Question 1

What is deadweight loss?

Accepted Answer

A)  the difference between quantity supplied and quantity demanded when there is a price ceiling 
B)  the difference between quantity supplied and quantity demanded when there is a price floor 
C)  the loss of consumer or producer surplus that is caused by an inefficient quantity of output 
D)  illegal markets that can occur as a consequence of shortages 
A)  the difference between quantity supplied and quantity demanded when there is a price ceiling 
B)  the difference between quantity supplied and quantity demanded when there is a price floor 
C)  the loss of consumer or producer surplus that is caused by an inefficient quantity of output 
D)  illegal markets that can occur as a consequence of shortages

Question 2

How do the price and quantity change for an inferior good if income increases?

Accepted Answer

A)  Price increases, and quantity increases. 
B)  Price increases, and quantity decreases. 
C)  Price decreases, and quantity increases. 
D)  Price decreases, and quantity decreases. 
A)  Price increases, and quantity increases. 
B)  Price increases, and quantity decreases. 
C)  Price decreases, and quantity increases. 
D)  Price decreases, and quantity decreases.

Question 3

In the market for beach umbrellas, the equilibrium price has increased, and the equilibrium quantity has decreased. What change in this market causes these changes in price and quantity?

Accepted Answer

A)  Only supply increased. 
B)  Both supply and demand decreased by the same amount. 
C)  Both supply and demand decreased, but demand decreased by a greater amount. 
D)  Both supply and demand decreased, but supply decreased by a greater amount. 
A)  Only supply increased. 
B)  Both supply and demand decreased by the same amount. 
C)  Both supply and demand decreased, but demand decreased by a greater amount. 
D)  Both supply and demand decreased, but supply decreased by a greater amount.

Question 4

How do the price and quantity change for lawn chairs if the cost of wood used to make lawn chairs increases?

Accepted Answer

A)  Price increases, and quantity decreases. 
B)  Price decreases, and quantity increases. 
C)  Price increases, and quantity increases. 
D)  Price decreases, and quantity decreases. 
A)  Price increases, and quantity decreases. 
B)  Price decreases, and quantity increases. 
C)  Price increases, and quantity increases. 
D)  Price decreases, and quantity decreases.

Question 5

Tapioca is an ingredient used to produce bubble tea, and consumers consider bubble tea to be a normal good. What happens to the equilibrium price and quantity in the market for bubble tea if the cost of tapioca increases and consumer incomes increase?

Accepted Answer

A)  Price increases; we cannot tell the effect on quantity without more information. 
B)  Price decreases; we cannot tell the effect on quantity without more information. 
C)  We cannot tell the effect on price without more information; quantity decreases. 
D)  We cannot tell the effect on price without more information; quantity increases. 
A)  Price increases; we cannot tell the effect on quantity without more information. 
B)  Price decreases; we cannot tell the effect on quantity without more information. 
C)  We cannot tell the effect on price without more information; quantity decreases. 
D)  We cannot tell the effect on price without more information; quantity increases.

Question 6

Which of the following is NOT a possibility if demand increases and supply decreases?

Accepted Answer

A)  Price increases. 
B)  Price decreases. 
C)  Quantity increases. 
D)  Quantity decreases. 
A)  Price increases. 
B)  Price decreases. 
C)  Quantity increases. 
D)  Quantity decreases.

Question 7

Why does it matter which shift is larger when demand and supply both increase?

Accepted Answer

A)  The effect of a decrease in demand on price is the opposite of the effect of a decrease in supply on price. 
B)  The effect of an increase in demand on price is the opposite of the effect of an increase in supply on price. 
C)  Price changes only when the supply decreases more than demand decreases. 
D)  Supply always increases more than demand, so the supply shift is always larger. 
A)  The effect of a decrease in demand on price is the opposite of the effect of a decrease in supply on price. 
B)  The effect of an increase in demand on price is the opposite of the effect of an increase in supply on price. 
C)  Price changes only when the supply decreases more than demand decreases. 
D)  Supply always increases more than demand, so the supply shift is always larger.

