Question 1

Which of the following would most likely increase the price of automobiles?

Accepted Answer

A)  a decrease in the price of steel used to produce automobiles 
B)  an increase in the price of gasoline 
C)  a decrease in consumer income 
D)  the United Auto Workers union obtaining a substantial wage increase for auto workers 
A)  a decrease in the price of steel used to produce automobiles 
B)  an increase in the price of gasoline 
C)  a decrease in consumer income 
D)  the United Auto Workers union obtaining a substantial wage increase for auto workers

Question 2

Assuming Chinese food and Thai food are substitutes, if Lucy Ho's Chinese restaurant reduces its prices,

Accepted Answer

A)  the demand for food at Lucy Ho's will increase. 
B)  the quantity demanded for food at Lucy Ho's will increase. 
C)  the demand facing the nearby Bahn Thai restaurant will decrease. 
D)  both b and c will happen. 
A)  the demand for food at Lucy Ho's will increase. 
B)  the quantity demanded for food at Lucy Ho's will increase. 
C)  the demand facing the nearby Bahn Thai restaurant will decrease. 
D)  both b and c will happen.

Question 3

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 4

Use the figure below to answer the following question(s).
Figure 3-13
 
Refer to Figure 3-13. The market for margarine was initially in equilibrium at point e. Other things constant, an increase in the price of soybean oil, an important ingredient used to produce margarine, would likely move the equilibrium in this market toward point

Accepted Answer

A)  r. 
B)  s. 
C)  t. 
D)  u. 
A)  r. 
B)  s. 
C)  t. 
D)  u.

Question 5

How will an increase in lumber prices influence the home construction market?

Accepted Answer

A)  The demand for newly constructed homes will increase. 
B)  The demand for newly constructed homes will decrease. 
C)  The supply of newly constructed homes will increase. 
D)  The supply of newly constructed homes will decrease. 
A)  The demand for newly constructed homes will increase. 
B)  The demand for newly constructed homes will decrease. 
C)  The supply of newly constructed homes will increase. 
D)  The supply of newly constructed homes will decrease.

Question 6

Figure 3-22

Refer to Figure 3-22. Which of the four graphs represents the market for winter coats as we progress from winter to spring?

Accepted Answer

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

Question 7

Figure 3-7  
In Figure 3-7, suppose D 1 and S 1 indicate the initial conditions in the market for ice cream. Which of the following changes would tend to cause the shift from D 1 to D 2 in the market for ice cream?

Accepted Answer

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

Question 8

If coffee and cream are complements, a decrease in the price of coffee will cause

Accepted Answer

A)  the demand for cream to decrease. 
B)  the demand for cream to increase. 
C)  the demand for coffee to increase. 
D)  no change in the demand for cream; only quantity demanded would be affected. 
A)  the demand for cream to decrease. 
B)  the demand for cream to increase. 
C)  the demand for coffee to increase. 
D)  no change in the demand for cream; only quantity demanded would be affected.

Question 9

The invisible hand principle, as developed by Adam Smith in The Wealth of Nations, states that

Accepted Answer

A)  government control over economic activity is essential for the talents of individuals to be directed toward their highest valued use. 
B)  the economic wealth of a nation is determined by a nation's holdings of precious metals, such as gold and silver. 
C)  public policy should prohibit domestic producers from selling their goods to foreigners. 
D)  competitive markets will bring individual self-interest and the public interest into harmony. 
A)  government control over economic activity is essential for the talents of individuals to be directed toward their highest valued use. 
B)  the economic wealth of a nation is determined by a nation's holdings of precious metals, such as gold and silver. 
C)  public policy should prohibit domestic producers from selling their goods to foreigners. 
D)  competitive markets will bring individual self-interest and the public interest into harmony.

Question 10

"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 famous economist made this statement?

