Question 1

A decrease in the price of milk will

Accepted Answer

A)  increase the demand for milk. 
B)  reduce the demand for milk. 
C)  reduce the demand for orange juice, a substitute for milk. 
D)  do both a and c 
A)  increase the demand for milk. 
B)  reduce the demand for milk. 
C)  reduce the demand for orange juice, a substitute for milk. 
D)  do both a and c

Question 2

Each point on the demand curve indicates

Accepted Answer

A)  the demand for the product. 
B)  the quantity demanded at that price. 
C)  the amount that people need. 
D)  the amount people want to buy at different income levels. 
A)  the demand for the product. 
B)  the quantity demanded at that price. 
C)  the amount that people need. 
D)  the amount people want to buy at different income levels.

Question 3

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 4

The demand schedule for a good

Accepted Answer

A)  indicates the relationship between the price of the good and the price of other goods. 
B)  indicates the quantities of the good that people will buy at various prices. 
C)  illustrates the quantity producers will provide at alternative prices. 
D)  is determined primarily by the cost of producing the good. 
A)  indicates the relationship between the price of the good and the price of other goods. 
B)  indicates the quantities of the good that people will buy at various prices. 
C)  illustrates the quantity producers will provide at alternative prices. 
D)  is determined primarily by the cost of producing the good.

Question 5

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 6

If cable TV service and satellite TV service are substitutes,

Accepted Answer

A)  a decrease in the price of cable will decrease the demand for satellite TV. 
B)  an increase in the price of cable will decrease the demand for satellite TV. 
C)  an increase in the price of cable will generally have no effect on the demand for satellite TV. 
D)  an increase in the price of cable will shift the demand curve for satellite TV to the left. 
A)  a decrease in the price of cable will decrease the demand for satellite TV. 
B)  an increase in the price of cable will decrease the demand for satellite TV. 
C)  an increase in the price of cable will generally have no effect on the demand for satellite TV. 
D)  an increase in the price of cable will shift the demand curve for satellite TV to the left.

Question 7

Use the figure below to answer the following question(s). Figure 3-9
  Given the demand (D) and supply (S) for gasoline in Figure 3-9, if the price of gasoline were $3 per gallon,

Accepted Answer

A)  consumers would wish to purchase more than was being supplied. 
B)  producers would be supplying more than consumers wished to purchase. 
C)  the quantity consumers wished to purchase would equal the quantity that producers wished to supply. 
D)  there would be a tendency for the price of gasoline to rise. 
A)  consumers would wish to purchase more than was being supplied. 
B)  producers would be supplying more than consumers wished to purchase. 
C)  the quantity consumers wished to purchase would equal the quantity that producers wished to supply. 
D)  there would be a tendency for the price of gasoline to rise.

Question 8

Which of the following is the most likely effect of lower apple juice prices on the price and quantity purchased of orange juice, a substitute product?

Accepted Answer

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

Question 9

A decrease in demand will cause

Accepted Answer

A)  an increase in supply. 
B)  a decrease in supply. 
C)  an increase in quantity supplied. 
D)  a decrease in quantity supplied. 
E)  an increase in equilibrium price. 
A)  an increase in supply. 
B)  a decrease in supply. 
C)  an increase in quantity supplied. 
D)  a decrease in quantity supplied. 
E)  an increase in equilibrium price.

Question 10

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 11

Which of the following will cause a decrease in the demand for peanut butter?

Accepted Answer

A)  an increase in the supply of peanut butter 
B)  an increase in the price of peanut butter 
C)  a doubling of the price of bread 
D)  a drought in Georgia that destroyed 30 percent of the peanut crop 
E)  an increase in consumer income 
A)  an increase in the supply of peanut butter 
B)  an increase in the price of peanut butter 
C)  a doubling of the price of bread 
D)  a drought in Georgia that destroyed 30 percent of the peanut crop 
E)  an increase in consumer income

Question 12

Consumers buy less of a good as its price increases because

Accepted Answer

A)  production costs have risen. 
B)  substitute goods are now relatively cheaper. 
C)  the income of consumers has effectively risen. 
D)  the higher price will make the good more valuable to each consumer. 
A)  production costs have risen. 
B)  substitute goods are now relatively cheaper. 
C)  the income of consumers has effectively risen. 
D)  the higher price will make the good more valuable to each consumer.

Question 13

The difference between the amount consumers would be willing to pay and the amount they actually pay for a good is called

Accepted Answer

A)  price elasticity of demand. 
B)  consumer surplus. 
C)  the substitution effect. 
D)  income elasticity of demand. 
A)  price elasticity of demand. 
B)  consumer surplus. 
C)  the substitution effect. 
D)  income elasticity of demand.

