Question 1

Which of the following would lead to an increase in the demand for fast food in Houston?

Accepted Answer

A)  an increase in Houston's population 
B)  a decrease in average consumer income in Houston 
C)  a front page newspaper article in Houston stating that fast food is very bad for your health 
D)  a decrease in the average price charged by sit-down restaurants 
A)  an increase in Houston's population 
B)  a decrease in average consumer income in Houston 
C)  a front page newspaper article in Houston stating that fast food is very bad for your health 
D)  a decrease in the average price charged by sit-down restaurants

Question 2

Suppose a person defects from Cuba (a country that generally disregards the use of markets) to the United States and asks to see a market in action. Where would you take her? Did you give her a complete showing of this market?

Accepted Answer

Most students will provide answers such

Question 3

If we observe a decrease in the price of a good and a decrease in the amount of the good bought and sold, this could be explained by

Accepted Answer

A)  an increase in the supply of the good. 
B)  an increase in the demand for the good. 
C)  a decrease in the demand for the good. 
D)  a decrease in the supply of the good. 
A)  an increase in the supply of the good. 
B)  an increase in the demand for the good. 
C)  a decrease in the demand for the good. 
D)  a decrease in the supply of the good.

Question 4

If the supply of a good is relatively elastic, this means that the quantity supplied of the good is

Accepted Answer

A)  not very sensitive to the price of the good. 
B)  highly sensitive to the price of the good. 
C)  unrelated to the price of the good. 
D)  none of the above. 
A)  not very sensitive to the price of the good. 
B)  highly sensitive to the price of the good. 
C)  unrelated to the price of the good. 
D)  none of the above.

Question 5

Figure 3-22

Refer to Figure 3-22. Which of the four graphs represents the market for pizza delivery in a college town as we go from summer to the beginning of the fall semester?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 6

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 7

Table 3-2
 
Refer to Table 3-2. If the price is $1,000,

Accepted Answer

A)  Denise is an eager supplier. 
B)  Catherine is an eager supplier. 
C)  Dale's producer surplus is $500. 
D)  All of the above are correct. 
A)  Denise is an eager supplier. 
B)  Catherine is an eager supplier. 
C)  Dale's producer surplus is $500. 
D)  All of the above are correct.

Question 8

How would a decrease in the price of the feed grains used to feed cattle affect the market for beef?

Accepted Answer

A)  The demand for beef would increase, increasing beef prices. 
B)  The demand for beef would decrease, decreasing beef prices. 
C)  The supply of beef would increase, decreasing beef prices. 
D)  The supply of beef would decrease, increasing beef prices. 
A)  The demand for beef would increase, increasing beef prices. 
B)  The demand for beef would decrease, decreasing beef prices. 
C)  The supply of beef would increase, decreasing beef prices. 
D)  The supply of beef would decrease, increasing beef prices.

Question 9

Figure 3-10  
Figure 3-10 illustrates the conditions of demand and supply in the market for compact discs. Indicate the equilibrium price and quantity.

Accepted Answer

A)  price, $20; quantity, 2,000 
B)  price, $15; quantity, 3,000 
C)  price, $10; quantity, 2,000 
D)  price, $10; quantity, 4,000 
A)  price, $20; quantity, 2,000 
B)  price, $15; quantity, 3,000 
C)  price, $10; quantity, 2,000 
D)  price, $10; quantity, 4,000

Question 10

The price of chicken increases as the result of higher beef prices. This indicates that

Accepted Answer

A)  chicken and beef are substitutes. 
B)  chicken and beef are complements. 
C)  the market demand for beef is inelastic. 
D)  the market demand for chicken is elastic. 
A)  chicken and beef are substitutes. 
B)  chicken and beef are complements. 
C)  the market demand for beef is inelastic. 
D)  the market demand for chicken is elastic.

