Question 1

Which of the following will most likely result from a destruction of half of the Florida orange crop due to a hard freeze?

Accepted Answer

A)  a decrease in the demand for oranges 
B)  an increase in the supply of oranges 
C)  an increase in the quantity of oranges bought and sold 
D)  an increase in the price of oranges 
A)  a decrease in the demand for oranges 
B)  an increase in the supply of oranges 
C)  an increase in the quantity of oranges bought and sold 
D)  an increase in the price of oranges

Question 2

If consumer purchases of a good are not very 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 3

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 4

Two products that are usually consumed jointly would be referred to as

Accepted Answer

A)  substitutes. 
B)  complements. 
C)  inferior goods. 
D)  unrelated goods. 
A)  substitutes. 
B)  complements. 
C)  inferior goods. 
D)  unrelated goods.

Question 5

Two goods are considered substitutes if

Accepted Answer

A)  a decrease in the demand for one leads to a decrease in the supply of the other. 
B)  an increase in the demand for one leads to a decrease in the supply of the other. 
C)  an increase in the price of one leads to an increase in the demand for the other. 
D)  a decrease in the price of one leads to an increase in the demand for the other. 
E)  a decrease in the supply of one leads producers to switch to production of the other. 
A)  a decrease in the demand for one leads to a decrease in the supply of the other. 
B)  an increase in the demand for one leads to a decrease in the supply of the other. 
C)  an increase in the price of one leads to an increase in the demand for the other. 
D)  a decrease in the price of one leads to an increase in the demand for the other. 
E)  a decrease in the supply of one leads producers to switch to production of the other.

Question 6

Figure 3-16   Refer to Figure 3-16. When the price is P1, 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 7

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 8

If the quantity of a good supplied is not very 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

Assume that supply decreases slightly and demand decreases greatly. Which of the following will happen?

Accepted Answer

A)  Equilibrium price will fall and equilibrium quantity will rise. 
B)  Equilibrium price will rise and equilibrium quantity will fall. 
C)  Equilibrium price will rise and equilibrium quantity will rise. 
D)  Equilibrium price will fall and equilibrium quantity will fall. 
E)  Neither equilibrium price nor equilibrium quantity will change. 
A)  Equilibrium price will fall and equilibrium quantity will rise. 
B)  Equilibrium price will rise and equilibrium quantity will fall. 
C)  Equilibrium price will rise and equilibrium quantity will rise. 
D)  Equilibrium price will fall and equilibrium quantity will fall. 
E)  Neither equilibrium price nor equilibrium quantity will change.

Question 10

Use the figure below to answer the following question(s). Figure 3-3
  In Figure 3-3, if the initial demand for margarine were D1, the impact of an increase in the price of margarine from $0.35 to $0.40 per pound on consumer purchases would be illustrated as

Accepted Answer

A)  a shift in the demand curve to D2. 
B)  a shift in the demand curve to D3. 
C)  a movement upward to the left along the original demand curve D1. 
D)  none of the above. 
A)  a shift in the demand curve to D2. 
B)  a shift in the demand curve to D3. 
C)  a movement upward to the left along the original demand curve D1. 
D)  none of the above.

Question 11

If a small percentage increase in the price of a good results in a rather large percentage reduction in the quantity demanded of the good, demand is said to be

Accepted Answer

A)  vertical. 
B)  relatively inelastic. 
C)  relatively elastic. 
D)  robust. 
A)  vertical. 
B)  relatively inelastic. 
C)  relatively elastic. 
D)  robust.

Question 12

Adam Smith's invisible hand principle stresses

Accepted Answer

A)  that benevolence is a powerful motivator that encourages individuals to engage in productive economic activity. 
B)  the tendency of the competitive market process to direct self-interested individuals into activities that enhance the economic welfare of society. 
C)  the potential of government regulation as a means of bringing the self interest of individuals into harmony with the economic welfare of society. 
D)  the tendency of self-interested individuals to pursue activities that benefit themselves but harm the overall economic welfare of society. 
A)  that benevolence is a powerful motivator that encourages individuals to engage in productive economic activity. 
B)  the tendency of the competitive market process to direct self-interested individuals into activities that enhance the economic welfare of society. 
C)  the potential of government regulation as a means of bringing the self interest of individuals into harmony with the economic welfare of society. 
D)  the tendency of self-interested individuals to pursue activities that benefit themselves but harm the overall economic welfare of society.

