Question 1

Economists use the term "demand" to refer to

Accepted Answer

A) a particular price-quantity combination on a stable demand curve. 
B) the total amount spent on a particular commodity over a fixed time period. 
C) an upsloping line on a graph that relates consumer purchases and product price. 
D) a schedule of various combinations of market prices and quantities demanded. 
A) a particular price-quantity combination on a stable demand curve. 
B) the total amount spent on a particular commodity over a fixed time period. 
C) an upsloping line on a graph that relates consumer purchases and product price. 
D) a schedule of various combinations of market prices and quantities demanded.

Question 2

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.A decrease in the price of a product that is a complement to X will

Accepted Answer

A) increase D, increase P, and increase Q. 
B) increase D, decrease P, and increase Q. 
C) increase D, increase P, and decrease Q. 
D) decrease S, decrease P, and increase Q. 
E) shift D left with no change in P and Q. 
A) increase D, increase P, and increase Q. 
B) increase D, decrease P, and increase Q. 
C) increase D, increase P, and decrease Q. 
D) decrease S, decrease P, and increase Q. 
E) shift D left with no change in P and Q.

Question 3

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 4

Adam Smith's "invisible hand" is now regarded as emergent equilibria as people's uncoordinated interactions are magically guided toward socially beneficial outcomes.

Accepted Answer

A) True 
 B)False

Question 5

An effective price ceiling will lower the equilibrium price and cause a surplus.

Accepted Answer

A) True 
 B)False

Question 6

If the demand for steak (a normal good)shifts to the left, the most likely reason is that

Accepted Answer

A) consumer incomes have fallen. 
B) cattle production has declined. 
C) the price of steak has risen. 
D) the price of cattle feed has gone up. 
A) consumer incomes have fallen. 
B) cattle production has declined. 
C) the price of steak has risen. 
D) the price of cattle feed has gone up.

Question 7

Which of the following is consistent with the law of demand?

Accepted Answer

A) A decrease in the price of tacos causes sellers to want to sell less. 
B) An increase in people's craving for pizza causes buyers to buy more pizza. 
C) An increase in the price of hamburgers causes buyers to buy fewer hamburgers. 
D) A decrease in the price of egg rolls causes a decrease in the quantity of egg rolls demanded. 
A) A decrease in the price of tacos causes sellers to want to sell less. 
B) An increase in people's craving for pizza causes buyers to buy more pizza. 
C) An increase in the price of hamburgers causes buyers to buy fewer hamburgers. 
D) A decrease in the price of egg rolls causes a decrease in the quantity of egg rolls demanded.

Question 8

Producing a good in the least costly way is known as allocative efficiency.

Accepted Answer

A) True 
 B)False

Question 9

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 10

Suppose that corn prices rise significantly. If farmers expect the price of corn to continue rising relative to other crops, then we would expect

Accepted Answer

A) the supply of ethanol, a corn-based product, to increase. 
B) consumer demand for wheat to fall. 
C) the supply to increase as farmers plant more corn. 
D) the supply to fall as farmers plant more of other crops. 
A) the supply of ethanol, a corn-based product, to increase. 
B) consumer demand for wheat to fall. 
C) the supply to increase as farmers plant more corn. 
D) the supply to fall as farmers plant more of other crops.

Question 11

If the price of product L increases, the demand curve for close-substitute product J will

Accepted Answer

A) shift downward toward the horizontal axis. 
B) shift to the left. 
C) shift to the right. 
D) remain unchanged. 
A) shift downward toward the horizontal axis. 
B) shift to the left. 
C) shift to the right. 
D) remain unchanged.

Question 12

If demand increases and supply simultaneously decreases, equilibrium price will rise.

Accepted Answer

A) True 
 B)False

Question 13

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 14

The term "quantity demanded"

Accepted Answer

A) refers to the entire series of prices and quantities that comprise the demand schedule. 
B) refers to a situation in which the income and substitution effects do not apply. 
C) refers to the amount of a product that will be purchased at some specific price. 
D) means the same thing as demand. 
A) refers to the entire series of prices and quantities that comprise the demand schedule. 
B) refers to a situation in which the income and substitution effects do not apply. 
C) refers to the amount of a product that will be purchased at some specific price. 
D) means the same thing as demand.

Question 15

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

Accepted Answer

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

Question 16

Suppose product X is an input in the production of product Y. Product Y in turn is a substitute for product Z. A decrease 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 of product Z. 
D) decrease the supply of Z. 
E) increase the supply of Z. 
A) decrease the demand for Z. 
B) increase the demand for Z. 
C) have no effect on the demand of product Z. 
D) decrease the supply of Z. 
E) increase the supply of Z.

Question 17

If we observe the price of a good in a competitive market rising, then we can conclude that there had been a shortage in the market.

Accepted Answer

A) True 
 B)False

Question 18

In response to the general public's complaints about "price gouging" by sellers, the government could impose a price floor.

Accepted Answer

A) True 
 B)False

Question 19

Markets, viewed from the perspective of the supply and demand model,

Accepted Answer

A) assume many buyers and many sellers of a standardized product. 
B) assume market power so that buyers and sellers bargain with one another. 
C) do not exist in the real-world economy. 
D) are approximated by markets in which a single seller determines price. 
A) assume many buyers and many sellers of a standardized product. 
B) assume market power so that buyers and sellers bargain with one another. 
C) do not exist in the real-world economy. 
D) are approximated by markets in which a single seller determines price.

Question 20

The law of demand states that, other things equal,

Accepted Answer

A) price and quantity demanded are inversely related. 
B) the larger the number of buyers in a market, the lower will be product price. 
C) price and quantity demanded are directly related. 
D) consumers will buy more of a product at high prices than at low prices. 
A) price and quantity demanded are inversely related. 
B) the larger the number of buyers in a market, the lower will be product price. 
C) price and quantity demanded are directly related. 
D) consumers will buy more of a product at high prices than at low prices.

Exam 3: Demand, Supply, and Market Equilibrium

Economists use the term "demand" to refer to

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

Adam Smith's "invisible hand" is now regarded as emergent equilibria as people's uncoordinated interactions are magically guided toward socially beneficial outcomes.

An effective price ceiling will lower the equilibrium price and cause a surplus.

If the demand for steak (a normal good)shifts to the left, the most likely reason is that

Which of the following is consistent with the law of demand?

Producing a good in the least costly way is known as allocative efficiency.

Price floors and ceiling prices both

Suppose that corn prices rise significantly. If farmers expect the price of corn to continue rising relative to other crops, then we would expect

If the price of product L increases, the demand curve for close-substitute product J will

If demand increases and supply simultaneously decreases, equilibrium price will rise.

Uber's dynamic pricing

The term "quantity demanded"

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

Suppose product X is an input in the production of product Y. Product Y in turn is a substitute for product Z. A decrease in the price of X can be expected to

If we observe the price of a good in a competitive market rising, then we can conclude that there had been a shortage in the market.

In response to the general public's complaints about "price gouging" by sellers, the government could impose a price floor.

Markets, viewed from the perspective of the supply and demand model,

The law of demand states that, other things equal,

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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