Question 1

Exhibit 4-3 Demand and supply curves
  
-If the market demand and supply curves shift as given in Exhibit 4-3,the resulting new equilibrium will show a/an:

Accepted Answer

A) increase in market price and a decrease in the quantity exchanged. 
B) decrease in market price and a decrease in the quantity exchanged. 
C) increase in market price and an increase in the quantity exchanged. 
D) decrease in market price and an increase in the quantity exchanged. 
E) decrease in market price and no change in the quantity exchanged. 
A) increase in market price and a decrease in the quantity exchanged. 
B) decrease in market price and a decrease in the quantity exchanged. 
C) increase in market price and an increase in the quantity exchanged. 
D) decrease in market price and an increase in the quantity exchanged. 
E) decrease in market price and no change in the quantity exchanged.

Question 2

Exhibit 4-5 Supply and demand data for cars
  
-In Exhibit 4-5,assume that the government initially sets a price floor of $30 000 for cars,and then removes this price floor.What effect will this price change have?

Accepted Answer

A) The price of cars will rise. 
B) The quantity of cars demanded will fall. 
C) The quantity of cars supplied will decline. 
D) Quantity supplied will continue to exceed quantity demanded. 
A) The price of cars will rise. 
B) The quantity of cars demanded will fall. 
C) The quantity of cars supplied will decline. 
D) Quantity supplied will continue to exceed quantity demanded.

Question 3

The shortage occurs because:

Accepted Answer

A) the quantity supplied is more than the quantity demanded at this price. 
B) of the black market. 
C) the quantity supplied is less than the quantity demanded at this price. 
D) the price floor was set by the government. 
A) the quantity supplied is more than the quantity demanded at this price. 
B) of the black market. 
C) the quantity supplied is less than the quantity demanded at this price. 
D) the price floor was set by the government.

Question 4

Ethical considerations mean that there is a support for a policy of:

Accepted Answer

A) increasing taxes to lower income earners. 
B) reducing taxes to higher income earners. 
C) reducing income inequality below the equilibrium level. 
D) reducing income inequality above the equilibrium level. 
A) increasing taxes to lower income earners. 
B) reducing taxes to higher income earners. 
C) reducing income inequality below the equilibrium level. 
D) reducing income inequality above the equilibrium level.

Question 5

Exhibit 4-4 Demand and supply curves
  
-In Exhibit 4-4,a movement from A to B is best explained by:

Accepted Answer

A) an increase in income and in the number of suppliers. 
B) an increase in the price of complements and an increase in the price of inputs. 
C) an increase in income and a decrease in the number of producers. 
D) a decrease in income and an improvement in the technology used to produce the good. 
E) an increase in the number of suppliers and a decrease in price of substitutes. 
A) an increase in income and in the number of suppliers. 
B) an increase in the price of complements and an increase in the price of inputs. 
C) an increase in income and a decrease in the number of producers. 
D) a decrease in income and an improvement in the technology used to produce the good. 
E) an increase in the number of suppliers and a decrease in price of substitutes.

Question 6

Consider the market for grapes.An increase in the wage paid to grape pickers will cause the:

Accepted Answer

A) demand curve for grapes to shift to the right, resulting in a higher equilibrium price for grapes and a reduction in the quantity consumed. 
B) demand curve for grapes to shift to the left, resulting in a lower equilibrium price for grapes and an increase in the quantity consumed. 
C) supply curve for grapes to shift to the left, resulting in a lower equilibrium price for grapes and a decrease in the quantity consumed. 
D) supply curve for grapes to shift to the left, resulting in a higher equilibrium price for grapes and a decrease in the quantity consumed. 
A) demand curve for grapes to shift to the right, resulting in a higher equilibrium price for grapes and a reduction in the quantity consumed. 
B) demand curve for grapes to shift to the left, resulting in a lower equilibrium price for grapes and an increase in the quantity consumed. 
C) supply curve for grapes to shift to the left, resulting in a lower equilibrium price for grapes and a decrease in the quantity consumed. 
D) supply curve for grapes to shift to the left, resulting in a higher equilibrium price for grapes and a decrease in the quantity consumed.

Question 7

An externality is:

Accepted Answer

A) always a benefit to the recipient. 
B) always a detriment to the recipient. 
C) an activity that occurs in a business which is unknown to management. 
D) an unintended benefit or cost imposed on third parties as a result of economic activity. 
E) an act, caused by a firm located in this country, which has an effect on a person in a foreign country. 
A) always a benefit to the recipient. 
B) always a detriment to the recipient. 
C) an activity that occurs in a business which is unknown to management. 
D) an unintended benefit or cost imposed on third parties as a result of economic activity. 
E) an act, caused by a firm located in this country, which has an effect on a person in a foreign country.