Question 8

The stalks left over from the harvesting of corn are used to produce ethanol. The demand for ethanol has increased. What happens to the price and quantity of ethanol if the price of corn also decreases but the shift in supply is not as large as the shift in demand?

Accepted Answer

A)  Price decreases, and quantity increases. 
B)  Price increases, and quantity increases. 
C)  Price increases, and quantity decreases. 
D)  Price decreases, and quantity decreases. 
A)  Price decreases, and quantity increases. 
B)  Price increases, and quantity increases. 
C)  Price increases, and quantity decreases. 
D)  Price decreases, and quantity decreases.

Question 9

Use Figure: The Market for Sandwiches. What happens if a price floor of $9 is placed on this market?
​
Figure: The Market for Sandwiches

Accepted Answer

A)  The price floor would not affect this market. 
B)  There would be a shortage of five sandwiches. 
C)  There would be a surplus of nine sandwiches. 
D)  A total of five sandwiches will be sold. 
A)  The price floor would not affect this market. 
B)  There would be a shortage of five sandwiches. 
C)  There would be a surplus of nine sandwiches. 
D)  A total of five sandwiches will be sold.

Question 10

Explain the process by which an increase in demand increases the price of a good.

Accepted Answer

When demand increases, the qua

Question 11

In the widget market, currently 100 widgets are being sold. At this quantity, consumers are willing to pay $7, and sellers are willing to accept $7. What must be true in the widget market?

Accepted Answer

A)  There is currently a surplus of widgets, and the price must rise above $7. 
B)  There is currently a surplus of widgets, and the price must fall below $7. 
C)  There is currently a shortage of widgets, and the price must rise above $7. 
D)  The market is in equilibrium. 
A)  There is currently a surplus of widgets, and the price must rise above $7. 
B)  There is currently a surplus of widgets, and the price must fall below $7. 
C)  There is currently a shortage of widgets, and the price must rise above $7. 
D)  The market is in equilibrium.

Question 12

In the widget market, currently 100 widgets are being sold. At this quantity, consumers are willing to pay $5, and sellers are willing to accept $2. What must be true in the widget market?

Accepted Answer

A)  There is currently a surplus of widgets, and the price must rise above $5. 
B)  There is currently a surplus of widgets, and the price must fall below $2. 
C)  There is currently a shortage of widgets, and the price must rise above $2. 
D)  The market is in equilibrium. 
A)  There is currently a surplus of widgets, and the price must rise above $5. 
B)  There is currently a surplus of widgets, and the price must fall below $2. 
C)  There is currently a shortage of widgets, and the price must rise above $2. 
D)  The market is in equilibrium.

Question 13

Why does it matter which shift is larger when demand and supply both decrease?

Accepted Answer

A)  The effect of a decrease in demand on price is the opposite of the effect of a decrease in supply on price. 
B)  The effect of an increase in demand on quantity is the opposite of the effect of a decrease in supply on quantity. 
C)  Quantity changes only when the supply decreases more than demand decreases. 
D)  Supply always increases more than demand, so the supply shift is always larger. 
A)  The effect of a decrease in demand on price is the opposite of the effect of a decrease in supply on price. 
B)  The effect of an increase in demand on quantity is the opposite of the effect of a decrease in supply on quantity. 
C)  Quantity changes only when the supply decreases more than demand decreases. 
D)  Supply always increases more than demand, so the supply shift is always larger.

Question 14

The current price of a flower arrangement is $40. At the current price, more people want to buy flower arrangements than sellers are willing to sell at that price. What statement about the market for flower arrangements is correct?

Accepted Answer

A)  The market for flower arrangements is in equilibrium. 
B)  The price of flower arrangements will decrease. 
C)  The price of flower arrangements will increase. 
D)  There is a surplus in this market. 
A)  The market for flower arrangements is in equilibrium. 
B)  The price of flower arrangements will decrease. 
C)  The price of flower arrangements will increase. 
D)  There is a surplus in this market.

Question 15

What is the equilibrium price?