Question 11

Susan says, "If the price of wool coats goes up, suppliers will offer more of the coats for sale." Brad replies, "It takes three months to harvest wool and employ all the steps necessary to produce a wool coat. Quantity supplied cannot possibly increase for three months." Is Brad correct? Why or why not?

Accepted Answer

Brad is correct in noting the supply of

Question 12

Farmers can choose to produce eggs or milk. If there is an increase in the price of milk then what will be the effect in the egg market?

Accepted Answer

A)  The quantity of eggs demanded will increase. 
B)  Egg demand will decrease. 
C)  Egg supply will increase. 
D)  Egg supply will decrease. 
A)  The quantity of eggs demanded will increase. 
B)  Egg demand will decrease. 
C)  Egg supply will increase. 
D)  Egg supply will decrease.

Question 13

Table 3-1
 
Refer to Table 3-1. If the table represents the willingness to pay of four buyers and the price of the product is $30, then their total consumer surplus is

Accepted Answer

A)  $ − 10. 
B)  $ − 6. 
C)  $20. 
D)  $30. 
A)  $ − 10. 
B)  $ − 6. 
C)  $20. 
D)  $30.

Question 14

A question on an economics exam asks, "What happens in the market for jelly when the price of peanut butter increases?" Allison, an excellent student, shows the demand for jelly increasing. Is she necessarily wrong? Why or why not?

Accepted Answer

If we consider Allison's answer wrong, w

Question 15

Two studies published in the New England Journal of Medicine link the risk of breast cancer to alcohol consumption. Young women who have nine drinks per week were reportedly 150 percent more likely to develop breast cancer. According to economic analysis, how would this information affect the market for alcohol?

Accepted Answer

A)  Demand will increase, placing upward pressure on price. 
B)  Supply will decrease, placing downward pressure on price. 
C)  Demand will decrease, placing downward pressure on price. 
D)  Supply will increase, placing upward pressure on price. 
A)  Demand will increase, placing upward pressure on price. 
B)  Supply will decrease, placing downward pressure on price. 
C)  Demand will decrease, placing downward pressure on price. 
D)  Supply will increase, placing upward pressure on price.

Question 16

Kristen decides that she would pay as much as $400 for a new camera. She buys the camera and realizes consumer surplus of $75. How much did Kristen pay for her camera?

Accepted Answer

A)  $75 
B)  $325 
C)  $400 
D)  $475 
A)  $75 
B)  $325 
C)  $400 
D)  $475

Question 17

If we observe an increase in the price of a good and a decrease in the amount of the good bought and sold, this could be explained by

Accepted Answer

A)  an increase in the supply of the good. 
B)  an increase in the demand for the good. 
C)  a decrease in the demand for the good. 
D)  a decrease in the supply of the good. 
A)  an increase in the supply of the good. 
B)  an increase in the demand for the good. 
C)  a decrease in the demand for the good. 
D)  a decrease in the supply of the good.

Question 18

Figure 3-5  
In Figure 3-5, if the initial demand for margarine were D 1, an increase in the price of butter, which is a substitute for margarine, would tend to cause which of the following changes in the market for margarine?

Accepted Answer

A)  a shift in the demand curve from D 1 to D 2 
B)  a shift in the demand curve from D 2 to D 1 
C)  a movement along demand curve D 1 from a to b 
D)  a movement along demand curve D 1 from b to a 
A)  a shift in the demand curve from D 1 to D 2 
B)  a shift in the demand curve from D 2 to D 1 
C)  a movement along demand curve D 1 from a to b 
D)  a movement along demand curve D 1 from b to a

Question 19

Figure 3-22

Refer to Figure 3-22. Which of the four graphs represents the market for cars as a result of the adoption of new technology on assembly lines?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 20

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

Which of the following would lead to an increase in the demand for fast food in Houston?

Suppose a person defects from Cuba (a country that generally disregards the use of markets) to the United States and asks to see a market in action. Where would you take her? Did you give her a complete showing of this market?

