Question 1

When the "invisible hand" guides economic activity, prices of products reflect

Accepted Answer

A)  only the values that society places on those products. 
B)  only the costs to society of producing those products. 
C)  both the values that society places on those products and the costs to society of producing those products. 
D)  none of the above; when the "invisible hand" guides economic activity, prices of products are set by the government in a manner that is thought to be "fair." 
A)  only the values that society places on those products. 
B)  only the costs to society of producing those products. 
C)  both the values that society places on those products and the costs to society of producing those products. 
D)  none of the above; when the "invisible hand" guides economic activity, prices of products are set by the government in a manner that is thought to be "fair."

Question 2

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 3

Around Easter time, the price of eggs rises. Some consumers complain about this and claim stores are 'price gouging.' Are there any positive functions played by the higher price of eggs around Easter? What would happen if the price of eggs were not permitted to rise by law?

Accepted Answer

The price of eggs rises around Easter du

Question 4

If the quantity of a good supplied is highly sensitive to the price of the good, this is illustrated by a

Accepted Answer

A)  demand curve that is relatively flat (more horizontal). 
B)  demand curve that is relatively steep (more vertical). 
C)  supply curve that is relatively flat (more horizontal). 
D)  supply curve that is relatively steep (more vertical). 
A)  demand curve that is relatively flat (more horizontal). 
B)  demand curve that is relatively steep (more vertical). 
C)  supply curve that is relatively flat (more horizontal). 
D)  supply curve that is relatively steep (more vertical).

Question 5

The current demand for a good would decrease if

Accepted Answer

A)  the price of a complementary good rose. 
B)  the price of a substitute good rose. 
C)  consumers suddenly believed the price of the good would be sharply higher in the future. 
D)  consumer income increased. 
A)  the price of a complementary good rose. 
B)  the price of a substitute good rose. 
C)  consumers suddenly believed the price of the good would be sharply higher in the future. 
D)  consumer income increased.

Question 6

An increase in the demand for a good means that

Accepted Answer

A)  the demand curve has shifted to the left. 
B)  the good's price has fallen and, as a result, consumers are buying more of the good. 
C)  the good has become scarce. 
D)  consumers are willing to purchase more of the good at each possible price. 
A)  the demand curve has shifted to the left. 
B)  the good's price has fallen and, as a result, consumers are buying more of the good. 
C)  the good has become scarce. 
D)  consumers are willing to purchase more of the good at each possible price.

Question 7

Which of the following would most likely decrease the price of beef?

Accepted Answer

A)  lower prices of grains used to produce cattle feed 
B)  higher prices for chicken, a substitute for beef 
C)  a cow disease that destroys millions of cattle (and makes their meat unfit for consumption) before they are ready for market 
D)  an increase in consumer income 
A)  lower prices of grains used to produce cattle feed 
B)  higher prices for chicken, a substitute for beef 
C)  a cow disease that destroys millions of cattle (and makes their meat unfit for consumption) before they are ready for market 
D)  an increase in consumer income

Question 8

Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?

Accepted Answer

A)  There is no such thing as a free lunch. 
B)  People buy more when prices are low than when prices are high. 
C)  No matter how much people earn, they tend to spend more than they earn. 
D)  Households and firms interacting in markets are guided by an "invisible hand" that leads them to desirable market outcomes. 
A)  There is no such thing as a free lunch. 
B)  People buy more when prices are low than when prices are high. 
C)  No matter how much people earn, they tend to spend more than they earn. 
D)  Households and firms interacting in markets are guided by an "invisible hand" that leads them to desirable market outcomes.

Question 9

Which of the following would lead to an increase in the demand for designer blue jeans?

Accepted Answer

A)  a decrease in the price of designer blue jeans 
B)  a reduction in the price of the cotton used to produce the jeans 
C)  an increase in the income of youthful Americans 
D)  an increase in the price of the cotton used to produce the jeans 
A)  a decrease in the price of designer blue jeans 
B)  a reduction in the price of the cotton used to produce the jeans 
C)  an increase in the income of youthful Americans 
D)  an increase in the price of the cotton used to produce the jeans

Question 10

How will an increase in the price of coffee affect the market for cocoa, a substitute good?

