Question 1

If the demand for beer increased, what would be the effect on the equilibrium price and quantity of beer?

Accepted Answer

A)  price increases, quantity decreases 
B)  price decreases, quantity decreases 
C)  price increases, quantity increases 
D)  price decreases, quantity increases 
A)  price increases, quantity decreases 
B)  price decreases, quantity decreases 
C)  price increases, quantity increases 
D)  price decreases, quantity increases

Question 2

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 3

Figure 3-1  
Which of the following is true regarding the market for steak shown in Figure 3-1?

Accepted Answer

A)  If the price of steak were $2 per pound, producers would want to supply less steak than consumers would want to buy. 
B)  If the price of steak were $4 per pound, producers would want to supply more steak than consumers would want to buy. 
C)  If the price of steak were $3 per pound, producers would want to supply the same amount of steak that consumers would want to buy. 
D)  All of the above are true regarding the market for steak shown in the figure. 
A)  If the price of steak were $2 per pound, producers would want to supply less steak than consumers would want to buy. 
B)  If the price of steak were $4 per pound, producers would want to supply more steak than consumers would want to buy. 
C)  If the price of steak were $3 per pound, producers would want to supply the same amount of steak that consumers would want to buy. 
D)  All of the above are true regarding the market for steak shown in the figure.

Question 4

If the demand for bicycles increases,

Accepted Answer

A)  the quantity demanded will decrease. 
B)  equilibrium price will increase and equilibrium quantity will decrease. 
C)  equilibrium price will decrease and equilibrium quantity will increase. 
D)  quantity supplied will increase. 
E)  quantity supplied will decrease. 
A)  the quantity demanded will decrease. 
B)  equilibrium price will increase and equilibrium quantity will decrease. 
C)  equilibrium price will decrease and equilibrium quantity will increase. 
D)  quantity supplied will increase. 
E)  quantity supplied will decrease.

Question 5

Which of the following would lead to an increase in the demand for rental apartments in your area?

Accepted Answer

A)  a reduction in the rental price of apartments 
B)  a sharp increase in the number of out-of-town students attending the local college 
C)  an increase in the cost of the materials used to construct apartment units. 
D)  an increase in unemployment and reduction in the income of people in your area 
A)  a reduction in the rental price of apartments 
B)  a sharp increase in the number of out-of-town students attending the local college 
C)  an increase in the cost of the materials used to construct apartment units. 
D)  an increase in unemployment and reduction in the income of people in your area

Question 6

When economists say that market equilibrium is consistent with economic efficiency, they mean

Accepted Answer

A)  the total gains from trade (the combined area of producer and consumer surplus) are smaller than potentially could be the case at a different price and quantity. 
B)  all units creating more benefit than cost have been produced. 
C)  some units have been produced that cost more than the benefits they create. 
D)  consumers and producers have made decisions without properly taking into account the market price. 
A)  the total gains from trade (the combined area of producer and consumer surplus) are smaller than potentially could be the case at a different price and quantity. 
B)  all units creating more benefit than cost have been produced. 
C)  some units have been produced that cost more than the benefits they create. 
D)  consumers and producers have made decisions without properly taking into account the market price.

Question 7

If there is a decrease 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 8

When a conflict arises in a major oil-exporting area of the world, such as the Middle East, the price of gasoline already in the storage tanks at local gas stations usually increases. Which of the following best explains this occurrence?

Accepted Answer

A)  Gas station owners anticipate consumers will buy more gasoline as gasoline prices increase. 
B)  Gas station owners are attempting to repeal the laws of supply and demand. 
C)  Gas station owners anticipate higher replacement costs for their supply of gasoline and, therefore, raise their prices in response to this higher expected cost. 
D)  A decline in consumer demand generally causes gas station owners to raise their prices. 
A)  Gas station owners anticipate consumers will buy more gasoline as gasoline prices increase. 
B)  Gas station owners are attempting to repeal the laws of supply and demand. 
C)  Gas station owners anticipate higher replacement costs for their supply of gasoline and, therefore, raise their prices in response to this higher expected cost. 
D)  A decline in consumer demand generally causes gas station owners to raise their prices.

