Question 1

Ceteris paribus , a decrease in the price of a good will cause the

Accepted Answer

A)  quantity demanded of the good to decrease. 
B)  quantity supplied of the good to increase. 
C)  producer surplus derived from the good to decrease. 
D)  supply of the good to decrease. 
A)  quantity demanded of the good to decrease. 
B)  quantity supplied of the good to increase. 
C)  producer surplus derived from the good to decrease. 
D)  supply of the good to decrease.

Question 2

Figure 3-18  
Refer to Figure 3-18. Which area represents the increase in consumer surplus when the price falls from P 1 to P 2?

Accepted Answer

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

Question 3

In San Francisco, tickets for professional and college football games are substitutes. An increase in the ticket price for professional football, other things being equal, will

Accepted Answer

A)  increase the demand for college football tickets. 
B)  decrease the demand for college football tickets. 
C)  not change the demand for college football tickets. 
D)  decrease the demand for professional football games. 
A)  increase the demand for college football tickets. 
B)  decrease the demand for college football tickets. 
C)  not change the demand for college football tickets. 
D)  decrease the demand for professional football games.

Question 4

Producers are willing to offer greater quantities for sale at higher prices because

Accepted Answer

A)  they have the incentive to pay the increasing opportunity cost of resources necessary to attract them from alternative uses 
B)  they will decrease their profits by expanding production at higher prices 
C)  the government orders them to do so 
D)  lower prices attract new firms, which have higher costs of production 
E)  they hire superior quality, higher-priced resources as production expands 
A)  they have the incentive to pay the increasing opportunity cost of resources necessary to attract them from alternative uses 
B)  they will decrease their profits by expanding production at higher prices 
C)  the government orders them to do so 
D)  lower prices attract new firms, which have higher costs of production 
E)  they hire superior quality, higher-priced resources as production expands

Question 5

A decrease in the price of leather used to make shoes would cause the

Accepted Answer

A)  demand for shoes to decrease. 
B)  demand for shoes to increase. 
C)  supply of shoes to decrease. 
D)  supply of shoes to increase. 
A)  demand for shoes to decrease. 
B)  demand for shoes to increase. 
C)  supply of shoes to decrease. 
D)  supply of shoes to increase.

Question 6

If an increase in the price of good X causes the demand for good Y to decrease, this indicates that

Accepted Answer

A)  X and Y are complements. 
B)  X and Y are substitutes. 
C)  X and Y are unrelated. 
D)  the demand for X is elastic, but the demand for Y is inelastic. 
A)  X and Y are complements. 
B)  X and Y are substitutes. 
C)  X and Y are unrelated. 
D)  the demand for X is elastic, but the demand for Y is inelastic.

Question 7

If the demand for 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 8

Figure 3-15  
Refer to Figure 3-15. Which area represents producer surplus when the price is P 2?

Accepted Answer

A)  BCE 
B)  ACF 
C)  ABED 
D)  AFEB 
A)  BCE 
B)  ACF 
C)  ABED 
D)  AFEB

Question 9

Market prices generally promote social cooperation because they

Accepted Answer

A)  clarify the options available to people and encourage individuals to help others in exchange for income. 
B)  encourage government officials to levy taxes to provide people with the necessities of life. 
C)  eliminate scarcity by allowing prices to rise. 
D)  reward only altruistic actions, whereby, people seek to help others without the expectation of personal gain. 
A)  clarify the options available to people and encourage individuals to help others in exchange for income. 
B)  encourage government officials to levy taxes to provide people with the necessities of life. 
C)  eliminate scarcity by allowing prices to rise. 
D)  reward only altruistic actions, whereby, people seek to help others without the expectation of personal gain.

Question 10

Figure 3-16  
Refer to Figure 3-16. When the price is P 1, producer surplus is

Accepted Answer

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

Question 11

A new hormone will increase the amount of milk each cow produces. If this hormone is adopted by many dairies, what will be the effect on the milk market?