Question 13

Figure 3-4   Figure 3-4 shows conditions in the market for beef. A reduction in the price of the grain used to feed cattle results in

Accepted Answer

A)  the supply curve for beef shifting to the left resulting in higher beef prices and a lower quantity sold. 
B)  the supply curve for beef shifting to the right resulting in lower beef prices and a higher quantity sold. 
C)  the demand curve for beef shifting to the left resulting in lower beef prices and a lower quantity sold. 
D)  the demand curve for beef shifting to the right resulting in higher beef prices and a higher quantity sold. 
A)  the supply curve for beef shifting to the left resulting in higher beef prices and a lower quantity sold. 
B)  the supply curve for beef shifting to the right resulting in lower beef prices and a higher quantity sold. 
C)  the demand curve for beef shifting to the left resulting in lower beef prices and a lower quantity sold. 
D)  the demand curve for beef shifting to the right resulting in higher beef prices and a higher quantity sold.

Question 14

Farmers can choose to produce eggs or milk. If there is an increase in the price of milk then what will be the effect in the egg market?

Accepted Answer

A)  The quantity of eggs demanded will increase. 
B)  Egg demand will decrease. 
C)  Egg supply will increase. 
D)  Egg supply will decrease. 
A)  The quantity of eggs demanded will increase. 
B)  Egg demand will decrease. 
C)  Egg supply will increase. 
D)  Egg supply will decrease.

Question 15

If DeShawn only pays $25,000 to purchase a new car even though he would have been willing to pay as much as $35,000 for the car, this indicates that

Accepted Answer

A)  DeShawn is an irrational consumer. 
B)  The seller earned a $10,000 profit on the sale of the car. 
C)  DeShawn reaped $10,000 of consumer surplus from the transaction. 
D)  The seller received $10,000 worth of producer surplus on the transaction. 
A)  DeShawn is an irrational consumer. 
B)  The seller earned a $10,000 profit on the sale of the car. 
C)  DeShawn reaped $10,000 of consumer surplus from the transaction. 
D)  The seller received $10,000 worth of producer surplus on the transaction.

Question 16

If the demand for a good is relatively elastic, this means that consumer purchases of the good are

Accepted Answer

A)  not very sensitive to the price of the good. 
B)  highly sensitive to the price of the good. 
C)  unrelated to the price of the good. 
D)  unaffected by changes in the income level of consumers. 
A)  not very sensitive to the price of the good. 
B)  highly sensitive to the price of the good. 
C)  unrelated to the price of the good. 
D)  unaffected by changes in the income level of consumers.

Question 17

Figure 3-19   Refer to Figure 3-19. If the government mandated a price increase from Pe to a higher price, then

Accepted Answer

A)  total surplus would decrease. 
B)  consumer surplus would increase. 
C)  total surplus would increase, since producer surplus would increase. 
D)  total surplus would remain unchanged. 
A)  total surplus would decrease. 
B)  consumer surplus would increase. 
C)  total surplus would increase, since producer surplus would increase. 
D)  total surplus would remain unchanged.

Question 18

A recent study suggested that moderate wine drinking may actually benefit one's health. If this information leads to an increased demand for wine, we would expect

Accepted Answer

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

Question 19

To be economically successful, the entrepreneur must

Accepted Answer

A)  combine resources in a manner that increases their value. 
B)  produce a good that consumers value less than the resources used to produce it. 
C)  use only personal financial capital to avoid the interest payments that would have to be paid if the money is borrowed from the bank. 
D)  transform or rearrange resources to maximize the entrepreneur's cost of production. 
A)  combine resources in a manner that increases their value. 
B)  produce a good that consumers value less than the resources used to produce it. 
C)  use only personal financial capital to avoid the interest payments that would have to be paid if the money is borrowed from the bank. 
D)  transform or rearrange resources to maximize the entrepreneur's cost of production.