Question 9

Figure 3-16  
Refer to Figure 3-16. When the price is P 2, producer surplus is

Accepted Answer

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

Question 10

Which of the following events would decrease producer surplus?

Accepted Answer

A)  Sellers' costs stay the same and the price of the good increases. 
B)  Sellers' costs increase and the price of the good stays the same. 
C)  Sellers' costs decrease and the price of the good increases. 
D)  All of the above are correct. 
A)  Sellers' costs stay the same and the price of the good increases. 
B)  Sellers' costs increase and the price of the good stays the same. 
C)  Sellers' costs decrease and the price of the good increases. 
D)  All of the above are correct.

Question 11

Which of the following is most likely to lead to an increase in the rental price of apartments near your campus?

Accepted Answer

A)  lower property taxes on apartment buildings 
B)  an unexpected increase in enrollment at your college 
C)  lower prices for the bricks used in the construction of apartments 
D)  the building of a new large dormitory on the college campus 
A)  lower property taxes on apartment buildings 
B)  an unexpected increase in enrollment at your college 
C)  lower prices for the bricks used in the construction of apartments 
D)  the building of a new large dormitory on the college campus

Question 12

According to economic theory, which of the following would most likely cause the demand curve for hamburgers to decrease?

Accepted Answer

A)  a drop in the price of hot dogs 
B)  an increase in the price of hamburgers 
C)  a drop in the price of hamburgers 
D)  a technological advance that reduces the cost of making frozen hamburger patties. 
A)  a drop in the price of hot dogs 
B)  an increase in the price of hamburgers 
C)  a drop in the price of hamburgers 
D)  a technological advance that reduces the cost of making frozen hamburger patties.

Question 13

Market prices are

Accepted Answer

A)  conveyors of information. 
B)  determined by the interactions of supply and demand in voluntary exchange. 
C)  indicators of the relative scarcity of resources and products. 
D)  all of the above. 
A)  conveyors of information. 
B)  determined by the interactions of supply and demand in voluntary exchange. 
C)  indicators of the relative scarcity of resources and products. 
D)  all of the above.

Question 14

The term market always refers to

Accepted Answer

A)  an arrangement in which buyers and sellers meet at a specific time and place. 
B)  an arrangement in which an auctioneer plays at least a limited role in setting prices. 
C)  a group of buyers and sellers of a particular good or service. 
D)  a single buyer and seller of a particular good or service. 
A)  an arrangement in which buyers and sellers meet at a specific time and place. 
B)  an arrangement in which an auctioneer plays at least a limited role in setting prices. 
C)  a group of buyers and sellers of a particular good or service. 
D)  a single buyer and seller of a particular good or service.

Question 15

Figure 3-11  
In Figure 3-11, suppose D 1 and S 1 indicate initial conditions in the market for kitchen cabinets. Which of the following would tend to cause the supply curve to shift from S 1 to S 2?

Accepted Answer

A)  the invention of "folding" plates and cups that take up substantially less storage space in the kitchen 
B)  a decrease in consumer income 
C)  a decrease in the price of wood, a resource used to produce kitchen cabinets 
D)  an increase in the price of steel hinges, a resource used to produce kitchen cabinets 
A)  the invention of "folding" plates and cups that take up substantially less storage space in the kitchen 
B)  a decrease in consumer income 
C)  a decrease in the price of wood, a resource used to produce kitchen cabinets 
D)  an increase in the price of steel hinges, a resource used to produce kitchen cabinets

Question 16

When economists say an activity is consistent with economic efficiency, they mean

Accepted Answer

A)  a majority of citizens favor the activity. 
B)  the benefits that result from the activity exceed the costs. 
C)  the number of people who gain from the activity exceeds the number on whom costs are imposed. 
D)  the costs that result from the activity exceed the benefits. 
A)  a majority of citizens favor the activity. 
B)  the benefits that result from the activity exceed the costs. 
C)  the number of people who gain from the activity exceeds the number on whom costs are imposed. 
D)  the costs that result from the activity exceed the benefits.