Accepted Answer

A)  An increase in supply, higher equilibrium price, and lower equilibrium quantity. 
B)  A decrease in supply, lower equilibrium price, and lower equilibrium quantity. 
C)  An increase in supply, lower equilibrium price, and higher equilibrium quantity. 
D)  An increase in supply, higher equilibrium price, and higher equilibrium quantity. 
E)  A decrease in supply, lower equilibrium price, and higher equilibrium quantity. 
A)  An increase in supply, higher equilibrium price, and lower equilibrium quantity. 
B)  A decrease in supply, lower equilibrium price, and lower equilibrium quantity. 
C)  An increase in supply, lower equilibrium price, and higher equilibrium quantity. 
D)  An increase in supply, higher equilibrium price, and higher equilibrium quantity. 
E)  A decrease in supply, lower equilibrium price, and higher equilibrium quantity.

Question 12

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 13

Assume that eggnog and cookies are complements. If the price of eggnog goes up, what happens to the demand for cookies?

Accepted Answer

A)  demand for cookies increases 
B)  demand for cookies decreases 
C)  demand for cookies remains unchanged 
D)  the shift in demand will depend on the original price of cookies 
A)  demand for cookies increases 
B)  demand for cookies decreases 
C)  demand for cookies remains unchanged 
D)  the shift in demand will depend on the original price of cookies

Question 14

Which of the following is the most likely effect of higher chicken prices on the price and quantity purchased of beef, a substitute product?

Accepted Answer

A)  The price of beef will increase, and the quantity purchased will fall. 
B)  The price of beef will fall, and the quantity purchased will increase. 
C)  The price of beef will increase, and the quantity purchased will increase. 
D)  The price of beef will fall, and the quantity purchased will fall. 
A)  The price of beef will increase, and the quantity purchased will fall. 
B)  The price of beef will fall, and the quantity purchased will increase. 
C)  The price of beef will increase, and the quantity purchased will increase. 
D)  The price of beef will fall, and the quantity purchased will fall.

Question 15

Which of the following would most likely increase the supply of beef?

Accepted Answer

A)  lower prices of grains used to feed cattle 
B)  lower prices for chicken, a substitute for beef 
C)  new medical research suggesting that beef causes more serious health problems than was previously thought 
D)  an increase in the cost of transporting beef products to the consumer market 
A)  lower prices of grains used to feed cattle 
B)  lower prices for chicken, a substitute for beef 
C)  new medical research suggesting that beef causes more serious health problems than was previously thought 
D)  an increase in the cost of transporting beef products to the consumer market

Question 16

Suppose both the equilibrium price and quantity rise for a particular product. Which of the following best explains this situation?

Accepted Answer

A)  Supply and demand simultaneously increased and the shift in supply was greater than the shift in demand. 
B)  Supply and demand simultaneously increased and the shift in supply was less than the shift in demand. 
C)  Supply and demand simultaneously decreased and the shift in supply was greater than the shift in demand. 
D)  Supply and demand simultaneously decreased and the shift in supply was less than the shift in demand. 
A)  Supply and demand simultaneously increased and the shift in supply was greater than the shift in demand. 
B)  Supply and demand simultaneously increased and the shift in supply was less than the shift in demand. 
C)  Supply and demand simultaneously decreased and the shift in supply was greater than the shift in demand. 
D)  Supply and demand simultaneously decreased and the shift in supply was less than the shift in demand.

Question 17

Which of the following would be most likely to cause the demand for Miller beer to increase?

Accepted Answer

A)  an increase in the price of Budweiser beer 
B)  a decrease in consumer income 
C)  a decrease in the price of barley used to make Miller beer 
D)  a decrease in the price of Miller beer 
A)  an increase in the price of Budweiser beer 
B)  a decrease in consumer income 
C)  a decrease in the price of barley used to make Miller beer 
D)  a decrease in the price of Miller beer

Question 18

Figure 3-20  
Refer to Figure 3-20. If the price decreases from $22 to $16, consumer surplus increases by

Accepted Answer

A)  $120. 
B)  $360. 
C)  $480. 
D)  $600. 
A)  $120. 
B)  $360. 
C)  $480. 
D)  $600.

Question 19

"Falling consumer income from the recent recession has hurt automakers in more ways than one. Not only have sales of new cars fallen, but car prices have fallen as well. As a result, the major automakers have announced cutbacks in production and layoffs of workers." Which of the following places these statements in the proper economic terminology within the context of the supply and demand model? [Note: It may help to graph this first.]