Accepted Answer

A)  Alfred Marshall 
B)  Friedrich Hayek 
C)  Adam Smith 
D)  David Ricardo 
A)  Alfred Marshall 
B)  Friedrich Hayek 
C)  Adam Smith 
D)  David Ricardo

Question 11

Market prices provide information to consumers, helping them coordinate their activities so long as

Accepted Answer

A)  competition is present and buyers and sellers are free to choose mutually agreeable prices. 
B)  prices are not allowed to rise too high, causing a shortage. 
C)  prices are legally kept equal in all markets, preventing unfair price increases in markets with shortages and unfair price decreases when a market surplus is present. 
D)  the government carefully screens producers and effectively keeps inefficient producers out of the market. 
A)  competition is present and buyers and sellers are free to choose mutually agreeable prices. 
B)  prices are not allowed to rise too high, causing a shortage. 
C)  prices are legally kept equal in all markets, preventing unfair price increases in markets with shortages and unfair price decreases when a market surplus is present. 
D)  the government carefully screens producers and effectively keeps inefficient producers out of the market.

Question 12

Figure 3-20  
Refer to Figure 3-20. If 40 units of the good are being bought and sold, then

Accepted Answer

A)  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 would be greater than consumer surplus. 
A)  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 would be greater than consumer surplus.

Question 13

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 14

Figure 3-24
 
In Figure 3-24, which of the following is true?

Accepted Answer

A)  At P3, consumer surplus and producer surplus are equal. 
B)  At P2, consumer surplus is greater than producer surplus. 
C)  At P1, consumer surplus is greater than producer surplus. 
D)  At P1, consumer surplus and producer surplus are equal. 
A)  At P3, consumer surplus and producer surplus are equal. 
B)  At P2, consumer surplus is greater than producer surplus. 
C)  At P1, consumer surplus is greater than producer surplus. 
D)  At P1, consumer surplus and producer surplus are equal.

Question 15

Prices direct economic activity in a market economy by

Accepted Answer

A)  influencing the actions of buyers and sellers. 
B)  reducing scarcity of the goods and services produced. 
C)  eliminating the need for government intervention. 
D)  allocating goods and services in the most equitable way. 
A)  influencing the actions of buyers and sellers. 
B)  reducing scarcity of the goods and services produced. 
C)  eliminating the need for government intervention. 
D)  allocating goods and services in the most equitable way.

Question 16

If coffee and cream are complements, an increase in the price of coffee will cause

Accepted Answer

A)  the demand for cream to increase. 
B)  the demand for cream to fall. 
C)  the demand for coffee to fall. 
D)  no change in the demand for cream; only quantity demanded would be affected. 
A)  the demand for cream to increase. 
B)  the demand for cream to fall. 
C)  the demand for coffee to fall. 
D)  no change in the demand for cream; only quantity demanded would be affected.

Question 17

If there is a decrease in demand for lettuce, we would expect

Accepted Answer

A)  both the price and quantity sold to increase. 
B)  both the price and quantity sold to decrease. 
C)  the price to decrease and the quantity sold to increase. 
D)  the price to increase and the quantity sold to decrease. 
A)  both the price and quantity sold to increase. 
B)  both the price and quantity sold to decrease. 
C)  the price to decrease and the quantity sold to increase. 
D)  the price to increase and the quantity sold to decrease.

Question 18

Which of the following would most likely cause the price of wheat to decline?

Accepted Answer

A)  an increase in the production costs of corn, a substitute for wheat 
B)  a decrease in the price of soybeans, a substitute for wheat 
C)  an increase in the price of fertilizer, a resource used to produce wheat 
D)  a sandwich craze among Americans, causing increased demand for whole-wheat bread 
A)  an increase in the production costs of corn, a substitute for wheat 
B)  a decrease in the price of soybeans, a substitute for wheat 
C)  an increase in the price of fertilizer, a resource used to produce wheat 
D)  a sandwich craze among Americans, causing increased demand for whole-wheat bread

Question 19

If you were a government official and wanted to raise the price of wheat, which of the following actions would you take?

