Question 1

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 2

Which of the following would most likely cause the supply of wheat to increase?

Accepted Answer

A)  a decrease in the price of corn, a substitute for wheat 
B)  a technological advance that lowers the cost of producing wheat 
C)  an increase in the cost of producing wheat 
D)  a change in consumer preferences, causing them to prefer plain white bread to whole-wheat bread 
A)  a decrease in the price of corn, a substitute for wheat 
B)  a technological advance that lowers the cost of producing wheat 
C)  an increase in the cost of producing wheat 
D)  a change in consumer preferences, causing them to prefer plain white bread to whole-wheat bread

Question 3

Which of the following will reduce the supply of motorcycles?

Accepted Answer

A)  an increase in the population age 16 to 35, the primary consumers of motorcycles 
B)  an increase in taxes imposed on motorcycle producers 
C)  a technological improvement reducing the production costs of motorcycles 
D)  a government study that reveals motorcycle riders, on average, live 10 years longer than those who don't ride motorcycles 
A)  an increase in the population age 16 to 35, the primary consumers of motorcycles 
B)  an increase in taxes imposed on motorcycle producers 
C)  a technological improvement reducing the production costs of motorcycles 
D)  a government study that reveals motorcycle riders, on average, live 10 years longer than those who don't ride motorcycles

Question 4

Figure 3-22         Refer to Figure 3-22. Suppose the events depicted in graphs A and C were illustrated together on a single graph. A definitive result of the two events would be

Accepted Answer

A)  an increase in the equilibrium quantity. 
B)  an increase in the equilibrium price. 
C)  an instance in which the law of demand fails to hold. 
D)  All of the above are correct. 
A)  an increase in the equilibrium quantity. 
B)  an increase in the equilibrium price. 
C)  an instance in which the law of demand fails to hold. 
D)  All of the above are correct.

Question 5

If there is a decrease in demand for picture frames, 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 6

Table 3-2   Refer to Table 3-2. If the price is $775, who would be willing to supply the product?

Accepted Answer

A)  Dale and Jill 
B)  Dale, Jill and Denise 
C)  Denise, Catherine and Jackson 
D)  Catherine and Jackson 
A)  Dale and Jill 
B)  Dale, Jill and Denise 
C)  Denise, Catherine and Jackson 
D)  Catherine and Jackson

Question 7

In which statement(s) is "demand" used correctly?
(I)  "An increase in the price of hamburgers will reduce the demand for hamburgers."
(II)  "An increase in the price of hamburgers will reduce the demand for hamburger buns."

Accepted Answer

A)  in both statements I and II 
B)  in statement I only 
C)  in statement II only 
D)  in neither statements I nor II 
A)  in both statements I and II 
B)  in statement I only 
C)  in statement II only 
D)  in neither statements I nor II

Question 8

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 9

Which of the following most accurately describes the invisible hand concept?

Accepted Answer

A)  Wise central planning by government is necessary for the efficient use of resources. 
B)  In a democratic setting, majority rule will result in the efficient use of resources. 
C)  In a market setting, when individuals pursue their own interests, they simultaneously tend to promote the public interest. 
D)  In a market setting, when individuals pursue their own interests, they tend to engage in activities that lower the overall economic welfare of society. 
A)  Wise central planning by government is necessary for the efficient use of resources. 
B)  In a democratic setting, majority rule will result in the efficient use of resources. 
C)  In a market setting, when individuals pursue their own interests, they simultaneously tend to promote the public interest. 
D)  In a market setting, when individuals pursue their own interests, they tend to engage in activities that lower the overall economic welfare of society.

Question 10

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 11

If consumer tastes are changing more in favor of the consumption of a particular good the

Accepted Answer

A)  market demand curve will shift to the left. 
B)  consumer will move up a given demand curve, decreasing the quantity demanded. 
C)  consumer would move down a given demand curve, decreasing the quantity demanded. 
D)  consumer would move down a given demand curve, increasing the quantity demanded. 
E)  market demand curve would shift to the right. 
A)  market demand curve will shift to the left. 
B)  consumer will move up a given demand curve, decreasing the quantity demanded. 
C)  consumer would move down a given demand curve, decreasing the quantity demanded. 
D)  consumer would move down a given demand curve, increasing the quantity demanded. 
E)  market demand curve would shift to the right.

Question 12

Which of the following would most likely increase the demand for televisions?

Accepted Answer

A)  a decrease in the price of televisions 
B)  a decline in consumer income 
C)  a decrease in the price of home stereo systems, a substitute for televisions 
D)  a decrease in the price of DVD players, a product that is complementary with televisions 
A)  a decrease in the price of televisions 
B)  a decline in consumer income 
C)  a decrease in the price of home stereo systems, a substitute for televisions 
D)  a decrease in the price of DVD players, a product that is complementary with televisions

Question 13

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 14

Andre decides that he would pay as much as $3,000 for a new laptop computer. He buys the computer and realizes consumer surplus of $700. How much did Andre pay for his computer?