If we observe a decrease in the price of a good and a decrease in the amount of the good bought and sold, this could be explained by

If the supply of a good is relatively elastic, this means that the quantity supplied of the good is

Figure 3-22 Refer to Figure 3-22. Which of the four graphs represents the market for pizza delivery in a college town as we go from summer to the beginning of the fall semester?

An increase in the demand for tattoos will lead to a

Table 3-2 Refer to Table 3-2. If the price is $1,000,

How would a decrease in the price of the feed grains used to feed cattle affect the market for beef?

Figure 3-10 Figure 3-10 illustrates the conditions of demand and supply in the market for compact discs. Indicate the equilibrium price and quantity.

The price of chicken increases as the result of higher beef prices. This indicates that

Farmers can choose to produce eggs or milk. If there is an increase in the price of milk then what will be the effect in the egg market?

Table 3-1 Refer to Table 3-1. If the table represents the willingness to pay of four buyers and the price of the product is $30, then their total consumer surplus is

A question on an economics exam asks, "What happens in the market for jelly when the price of peanut butter increases?" Allison, an excellent student, shows the demand for jelly increasing. Is she necessarily wrong? Why or why not?

Kristen decides that she would pay as much as $400 for a new camera. She buys the camera and realizes consumer surplus of $75. How much did Kristen pay for her camera?

If we observe an increase in the price of a good and a decrease in the amount of the good bought and sold, this could be explained by

Figure 3-5 In Figure 3-5, if the initial demand for margarine were D ₁, an increase in the price of butter, which is a substitute for margarine, would tend to cause which of the following changes in the market for margarine?

Figure 3-22 Refer to Figure 3-22. Which of the four graphs represents the market for cars as a result of the adoption of new technology on assembly lines?

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.

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

Which of the following would lead to an increase in the demand for fast food in Houston?

Suppose a person defects from Cuba (a country that generally disregards the use of markets) to the United States and asks to see a market in action. Where would you take her? Did you give her a complete showing of this market?

If we observe a decrease in the price of a good and a decrease in the amount of the good bought and sold, this could be explained by

If the supply of a good is relatively elastic, this means that the quantity supplied of the good is

Figure 3-22 Refer to Figure 3-22. Which of the four graphs represents the market for pizza delivery in a college town as we go from summer to the beginning of the fall semester?

An increase in the demand for tattoos will lead to a

Table 3-2 Refer to Table 3-2. If the price is $1,000,

How would a decrease in the price of the feed grains used to feed cattle affect the market for beef?

Figure 3-10 Figure 3-10 illustrates the conditions of demand and supply in the market for compact discs. Indicate the equilibrium price and quantity.

The price of chicken increases as the result of higher beef prices. This indicates that

Farmers can choose to produce eggs or milk. If there is an increase in the price of milk then what will be the effect in the egg market?

Table 3-1 Refer to Table 3-1. If the table represents the willingness to pay of four buyers and the price of the product is $30, then their total consumer surplus is

A question on an economics exam asks, "What happens in the market for jelly when the price of peanut butter increases?" Allison, an excellent student, shows the demand for jelly increasing. Is she necessarily wrong? Why or why not?

Kristen decides that she would pay as much as $400 for a new camera. She buys the camera and realizes consumer surplus of $75. How much did Kristen pay for her camera?

If we observe an increase in the price of a good and a decrease in the amount of the good bought and sold, this could be explained by

Figure 3-5 In Figure 3-5, if the initial demand for margarine were D 1, an increase in the price of butter, which is a substitute for margarine, would tend to cause which of the following changes in the market for margarine?

Figure 3-22 Refer to Figure 3-22. Which of the four graphs represents the market for cars as a result of the adoption of new technology on assembly lines?

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.

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 3-5 In Figure 3-5, if the initial demand for margarine were D ₁, an increase in the price of butter, which is a substitute for margarine, would tend to cause which of the following changes in the market for margarine?