Question 1

If the price of hot dogs were to decrease, which of the following changes would we expect to occur in the hot dog bun market?

Accepted Answer

A)  The equilibrium price of hot dog buns would decrease and the quantity of hot dog buns sold would increase. 
B)  The equilibrium price of hot dog buns would increase and the quantity of hot dog buns sold would decrease. 
C)  The equilibrium price of hot dog buns would increase and the quantity of hot dog buns sold would increase. 
D)  The equilibrium price of hot dog buns would decrease and the quantity of hot dog buns sold would decrease. 
E)  The equilibrium price of hot dog buns would stay the same and the quantity of hot dog buns sold would increase. 
A)  The equilibrium price of hot dog buns would decrease and the quantity of hot dog buns sold would increase. 
B)  The equilibrium price of hot dog buns would increase and the quantity of hot dog buns sold would decrease. 
C)  The equilibrium price of hot dog buns would increase and the quantity of hot dog buns sold would increase. 
D)  The equilibrium price of hot dog buns would decrease and the quantity of hot dog buns sold would decrease. 
E)  The equilibrium price of hot dog buns would stay the same and the quantity of hot dog buns sold would increase.

Question 2

Consider a demand curve for peaches. Which of the following movements will be observed if the price of peaches decline at a point in time?

Accepted Answer

A)  The demand curve will rotate inward at the given price level. 
B)  The will be a movement up along the demand curve. 
C)  The demand curve will rotate outward at the given price level. 
D)  There will be a movement down along the demand curve. 
E)  There will be no change in the demand curve. 
A)  The demand curve will rotate inward at the given price level. 
B)  The will be a movement up along the demand curve. 
C)  The demand curve will rotate outward at the given price level. 
D)  There will be a movement down along the demand curve. 
E)  There will be no change in the demand curve.

Question 3

When will a shortage occur in a market?

Accepted Answer

A)  When the actual price is lower than the equilibrium price 
B)  When quantity supplied is greater than the equilibrium quantity 
C)  When the quantity that consumers are willing and able to purchase decreases 
D)  When the quantity available at zero price is insufficient to meet demand 
E)  When a price floor is set in the market 
A)  When the actual price is lower than the equilibrium price 
B)  When quantity supplied is greater than the equilibrium quantity 
C)  When the quantity that consumers are willing and able to purchase decreases 
D)  When the quantity available at zero price is insufficient to meet demand 
E)  When a price floor is set in the market

Question 4

Which of the following would lead to a rightward shift in the demand curve for golf balls?

Accepted Answer

A)  An increase in the price of golf clubs 
B)  A decrease in the popularity of golf 
C)  An increase in the number of golfers 
D)  A decrease in the price of golf balls 
E)  An increase in the golf club membership fee 
A)  An increase in the price of golf clubs 
B)  A decrease in the popularity of golf 
C)  An increase in the number of golfers 
D)  A decrease in the price of golf balls 
E)  An increase in the golf club membership fee

Question 5

The table given below reports the quantity of bread loaves demanded and supplied at different per unit prices.
Table 3.3
 $\begin{array}{|ccc|}
\hline \text { Price per Loaf }(\$) & \text { Quantity Demanded } & \text { Quantity Supplied } \
5 & 30 & 102 \
4 & 48 & 84 \
3 & 66 & 66 \
2 & 84 & 48 \
1 & 102 & 30\
\hline
\end{array}$
-According to Table 3.3, equilibrium in the market for bread occurs at the price of:

Accepted Answer

A)  $2 per unit 
B)  $3 per unit 
C)  $4 per unit 
D)  $4.5 per unit 
E)  $1.5 per unit 
A)  $2 per unit 
B)  $3 per unit 
C)  $4 per unit 
D)  $4.5 per unit 
E)  $1.5 per unit

Question 6

According to the law of demand, when the price of a BMW or a Gucci purse increases, the quantity demanded of these goods will also increase because consumers consider them prestigious.

Accepted Answer

A) True 
 B)False

Question 7

According to the law of demand, if the price of a netbook decreases, ceteris paribus, the demand for netbooks would increase.

Accepted Answer

A) True 
 B)False

Question 8

If a society's scarce resources are allocated by the government, which of the following is most likely to result?

Accepted Answer

A)  Only those who circumvent the government's rules will prosper. 
B)  Under a government allocation, no one will have to do without. 
C)  It provides an incentive to be a member of government and thus help determine the allocation rules. 
D)  Under a government allocation, some will have to do without, but the government guarantees that resource allocations are fair. 
E)  Government allocation provides incentives to increase production and efficiency and to create value. 
A)  Only those who circumvent the government's rules will prosper. 
B)  Under a government allocation, no one will have to do without. 
C)  It provides an incentive to be a member of government and thus help determine the allocation rules. 
D)  Under a government allocation, some will have to do without, but the government guarantees that resource allocations are fair. 
E)  Government allocation provides incentives to increase production and efficiency and to create value.

Question 9

Identify the correct statement.

