Question 1

When an increase in the price of good A leads to a decrease in the price of good B,then these goods are said to be

Accepted Answer

A)  generic. 
B)  inferior. 
C)  abundant. 
D)  complements. 
E)  replacements. 
A)  generic. 
B)  inferior. 
C)  abundant. 
D)  complements. 
E)  replacements.

Question 2

The fact that there is no way to prevent citizens from benefiting from expenditures on national defense,whether they pay taxes or not,is an example of a(n)

Accepted Answer

A)  unfair distribution of income. 
B)  external economy. 
C)  external diseconomy. 
D)  public good. 
E)  transfer payment. 
A)  unfair distribution of income. 
B)  external economy. 
C)  external diseconomy. 
D)  public good. 
E)  transfer payment.

Question 3

The following question are based on the following graph showing the market for corn:
  
-If the quantity supplied were less than the quantity demanded at a particular price,the equilibrium price would be achieved by

Accepted Answer

A)  rationing. 
B)  a decrease in supply. 
C)  an increase in the price that increases the quantity supplied and decreases the quantity demanded. 
D)  the piling up of inventories until firms were forced to lower the price. 
E)  an increase in demand that would induce firms to step up production. 
A)  rationing. 
B)  a decrease in supply. 
C)  an increase in the price that increases the quantity supplied and decreases the quantity demanded. 
D)  the piling up of inventories until firms were forced to lower the price. 
E)  an increase in demand that would induce firms to step up production.

Question 4

The following question are based on the following diagram:
  
-If the actual price of sweatshirts is $10 each,the market is not in equilibrium because

Accepted Answer

A)  all consumers willing to pay $10 for a sweatshirt are unable to buy one. 
B)  there is excess demand. 
C)  the rate at which sweatshirts are supplied is greater than the rate at which they are demanded. 
D)  the price at which sweatshirts are demanded is less than the price at which they are supplied. 
E)  the price is not equal to the quantity. 
A)  all consumers willing to pay $10 for a sweatshirt are unable to buy one. 
B)  there is excess demand. 
C)  the rate at which sweatshirts are supplied is greater than the rate at which they are demanded. 
D)  the price at which sweatshirts are demanded is less than the price at which they are supplied. 
E)  the price is not equal to the quantity.

Question 5

From the event depicted in the graph,one can conclude that,over the period in question,wheat

Accepted Answer

A)  prices and output fell. 
B)  prices and output rose. 
C)  prices and income rose. 
D)  output and income fell. 
E)  prices fell and output rose. 
A)  prices and output fell. 
B)  prices and output rose. 
C)  prices and income rose. 
D)  output and income fell. 
E)  prices fell and output rose.

Question 6

The following question are based on the following diagram:
  
-In the diagram,movement toward equilibrium would cause the

Accepted Answer

A)  supply curve to shift to the right and the demand curve to shift to the left. 
B)  actual price to fall below $10 and the quantity supplied and demanded to fall. 
C)  actual price to remain the same but the supply to drift to the left as producers cut down on production. 
D)  actual price to rise above $10 and the quantity demanded to fall. 
E)  actual price to fall below $10, the quantity supplied to fall, and the quantity demanded to rise. 
A)  supply curve to shift to the right and the demand curve to shift to the left. 
B)  actual price to fall below $10 and the quantity supplied and demanded to fall. 
C)  actual price to remain the same but the supply to drift to the left as producers cut down on production. 
D)  actual price to rise above $10 and the quantity demanded to fall. 
E)  actual price to fall below $10, the quantity supplied to fall, and the quantity demanded to rise.

Question 7

The following question are based on the following table:
  
-A firm is able to purchase 1 unit of raw material for $2 and convert that unit into a finished product that sells for $25.Four production techniques are available,as shown in the table.If labor costs $1 per hour and machine time costs $3 per hour,the firm should

Accepted Answer

A)  use technique A. 
B)  use technique B. 
C)  use technique C. 
D)  use technique D. 
E)  not produce at all. 
A)  use technique A. 
B)  use technique B. 
C)  use technique C. 
D)  use technique D. 
E)  not produce at all.

Question 8

The following question are based on the following table:
  
-The profit the producer makes using this minimum cost technique is

Accepted Answer

A)  $4. 
B)  $9. 
C)  $10. 
D)  $12. 
E)  $14. 
A)  $4. 
B)  $9. 
C)  $10. 
D)  $12. 
E)  $14.

Question 9

For a market to exist,there must be

Accepted Answer

A)  buyers and sellers. 
B)  a building such as a retail store. 
C)  third parties such as brokers and agents. 
D)  perfect information. 
E)  government oversight. 
A)  buyers and sellers. 
B)  a building such as a retail store. 
C)  third parties such as brokers and agents. 
D)  perfect information. 
E)  government oversight.

Question 10

Economists generally assume that the actual market price of an item approximates the equilibrium price.They make this assumption because

Accepted Answer

A)  their information is too limited to permit a more accurate guess. 
B)  as soon as the actual price shifts, the equilibrium price shifts. 
C)  forces in the market tend to push actual price toward equilibrium. 
D)  very few products ever vary in price from the equilibrium. 
E)  actual prices are set by the government. 
A)  their information is too limited to permit a more accurate guess. 
B)  as soon as the actual price shifts, the equilibrium price shifts. 
C)  forces in the market tend to push actual price toward equilibrium. 
D)  very few products ever vary in price from the equilibrium. 
E)  actual prices are set by the government.