Accepted Answer

A)  a decrease in demand and a decrease in supply 
B)  a decrease in demand and a decrease in quantity supplied 
C)  a decrease in quantity demanded and a decrease in quantity supplied 
D)  a decrease in quantity demanded and a decrease in supply 
A)  a decrease in demand and a decrease in supply 
B)  a decrease in demand and a decrease in quantity supplied 
C)  a decrease in quantity demanded and a decrease in quantity supplied 
D)  a decrease in quantity demanded and a decrease in supply

Question 20

Table 3-2
 
Refer to Table 3-2. Suppose each of the five sellers can supply at most one unit of the good; then the market quantity supplied is exactly 3 if the price is

Accepted Answer

A)  $670. 
B)  $770. 
C)  $970. 
D)  $1,170. 
A)  $670. 
B)  $770. 
C)  $970. 
D)  $1,170.

Ceteris paribus , a decrease in the price of a good will cause the

Figure 3-18 Refer to Figure 3-18. Which area represents the increase in consumer surplus when the price falls from P ₁ to P ₂?

In San Francisco, tickets for professional and college football games are substitutes. An increase in the ticket price for professional football, other things being equal, will

Producers are willing to offer greater quantities for sale at higher prices because

A decrease in the price of leather used to make shoes would cause the

If an increase in the price of good X causes the demand for good Y to decrease, this indicates that

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

Figure 3-15 Refer to Figure 3-15. Which area represents producer surplus when the price is P ₂?

Market prices generally promote social cooperation because they

Figure 3-16 Refer to Figure 3-16. When the price is P ₁, producer surplus is

A new hormone will increase the amount of milk each cow produces. If this hormone is adopted by many dairies, what will be the effect on the milk market?

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

Assume that eggnog and cookies are complements. If the price of eggnog goes up, what happens to the demand for cookies?

Which of the following is the most likely effect of higher chicken prices on the price and quantity purchased of beef, a substitute product?

Which of the following would most likely increase the supply of beef?

Suppose both the equilibrium price and quantity rise for a particular product. Which of the following best explains this situation?

Which of the following would be most likely to cause the demand for Miller beer to increase?

Figure 3-20 Refer to Figure 3-20. If the price decreases from $22 to $16, consumer surplus increases by

Table 3-2 Refer to Table 3-2. Suppose each of the five sellers can supply at most one unit of the good; then the market quantity supplied is exactly 3 if the price 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

Exam 3: Demand, Supply, and the Market Process

Ceteris paribus , a decrease in the price of a good will cause the

Figure 3-18 Refer to Figure 3-18. Which area represents the increase in consumer surplus when the price falls from P 1 to P 2?

In San Francisco, tickets for professional and college football games are substitutes. An increase in the ticket price for professional football, other things being equal, will

Producers are willing to offer greater quantities for sale at higher prices because

A decrease in the price of leather used to make shoes would cause the

If an increase in the price of good X causes the demand for good Y to decrease, this indicates that

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

Figure 3-15 Refer to Figure 3-15. Which area represents producer surplus when the price is P 2?

Market prices generally promote social cooperation because they

Figure 3-16 Refer to Figure 3-16. When the price is P 1, producer surplus is

A new hormone will increase the amount of milk each cow produces. If this hormone is adopted by many dairies, what will be the effect on the milk market?

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

Assume that eggnog and cookies are complements. If the price of eggnog goes up, what happens to the demand for cookies?

Which of the following is the most likely effect of higher chicken prices on the price and quantity purchased of beef, a substitute product?

Which of the following would most likely increase the supply of beef?

Suppose both the equilibrium price and quantity rise for a particular product. Which of the following best explains this situation?

Which of the following would be most likely to cause the demand for Miller beer to increase?

Figure 3-20 Refer to Figure 3-20. If the price decreases from $22 to $16, consumer surplus increases by

Table 3-2 Refer to Table 3-2. Suppose each of the five sellers can supply at most one unit of the good; then the market quantity supplied is exactly 3 if the price 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

Figure 3-18 Refer to Figure 3-18. Which area represents the increase in consumer surplus when the price falls from P ₁ to P ₂?

Figure 3-15 Refer to Figure 3-15. Which area represents producer surplus when the price is P ₂?

Figure 3-16 Refer to Figure 3-16. When the price is P ₁, producer surplus is