Question 1

A decrease in demand

Accepted Answer

A)  results from a decrease in supply. 
B)  means that the demand curve has shifted to the left. 
C)  increases the quantity sold in the market. 
D)  reflects an increasing consumer preference for the item. 
E)  causes the equilibrium price to rise. 
A)  results from a decrease in supply. 
B)  means that the demand curve has shifted to the left. 
C)  increases the quantity sold in the market. 
D)  reflects an increasing consumer preference for the item. 
E)  causes the equilibrium price to rise.

Question 2

The following question are based on the following graph:
   
The curves D and S represent the market demand and supply curves for wheat in 1960. The curves D₁ and S₁ represent the market demand and supply curves in 2000. Assume there were no support programs in either year.
-In the graph

Accepted Answer

A)  demand rose and supply fell. 
B)  demand fell and supply rose. 
C)  both demand and supply fell. 
D)  both demand and supply rose. 
E)  demand and supply remained unchanged, but the quantity demanded rose and the quantity supplied fell. 
A)  demand rose and supply fell. 
B)  demand fell and supply rose. 
C)  both demand and supply fell. 
D)  both demand and supply rose. 
E)  demand and supply remained unchanged, but the quantity demanded rose and the quantity supplied fell.

Question 3

During the summer months,it is not unusual for both the price and the quantity consumed of gasoline to rise.These conditions reflect a(n)

Accepted Answer

A)  violation of the law of demand. 
B)  shift to the left of the supply curve. 
C)  increase in demand. 
D)  condition of deficient demand. 
E)  surplus. 
A)  violation of the law of demand. 
B)  shift to the left of the supply curve. 
C)  increase in demand. 
D)  condition of deficient demand. 
E)  surplus.

Question 4

In the United States about 90 percent of all goods and services are produced by

Accepted Answer

A)  the government. 
B)  consumers. 
C)  unions. 
D)  firms. 
E)  nonprofit organizations. 
A)  the government. 
B)  consumers. 
C)  unions. 
D)  firms. 
E)  nonprofit organizations.

Question 5

One notable characteristic of a public good is that

Accepted Answer

A)  its production incurs no economic costs. 
B)  consumers can easily be denied its benefits. 
C)  it is automatically produced by the free market price system. 
D)  it can be consumed collectively. 
E)  consumers may readily divide it into individual pieces and distribute it among themselves. 
A)  its production incurs no economic costs. 
B)  consumers can easily be denied its benefits. 
C)  it is automatically produced by the free market price system. 
D)  it can be consumed collectively. 
E)  consumers may readily divide it into individual pieces and distribute it among themselves.

Question 6

If the supply curve for peaches slopes upward,a decrease in the demand for peaches causes the equilibrium price

Accepted Answer

A)  to rise and quantity to fall. 
B)  to fall and quantity to rise. 
C)  and quantity both to fall. 
D)  and quantity both to rise. 
E)  and quantity both to remain unchanged. 
A)  to rise and quantity to fall. 
B)  to fall and quantity to rise. 
C)  and quantity both to fall. 
D)  and quantity both to rise. 
E)  and quantity both to remain unchanged.

Question 7

When demand decreases in a competitive market

Accepted Answer

A)  equilibrium price falls. 
B)  supply rises. 
C)  shortages emerge. 
D)  actual price rises. 
E)  quantities sold increase. 
A)  equilibrium price falls. 
B)  supply rises. 
C)  shortages emerge. 
D)  actual price rises. 
E)  quantities sold increase.

Question 8

The following question are based on the following diagram:
  
-For a market to exhibit excess demand

Accepted Answer

A)  supply must exceed demand. 
B)  the equilibrium price must be too high to clear the market. 
C)  the actual price must be below the equilibrium price. 
D)  the demand curve must slope upward. 
E)  the market must be growing. 
A)  supply must exceed demand. 
B)  the equilibrium price must be too high to clear the market. 
C)  the actual price must be below the equilibrium price. 
D)  the demand curve must slope upward. 
E)  the market must be growing.

Question 9

If the demand curve slopes downward and the supply curve slopes upward,which of the following events leads to an increase in both the equilibrium price and quantity?

Accepted Answer

A)  a rightward shift in supply with demand unchanged 
B)  a leftward shift in both demand and supply 
C)  a leftward shift in supply with demand unchanged 
D)  a leftward shift in demand with supply unchanged 
E)  a rightward shift in demand with supply unchanged 
A)  a rightward shift in supply with demand unchanged 
B)  a leftward shift in both demand and supply 
C)  a leftward shift in supply with demand unchanged 
D)  a leftward shift in demand with supply unchanged 
E)  a rightward shift in demand with supply unchanged

Question 10

The following question are based on the following diagram:
  
-At the equilibrium price

Accepted Answer

A)  scarcity is eliminated. 
B)  everyone is content. 
C)  there is no inflation. 
D)  price equals quantity. 
E)  quantity demanded equals quantity supplied. 
A)  scarcity is eliminated. 
B)  everyone is content. 
C)  there is no inflation. 
D)  price equals quantity. 
E)  quantity demanded equals quantity supplied.

Question 11

A decrease in supply

Accepted Answer

A)  is unrelated to changes in the assumptions that underlie the supply curve. 
B)  produces a supply curve that slopes downward to the right. 
C)  is caused by a price change along a supply curve. 
D)  affects only an agricultural supply curve. 
E)  is synonymous with a leftward shift of the supply curve. 
A)  is unrelated to changes in the assumptions that underlie the supply curve. 
B)  produces a supply curve that slopes downward to the right. 
C)  is caused by a price change along a supply curve. 
D)  affects only an agricultural supply curve. 
E)  is synonymous with a leftward shift of the supply curve.

Question 12

Individuals who purchase the final goods and services of an economy are called

Accepted Answer

A)  consumers. 
B)  firms. 
C)  businesses. 
D)  markets. 
E)  entrepreneurs. 
A)  consumers. 
B)  firms. 
C)  businesses. 
D)  markets. 
E)  entrepreneurs.

Question 13

The price system determines the level and composition of output because it relies on firms' acting in accord with

Accepted Answer

A)  altruistic concerns. 
B)  government mandates. 
C)  the profit motive. 
D)  the market supply curve. 
E)  the predictions of economists. 
A)  altruistic concerns. 
B)  government mandates. 
C)  the profit motive. 
D)  the market supply curve. 
E)  the predictions of economists.

Question 14

Economic theory states that more of a good is supplied at a higher price than a lower one,yet the sales of digital cameras have increased while their prices have fallen.This statement

Accepted Answer

A)  reflects the fact that economics is not a precise science and its predictions are sometimes incorrect. 
B)  merely illustrates that the digital camera market may be an exception to the general rule. 
C)  applies only to the supply side and overlooks the tremendous increase in the demand for digital cameras. 
D)  confuses changes in the quantity supplied with changes in supply. 
E)  ignores the fact that the current price may be below the equilibrium level. 
A)  reflects the fact that economics is not a precise science and its predictions are sometimes incorrect. 
B)  merely illustrates that the digital camera market may be an exception to the general rule. 
C)  applies only to the supply side and overlooks the tremendous increase in the demand for digital cameras. 
D)  confuses changes in the quantity supplied with changes in supply. 
E)  ignores the fact that the current price may be below the equilibrium level.

Question 15

The distribution of income generated by the price system

Accepted Answer

A)  inevitably becomes egalitarian. 
B)  may not create sufficient spending power to provide for the needs of the poor. 
C)  is an example of an external diseconomy. 
D)  is considered by most people to be fair and therefore in no need of alteration to suit humanitarian concerns. 
E)  enables firms to satisfy all consumer desires. 
A)  inevitably becomes egalitarian. 
B)  may not create sufficient spending power to provide for the needs of the poor. 
C)  is an example of an external diseconomy. 
D)  is considered by most people to be fair and therefore in no need of alteration to suit humanitarian concerns. 
E)  enables firms to satisfy all consumer desires.

Question 16

The following question are based on the following circular flow diagram:
  
-In the model of the circular flow

Accepted Answer

A)  the dollar flows on the left side represent expenditures for final goods and services. 
B)  the dollar flows on the right side represent incomes being paid by businesses to consumers. 
C)  resources flow to businesses on the left side, and final goods and services flow to households on the right side. 
D)  households are buyers of factors of production on the left side and sellers of goods and services on the right side. 
E)  the dollar value on the left side is unrelated to the dollar value on the right side. 
A)  the dollar flows on the left side represent expenditures for final goods and services. 
B)  the dollar flows on the right side represent incomes being paid by businesses to consumers. 
C)  resources flow to businesses on the left side, and final goods and services flow to households on the right side. 
D)  households are buyers of factors of production on the left side and sellers of goods and services on the right side. 
E)  the dollar value on the left side is unrelated to the dollar value on the right side.

Question 17

The following question are based on the following diagram:
  
-In the market diagram,excess demand is best represented by triangle

Accepted Answer

A)  ABE. 
B)  ABD. 
C)  BCE. 
D)  AED. 
E)  CED. 
A)  ABE. 
B)  ABD. 
C)  BCE. 
D)  AED. 
E)  CED.

Question 18

New residents moving into a growing community increase the

Accepted Answer

A)  size of housing. 
B)  elegance of housing. 
C)  housing surplus. 
D)  quantity demanded of housing. 
E)  demand for housing. 
A)  size of housing. 
B)  elegance of housing. 
C)  housing surplus. 
D)  quantity demanded of housing. 
E)  demand for housing.

Question 19

In free markets,the price system encourages producers to meet consumers' wants because

Accepted Answer

A)  it signals to producers which goods are profitable. 
B)  producers have the public interest in mind. 
C)  it allows the government to direct firms to the best production technique. 
D)  it rewards consumers for the resources they bring to the marketplace. 
E)  consumers are generally willing to pay more than the actual price. 
A)  it signals to producers which goods are profitable. 
B)  producers have the public interest in mind. 
C)  it allows the government to direct firms to the best production technique. 
D)  it rewards consumers for the resources they bring to the marketplace. 
E)  consumers are generally willing to pay more than the actual price.

Question 20

In a free market,actual price will

Accepted Answer

A)  remain unchanged as equilibrium price changes. 
B)  move toward equilibrium price. 
C)  cause the demand and supply curves to shift directions. 
D)  always exceed equilibrium price. 
E)  be very difficult to calculate. 
A)  remain unchanged as equilibrium price changes. 
B)  move toward equilibrium price. 
C)  cause the demand and supply curves to shift directions. 
D)  always exceed equilibrium price. 
E)  be very difficult to calculate.

Exam 2: Markets and Prices

A decrease in demand

The following question are based on the following graph: The curves D and S represent the market demand and supply curves for wheat in 1960. The curves D₁ and S₁ represent the market demand and supply curves in 2000. Assume there were no support programs in either year. -In the graph

During the summer months,it is not unusual for both the price and the quantity consumed of gasoline to rise.These conditions reflect a(n)

In the United States about 90 percent of all goods and services are produced by

One notable characteristic of a public good is that

If the supply curve for peaches slopes upward,a decrease in the demand for peaches causes the equilibrium price

When demand decreases in a competitive market

The following question are based on the following diagram: -For a market to exhibit excess demand

If the demand curve slopes downward and the supply curve slopes upward,which of the following events leads to an increase in both the equilibrium price and quantity?

The following question are based on the following diagram: -At the equilibrium price

A decrease in supply

Individuals who purchase the final goods and services of an economy are called

The price system determines the level and composition of output because it relies on firms' acting in accord with

Economic theory states that more of a good is supplied at a higher price than a lower one,yet the sales of digital cameras have increased while their prices have fallen.This statement

The distribution of income generated by the price system

The following question are based on the following circular flow diagram: -In the model of the circular flow

The following question are based on the following diagram: -In the market diagram,excess demand is best represented by triangle

New residents moving into a growing community increase the

In free markets,the price system encourages producers to meet consumers' wants because

In a free market,actual price will

What is Economics

The Business Firm: Organization,motivation,and Optimal Input Decisions

Getting Behind the Demand and Supply Curves

Market Demand and Price Elasticity

Economic Efficiency,market Supply,and Perfect Competition

Monopoly and Its Regulation

Monopolistic Competition,oligopoly,and Antitrust Policy

Pollution and the Environment

The Supply and Demand for Labor

Interest,rent,and Profit

Poverty,income Inequality,and Discrimination

Economic Growth

Public Goods and the Role of the Government

National Income and Product

Business Fluctuations and Unemployment

The Determination of National Output and the Keynesian Multiplier

Fiscal Policy and National Output

Inflation

Money and the Banking System

The Federal Reserve and Monetary Policy

Supply Shocks and Inflation

Productivity,growth,and Technology Policy

Surpluses,deficits,public Debt,and the Federal Budget

Monetary Policy,interest Rates,and Economic Activity

Controversies Over Stabilization Policy

International Trade

Exchange Rates and the Balance of Payments

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