Accepted Answer

A)  The supply of cocoa will increase, leading to a reduction in the price of cocoa. 
B)  The supply of cocoa will decrease, leading to an increase in the price of cocoa. 
C)  The demand for cocoa will increase, leading to an increase in the price of cocoa. 
D)  The demand for cocoa will decrease, leading to a reduction in the price of cocoa. 
A)  The supply of cocoa will increase, leading to a reduction in the price of cocoa. 
B)  The supply of cocoa will decrease, leading to an increase in the price of cocoa. 
C)  The demand for cocoa will increase, leading to an increase in the price of cocoa. 
D)  The demand for cocoa will decrease, leading to a reduction in the price of cocoa.

Question 11

When there is excess supply of a product in a market,

Accepted Answer

A)  price will tend to rise. 
B)  price must be above the equilibrium price. 
C)  producers will expand output and sales will rise. 
D)  price must be below the equilibrium price. 
A)  price will tend to rise. 
B)  price must be above the equilibrium price. 
C)  producers will expand output and sales will rise. 
D)  price must be below the equilibrium price.

Question 12

If you were a government official that wanted to raise the equilibrium price of milk, which of the following actions would you take?

Accepted Answer

A)  Take milk from government storage and sell it. 
B)  Encourage farmers to produce more milk. 
C)  Subsidize purchases of dairy equipment. 
D)  Encourage farmers to produce less milk. 
A)  Take milk from government storage and sell it. 
B)  Encourage farmers to produce more milk. 
C)  Subsidize purchases of dairy equipment. 
D)  Encourage farmers to produce less milk.

Question 13

Last year, 1,000 cases of bottled water were sold at $5; this year, 1,200 cases were sold at $7. These data could be explained by the

Accepted Answer

A)  supply and demand curves shifting to the right. 
B)  supply and demand curves shifting to the left. 
C)  supply curve shifting to the left, with no change in demand. 
D)  demand curve shifting to the right, with no change in supply. 
A)  supply and demand curves shifting to the right. 
B)  supply and demand curves shifting to the left. 
C)  supply curve shifting to the left, with no change in demand. 
D)  demand curve shifting to the right, with no change in supply.

Question 14

A decrease in supply will cause

Accepted Answer

A)  an increase in demand. 
B)  a decrease in demand. 
C)  an increase in quantity demanded. 
D)  a decrease in quantity demanded. 
E)  a decrease in equilibrium price. 
A)  an increase in demand. 
B)  a decrease in demand. 
C)  an increase in quantity demanded. 
D)  a decrease in quantity demanded. 
E)  a decrease in equilibrium price.

Question 15

If the supply of a good decreased, what would be the effect on the equilibrium price and quantity?

Accepted Answer

A)  Price would increase, and quantity would decrease. 
B)  Price would decrease, and quantity would decrease. 
C)  Price would increase, and quantity would increase. 
D)  Price would decrease, and quantity would increase. 
A)  Price would increase, and quantity would decrease. 
B)  Price would decrease, and quantity would decrease. 
C)  Price would increase, and quantity would increase. 
D)  Price would decrease, and quantity would increase.

Question 16

The total economic cost of producing a good or service is called the

Accepted Answer

A)  comparative value of construction. 
B)  social consequence of resources. 
C)  marginal valuation of output. 
D)  opportunity cost of production. 
A)  comparative value of construction. 
B)  social consequence of resources. 
C)  marginal valuation of output. 
D)  opportunity cost of production.

Question 17

Suppose a new law requires all piercing studios to pass tougher licensing tests and to begin using more costly sterilization methods. Other things constant, this law would cause

Accepted Answer

A)  an increase in the supply of piercings and a lower price for piercings. 
B)  an increase in the supply of piercings and a higher price for piercings. 
C)  a decrease in the supply of piercings and a higher price for piercings. 
D)  a decrease in the supply of piercings and a lower price for piercings. 
A)  an increase in the supply of piercings and a lower price for piercings. 
B)  an increase in the supply of piercings and a higher price for piercings. 
C)  a decrease in the supply of piercings and a higher price for piercings. 
D)  a decrease in the supply of piercings and a lower price for piercings.

