Question 1

When a shortage occurs in the market for a good, quantity

Accepted Answer

A) demanded exceeds quantity supplied and the market mechanism pushes the price up, which in turn encourages more production and less consumption. 
B) supplied exceeds quantity demanded and the price falls, which encourages more production and less consumption. 
C) demanded exceeds quantity supplied and the market mechanism pushes the price down, which encourages more production and less consumption. 
D) supplied exceeds quantity demanded and the price rises, which encourages more production and less consumption. 
A) demanded exceeds quantity supplied and the market mechanism pushes the price up, which in turn encourages more production and less consumption. 
B) supplied exceeds quantity demanded and the price falls, which encourages more production and less consumption. 
C) demanded exceeds quantity supplied and the market mechanism pushes the price down, which encourages more production and less consumption. 
D) supplied exceeds quantity demanded and the price rises, which encourages more production and less consumption.

Question 2

In a free-market system, producers will react to an increase in demand when

Accepted Answer

A) the price goes up. 
B) the government announces the increased demand. 
C) their costs increase. 
D) the free press publishes news of the increased demand. 
A) the price goes up. 
B) the government announces the increased demand. 
C) their costs increase. 
D) the free press publishes news of the increased demand.

Question 3

Command economies are able to achieve greater allocative efficiency than market economies.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following industries relies heavily on peak\off-peak pricing?

Accepted Answer

A) Auto manufacturing 
B) Computer software 
C) Airlines 
D) Book publishing 
A) Auto manufacturing 
B) Computer software 
C) Airlines 
D) Book publishing

Question 5

For an efficient outcome, MR must exceed MC.

Accepted Answer

A) True 
 B)False

Question 6

Explain why movie theaters charge more for evening performances than for matinees.

Accepted Answer

If prices were the same at all times, mo

Question 7

If a technological breakthrough reduces input quantities needed to produce some item,

Accepted Answer

A) cost of production will be increased. 
B) the price of the product will rise. 
C) the price of the product will fall. 
D) quantity demanded of the product will fall. 
A) cost of production will be increased. 
B) the price of the product will rise. 
C) the price of the product will fall. 
D) quantity demanded of the product will fall.

Question 8

Which of the proposals for education reform is likely to be supported by an economist concerned with efficiency?

Accepted Answer

A) Give families "education stamps" to be spent at the school of their choice. 
B) Assign children to particular schools based on where they live. 
C) Give all schoolchildren the same number of years of education. 
D) Abolish private (i.e., fee-charging)schools. 
A) Give families "education stamps" to be spent at the school of their choice. 
B) Assign children to particular schools based on where they live. 
C) Give all schoolchildren the same number of years of education. 
D) Abolish private (i.e., fee-charging)schools.

Question 9

Allocations that are inefficient are sometimes chosen by policy makers as a way of improving fairness.

Accepted Answer

A) True 
 B)False

Question 10

The questions of what to produce, how to produce, and for whom are answered by

Accepted Answer

A) free-market economies. 
B) economies that are a mixture of planning and markets. 
C) command economies. 
D) all economic systems in some manner. 
A) free-market economies. 
B) economies that are a mixture of planning and markets. 
C) command economies. 
D) all economic systems in some manner.

Question 11

Each point on a production possibilities frontier represents an efficient allocation of resources in an economy at one point in time.

Accepted Answer

A) True 
 B)False

Question 12

When an economy operates efficiently,

Accepted Answer

A) the MRPs of every input into the production of a good are equal. 
B) marginal utility equals marginal cost for every good. 
C) the price of a good equals the sum of the marginal physical products of its inputs. 
D) All of the responses are correct. 
A) the MRPs of every input into the production of a good are equal. 
B) marginal utility equals marginal cost for every good. 
C) the price of a good equals the sum of the marginal physical products of its inputs. 
D) All of the responses are correct.

Question 13

The price of a ride on the Washington, D.C. metro depends on the time of day you ride. This is an example of

Accepted Answer

A) exploitation. 
B) inefficiency. 
C) political interference with a market. 
D) pricing to spread out demand. 
A) exploitation. 
B) inefficiency. 
C) political interference with a market. 
D) pricing to spread out demand.

Question 14

Which of the following is least likely to be an example of peak\off-peak pricing?

Accepted Answer

A) Breakfast cereals 
B) Hotels 
C) Toll roads 
D) Electricity 
A) Breakfast cereals 
B) Hotels 
C) Toll roads 
D) Electricity

Question 15

The price system rations goods among consumers in such a way that

Accepted Answer

A) all are treated equally. 
B) all needs are satisfied. 
C) the rich are favored. 
D) important needs are satisfied first. 
A) all are treated equally. 
B) all needs are satisfied. 
C) the rich are favored. 
D) important needs are satisfied first.

Question 16

Prices are useful in coordinating society's economic planning because

Accepted Answer

A) they convey information about which goods are scarce and which are plentiful. 
B) economies based on price systems are more flexible than centrally planned economies. 
C) economies based on price systems are more likely than centrally planned economies to minimize the cost of producing society's output. 
D) All of the responses are correct. 
A) they convey information about which goods are scarce and which are plentiful. 
B) economies based on price systems are more flexible than centrally planned economies. 
C) economies based on price systems are more likely than centrally planned economies to minimize the cost of producing society's output. 
D) All of the responses are correct.

Question 17

"Peak pricing" can only work effectively if prices remain relatively low for scarce resources.

Accepted Answer

A) True 
 B)False

Question 18

The coordination task of any economy that answers the question of how output shall be divided among consumers may best be described as

Accepted Answer

A) output selection. 
B) production planning. 
C) distribution. 
D) input-output analysis. 
A) output selection. 
B) production planning. 
C) distribution. 
D) input-output analysis.

Question 19

Figure 11-1 ​
 
In Figure 11-1, a cost-reducing technological breakthrough in calculator production would cause which movement?

Accepted Answer

A) A to D 
B) A to C 
C) A to B 
D) A to E 
A) A to D 
B) A to C 
C) A to B 
D) A to E

Exam 11: The Case for Free Markets: the Price System

When a shortage occurs in the market for a good, quantity

In a free-market system, producers will react to an increase in demand when

Command economies are able to achieve greater allocative efficiency than market economies.

Which of the following industries relies heavily on peak\off-peak pricing?

For an efficient outcome, MR must exceed MC.

Explain why movie theaters charge more for evening performances than for matinees.

If a technological breakthrough reduces input quantities needed to produce some item,

Which of the proposals for education reform is likely to be supported by an economist concerned with efficiency?

Allocations that are inefficient are sometimes chosen by policy makers as a way of improving fairness.

The questions of what to produce, how to produce, and for whom are answered by

Each point on a production possibilities frontier represents an efficient allocation of resources in an economy at one point in time.

When an economy operates efficiently,

The price of a ride on the Washington, D.C. metro depends on the time of day you ride. This is an example of

Which of the following is least likely to be an example of peak\off-peak pricing?

The price system rations goods among consumers in such a way that

Prices are useful in coordinating society's economic planning because

"Peak pricing" can only work effectively if prices remain relatively low for scarce resources.

The coordination task of any economy that answers the question of how output shall be divided among consumers may best be described as

Figure 11-1 ​ In Figure 11-1, a cost-reducing technological breakthrough in calculator production would cause which movement?

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

Filters

Figure 11-1 In Figure 11-1, a cost-reducing technological breakthrough in calculator production would cause which movement?