Accepted Answer

A)  the price that minimizes a producer's profit 
B)  the price that brings the market to the equilibrium point 
C)  the lowest price that can be imposed on a market 
D)  the difference between revenue and costs 
A)  the price that minimizes a producer's profit 
B)  the price that brings the market to the equilibrium point 
C)  the lowest price that can be imposed on a market 
D)  the difference between revenue and costs

Question 16

The equilibrium price in the market for lobster tails is $45 per pound. If a price of $50 is imposed on this market, this would be:

Accepted Answer

A)  an equilibrium price. 
B)  an effective price ceiling. 
C)  an effective price floor. 
D)  a queueing cost. 
A)  an equilibrium price. 
B)  an effective price ceiling. 
C)  an effective price floor. 
D)  a queueing cost.

Question 17

What happens to the equilibrium price and quantity of ricotta if the price of mozzarella, a complement in production to ricotta, decreases?

Accepted Answer

A)  Price decreases, and quantity increases. 
B)  Price decreases, and quantity decreases. 
C)  Price increases, and quantity increases. 
D)  Price increases, and quantity decreases. 
A)  Price decreases, and quantity increases. 
B)  Price decreases, and quantity decreases. 
C)  Price increases, and quantity increases. 
D)  Price increases, and quantity decreases.

Question 18

A tariff is placed on rosewood, a type of wood that is used to make ukuleles. What effect will this have on the equilibrium price and quantity of ukuleles?

Accepted Answer

A)  Price increases, and quantity increases. 
B)  Price increases, and quantity decreases. 
C)  Price decreases, and quantity increases. 
D)  Price decreases, and quantity decreases. 
A)  Price increases, and quantity increases. 
B)  Price increases, and quantity decreases. 
C)  Price decreases, and quantity increases. 
D)  Price decreases, and quantity decreases.

Question 19

A price ceiling:

Accepted Answer

A)  is an artificial upper limit on the price of a good or service. 
B)  is the minimum price that a good can be sold for. 
C)  leads to surpluses. 
D)  is a price set on a market that is higher than the equilibrium price. 
A)  is an artificial upper limit on the price of a good or service. 
B)  is the minimum price that a good can be sold for. 
C)  leads to surpluses. 
D)  is a price set on a market that is higher than the equilibrium price.

Question 20

Use Figure: The Market for Sandwiches. What happens if the current price of sandwiches is $9?
​
Figure: The Market for Sandwiches

Accepted Answer

A)  There is a shortage. 
B)  There is a surplus. 
C)  Quantity demanded exceeds quantity supplied. 
D)  Quantity supplied equals quantity demanded. 
A)  There is a shortage. 
B)  There is a surplus. 
C)  Quantity demanded exceeds quantity supplied. 
D)  Quantity supplied equals quantity demanded.

What is deadweight loss?

How do the price and quantity change for an inferior good if income increases?

In the market for beach umbrellas, the equilibrium price has increased, and the equilibrium quantity has decreased. What change in this market causes these changes in price and quantity?

How do the price and quantity change for lawn chairs if the cost of wood used to make lawn chairs increases?

Tapioca is an ingredient used to produce bubble tea, and consumers consider bubble tea to be a normal good. What happens to the equilibrium price and quantity in the market for bubble tea if the cost of tapioca increases and consumer incomes increase?

Which of the following is NOT a possibility if demand increases and supply decreases?

Why does it matter which shift is larger when demand and supply both increase?

The stalks left over from the harvesting of corn are used to produce ethanol. The demand for ethanol has increased. What happens to the price and quantity of ethanol if the price of corn also decreases but the shift in supply is not as large as the shift in demand?

Use Figure: The Market for Sandwiches. What happens if a price floor of $9 is placed on this market? Figure: The Market for Sandwiches

Explain the process by which an increase in demand increases the price of a good.

In the widget market, currently 100 widgets are being sold. At this quantity, consumers are willing to pay $7, and sellers are willing to accept $7. What must be true in the widget market?

