Question 1

The price of a good will tend to fall when

Accepted Answer

A)  there is excess demand for the good. 
B)  there is excess supply of the good. 
C)  demand for the good increases. 
D)  the supply of the good decreases. 
A)  there is excess demand for the good. 
B)  there is excess supply of the good. 
C)  demand for the good increases. 
D)  the supply of the good decreases.

Question 2

If consumer purchases of a good are highly sensitive to the price of the good, economists say the demand for the good is relatively

Accepted Answer

A)  inelastic. 
B)  elastic. 
C)  robust. 
D)  inverse. 
A)  inelastic. 
B)  elastic. 
C)  robust. 
D)  inverse.

Question 3

A shortage occurs whenever

Accepted Answer

A)  quantity demanded exceeds quantity supplied at the equilibrium price. 
B)  price is less than equilibrium price. 
C)  quantity demanded is less than quantity supplied. 
D)  goods are scarce. 
E)  some of the people who need the product are not willing and able to buy it at the equilibrium price. 
A)  quantity demanded exceeds quantity supplied at the equilibrium price. 
B)  price is less than equilibrium price. 
C)  quantity demanded is less than quantity supplied. 
D)  goods are scarce. 
E)  some of the people who need the product are not willing and able to buy it at the equilibrium price.

Question 4

Which of the following would reduce the price of DVD players and increase the quantity sold?

Accepted Answer

A)  an increase in the demand for DVD players 
B)  a decrease in the demand for DVD players 
C)  a decrease in the supply of DVD players 
D)  an increase in the supply of DVD players 
A)  an increase in the demand for DVD players 
B)  a decrease in the demand for DVD players 
C)  a decrease in the supply of DVD players 
D)  an increase in the supply of DVD players

Question 5

Figure 3-22

Refer to Figure 3-22. Graph A shows which of the following?

Accepted Answer

A)  An increase in demand and an increase in quantity supplied. 
B)  An increase in demand and an increase in supply. 
C)  An increase in quantity demanded and an increase in quantity supplied. 
D)  An increase in supply and an increase in quantity demanded. 
A)  An increase in demand and an increase in quantity supplied. 
B)  An increase in demand and an increase in supply. 
C)  An increase in quantity demanded and an increase in quantity supplied. 
D)  An increase in supply and an increase in quantity demanded.

Question 6

Which of the following is the best description of the effects of an increase in the supply of bread?

Accepted Answer

A)  Consumers will pay more for bread. 
B)  Bread prices will fall, and bread sales will rise. 
C)  A permanent surplus of bread will remain on the market. 
D)  Bakers will have higher marginal costs. 
A)  Consumers will pay more for bread. 
B)  Bread prices will fall, and bread sales will rise. 
C)  A permanent surplus of bread will remain on the market. 
D)  Bakers will have higher marginal costs.

Question 7

Which of the following will most likely result from a destruction of half of the Florida orange crop due to a hard freeze?

Accepted Answer

A)  a decrease in the demand for oranges 
B)  an increase in the supply of oranges 
C)  an increase in the quantity of oranges bought and sold 
D)  an increase in the price of oranges 
A)  a decrease in the demand for oranges 
B)  an increase in the supply of oranges 
C)  an increase in the quantity of oranges bought and sold 
D)  an increase in the price of oranges

Question 8

If Harry is paid $25,000 to sell his crop of tomatoes even though he would have been willing to have sold the crop for as little as $20,000, this indicates that

Accepted Answer

A)  Harry received no producer surplus from the transaction. 
B)  Harry received $5,000 of producer surplus from the transaction. 
C)  Harry received $20,000 of producer surplus from the transaction. 
D)  Harry received $25,000 of producer surplus from the transaction. 
A)  Harry received no producer surplus from the transaction. 
B)  Harry received $5,000 of producer surplus from the transaction. 
C)  Harry received $20,000 of producer surplus from the transaction. 
D)  Harry received $25,000 of producer surplus from the transaction.

Question 9

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 10

Which of the following is not a function of prices in a market system?