Question 11

If 1,375 seats were available at any particular time,the equilibrium price would be

Accepted Answer

A)  $20. 
B)  $25. 
C)  $30. 
D)  $35. 
E)  $40. 
A)  $20. 
B)  $25. 
C)  $30. 
D)  $35. 
E)  $40.

Question 12

A change in demand means that there has been a

Accepted Answer

A)  movement along a given demand curve. 
B)  shift to the right or left of a given demand curve. 
C)  change in sellers' input prices. 
D)  corresponding change in supply. 
E)  permanent disequilibrium condition created in the market. 
A)  movement along a given demand curve. 
B)  shift to the right or left of a given demand curve. 
C)  change in sellers' input prices. 
D)  corresponding change in supply. 
E)  permanent disequilibrium condition created in the market.

Question 13

In a free market,producers' desires to maximize profit

Accepted Answer

A)  inevitably lead to rising market prices. 
B)  are inconsistent with incentives to introduce new technology. 
C)  guarantee that firms never take losses. 
D)  cause firms to use the most efficient techniques. 
E)  mean that government must control prices to prevent producers from overcharging consumers. 
A)  inevitably lead to rising market prices. 
B)  are inconsistent with incentives to introduce new technology. 
C)  guarantee that firms never take losses. 
D)  cause firms to use the most efficient techniques. 
E)  mean that government must control prices to prevent producers from overcharging consumers.

Question 14

In a free market,the price system determines how society's output is distributed by

Accepted Answer

A)  ensuring that low income people can buy all the necessities for living. 
B)  providing goods for those willing and able to pay at least the equilibrium price. 
C)  determining each person's income in the labor market according to the tax rate imposed by the state. 
D)  allowing all those who desire a commodity to buy it. 
E)  ensuring that each commodity is produced by the most efficient technique. 
A)  ensuring that low income people can buy all the necessities for living. 
B)  providing goods for those willing and able to pay at least the equilibrium price. 
C)  determining each person's income in the labor market according to the tax rate imposed by the state. 
D)  allowing all those who desire a commodity to buy it. 
E)  ensuring that each commodity is produced by the most efficient technique.

Question 15

In a market economy,who gets what

Accepted Answer

A)  depends on the amount and kinds of resources individuals own. 
B)  cannot be resolved without government intervention. 
C)  is unrelated to the questions of what goods are produced and how. 
D)  is determined by the production possibilities curve. 
E)  is an irrelevant and unnecessary concern. 
A)  depends on the amount and kinds of resources individuals own. 
B)  cannot be resolved without government intervention. 
C)  is unrelated to the questions of what goods are produced and how. 
D)  is determined by the production possibilities curve. 
E)  is an irrelevant and unnecessary concern.

Question 16

The following question are based on the following table:
  
-This table shows the number of theater tickets the public is willing to buy for a particular show at various prices.If we plotted the points in this table,the result would be a ________ curve.

Accepted Answer

A)  growth 
B)  demand 
C)  cost 
D)  supply 
E)  production possibilities 
A)  growth 
B)  demand 
C)  cost 
D)  supply 
E)  production possibilities

Question 17

If both the supply and demand for a good decrease,we can predict with certainty that

Accepted Answer

A)  the quantity sold will fall. 
B)  the price will fall. 
C)  the price will rise. 
D)  the quantity sold will rise. 
E)  neither the price nor the quantity sold will be affected. 
A)  the quantity sold will fall. 
B)  the price will fall. 
C)  the price will rise. 
D)  the quantity sold will rise. 
E)  neither the price nor the quantity sold will be affected.

Question 18

A firm dumping pollutants into a stream,rendering the water unfit for use by those downstream,is an example of a(n)

Accepted Answer

A)  unfair distribution of income. 
B)  external economy. 
C)  external diseconomy. 
D)  public good. 
E)  transfer payment. 
A)  unfair distribution of income. 
B)  external economy. 
C)  external diseconomy. 
D)  public good. 
E)  transfer payment.

Exam 2: Markets and Prices

When an increase in the price of good A leads to a decrease in the price of good B,then these goods are said to be

The fact that there is no way to prevent citizens from benefiting from expenditures on national defense,whether they pay taxes or not,is an example of a(n)

The following question are based on the following graph showing the market for corn: -If the quantity supplied were less than the quantity demanded at a particular price,the equilibrium price would be achieved by

The following question are based on the following diagram: -If the actual price of sweatshirts is $10 each,the market is not in equilibrium because

From the event depicted in the graph,one can conclude that,over the period in question,wheat

The following question are based on the following diagram: -In the diagram,movement toward equilibrium would cause the

The following question are based on the following table: -The profit the producer makes using this minimum cost technique is

For a market to exist,there must be

Economists generally assume that the actual market price of an item approximates the equilibrium price.They make this assumption because

If 1,375 seats were available at any particular time,the equilibrium price would be

A change in demand means that there has been a

In a free market,producers' desires to maximize profit

In a free market,the price system determines how society's output is distributed by

In a market economy,who gets what

The following question are based on the following table: -This table shows the number of theater tickets the public is willing to buy for a particular show at various prices.If we plotted the points in this table,the result would be a ________ curve.

If both the supply and demand for a good decrease,we can predict with certainty that

A firm dumping pollutants into a stream,rendering the water unfit for use by those downstream,is an example of a(n)

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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