Accepted Answer

A)  Take wheat from government storage and sell it. 
B)  Encourage farmers to use more fertilizer. 
C)  Lower the price of rye. 
D)  Subsidize purchases of farm equipment. 
E)  Encourage farmers to grow less wheat. 
A)  Take wheat from government storage and sell it. 
B)  Encourage farmers to use more fertilizer. 
C)  Lower the price of rye. 
D)  Subsidize purchases of farm equipment. 
E)  Encourage farmers to grow less wheat.

Question 20

Figure 3-17  
Refer to Figure 3-17. Area C represents

Accepted Answer

A)  the decrease in consumer surplus that results from a downward-sloping demand curve. 
B)  consumer surplus to new consumers who enter the market when the price falls from P 2 to P 1. 
C)  the increase in producer surplus when quantity sold increases from Q 2 to Q 1. 
D)  the decrease in consumer surplus to each consumer in the market when the price increases from P 1 to P 2. 
A)  the decrease in consumer surplus that results from a downward-sloping demand curve. 
B)  consumer surplus to new consumers who enter the market when the price falls from P 2 to P 1. 
C)  the increase in producer surplus when quantity sold increases from Q 2 to Q 1. 
D)  the decrease in consumer surplus to each consumer in the market when the price increases from P 1 to P 2.

Which of the following would most likely increase the price of automobiles?

Assuming Chinese food and Thai food are substitutes, if Lucy Ho's Chinese restaurant reduces its prices,

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

How will an increase in lumber prices influence the home construction market?

Figure 3-22 Refer to Figure 3-22. Which of the four graphs represents the market for winter coats as we progress from winter to spring?

Figure 3-7 In Figure 3-7, suppose D ₁ and S ₁ indicate the initial conditions in the market for ice cream. Which of the following changes would tend to cause the shift from D ₁ to D ₂ in the market for ice cream?

If coffee and cream are complements, a decrease in the price of coffee will cause

The invisible hand principle, as developed by Adam Smith in The Wealth of Nations, states that

"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 famous economist made this statement?

Market prices provide information to consumers, helping them coordinate their activities so long as

Figure 3-20 Refer to Figure 3-20. If 40 units of the good are being bought and sold, then

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 3-24 In Figure 3-24, which of the following is true?

Prices direct economic activity in a market economy by

If coffee and cream are complements, an increase in the price of coffee will cause

If there is a decrease in demand for lettuce, we would expect

Which of the following would most likely cause the price of wheat to decline?

If you were a government official and wanted to raise the price of wheat, which of the following actions would you take?

Figure 3-17 Refer to Figure 3-17. Area C represents

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 most likely increase the price of automobiles?

Assuming Chinese food and Thai food are substitutes, if Lucy Ho's Chinese restaurant reduces its prices,

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

How will an increase in lumber prices influence the home construction market?

Figure 3-22 Refer to Figure 3-22. Which of the four graphs represents the market for winter coats as we progress from winter to spring?

Figure 3-7 In Figure 3-7, suppose D 1 and S 1 indicate the initial conditions in the market for ice cream. Which of the following changes would tend to cause the shift from D 1 to D 2 in the market for ice cream?

If coffee and cream are complements, a decrease in the price of coffee will cause

The invisible hand principle, as developed by Adam Smith in The Wealth of Nations, states that

"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 famous economist made this statement?

Market prices provide information to consumers, helping them coordinate their activities so long as

Figure 3-20 Refer to Figure 3-20. If 40 units of the good are being bought and sold, then

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 3-24 In Figure 3-24, which of the following is true?

Prices direct economic activity in a market economy by

If coffee and cream are complements, an increase in the price of coffee will cause

If there is a decrease in demand for lettuce, we would expect

Which of the following would most likely cause the price of wheat to decline?

If you were a government official and wanted to raise the price of wheat, which of the following actions would you take?

Figure 3-17 Refer to Figure 3-17. Area C represents

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 3-7 In Figure 3-7, suppose D ₁ and S ₁ indicate the initial conditions in the market for ice cream. Which of the following changes would tend to cause the shift from D ₁ to D ₂ in the market for ice cream?