Accepted Answer

A)  Prices have the crucial job of balancing supply and demand. 
B)  Prices send signals to buyers and sellers to help them make rational economic decisions. 
C)  Prices coordinate economic activity. 
D)  Prices ensure an equitable distribution of goods and services among consumers. 
A)  Prices have the crucial job of balancing supply and demand. 
B)  Prices send signals to buyers and sellers to help them make rational economic decisions. 
C)  Prices coordinate economic activity. 
D)  Prices ensure an equitable distribution of goods and services among consumers.

Question 11

How would a decrease in consumer income affect the market for new furniture?

Accepted Answer

A)  Demand would decrease, leading to an increase in price and a reduction in quantity sold. 
B)  Demand would decrease, leading to a reduction in price and a reduction in quantity sold. 
C)  Demand would increase, leading to an increase in price and an increase in quantity sold. 
D)  Demand would increase, leading to a reduction in price and an increase in quantity sold. 
A)  Demand would decrease, leading to an increase in price and a reduction in quantity sold. 
B)  Demand would decrease, leading to a reduction in price and a reduction in quantity sold. 
C)  Demand would increase, leading to an increase in price and an increase in quantity sold. 
D)  Demand would increase, leading to a reduction in price and an increase in quantity sold.

Question 12

When oil prices increased to record levels in the 1970s, salaries dramatically increased for petroleum geologists skilled in finding oil. Those geologists who moved from other areas to the higher paying jobs were

Accepted Answer

A)  seeking to profit from society's needs rather than following the guidance of the invisible hand, which would have led them to seek jobs serving society rather than jobs with higher pay. 
B)  following the guidance of the invisible hand and probably serving society's best interests as well as their own. 
C)  causing oil prices to rise even more by moving to jobs with higher salaries. 
D)  helping themselves but hurting the economy. 
A)  seeking to profit from society's needs rather than following the guidance of the invisible hand, which would have led them to seek jobs serving society rather than jobs with higher pay. 
B)  following the guidance of the invisible hand and probably serving society's best interests as well as their own. 
C)  causing oil prices to rise even more by moving to jobs with higher salaries. 
D)  helping themselves but hurting the economy.

Question 13

Figure 3-18  
Refer to Figure 3-18. When the price falls from P 1 to P 2, which area represents the increase in consumer surplus to new buyers entering the market?

Accepted Answer

A)  ABD 
B)  ACF 
C)  BCDE 
D)  DEF 
A)  ABD 
B)  ACF 
C)  BCDE 
D)  DEF

Question 14

Which of the following would increase the price of fitness equipment?

Accepted Answer

A)  a reduction in consumer income 
B)  a major study indicating that a 30-minute workout each day improved health more than was previously thought to be the case 
C)  a decrease in the price of steel used to produce the equipment 
D)  all of the above 
A)  a reduction in consumer income 
B)  a major study indicating that a 30-minute workout each day improved health more than was previously thought to be the case 
C)  a decrease in the price of steel used to produce the equipment 
D)  all of the above

Question 15

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.

Question 16

If there is an increase in both the supply and demand for a good, which of the following will definitely occur?

Accepted Answer

A)  The price of the good will increase. 
B)  The price of the good will decrease. 
C)  The equilibrium quantity will increase. 
D)  The equilibrium quantity will decrease. 
A)  The price of the good will increase. 
B)  The price of the good will decrease. 
C)  The equilibrium quantity will increase. 
D)  The equilibrium quantity will decrease.

Question 17

The height of the demand curve for a product indicates the

Accepted Answer

A)  minimum price consumers are willing to pay for an additional unit of it. 
B)  minimum quantity consumers are willing to purchase at the current price. 
C)  maximum price consumers are willing to pay for an additional unit of it. 
D)  minimum price required to induce suppliers to produce an additional unit of it. 
A)  minimum price consumers are willing to pay for an additional unit of it. 
B)  minimum quantity consumers are willing to purchase at the current price. 
C)  maximum price consumers are willing to pay for an additional unit of it. 
D)  minimum price required to induce suppliers to produce an additional unit of it.

Question 18

Which of the following would most likely cause the current demand for DVD players to fall?