Accepted Answer

A)  Demand is the total quantity of a product that people are willing, even if unable, to purchase at a given price. 
B)  Demand for a product is the same as the quantity demanded of a product. 
C)  Demand represents the different quantities of a good or service that provides consumers the same amount of utility. 
D)  Demand is the quantity of a product that people are willing and able to purchase at different prices. 
E)  Demand is the quantity of a product that producers are willing to produce at a particular price. 
A)  Demand is the total quantity of a product that people are willing, even if unable, to purchase at a given price. 
B)  Demand for a product is the same as the quantity demanded of a product. 
C)  Demand represents the different quantities of a good or service that provides consumers the same amount of utility. 
D)  Demand is the quantity of a product that people are willing and able to purchase at different prices. 
E)  Demand is the quantity of a product that producers are willing to produce at a particular price.

Question 10

A price floor does not benefit producers.

Accepted Answer

A) True 
 B)False

Question 11

When a market is in surplus, there is pressure for the price to move upward.

Accepted Answer

A) True 
 B)False

Question 12

Without money, no transaction can occur.

Accepted Answer

A) True 
 B)False

Question 13

Margaret can use her quarterly savings to buy a teakwood study table for her room or spend it on a small Christmas party with her family. The _____ cost of her enjoyment at the Christmas party would then equal the forgone utility of the study table.

Accepted Answer

A)  transaction 
B)  exchange 
C)  opportunity 
D)  direct 
E)  sunk 
A)  transaction 
B)  exchange 
C)  opportunity 
D)  direct 
E)  sunk

Question 14

The below figure shows the demand and supply curves in the market for gasoline. The price and quantity at the point of intersection of the demand and supply curves is $30 and 300 gallons respectively.
Figure 3.6
  
-Assume that the market for gasoline in Figure 3.6 is in equilibrium. What is the most likely consequence of a government-imposed price ceiling at $10 per unit?

Accepted Answer

A)  The profit made by gasoline producers will increase. 
B)  The demand for gasoline will decrease. 
C)  The quantity of gasoline supplied to the market will decrease. 
D)  There will be a surplus of gasoline in the market. 
E)  The demand curve for gasoline will shift to the right. 
A)  The profit made by gasoline producers will increase. 
B)  The demand for gasoline will decrease. 
C)  The quantity of gasoline supplied to the market will decrease. 
D)  There will be a surplus of gasoline in the market. 
E)  The demand curve for gasoline will shift to the right.

Question 15

The table given below represents the supply schedules of the only three DVD producers in the market for DVDs.
Table 3.2
 $\begin{array}{|cccc|}
\hline\text { Supply 1 } & \text { Supply 2 } & \text { Supply 3 } & \text { Price per DVD (\$) } \
60 & 30 & 12 & 5 \
50 & 25 & 9 & 4 \
40 & 20 & 6 & 3 \
30 & 15 & 3 & 2 \
20 & 10 & 0 & 1\
\hline
\end{array}$
-According to Table 3.2, if the supply schedules 1, 2, and 3 are the market supply schedules for DVDs in three different time periods, what could explain the change from the Supply 1 schedule to the Supply 2 schedule?

Accepted Answer

A)  A decrease in the price of DVDs 
B)  A decrease in the cost of DVD players 
C)  A change in consumer preferences 
D)  A change in the average income of consumers 
E)  An increase in the cost of producing DVDs 
A)  A decrease in the price of DVDs 
B)  A decrease in the cost of DVD players 
C)  A change in consumer preferences 
D)  A change in the average income of consumers 
E)  An increase in the cost of producing DVDs

Question 16

It is absolutely necessary for at least one trader to have money for barter exchange to take place.

Accepted Answer

A) True 
 B)False

Question 17

The table given below reports the quantity demanded and supplied of a commodity at different prices in a market.
Table 3.5
 $\begin{array}{|ccc|}
\hline\text { Quantity Demanded }& \text { Price per Unit (\$) } &\text { Quantity Supplied }\

10 & 5 & 50 \
20 & 4 & 40 \
30 & 3 & 30 \
40 & 2 & 20 \
50 & 1 & 10\
\hline

\end{array}$
-Refer to Table 3.5. If government imposes a price floor of $2:

Accepted Answer

A)  the price floor will not have an effect. 
B)  the price will fall to $1 because producers will be forced to incur losses. 
C)  demand will increase. 
D)  a surplus will result equal to 20 units. 
E)  a shortage will result equal to 20 units. 
A)  the price floor will not have an effect. 
B)  the price will fall to $1 because producers will be forced to incur losses. 
C)  demand will increase. 
D)  a surplus will result equal to 20 units. 
E)  a shortage will result equal to 20 units.