Question 17

Which of the following is necessary for the invisible hand of market prices to work properly?

Accepted Answer

A)  buyers and sellers who generally tend to disregard their own self-interest 
B)  democratic political procedures and highly regulated markets 
C)  price controls that restrict the movement of market prices 
D)  competition and property rights that are well-defined and enforced 
A)  buyers and sellers who generally tend to disregard their own self-interest 
B)  democratic political procedures and highly regulated markets 
C)  price controls that restrict the movement of market prices 
D)  competition and property rights that are well-defined and enforced

Question 18

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 19

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 20

When the market for a good is in equilibrium,

Accepted Answer

A)  consumer surplus will equal producer surplus. 
B)  the total value created for consumers will equal the total cost of production for business firms. 
C)  all units valued more highly than the opportunity cost of production will be supplied. 
D)  all units that have value will be produced, regardless of their cost of production. 
A)  consumer surplus will equal producer surplus. 
B)  the total value created for consumers will equal the total cost of production for business firms. 
C)  all units valued more highly than the opportunity cost of production will be supplied. 
D)  all units that have value will be produced, regardless of their cost of production.

If the demand for beer increased, what would be the effect on the equilibrium price and quantity of beer?

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?

Figure 3-1 Which of the following is true regarding the market for steak shown in Figure 3-1?

If the demand for bicycles increases,

Which of the following would lead to an increase in the demand for rental apartments in your area?

When economists say that market equilibrium is consistent with economic efficiency, they mean

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

When a conflict arises in a major oil-exporting area of the world, such as the Middle East, the price of gasoline already in the storage tanks at local gas stations usually increases. Which of the following best explains this occurrence?

Figure 3-16 Refer to Figure 3-16. When the price is P ₂, producer surplus is

Which of the following events would decrease producer surplus?

Which of the following is most likely to lead to an increase in the rental price of apartments near your campus?

According to economic theory, which of the following would most likely cause the demand curve for hamburgers to decrease?

Market prices are

The term market always refers to

Figure 3-11 In Figure 3-11, suppose D ₁ and S ₁ indicate initial conditions in the market for kitchen cabinets. Which of the following would tend to cause the supply curve to shift from S ₁ to S ₂?

When economists say an activity is consistent with economic efficiency, they mean

Which of the following is necessary for the invisible hand of market prices to work properly?

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

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.

When the market for a good is in equilibrium,

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 demand for beer increased, what would be the effect on the equilibrium price and quantity of beer?

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?

Figure 3-1 Which of the following is true regarding the market for steak shown in Figure 3-1?

If the demand for bicycles increases,

Which of the following would lead to an increase in the demand for rental apartments in your area?

When economists say that market equilibrium is consistent with economic efficiency, they mean

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

When a conflict arises in a major oil-exporting area of the world, such as the Middle East, the price of gasoline already in the storage tanks at local gas stations usually increases. Which of the following best explains this occurrence?

Figure 3-16 Refer to Figure 3-16. When the price is P 2, producer surplus is

Which of the following events would decrease producer surplus?

Which of the following is most likely to lead to an increase in the rental price of apartments near your campus?

According to economic theory, which of the following would most likely cause the demand curve for hamburgers to decrease?

Market prices are

The term market always refers to

Figure 3-11 In Figure 3-11, suppose D 1 and S 1 indicate initial conditions in the market for kitchen cabinets. Which of the following would tend to cause the supply curve to shift from S 1 to S 2?

When economists say an activity is consistent with economic efficiency, they mean

Which of the following is necessary for the invisible hand of market prices to work properly?

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

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.

When the market for a good is in equilibrium,

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 3-16 Refer to Figure 3-16. When the price is P ₂, producer surplus is

Figure 3-11 In Figure 3-11, suppose D ₁ and S ₁ indicate initial conditions in the market for kitchen cabinets. Which of the following would tend to cause the supply curve to shift from S ₁ to S ₂?