Accepted Answer

A)  an increase in consumer income 
B)  an increase in the price of DVD players 
C)  an increase in the price of Blu-ray players, a substitute good 
D)  the expectation that the price of DVD players will decrease sharply during the next six months 
A)  an increase in consumer income 
B)  an increase in the price of DVD players 
C)  an increase in the price of Blu-ray players, a substitute good 
D)  the expectation that the price of DVD players will decrease sharply during the next six months

Question 19

Figure 3-22

Refer to Figure 3-22. Which of the four graphs illustrates a decrease in quantity demanded?

Accepted Answer

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

Question 20

If the market price is above the equilibrium price, there will be a tendency for price to decrease, causing

Accepted Answer

A)  the quantity demanded to decrease and the quantity supplied to increase until they are equal. 
B)  the quantity demanded to increase and the quantity supplied to decrease until they are equal. 
C)  both quantity demanded and quantity supplied to decrease until they are equal. 
D)  both quantity demanded and quantity supplied to increase until they are equal. 
A)  the quantity demanded to decrease and the quantity supplied to increase until they are equal. 
B)  the quantity demanded to increase and the quantity supplied to decrease until they are equal. 
C)  both quantity demanded and quantity supplied to decrease until they are equal. 
D)  both quantity demanded and quantity supplied to increase until they are equal.

The price of a good will tend to fall when

If consumer purchases of a good are highly sensitive to the price of the good, economists say the demand for the good is relatively

A shortage occurs whenever

Which of the following would reduce the price of DVD players and increase the quantity sold?

Figure 3-22 Refer to Figure 3-22. Graph A shows which of the following?

Which of the following is the best description of the effects of an increase in the supply of bread?

Which of the following will most likely result from a destruction of half of the Florida orange crop due to a hard freeze?

If Harry is paid $25,000 to sell his crop of tomatoes even though he would have been willing to have sold the crop for as little as $20,000, this indicates that

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

Which of the following is not a function of prices in a market system?

How would a decrease in consumer income affect the market for new furniture?

When oil prices increased to record levels in the 1970s, salaries dramatically increased for petroleum geologists skilled in finding oil. Those geologists who moved from other areas to the higher paying jobs were

Figure 3-18 Refer to Figure 3-18. When the price falls from P ₁ to P ₂, which area represents the increase in consumer surplus to new buyers entering the market?

Which of the following would increase the price of fitness equipment?

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

If there is an increase in both the supply and demand for a good, which of the following will definitely occur?

The height of the demand curve for a product indicates the

Which of the following would most likely cause the current demand for DVD players to fall?

Figure 3-22 Refer to Figure 3-22. Which of the four graphs illustrates a decrease in quantity demanded?

If the market price is above the equilibrium price, there will be a tendency for price to decrease, causing

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

The price of a good will tend to fall when

If consumer purchases of a good are highly sensitive to the price of the good, economists say the demand for the good is relatively

A shortage occurs whenever

Which of the following would reduce the price of DVD players and increase the quantity sold?

Figure 3-22 Refer to Figure 3-22. Graph A shows which of the following?

Which of the following is the best description of the effects of an increase in the supply of bread?

Which of the following will most likely result from a destruction of half of the Florida orange crop due to a hard freeze?

If Harry is paid $25,000 to sell his crop of tomatoes even though he would have been willing to have sold the crop for as little as $20,000, this indicates that

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

Which of the following is not a function of prices in a market system?

How would a decrease in consumer income affect the market for new furniture?

When oil prices increased to record levels in the 1970s, salaries dramatically increased for petroleum geologists skilled in finding oil. Those geologists who moved from other areas to the higher paying jobs were

Figure 3-18 Refer to Figure 3-18. When the price falls from P 1 to P 2, which area represents the increase in consumer surplus to new buyers entering the market?

Which of the following would increase the price of fitness equipment?

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

If there is an increase in both the supply and demand for a good, which of the following will definitely occur?

The height of the demand curve for a product indicates the

Which of the following would most likely cause the current demand for DVD players to fall?

Figure 3-22 Refer to Figure 3-22. Which of the four graphs illustrates a decrease in quantity demanded?

If the market price is above the equilibrium price, there will be a tendency for price to decrease, causing

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 3-18 Refer to Figure 3-18. When the price falls from P ₁ to P ₂, which area represents the increase in consumer surplus to new buyers entering the market?