 and 6 units 
C)  $5 and 7 units 
D)  $6 and 8 units 
A)  $3 and 5 units 
B)  $4 and 6 units 
C)  $5 and 7 units 
D)  $6 and 8 units

Question 18

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 19

Given a downsloping demand curve and an upsloping supply curve for a product, an increase in the price of a substitute good (from the buyer's perspective) will

Accepted Answer

A)  increase equilibrium price and quantity. 
B)  decrease equilibrium price and quantity. 
C)  increase equilibrium price and decrease equilibrium quantity. 
D)  decrease equilibrium price and increase equilibrium quantity. 
A)  increase equilibrium price and quantity. 
B)  decrease equilibrium price and quantity. 
C)  increase equilibrium price and decrease equilibrium quantity. 
D)  decrease equilibrium price and increase equilibrium quantity.

Question 20

Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market the indicated shift in supply may have been caused by

Accepted Answer

A)  an increase in the wages paid to workers producing this good. 
B)  the development of more eﬃcient machinery for producing this commodity. 
C)  this product becoming less fashionable. 
D)  an increase in consumer incomes. 
A)  an increase in the wages paid to workers producing this good. 
B)  the development of more eﬃcient machinery for producing this commodity. 
C)  this product becoming less fashionable. 
D)  an increase in consumer incomes.

Refer to the diagram. The highest price that buyers will be willing and able to pay for 100 units of this product is

As a result of a fall in the price of gasoline, consumers can afford to buy more gasoline for more driving trips. This is an illustration of

The ﬁgure below shows three demand curves for coffee. Which of the following would cause a shift in coffee demand from D1 to D3?

The location of the product supply curve depends on

Refer to the diagram. A decrease in quantity demanded is depicted by a

There is a shortage in a market for a product when

The ﬁgure below shows three demand curves for coffee. Which of the following would cause a shift in coffee demand from D1 to D2?

There will be a surplus of a product when

Allocative eﬃciency involves determining

Plastics manufacturers can make either toys or plastic containers. If the prices and proﬁtability of plastic toys increase, then the

(Consider This) Uber's dynamic pricing

Refer to the above graph. An increase in price, other factors constant, would cause a change from

Assuming competitive markets with typical supply and demand curves, which of the following statements is correct?

(1) (2) (3) (4) (5) Price 50 40 \ 10 70 80 60 50 9 60 70 80 60 8 50 60 90 70 7 40 50 100 80 6 30 40 Refer to the table. Suppose that demand is represented by columns (3) and (2) and supply is represented by columns (3) and (5). If the price were arti?cially set at $6,

A and B are substitute goods, but A and C are complementary goods. If the cost of producing A decreases, then the demand for

Quantity Demanded Price Quantity Supplied 5 \ 7 9 6 6 8 7 5 7 8 4 6 9 3 5 10 2 4 11 1 3 Refer to the above table. If demand decreased by 4 units at each price, what would the new equilibrium price and quantity be?

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

Given a downsloping demand curve and an upsloping supply curve for a product, an increase in the price of a substitute good (from the buyer's perspective) will

Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market the indicated shift in supply may have been caused by

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

Refer to the diagram. The highest price that buyers will be willing and able to pay for 100 units of this product is

As a result of a fall in the price of gasoline, consumers can afford to buy more gasoline for more driving trips. This is an illustration of

The ﬁgure below shows three demand curves for coffee. Which of the following would cause a shift in coffee demand from D1 to D3?

The location of the product supply curve depends on

Refer to the diagram. A decrease in quantity demanded is depicted by a

There is a shortage in a market for a product when

The ﬁgure below shows three demand curves for coffee. Which of the following would cause a shift in coffee demand from D1 to D2?

There will be a surplus of a product when

Allocative eﬃciency involves determining

Plastics manufacturers can make either toys or plastic containers. If the prices and proﬁtability of plastic toys increase, then the

(Consider This) Uber's dynamic pricing

Refer to the above graph. An increase in price, other factors constant, would cause a change from

Assuming competitive markets with typical supply and demand curves, which of the following statements is correct?

(1) (2) (3) (4) (5) Price 50 40 \ 10 70 80 60 50 9 60 70 80 60 8 50 60 90 70 7 40 50 100 80 6 30 40 Refer to the table. Suppose that demand is represented by columns (3) and (2) and supply is represented by columns (3) and (5). If the price were arti?cially set at $6,

A and B are substitute goods, but A and C are complementary goods. If the cost of producing A decreases, then the demand for

Quantity Demanded Price Quantity Supplied 5 \ 7 9 6 6 8 7 5 7 8 4 6 9 3 5 10 2 4 11 1 3 Refer to the above table. If demand decreased by 4 units at each price, what would the new equilibrium price and quantity be?

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

Given a downsloping demand curve and an upsloping supply curve for a product, an increase in the price of a substitute good (from the buyer's perspective) will

Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market the indicated shift in supply may have been caused by

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