Question 1

If the price of coffee decreases, the demand curve for tea (a substitute good) will

Accepted Answer

A)  remain unchanged. 
B)  shift to the right. 
C)  shift to the left. 
D)  do none of the above 
A)  remain unchanged. 
B)  shift to the right. 
C)  shift to the left. 
D)  do none of the above C

Question 2

Figure 3-20  
Refer to Figure 3-20. If 110 units of the good are being bought and sold, then

Accepted Answer

A)  the cost to sellers is equal to the value to buyers. 
B)  the value to buyers is greater than the cost to sellers. 
C)  the cost to sellers is greater than the value to buyers. 
D)  producer surplus is greater than consumer surplus. 
A)  the cost to sellers is equal to the value to buyers. 
B)  the value to buyers is greater than the cost to sellers. 
C)  the cost to sellers is greater than the value to buyers. 
D)  producer surplus is greater than consumer surplus. C

Question 3

Which of the following will most likely decrease the current price of personal computers?

Accepted Answer

A)  a technological advance that decreases the production costs of personal computers 
B)  an increase in consumer income 
C)  development of new software that makes it easier for more people to use personal computers 
D)  the expectation that the price of personal computers will increase during the next six months 
A)  a technological advance that decreases the production costs of personal computers 
B)  an increase in consumer income 
C)  development of new software that makes it easier for more people to use personal computers 
D)  the expectation that the price of personal computers will increase during the next six months A

Question 4

When economists say the quantity demanded of a product has decreased, they mean the

Accepted Answer

A)  demand curve has shifted to the left. 
B)  demand curve has shifted to the right. 
C)  price of the product has fallen, and consequently, consumers are buying more of it. 
D)  price of the product has risen, and consequently, consumers are buying less of it. 
A)  demand curve has shifted to the left. 
B)  demand curve has shifted to the right. 
C)  price of the product has fallen, and consequently, consumers are buying more of it. 
D)  price of the product has risen, and consequently, consumers are buying less of it.

Question 5

Economists would say that the demand for tacos is

Accepted Answer

A)  relatively inelastic because there are very few close substitutes available. 
B)  relatively elastic because there are many substitutes for tacos. 
C)  increasing because of reports of Mad Cow Disease. 
D)  relatively inelastic because its demand curve is flatter. 
A)  relatively inelastic because there are very few close substitutes available. 
B)  relatively elastic because there are many substitutes for tacos. 
C)  increasing because of reports of Mad Cow Disease. 
D)  relatively inelastic because its demand curve is flatter.

Question 6

The law of demand refers to the

Accepted Answer

A)  inverse relationship between the price of a good and the willingness of consumers to buy it. 
B)  price increase that results from an increase in demand for a good of limited supply. 
C)  inverse relationship between the price of a good and the quantity offered for sale. 
D)  increase in the quantity of a good available when its price increases. 
A)  inverse relationship between the price of a good and the willingness of consumers to buy it. 
B)  price increase that results from an increase in demand for a good of limited supply. 
C)  inverse relationship between the price of a good and the quantity offered for sale. 
D)  increase in the quantity of a good available when its price increases.

Question 7

Assume that supply decreases slightly and demand decreases greatly. Which of the following will happen?

Accepted Answer

A)  Equilibrium price will fall and equilibrium quantity will rise. 
B)  Equilibrium price will rise and equilibrium quantity will fall. 
C)  Equilibrium price will rise and equilibrium quantity will rise. 
D)  Equilibrium price will fall and equilibrium quantity will fall. 
E)  Neither equilibrium price nor equilibrium quantity will change. 
A)  Equilibrium price will fall and equilibrium quantity will rise. 
B)  Equilibrium price will rise and equilibrium quantity will fall. 
C)  Equilibrium price will rise and equilibrium quantity will rise. 
D)  Equilibrium price will fall and equilibrium quantity will fall. 
E)  Neither equilibrium price nor equilibrium quantity will change.

Question 8

Figure 3-6  
In Figure 3-6, suppose D 1 and S 1 indicate initial conditions in the market for ice cream. Which of the following changes would tend to cause a shift from S 1 to S 2 in the market for ice cream?

Accepted Answer

A)  an increase in the price of sugar, an ingredient used to produce ice cream 
B)  a decrease in the price of frozen yogurt, a substitute for ice cream 
C)  abnormally hot weather that temporarily increases consumer desire for ice cream 
D)  a decrease in the price of milk, an ingredient used to produce ice cream 
A)  an increase in the price of sugar, an ingredient used to produce ice cream 
B)  a decrease in the price of frozen yogurt, a substitute for ice cream 
C)  abnormally hot weather that temporarily increases consumer desire for ice cream 
D)  a decrease in the price of milk, an ingredient used to produce ice cream

Question 9

For a typical product, a decrease in consumer income will cause the market demand for the product to

Accepted Answer

A)  decrease, which is a shift to the left of the demand curve. 
B)  decrease, which is a shift to the right of the demand curve. 
C)  increase, which is a shift to the left of the demand curve. 
D)  increase, which is a shift to the right of the demand curve. 
A)  decrease, which is a shift to the left of the demand curve. 
B)  decrease, which is a shift to the right of the demand curve. 
C)  increase, which is a shift to the left of the demand curve. 
D)  increase, which is a shift to the right of the demand curve.