In the widget market, currently 100 widgets are being sold. At this quantity, consumers are willing to pay $5, and sellers are willing to accept $2. What must be true in the widget market?

Why does it matter which shift is larger when demand and supply both decrease?

The current price of a flower arrangement is $40. At the current price, more people want to buy flower arrangements than sellers are willing to sell at that price. What statement about the market for flower arrangements is correct?

What is the equilibrium price?

The equilibrium price in the market for lobster tails is $45 per pound. If a price of $50 is imposed on this market, this would be:

What happens to the equilibrium price and quantity of ricotta if the price of mozzarella, a complement in production to ricotta, decreases?

A tariff is placed on rosewood, a type of wood that is used to make ukuleles. What effect will this have on the equilibrium price and quantity of ukuleles?

A price ceiling:

Use Figure: The Market for Sandwiches. What happens if the current price of sandwiches is $9? Figure: The Market for Sandwiches

Foundations of Economics

Extension: Understanding Graphs

Markets and Economies

Demand

Supply

Elasticity

Consumer Behavior

Production Costs

Perfect Competition

Market Power

Factor Markets

Market Failure and Government Failure

Measuring an Economys Performance

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money and Banking

Monetary Policy

Economic Growth and Development

International Trade and Finance

Filters

Exam 5: Market Equilibrium

What is deadweight loss?

How do the price and quantity change for an inferior good if income increases?

In the market for beach umbrellas, the equilibrium price has increased, and the equilibrium quantity has decreased. What change in this market causes these changes in price and quantity?

How do the price and quantity change for lawn chairs if the cost of wood used to make lawn chairs increases?

Tapioca is an ingredient used to produce bubble tea, and consumers consider bubble tea to be a normal good. What happens to the equilibrium price and quantity in the market for bubble tea if the cost of tapioca increases and consumer incomes increase?

Which of the following is NOT a possibility if demand increases and supply decreases?

Why does it matter which shift is larger when demand and supply both increase?

The stalks left over from the harvesting of corn are used to produce ethanol. The demand for ethanol has increased. What happens to the price and quantity of ethanol if the price of corn also decreases but the shift in supply is not as large as the shift in demand?

Use Figure: The Market for Sandwiches. What happens if a price floor of $9 is placed on this market? ​ Figure: The Market for Sandwiches

Explain the process by which an increase in demand increases the price of a good.

In the widget market, currently 100 widgets are being sold. At this quantity, consumers are willing to pay $7, and sellers are willing to accept $7. What must be true in the widget market?

In the widget market, currently 100 widgets are being sold. At this quantity, consumers are willing to pay $5, and sellers are willing to accept $2. What must be true in the widget market?

Why does it matter which shift is larger when demand and supply both decrease?

The current price of a flower arrangement is $40. At the current price, more people want to buy flower arrangements than sellers are willing to sell at that price. What statement about the market for flower arrangements is correct?

What is the equilibrium price?

The equilibrium price in the market for lobster tails is $45 per pound. If a price of $50 is imposed on this market, this would be:

What happens to the equilibrium price and quantity of ricotta if the price of mozzarella, a complement in production to ricotta, decreases?

A tariff is placed on rosewood, a type of wood that is used to make ukuleles. What effect will this have on the equilibrium price and quantity of ukuleles?

A price ceiling:

Use Figure: The Market for Sandwiches. What happens if the current price of sandwiches is $9? ​ Figure: The Market for Sandwiches

Foundations of Economics

Extension: Understanding Graphs

Markets and Economies

Demand

Supply

Elasticity

Consumer Behavior

Production Costs

Perfect Competition

Market Power

Factor Markets

Market Failure and Government Failure

Measuring an Economys Performance

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money and Banking

Monetary Policy

Economic Growth and Development

International Trade and Finance

Filters

Use Figure: The Market for Sandwiches. What happens if a price floor of $9 is placed on this market? Figure: The Market for Sandwiches

Use Figure: The Market for Sandwiches. What happens if the current price of sandwiches is $9? Figure: The Market for Sandwiches