Question 20

Willingness to pay

Accepted Answer

A)  measures the value that a buyer places on a good. 
B)  is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept. 
C)  is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept. 
D)  is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it. 
A)  measures the value that a buyer places on a good. 
B)  is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept. 
C)  is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept. 
D)  is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.

Which of the following will most likely result from a destruction of half of the Florida orange crop due to a hard freeze?

If consumer purchases of a good are not very sensitive to the price of the good, this is illustrated by a

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

Two products that are usually consumed jointly would be referred to as

Two goods are considered substitutes if

Figure 3-16 Refer to Figure 3-16. When the price is P₁, producer surplus is

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

If the quantity of a good supplied is not very sensitive to the price of the good, this is illustrated by a

Assume that supply decreases slightly and demand decreases greatly. Which of the following will happen?

Use the figure below to answer the following question(s). Figure 3-3 In Figure 3-3, if the initial demand for margarine were D₁, the impact of an increase in the price of margarine from $0.35 to $0.40 per pound on consumer purchases would be illustrated as

If a small percentage increase in the price of a good results in a rather large percentage reduction in the quantity demanded of the good, demand is said to be

Adam Smith's invisible hand principle stresses

Figure 3-4 Figure 3-4 shows conditions in the market for beef. A reduction in the price of the grain used to feed cattle results in

Farmers can choose to produce eggs or milk. If there is an increase in the price of milk then what will be the effect in the egg market?

If DeShawn only pays $25,000 to purchase a new car even though he would have been willing to pay as much as $35,000 for the car, this indicates that

If the demand for a good is relatively elastic, this means that consumer purchases of the good are

Figure 3-19 Refer to Figure 3-19. If the government mandated a price increase from P_e to a higher price, then

A recent study suggested that moderate wine drinking may actually benefit one's health. If this information leads to an increased demand for wine, we would expect

To be economically successful, the entrepreneur must

Willingness to pay

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

Which of the following will most likely result from a destruction of half of the Florida orange crop due to a hard freeze?

If consumer purchases of a good are not very sensitive to the price of the good, this is illustrated by a

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

Two products that are usually consumed jointly would be referred to as

Two goods are considered substitutes if

Figure 3-16 Refer to Figure 3-16. When the price is P1, producer surplus is

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

If the quantity of a good supplied is not very sensitive to the price of the good, this is illustrated by a

Assume that supply decreases slightly and demand decreases greatly. Which of the following will happen?

Use the figure below to answer the following question(s). Figure 3-3 In Figure 3-3, if the initial demand for margarine were D1, the impact of an increase in the price of margarine from $0.35 to $0.40 per pound on consumer purchases would be illustrated as

If a small percentage increase in the price of a good results in a rather large percentage reduction in the quantity demanded of the good, demand is said to be

Adam Smith's invisible hand principle stresses

Figure 3-4 Figure 3-4 shows conditions in the market for beef. A reduction in the price of the grain used to feed cattle results in

Farmers can choose to produce eggs or milk. If there is an increase in the price of milk then what will be the effect in the egg market?

If DeShawn only pays $25,000 to purchase a new car even though he would have been willing to pay as much as $35,000 for the car, this indicates that

If the demand for a good is relatively elastic, this means that consumer purchases of the good are

Figure 3-19 Refer to Figure 3-19. If the government mandated a price increase from Pe to a higher price, then

A recent study suggested that moderate wine drinking may actually benefit one's health. If this information leads to an increased demand for wine, we would expect

To be economically successful, the entrepreneur must

Willingness to pay

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 3-16 Refer to Figure 3-16. When the price is P₁, producer surplus is

Use the figure below to answer the following question(s). Figure 3-3 In Figure 3-3, if the initial demand for margarine were D₁, the impact of an increase in the price of margarine from $0.35 to $0.40 per pound on consumer purchases would be illustrated as

Figure 3-19 Refer to Figure 3-19. If the government mandated a price increase from P_e to a higher price, then