Question 10

Which of the following would most likely increase demand for tickets to major league baseball games?

Accepted Answer

A)  a decrease in consumer income 
B)  an increase in the price of tickets to professional football games, a substitute for baseball games 
C)  an increase in the price of refreshments sold at the baseball games 
D)  none of the above 
A)  a decrease in consumer income 
B)  an increase in the price of tickets to professional football games, a substitute for baseball games 
C)  an increase in the price of refreshments sold at the baseball games 
D)  none of the above

Question 11

"He [the producer] intends only his gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention." What is the "invisible hand" referred to in this statement?

Accepted Answer

A)  the elasticity of the market demand curve 
B)  the power of government when decisions are made democratically 
C)  the guidelines and regulations set for his industry by the government 
D)  the incentive structure accompanying market prices 
A)  the elasticity of the market demand curve 
B)  the power of government when decisions are made democratically 
C)  the guidelines and regulations set for his industry by the government 
D)  the incentive structure accompanying market prices

Question 12

Figure 3-17  
Refer to Figure 3-17. When the price is P 1, consumer surplus is

Accepted Answer

A)  A. 
B)  A + B. 
C)  A + B + C. 
D)  A + B + D. 
A)  A. 
B)  A + B. 
C)  A + B + C. 
D)  A + B + D.

Question 13

An increase in the demand for tattoos will lead to a

Accepted Answer

A)  higher price and a larger quantity sold. 
B)  lower price and a larger quantity sold. 
C)  higher price and a smaller quantity sold. 
D)  lower price and a smaller quantity sold. 
A)  higher price and a larger quantity sold. 
B)  lower price and a larger quantity sold. 
C)  higher price and a smaller quantity sold. 
D)  lower price and a smaller quantity sold.

Question 14

A movement along a demand curve

Accepted Answer

A)  is called a change in demand. 
B)  is the result of a change in the price of the good. 
C)  can be caused by many things. 
D)  means the product is inelastic. 
A)  is called a change in demand. 
B)  is the result of a change in the price of the good. 
C)  can be caused by many things. 
D)  means the product is inelastic.

Question 15

Figure 3-17  
Refer to Figure 3-17. When the price is P 2, consumer surplus is

Accepted Answer

A)  A. 
B)  B. 
C)  A + B. 
D)  A + B + C. 
A)  A. 
B)  B. 
C)  A + B. 
D)  A + B + C.

Question 16

Which of the following is most likely to result in higher prices of tickets at movie theatres near your campus?

Accepted Answer

A)  an unexpected increase in enrollment at your college 
B)  lower electricity rates that reduces the cost of keeping the theater at a comfortable temperature 
C)  lower prices for video tape and DVD movie rentals in the stores near your campus 
D)  an increase in tuition at your school that lowers enrollment 
A)  an unexpected increase in enrollment at your college 
B)  lower electricity rates that reduces the cost of keeping the theater at a comfortable temperature 
C)  lower prices for video tape and DVD movie rentals in the stores near your campus 
D)  an increase in tuition at your school that lowers enrollment

Question 17

Figure 3-21  
Refer to Figure 3-21. At the quantity Q 3,

Accepted Answer

A)  the market is in equilibrium. 
B)  consumer surplus is maximized. 
C)  the sum of consumer surplus and producer surplus is maximized. 
D)  the value to buyers is less than the cost to sellers. 
A)  the market is in equilibrium. 
B)  consumer surplus is maximized. 
C)  the sum of consumer surplus and producer surplus is maximized. 
D)  the value to buyers is less than the cost to sellers.

Question 18

Sam lives in a town with a population of 3,000. He says, "This town really needs a pizza restaurant. People want pizza and would be willing to pay a lot for it, but no one will open a pizza place because they couldn't make any money." Evaluate Sam's statement.

Accepted Answer

His statement clearly conflicts with the

Question 19

In which statement(s) is "demand" used correctly? (I) "An increase in the price of hot dogs will reduce the demand for hot dogs."
(II) "An increase in the price of hot dogs will reduce the demand for hot dog buns."