Question 18

The table given below reports the quantity demanded of a good by individuals 1, 2, and 3 at different prices.
Table 3.1
 $\begin{array}{|cccc|}
\hline\begin{array}{c}
\text { Price per } \
\text { DVD (\$) }
\end{array} & \begin{array}{c}
\text { Quantity } \
\text { Demanded 1 }
\end{array} & \begin{array}{c}
\text { Quantity } \
\text { Demanded 2 }
\end{array} & \begin{array}{c}
\text { Quantity } \
\text { Demanded 3 }
\end{array} \
5 & 10 & 15 & 5 \
4 & 20 & 25 & 15 \
3 & 30 & 35 & 25 \
2 & 40 & 45 & 35 \
1 & 50 & 55 & 45 \
\hline
\end{array}$
-Refer to Table 3.1. If Quantity Demanded 1, Quantity Demanded 2, and Quantity Demanded 3 are market demand schedules, then the change from Quantity Demanded 1 to Quantity Demanded 3 may have been due to:

Accepted Answer

A)  an increase in price. 
B)  an increase in the number of sellers. 
C)  a decrease in price. 
D)  a decrease in the number of buyers. 
E)  a decrease in the price of a substitute good. 
A)  an increase in price. 
B)  an increase in the number of sellers. 
C)  a decrease in price. 
D)  a decrease in the number of buyers. 
E)  a decrease in the price of a substitute good.

Question 19

Which of the following statements is not true about a market system?

Accepted Answer

A)  The market system provides an incentive to consumers to acquire purchasing ability. 
B)  The market system magnifies the problem of scarcity of goods and services. 
C)  The market system provides an incentive for allocating resources. 
D)  The market system provides an incentive to improve the quality of goods produced. 
E)  The market system provides everything everyone wants to consume. 
A)  The market system provides an incentive to consumers to acquire purchasing ability. 
B)  The market system magnifies the problem of scarcity of goods and services. 
C)  The market system provides an incentive for allocating resources. 
D)  The market system provides an incentive to improve the quality of goods produced. 
E)  The market system provides everything everyone wants to consume.

Question 20

Assume that Ford Motor Company engineers achieve a revolutionary technological breakthrough in the production process of automobiles. Which of the following is expected to take place?

Accepted Answer

A)  A movement up the existing supply curve for Ford automobiles 
B)  The supply of Ford automobiles will remain unchanged 
C)  An inward shift of the supply curve for Ford automobiles 
D)  A movement down along an existing supply curve for Ford automobiles 
E)  An outward shift of the supply curve for Ford automobiles 
A)  A movement up the existing supply curve for Ford automobiles 
B)  The supply of Ford automobiles will remain unchanged 
C)  An inward shift of the supply curve for Ford automobiles 
D)  A movement down along an existing supply curve for Ford automobiles 
E)  An outward shift of the supply curve for Ford automobiles

If the price of hot dogs were to decrease, which of the following changes would we expect to occur in the hot dog bun market?

Consider a demand curve for peaches. Which of the following movements will be observed if the price of peaches decline at a point in time?

When will a shortage occur in a market?

Which of the following would lead to a rightward shift in the demand curve for golf balls?

According to the law of demand, when the price of a BMW or a Gucci purse increases, the quantity demanded of these goods will also increase because consumers consider them prestigious.

According to the law of demand, if the price of a netbook decreases, ceteris paribus, the demand for netbooks would increase.

If a society's scarce resources are allocated by the government, which of the following is most likely to result?

Identify the correct statement.

A price floor does not benefit producers.

When a market is in surplus, there is pressure for the price to move upward.

Without money, no transaction can occur.

Margaret can use her quarterly savings to buy a teakwood study table for her room or spend it on a small Christmas party with her family. The _____ cost of her enjoyment at the Christmas party would then equal the forgone utility of the study table.

It is absolutely necessary for at least one trader to have money for barter exchange to take place.

Which of the following statements is not true about a market system?

Assume that Ford Motor Company engineers achieve a revolutionary technological breakthrough in the production process of automobiles. Which of the following is expected to take place?

Economics: the World Around You

Choice, Opportunity Costs, and Specialization

The Market System and the Private and Public Sector

National Income Accounting

An Introduction to the Foreign Exchange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

Exam 3: Markets, Demand and Supply, and the Price System

If the price of hot dogs were to decrease, which of the following changes would we expect to occur in the hot dog bun market?

Consider a demand curve for peaches. Which of the following movements will be observed if the price of peaches decline at a point in time?

When will a shortage occur in a market?

Which of the following would lead to a rightward shift in the demand curve for golf balls?

According to the law of demand, when the price of a BMW or a Gucci purse increases, the quantity demanded of these goods will also increase because consumers consider them prestigious.

According to the law of demand, if the price of a netbook decreases, ceteris paribus, the demand for netbooks would increase.

If a society's scarce resources are allocated by the government, which of the following is most likely to result?

Identify the correct statement.

A price floor does not benefit producers.

When a market is in surplus, there is pressure for the price to move upward.

Without money, no transaction can occur.

Margaret can use her quarterly savings to buy a teakwood study table for her room or spend it on a small Christmas party with her family. The _____ cost of her enjoyment at the Christmas party would then equal the forgone utility of the study table.

It is absolutely necessary for at least one trader to have money for barter exchange to take place.

Which of the following statements is not true about a market system?

Assume that Ford Motor Company engineers achieve a revolutionary technological breakthrough in the production process of automobiles. Which of the following is expected to take place?

Economics: the World Around You

Choice, Opportunity Costs, and Specialization

The Market System and the Private and Public Sector

National Income Accounting

An Introduction to the Foreign Exchange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters