Question 1

A group of firms and individuals in touch with each other to buy or sell something is called a

Accepted Answer

A)  model. 
B)  market. 
C)  merger. 
D)  microcosm. 
E)  melee. 
A)  model. 
B)  market. 
C)  merger. 
D)  microcosm. 
E)  melee.

Question 2

Increases in demand are caused by

Accepted Answer

A)  decreases in price. 
B)  increases in costs of production. 
C)  decreases in the prices of substitute goods. 
D)  increases in income. 
E)  decreases in the number of consumers in the market. 
A)  decreases in price. 
B)  increases in costs of production. 
C)  decreases in the prices of substitute goods. 
D)  increases in income. 
E)  decreases in the number of consumers in the market.

Question 3

In general,supply curves slope upward to the right because

Accepted Answer

A)  increases in the price of a commodity lead to rightward shifts of the supply curve. 
B)  rising prices motivate producers to offer more units for sale. 
C)  technology progresses over time, increasing the ability of firms to produce more at existing prices. 
D)  of increases in input prices as production is increased. 
E)  empirical studies almost always show that this is the case. 
A)  increases in the price of a commodity lead to rightward shifts of the supply curve. 
B)  rising prices motivate producers to offer more units for sale. 
C)  technology progresses over time, increasing the ability of firms to produce more at existing prices. 
D)  of increases in input prices as production is increased. 
E)  empirical studies almost always show that this is the case.

Question 4

In perfectly competitive markets,prices are

Accepted Answer

A)  set by powerful firms. 
B)  unaffected by actions of individual buyers or sellers. 
C)  regulated by government interaction. 
D)  likely to remain unchanged for long periods of time. 
E)  unimportant. 
A)  set by powerful firms. 
B)  unaffected by actions of individual buyers or sellers. 
C)  regulated by government interaction. 
D)  likely to remain unchanged for long periods of time. 
E)  unimportant.

Question 5

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

Accepted Answer

A)  ABC. 
B)  CDB. 
C)  AED. 
D)  DEC. 
E)  BEC. 
A)  ABC. 
B)  CDB. 
C)  AED. 
D)  DEC. 
E)  BEC.

Question 6

In the mid-1980s buyers demanded 2.7 million bushels of wheat at $3 per bushel.In the mid-1990s buyers demanded about 2.4 million bushels of wheat at $3 per bushel.From this information it is clear that

Accepted Answer

A)  demand decreased. 
B)  supply decreased. 
C)  demand was unchanged; only the quantity demanded fell. 
D)  the demand curve sloped upward. 
E)  the number of consumers in the market and their incomes rose. 
A)  demand decreased. 
B)  supply decreased. 
C)  demand was unchanged; only the quantity demanded fell. 
D)  the demand curve sloped upward. 
E)  the number of consumers in the market and their incomes rose.

Question 7

The following question are based on the following circular flow diagram:
  
-In a free market,the price system provides for an adequate rate of growth by

Accepted Answer

A)  making the augmentation of a society's resources unprofitable. 
B)  ensuring an upward-sloping supply curve. 
C)  meeting each consumer's demand. 
D)  providing strong incentives for firms to introduce new technology. 
E)  ensuring that each good is produced in the proper amount. 
A)  making the augmentation of a society's resources unprofitable. 
B)  ensuring an upward-sloping supply curve. 
C)  meeting each consumer's demand. 
D)  providing strong incentives for firms to introduce new technology. 
E)  ensuring that each good is produced in the proper amount.

Question 8

A major social and economic institution that came out of the Industrial Revolution was

Accepted Answer

A)  the church. 
B)  universities. 
C)  serfdom. 
D)  the military. 
E)  the factory. 
A)  the church. 
B)  universities. 
C)  serfdom. 
D)  the military. 
E)  the factory.

Question 9

A local farmer says that he can sell 50 dozen ears of corn per day at his roadside stand."But if I raise my price," he claims,"the demand falls." The farmer is

Accepted Answer

A)  using the term demand correctly and is right in his conclusion. 
B)  confusing demand and supply. 
C)  incorrect because changes in prices affect quantity demanded, not demand. 
D)  correct only if factors such as the prices of competitive items, the number of buyers, and the tastes of buyers remain constant. 
E)  incorrect because he does not hold input prices and technology constant in his analysis. 
A)  using the term demand correctly and is right in his conclusion. 
B)  confusing demand and supply. 
C)  incorrect because changes in prices affect quantity demanded, not demand. 
D)  correct only if factors such as the prices of competitive items, the number of buyers, and the tastes of buyers remain constant. 
E)  incorrect because he does not hold input prices and technology constant in his analysis.

Question 10

If actual price is above equilibrium price

Accepted Answer

A)  demand falls. 
B)  supply rises. 
C)  shortages will emerge. 
D)  the quantity supplied exceeds the quantity demanded. 
E)  the equilibrium price rises. 
A)  demand falls. 
B)  supply rises. 
C)  shortages will emerge. 
D)  the quantity supplied exceeds the quantity demanded. 
E)  the equilibrium price rises.

Question 11

Which of the following most likely leads to an increase in the quantity demanded?

Accepted Answer

A)  an increase in price 
B)  a decrease in the price of a substitute good 
C)  a decrease in income 
D)  an increase in supply 
E)  an increase in the cost of production 
A)  an increase in price 
B)  a decrease in the price of a substitute good 
C)  a decrease in income 
D)  an increase in supply 
E)  an increase in the cost of production

Question 12

Which of the following activities is most likely to generate an external economy?

Accepted Answer

A)  playing a stereo full blast in a dorm room during reading days 
B)  eating a pizza in a restaurant 
C)  driving while intoxicated 
D)  keeping a neatly mown, weedless lawn in a suburban neighborhood 
E)  quietly napping during an Economics class 
A)  playing a stereo full blast in a dorm room during reading days 
B)  eating a pizza in a restaurant 
C)  driving while intoxicated 
D)  keeping a neatly mown, weedless lawn in a suburban neighborhood 
E)  quietly napping during an Economics class

Question 13

The following question are based on the following circular flow diagram:
  
-In the circular flow model,income to the household is,from the point of view of the firm that pays this income,the same things as

Accepted Answer

A)  investment. 
B)  savings. 
C)  revenue. 
D)  production costs. 
E)  working capital. 
A)  investment. 
B)  savings. 
C)  revenue. 
D)  production costs. 
E)  working capital.

Question 14

A market demand curve

Accepted Answer

A)  shifts as the price falls. 
B)  slopes upward from left to right. 
C)  is unaffected by changes in consumers' tastes and incomes. 
D)  measures the rate of growth of per capita output. 
E)  shows the amount buyers would like to purchase at various prices. 
A)  shifts as the price falls. 
B)  slopes upward from left to right. 
C)  is unaffected by changes in consumers' tastes and incomes. 
D)  measures the rate of growth of per capita output. 
E)  shows the amount buyers would like to purchase at various prices.

Question 15

Werner H.,an engineer very experienced in bridge design,is looking for a position with a firm that specializes in bridge building.In presenting his qualifications,he takes care to point out his experience in handling difficult terrain.Werner is currently doing business in a ________ market.

Accepted Answer

A)  consumers' 
B)  business 
C)  product 
D)  resource 
E)  closed 
A)  consumers' 
B)  business 
C)  product 
D)  resource 
E)  closed

Question 16

The following question are based on the following diagram:
  
-On the basis of the information provided in the diagram,the closed triangle represents

Accepted Answer

A)  excess supply. 
B)  excess demand. 
C)  equilibrium prices. 
D)  actual prices. 
E)  surplus value. 
A)  excess supply. 
B)  excess demand. 
C)  equilibrium prices. 
D)  actual prices. 
E)  surplus value.

Question 17

Which of the following supply conditions leads to an increase in the equilibrium price?

Accepted Answer

A)  excess supply 
B)  a decrease in supply 
C)  the law of supply 
D)  an upward-sloping supply 
E)  an elastic supply 
A)  excess supply 
B)  a decrease in supply 
C)  the law of supply 
D)  an upward-sloping supply 
E)  an elastic supply

Question 18

The following question are based on the following graph showing the market for corn:
  
-At the price of $1 per bushel,there would be an excess ________ million bushels.

Accepted Answer

A)  demand of 200 
B)  demand of 300 
C)  demand of 400 
D)  supply of 200 
E)  supply of 300 
A)  demand of 200 
B)  demand of 300 
C)  demand of 400 
D)  supply of 200 
E)  supply of 300

Question 19

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

Accepted Answer

A)  demand must exceed supply. 
B)  the market must be growing. 
C)  demand must increase. 
D)  the equilibrium price must be too high to clear the market. 
E)  the actual price must be above the equilibrium price. 
A)  demand must exceed supply. 
B)  the market must be growing. 
C)  demand must increase. 
D)  the equilibrium price must be too high to clear the market. 
E)  the actual price must be above the equilibrium price.

Question 20

A fall in which of the following increases the demand for large automobiles?

Accepted Answer

A)  the price of small automobiles 
B)  the price of gasoline 
C)  the price of large automobiles 
D)  buyers' incomes 
E)  consumers' preferences for driving large automobiles 
A)  the price of small automobiles 
B)  the price of gasoline 
C)  the price of large automobiles 
D)  buyers' incomes 
E)  consumers' preferences for driving large automobiles

Exam 2: Markets and Prices

A group of firms and individuals in touch with each other to buy or sell something is called a

Increases in demand are caused by

In general,supply curves slope upward to the right because

In perfectly competitive markets,prices are

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

In the mid-1980s buyers demanded 2.7 million bushels of wheat at $3 per bushel.In the mid-1990s buyers demanded about 2.4 million bushels of wheat at $3 per bushel.From this information it is clear that

The following question are based on the following circular flow diagram: -In a free market,the price system provides for an adequate rate of growth by

A major social and economic institution that came out of the Industrial Revolution was

A local farmer says that he can sell 50 dozen ears of corn per day at his roadside stand."But if I raise my price," he claims,"the demand falls." The farmer is

If actual price is above equilibrium price

Which of the following most likely leads to an increase in the quantity demanded?

Which of the following activities is most likely to generate an external economy?

The following question are based on the following circular flow diagram: -In the circular flow model,income to the household is,from the point of view of the firm that pays this income,the same things as

A market demand curve

Werner H.,an engineer very experienced in bridge design,is looking for a position with a firm that specializes in bridge building.In presenting his qualifications,he takes care to point out his experience in handling difficult terrain.Werner is currently doing business in a ________ market.

The following question are based on the following diagram: -On the basis of the information provided in the diagram,the closed triangle represents

Which of the following supply conditions leads to an increase in the equilibrium price?

The following question are based on the following graph showing the market for corn: -At the price of $1 per bushel,there would be an excess ________ million bushels.

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

A fall in which of the following increases the demand for large automobiles?

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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