Question 18

Other things being equal, the effect of a decrease in the price of orange juice would be illustrated by

Accepted Answer

A)  a rightward shift in the demand curve for orange juice. 
B)  an increase in the quantity demanded for orange juice. 
C)  a leftward shift in the demand curve for orange juice. 
D)  a decrease in the quantity demanded orange juice. 
A)  a rightward shift in the demand curve for orange juice. 
B)  an increase in the quantity demanded for orange juice. 
C)  a leftward shift in the demand curve for orange juice. 
D)  a decrease in the quantity demanded orange juice.

Question 19

What impact would a severe drought that destroys the wheat crop in several areas of the United States have on the market for wheat?

Accepted Answer

A)  The supply of wheat would fall. 
B)  The supply of wheat would rise. 
C)  The demand for wheat would fall. 
D)  The demand for wheat would rise. 
A)  The supply of wheat would fall. 
B)  The supply of wheat would rise. 
C)  The demand for wheat would fall. 
D)  The demand for wheat would rise.

Question 20

When a firm is earning economic profit, this indicates the firm is

Accepted Answer

A)  increasing the value of the resources that it is using. 
B)  reducing the value of the resources that it is using. 
C)  supplying the market with a low quality product. 
D)  creating less value for consumers than another firm that is currently earning losses. 
A)  increasing the value of the resources that it is using. 
B)  reducing the value of the resources that it is using. 
C)  supplying the market with a low quality product. 
D)  creating less value for consumers than another firm that is currently earning losses.

When the "invisible hand" guides economic activity, prices of products reflect

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

Around Easter time, the price of eggs rises. Some consumers complain about this and claim stores are 'price gouging.' Are there any positive functions played by the higher price of eggs around Easter? What would happen if the price of eggs were not permitted to rise by law?

If the quantity of a good supplied is highly sensitive to the price of the good, this is illustrated by a

The current demand for a good would decrease if

An increase in the demand for a good means that

Which of the following would most likely decrease the price of beef?

Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?

Which of the following would lead to an increase in the demand for designer blue jeans?

How will an increase in the price of coffee affect the market for cocoa, a substitute good?

When there is excess supply of a product in a market,

If you were a government official that wanted to raise the equilibrium price of milk, which of the following actions would you take?

Last year, 1,000 cases of bottled water were sold at $5; this year, 1,200 cases were sold at $7. These data could be explained by the

A decrease in supply will cause

If the supply of a good decreased, what would be the effect on the equilibrium price and quantity?

The total economic cost of producing a good or service is called the

Suppose a new law requires all piercing studios to pass tougher licensing tests and to begin using more costly sterilization methods. Other things constant, this law would cause

Other things being equal, the effect of a decrease in the price of orange juice would be illustrated by

What impact would a severe drought that destroys the wheat crop in several areas of the United States have on the market for wheat?

When a firm is earning economic profit, this indicates the firm is

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

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Exam 3: Demand, Supply, and the Market Process

When the "invisible hand" guides economic activity, prices of products reflect

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

Around Easter time, the price of eggs rises. Some consumers complain about this and claim stores are 'price gouging.' Are there any positive functions played by the higher price of eggs around Easter? What would happen if the price of eggs were not permitted to rise by law?

If the quantity of a good supplied is highly sensitive to the price of the good, this is illustrated by a

The current demand for a good would decrease if

An increase in the demand for a good means that

Which of the following would most likely decrease the price of beef?

Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?

Which of the following would lead to an increase in the demand for designer blue jeans?

How will an increase in the price of coffee affect the market for cocoa, a substitute good?

When there is excess supply of a product in a market,

If you were a government official that wanted to raise the equilibrium price of milk, which of the following actions would you take?

Last year, 1,000 cases of bottled water were sold at $5; this year, 1,200 cases were sold at $7. These data could be explained by the

A decrease in supply will cause

If the supply of a good decreased, what would be the effect on the equilibrium price and quantity?

The total economic cost of producing a good or service is called the

Suppose a new law requires all piercing studios to pass tougher licensing tests and to begin using more costly sterilization methods. Other things constant, this law would cause

Other things being equal, the effect of a decrease in the price of orange juice would be illustrated by

What impact would a severe drought that destroys the wheat crop in several areas of the United States have on the market for wheat?

When a firm is earning economic profit, this indicates the firm is

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