Question 14

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 15

According to the invisible hand principle, competitive markets generally

Accepted Answer

A)  bring the self-interest of individuals into harmony with the efficient allocation of resources, even though centralized planning of economic activities is absent. 
B)  bring the self-interest of individuals into harmony with the efficient allocation of resources when the behavior of individuals is directed by democratic centralized planning. 
C)  require central direction; otherwise, the actions of self-interested individuals will conflict with the general interests of society. 
D)  promote the economic welfare of self-interested producers at the expense of unorganized groups such as consumers and taxpayers. 
A)  bring the self-interest of individuals into harmony with the efficient allocation of resources, even though centralized planning of economic activities is absent. 
B)  bring the self-interest of individuals into harmony with the efficient allocation of resources when the behavior of individuals is directed by democratic centralized planning. 
C)  require central direction; otherwise, the actions of self-interested individuals will conflict with the general interests of society. 
D)  promote the economic welfare of self-interested producers at the expense of unorganized groups such as consumers and taxpayers.

Question 16

Use the table below to choose the correct answer. The table is a schedule of the supply and demand for coffee (both given in thousands of pounds per month).   The equilibrium market price of coffee would be

Accepted Answer

A)  $6 per pound. 
B)  $8 per pound. 
C)  $10 per pound. 
D)  $12 per pound. 
A)  $6 per pound. 
B)  $8 per pound. 
C)  $10 per pound. 
D)  $12 per pound.

Question 17

When there is excess demand for a product in a market,

Accepted Answer

A)  price will tend to fall. 
B)  price must be below the equilibrium price. 
C)  price must be above the equilibrium price. 
D)  producers will reduce output and sales will fall. 
A)  price will tend to fall. 
B)  price must be below the equilibrium price. 
C)  price must be above the equilibrium price. 
D)  producers will reduce output and sales will fall.

Question 18

According to Adam Smith's invisible hand principle, productive actions that promote the general welfare of society will be undertaken when

Accepted Answer

A)  political representatives are elected democratically. 
B)  competitive markets direct the actions of self-interested individuals. 
C)  the selfish instincts of individuals are controlled. 
D)  workers are able to organize and develop strong unions. 
A)  political representatives are elected democratically. 
B)  competitive markets direct the actions of self-interested individuals. 
C)  the selfish instincts of individuals are controlled. 
D)  workers are able to organize and develop strong unions.

Question 19

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 20

Which of the following will decrease the demand for coffee?

Accepted Answer

A)  the discovery that caffeine can cause heart problems 
B)  an increase in the price of coffee 
C)  an increase in the price of tea, a substitute for coffee 
D)  a decrease in the prices of coffee makers and coffee cups, complements to coffee 
A)  the discovery that caffeine can cause heart problems 
B)  an increase in the price of coffee 
C)  an increase in the price of tea, a substitute for coffee 
D)  a decrease in the prices of coffee makers and coffee cups, complements to coffee

A decrease in the price of milk will

Each point on the demand curve indicates

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

The demand schedule for a good

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?

If cable TV service and satellite TV service are substitutes,

Use the figure below to answer the following question(s). Figure 3-9 Given the demand (D) and supply (S) for gasoline in Figure 3-9, if the price of gasoline were $3 per gallon,

Which of the following is the most likely effect of lower apple juice prices on the price and quantity purchased of orange juice, a substitute product?

A decrease in demand will cause

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

Which of the following will cause a decrease in the demand for peanut butter?

Consumers buy less of a good as its price increases because

The difference between the amount consumers would be willing to pay and the amount they actually pay for a good is called

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

According to the invisible hand principle, competitive markets generally

Use the table below to choose the correct answer. The table is a schedule of the supply and demand for coffee (both given in thousands of pounds per month). The equilibrium market price of coffee would be

When there is excess demand for a product in a market,

According to Adam Smith's invisible hand principle, productive actions that promote the general welfare of society will be undertaken when

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

Which of the following will decrease the demand for coffee?

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

A decrease in the price of milk will

Each point on the demand curve indicates

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

The demand schedule for a good

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?

If cable TV service and satellite TV service are substitutes,

Use the figure below to answer the following question(s). Figure 3-9 Given the demand (D) and supply (S) for gasoline in Figure 3-9, if the price of gasoline were $3 per gallon,

Which of the following is the most likely effect of lower apple juice prices on the price and quantity purchased of orange juice, a substitute product?

A decrease in demand will cause

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

Which of the following will cause a decrease in the demand for peanut butter?

Consumers buy less of a good as its price increases because

The difference between the amount consumers would be willing to pay and the amount they actually pay for a good is called

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

According to the invisible hand principle, competitive markets generally

Use the table below to choose the correct answer. The table is a schedule of the supply and demand for coffee (both given in thousands of pounds per month). The equilibrium market price of coffee would be

When there is excess demand for a product in a market,

According to Adam Smith's invisible hand principle, productive actions that promote the general welfare of society will be undertaken when

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

Which of the following will decrease the demand for coffee?

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