Question 1

If two goods are complements,

Accepted Answer

A) they are consumed independently. 
B) an increase in the price of one will increase the demand for the other. 
C) a decrease in the price of one will increase the demand for the other. 
D) they are necessarily inferior goods. 
A) they are consumed independently. 
B) an increase in the price of one will increase the demand for the other. 
C) a decrease in the price of one will increase the demand for the other. 
D) they are necessarily inferior goods.

Question 2

An economist for a bicycle company predicts that, other things equal, a rise in consumer incomes will increase the demand for bicycles. This prediction assumes that

Accepted Answer

A) there are many goods that are substitutes for bicycles. 
B) there are many goods that are complementary to bicycles. 
C) there are few goods that are substitutes for bicycles. 
D) bicycles are normal goods. 
A) there are many goods that are substitutes for bicycles. 
B) there are many goods that are complementary to bicycles. 
C) there are few goods that are substitutes for bicycles. 
D) bicycles are normal goods.

Question 3

The law of demand states that if price increases, other things being equal, the demand for the product will decrease.

Accepted Answer

A) True 
 B)False

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

What is the difference between a change in demand and a change in quantity demanded?

Accepted Answer

A change in demand is a shift of the dem

Question 6

A firm's supply curve is upsloping because

Accepted Answer

A) the expansion of production necessitates the use of qualitatively inferior inputs. 
B) mass production economies are associated with larger levels of output. 
C) consumers envision a positive relationship between price and quality. 
D) beyond some point, the production costs of additional units of output will rise. 
A) the expansion of production necessitates the use of qualitatively inferior inputs. 
B) mass production economies are associated with larger levels of output. 
C) consumers envision a positive relationship between price and quality. 
D) beyond some point, the production costs of additional units of output will rise.

Question 7

A market

Accepted Answer

A) reflects upsloping demand and downsloping supply curves. 
B) entails the exchange of goods, but not services. 
C) is an institution that brings together buyers and sellers. 
D) always requires face-to-face contact between buyer and seller. 
A) reflects upsloping demand and downsloping supply curves. 
B) entails the exchange of goods, but not services. 
C) is an institution that brings together buyers and sellers. 
D) always requires face-to-face contact between buyer and seller.

Question 8

A surplus indicates that the quantity demanded is greater than the quantity supplied at that price.

Accepted Answer

A) True 
 B)False

Question 9

When an economist says that the demand for a product has increased, this means that

Accepted Answer

A) consumers are now willing to purchase more of this product at each possible price. 
B) the product has become particularly scarce for some reason. 
C) product price has fallen and, as a consequence, consumers are buying a larger quantity of the product. 
D) the demand curve has shifted to the left. 
A) consumers are now willing to purchase more of this product at each possible price. 
B) the product has become particularly scarce for some reason. 
C) product price has fallen and, as a consequence, consumers are buying a larger quantity of the product. 
D) the demand curve has shifted to the left.

Question 10

If the demand and supply curves for product X are stable, a government-mandated increase in the price of X will

Accepted Answer

A) increase the supply of X and decrease the demand for X. 
B) increase the demand for X and decrease the supply of X. 
C) increase the quantity supplied of X and decrease the quantity demanded of X. 
D) decrease the quantity supplied of X and increase the quantity demanded of X. 
A) increase the supply of X and decrease the demand for X. 
B) increase the demand for X and decrease the supply of X. 
C) increase the quantity supplied of X and decrease the quantity demanded of X. 
D) decrease the quantity supplied of X and increase the quantity demanded of X.

Question 11

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 12

A government subsidy to the producers of a product

Accepted Answer

A) reduces product supply. 
B) increases product supply. 
C) reduces product demand. 
D) increases product demand. 
A) reduces product supply. 
B) increases product supply. 
C) reduces product demand. 
D) increases product demand.

Question 13

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 14

What is productive efficiency, and how does a market achieve allocative efficiency?

Accepted Answer

Productive efficiency is production of a

Question 15

If the organizers of a major sports event set the ticket price above the equilibrium level, then scalping will develop in a secondary market for tickets.

Accepted Answer

A) True 
 B)False

Question 16

Answer the question based on the given supply and demand data for wheat.   Equilibrium price in this market is

Accepted Answer

A) $5. 
B) $4. 
C) $3. 
D) $2. 
A) $5. 
B) $4. 
C) $3. 
D) $2.

Question 17

The demand curve shows the relationship between

Accepted Answer

A) money income and quantity demanded. 
B) price and production costs. 
C) price and quantity demanded. 
D) consumer tastes and quantity demanded. 
A) money income and quantity demanded. 
B) price and production costs. 
C) price and quantity demanded. 
D) consumer tastes and quantity demanded.

Question 18

Buyers and sellers do not have to deal face-to-face with one another in markets.

Accepted Answer

A) True 
 B)False

Question 19

An increase in quantity supplied might be caused by an increase in resource costs.

Accepted Answer

A) True 
 B)False

Question 20

A price floor in a competitive market will result in persistent shortages of a product.

Accepted Answer

A) True 
 B)False

Exam 3: Demand, Supply, and Market Equilibrium

If two goods are complements,

An economist for a bicycle company predicts that, other things equal, a rise in consumer incomes will increase the demand for bicycles. This prediction assumes that

The law of demand states that if price increases, other things being equal, the demand for the product will decrease.

The location of the product supply curve depends on

What is the difference between a change in demand and a change in quantity demanded?

A firm's supply curve is upsloping because

A market

A surplus indicates that the quantity demanded is greater than the quantity supplied at that price.

When an economist says that the demand for a product has increased, this means that

If the demand and supply curves for product X are stable, a government-mandated increase in the price of X will

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

A government subsidy to the producers of a product

Which of the following statements is true about price ceilings?

What is productive efficiency, and how does a market achieve allocative efficiency?

If the organizers of a major sports event set the ticket price above the equilibrium level, then scalping will develop in a secondary market for tickets.

Answer the question based on the given supply and demand data for wheat. Equilibrium price in this market is

The demand curve shows the relationship between

Buyers and sellers do not have to deal face-to-face with one another in markets.

An increase in quantity supplied might be caused by an increase in resource costs.

A price floor in a competitive market will result in persistent shortages of a product.

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, 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

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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