Accepted Answer

A)  in both statements I and II 
B)  in statement I only 
C)  in statement II only 
D)  in neither statements I nor II 
A)  in both statements I and II 
B)  in statement I only 
C)  in statement II only 
D)  in neither statements I nor II

Question 20

Adam Smith's invisible hand principle stresses

Accepted Answer

A)  that benevolence is a powerful motivator that encourages individuals to engage in productive economic activity. 
B)  the tendency of the competitive market process to direct self-interested individuals into activities that enhance the economic welfare of society. 
C)  the potential of government regulation as a means of bringing the self interest of individuals into harmony with the economic welfare of society. 
D)  the tendency of self-interested individuals to pursue activities that benefit themselves but harm the overall economic welfare of society. 
A)  that benevolence is a powerful motivator that encourages individuals to engage in productive economic activity. 
B)  the tendency of the competitive market process to direct self-interested individuals into activities that enhance the economic welfare of society. 
C)  the potential of government regulation as a means of bringing the self interest of individuals into harmony with the economic welfare of society. 
D)  the tendency of self-interested individuals to pursue activities that benefit themselves but harm the overall economic welfare of society.

If the price of coffee decreases, the demand curve for tea (a substitute good) will

Figure 3-20 Refer to Figure 3-20. If 110 units of the good are being bought and sold, then

Which of the following will most likely decrease the current price of personal computers?

When economists say the quantity demanded of a product has decreased, they mean the

Economists would say that the demand for tacos is

The law of demand refers to the

Assume that supply decreases slightly and demand decreases greatly. Which of the following will happen?

Figure 3-6 In Figure 3-6, suppose D ₁ and S ₁ indicate initial conditions in the market for ice cream. Which of the following changes would tend to cause a shift from S ₁ to S ₂ in the market for ice cream?

For a typical product, a decrease in consumer income will cause the market demand for the product to

Which of the following would most likely increase demand for tickets to major league baseball games?

"He [the producer] intends only his gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention." What is the "invisible hand" referred to in this statement?

Figure 3-17 Refer to Figure 3-17. When the price is P ₁, consumer surplus is

An increase in the demand for tattoos will lead to a

A movement along a demand curve

Figure 3-17 Refer to Figure 3-17. When the price is P ₂, consumer surplus is

Which of the following is most likely to result in higher prices of tickets at movie theatres near your campus?

Figure 3-21 Refer to Figure 3-21. At the quantity Q ₃,

Sam lives in a town with a population of 3,000. He says, "This town really needs a pizza restaurant. People want pizza and would be willing to pay a lot for it, but no one will open a pizza place because they couldn't make any money." Evaluate Sam's statement.

In which statement(s) is "demand" used correctly? (I) "An increase in the price of hot dogs will reduce the demand for hot dogs." (II) "An increase in the price of hot dogs will reduce the demand for hot dog buns."

Adam Smith's invisible hand principle stresses

The Economic Approach

Some Tools of the Economist

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Applying the Basics: Special Topics in Economics

Filters

Exam 3: Demand, Supply, and the Market Process

If the price of coffee decreases, the demand curve for tea (a substitute good) will

Figure 3-20 Refer to Figure 3-20. If 110 units of the good are being bought and sold, then

Which of the following will most likely decrease the current price of personal computers?

When economists say the quantity demanded of a product has decreased, they mean the

Economists would say that the demand for tacos is

The law of demand refers to the

Assume that supply decreases slightly and demand decreases greatly. Which of the following will happen?

Figure 3-6 In Figure 3-6, suppose D 1 and S 1 indicate initial conditions in the market for ice cream. Which of the following changes would tend to cause a shift from S 1 to S 2 in the market for ice cream?

For a typical product, a decrease in consumer income will cause the market demand for the product to

Which of the following would most likely increase demand for tickets to major league baseball games?

"He [the producer] intends only his gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention." What is the "invisible hand" referred to in this statement?

Figure 3-17 Refer to Figure 3-17. When the price is P 1, consumer surplus is

An increase in the demand for tattoos will lead to a

A movement along a demand curve

Figure 3-17 Refer to Figure 3-17. When the price is P 2, consumer surplus is

Which of the following is most likely to result in higher prices of tickets at movie theatres near your campus?

Figure 3-21 Refer to Figure 3-21. At the quantity Q 3,

Sam lives in a town with a population of 3,000. He says, "This town really needs a pizza restaurant. People want pizza and would be willing to pay a lot for it, but no one will open a pizza place because they couldn't make any money." Evaluate Sam's statement.

In which statement(s) is "demand" used correctly? (I) "An increase in the price of hot dogs will reduce the demand for hot dogs." (II) "An increase in the price of hot dogs will reduce the demand for hot dog buns."

Adam Smith's invisible hand principle stresses

The Economic Approach

Some Tools of the Economist

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Applying the Basics: Special Topics in Economics

Filters

Figure 3-6 In Figure 3-6, suppose D ₁ and S ₁ indicate initial conditions in the market for ice cream. Which of the following changes would tend to cause a shift from S ₁ to S ₂ in the market for ice cream?

Figure 3-17 Refer to Figure 3-17. When the price is P ₁, consumer surplus is

Figure 3-17 Refer to Figure 3-17. When the price is P ₂, consumer surplus is

Figure 3-21 Refer to Figure 3-21. At the quantity Q ₃,