Accepted Answer

A)  $700 
B)  $2,300 
C)  $3,000 
D)  $3,700 
A)  $700 
B)  $2,300 
C)  $3,000 
D)  $3,700

Question 15

If price rises, what happens to supply of a product?

Accepted Answer

A)  It increases. 
B)  It decreases. 
C)  It does not change. 
D)  Uncertain--economic theory has no answer to this question. 
A)  It increases. 
B)  It decreases. 
C)  It does not change. 
D)  Uncertain--economic theory has no answer to this question.

Question 16

Because the height of the demand curve measures the marginal value of the good to consumers, the fact that a demand curve slopes downward to the right illustrates that

Accepted Answer

A)  as more of a product is consumed, consumers will value additional units less. 
B)  as more of a product is consumed, consumers will value additional units more. 
C)  the value of additional units of the good is unrelated to the amount consumed. 
D)  the cost of production for a good generally rises as more of it is produced. 
A)  as more of a product is consumed, consumers will value additional units less. 
B)  as more of a product is consumed, consumers will value additional units more. 
C)  the value of additional units of the good is unrelated to the amount consumed. 
D)  the cost of production for a good generally rises as more of it is produced.

Question 17

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 18

Figure 3-18   Refer to Figure 3-18. When the price falls from P1 to P2, which area represents the increase in consumer surplus to existing buyers?

Accepted Answer

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

Question 19

Two students are walking by a department store window that has on display a $400 dress. The English major declares, "I want that dress but can't afford it." The economics major replies, "No, you don't." Explain the logic of this reply.

Accepted Answer

This is a version of the old economics j

Question 20

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

Accepted Answer

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

Market prices generally promote social cooperation because they

Which of the following would most likely cause the supply of wheat to increase?

Which of the following will reduce the supply of motorcycles?

Figure 3-22 Refer to Figure 3-22. Suppose the events depicted in graphs A and C were illustrated together on a single graph. A definitive result of the two events would be

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

Table 3-2 Refer to Table 3-2. If the price is $775, who would be willing to supply the product?

In which statement(s) is "demand" used correctly? (I) "An increase in the price of hamburgers will reduce the demand for hamburgers." (II) "An increase in the price of hamburgers will reduce the demand for hamburger buns."

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

Which of the following most accurately describes the invisible hand concept?

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

If consumer tastes are changing more in favor of the consumption of a particular good the

Which of the following would most likely increase the demand for televisions?

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

Andre decides that he would pay as much as $3,000 for a new laptop computer. He buys the computer and realizes consumer surplus of $700. How much did Andre pay for his computer?

If price rises, what happens to supply of a product?

Because the height of the demand curve measures the marginal value of the good to consumers, the fact that a demand curve slopes downward to the right illustrates that

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?

Figure 3-18 Refer to Figure 3-18. When the price falls from P₁ to P₂, which area represents the increase in consumer surplus to existing buyers?

Two students are walking by a department store window that has on display a $400 dress. The English major declares, "I want that dress but can't afford it." The economics major replies, "No, you don't." Explain the logic of this reply.

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

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

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad--As Model

Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy: Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Special Topics

Filters

Exam 3: Demand, Supply, and the Market Process

Market prices generally promote social cooperation because they

Which of the following would most likely cause the supply of wheat to increase?

Which of the following will reduce the supply of motorcycles?

Figure 3-22 Refer to Figure 3-22. Suppose the events depicted in graphs A and C were illustrated together on a single graph. A definitive result of the two events would be

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

Table 3-2 Refer to Table 3-2. If the price is $775, who would be willing to supply the product?

In which statement(s) is "demand" used correctly? (I) "An increase in the price of hamburgers will reduce the demand for hamburgers." (II) "An increase in the price of hamburgers will reduce the demand for hamburger buns."

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

Which of the following most accurately describes the invisible hand concept?

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

If consumer tastes are changing more in favor of the consumption of a particular good the

Which of the following would most likely increase the demand for televisions?

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

Andre decides that he would pay as much as $3,000 for a new laptop computer. He buys the computer and realizes consumer surplus of $700. How much did Andre pay for his computer?

If price rises, what happens to supply of a product?

Because the height of the demand curve measures the marginal value of the good to consumers, the fact that a demand curve slopes downward to the right illustrates that

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?

Figure 3-18 Refer to Figure 3-18. When the price falls from P1 to P2, which area represents the increase in consumer surplus to existing buyers?

Two students are walking by a department store window that has on display a $400 dress. The English major declares, "I want that dress but can't afford it." The economics major replies, "No, you don't." Explain the logic of this reply.

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

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

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad--As Model

Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy: Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Special Topics

Filters

Figure 3-18 Refer to Figure 3-18. When the price falls from P₁ to P₂, which area represents the increase in consumer surplus to existing buyers?