Question 8

An economic justification for government providing public goods and services is that many people can benefit regardless of whether they pay or not.

Accepted Answer

A) True 
 B)False

Question 9

More information on the benefits of honey will result in more honey bought.

Accepted Answer

A) True 
 B)False

Question 10

In the case of negative externalities in production,the firm's internal costs:

Accepted Answer

A) exceed the external costs. 
B) are less than the external costs. 
C) equal the external costs. 
D) understate the true cost of producing the product. 
E) overstate the true cost of producing the product. 
A) exceed the external costs. 
B) are less than the external costs. 
C) equal the external costs. 
D) understate the true cost of producing the product. 
E) overstate the true cost of producing the product.

Question 11

If the government imposes a price ceiling above the market equilibrium price,then:

Accepted Answer

A) there will be excess supply. 
B) there will be excess demand. 
C) the market equilibrium price will prevail. 
D) the price set by the government will prevail. 
A) there will be excess supply. 
B) there will be excess demand. 
C) the market equilibrium price will prevail. 
D) the price set by the government will prevail.

Question 12

If the government imposes a price ceiling below the market equilibrium price,then:

Accepted Answer

A) there will be no changes to the market equilibrium. 
B) there will be excess supply. 
C) there will be more goods to meet the additional demand. 
D) there will be less goods to meet the demand. 
A) there will be no changes to the market equilibrium. 
B) there will be excess supply. 
C) there will be more goods to meet the additional demand. 
D) there will be less goods to meet the demand.

Question 13

Ceteris paribus,an increase in the supply of a good causes which of the following?

Accepted Answer

A) Lowers the equilibrium price and reduces the quantity bought and sold. 
B) Raises the equilibrium price and raises the quantity bought and sold. 
C) Raises the equilibrium price and increases the quantity bought and sold. 
D) Lowers the equilibrium price and increases the quantity bought and sold. 
E) Equilibrium price and equilibrium quantity change are indeterminate. 
A) Lowers the equilibrium price and reduces the quantity bought and sold. 
B) Raises the equilibrium price and raises the quantity bought and sold. 
C) Raises the equilibrium price and increases the quantity bought and sold. 
D) Lowers the equilibrium price and increases the quantity bought and sold. 
E) Equilibrium price and equilibrium quantity change are indeterminate.

Question 14

There was an extensive black market (illegal market)for many consumer products in the United States during the Second World War.A likely explanation of the black market is that:

Accepted Answer

A) the prices of goods were artificially held down by price controls. 
B) black markets were legal during the war. 
C) goods were not subject to price controls. 
D) gasoline rationing greatly restricted civilians from driving to stores. 
A) the prices of goods were artificially held down by price controls. 
B) black markets were legal during the war. 
C) goods were not subject to price controls. 
D) gasoline rationing greatly restricted civilians from driving to stores.

Question 15

There are apartments in Perth whose rooftops overlook Subiaco Oval.On game day you can find free riders on the roof enjoying _____.

Accepted Answer

A) beer 
B) free property rights 
C) an externality 
D) a public good 
E) excess utility 
A) beer 
B) free property rights 
C) an externality 
D) a public good 
E) excess utility

Question 16

Suppose the government sets a price floor of $10.It means that the government:

Accepted Answer

A) wants to prevent market price from rising above $10. 
B) wants to prevent market price from falling below $10. 
C) has no intentions to intervene in the market. 
D) wants a market to determine the market price. 
A) wants to prevent market price from rising above $10. 
B) wants to prevent market price from falling below $10. 
C) has no intentions to intervene in the market. 
D) wants a market to determine the market price.

Question 17

Assuming supply is held constant,an increase in demand for a product will cause a decrease in the market price and the amount bought and sold.

Accepted Answer

A) True 
 B)False

Question 18

What are the effects of shifts in demand on market equilibrium?

Accepted Answer

A) Decrease in demand will result in higher equilibrium price and lower equilibrium quantity. 
B) Decrease in demand will result in lower equilibrium price and lower equilibrium quantity. 
C) Decrease in demand will result in higher equilibrium price and higher equilibrium quantity. 
D) Decrease in demand will result in the same equilibrium price and equilibrium quantity. 
A) Decrease in demand will result in higher equilibrium price and lower equilibrium quantity. 
B) Decrease in demand will result in lower equilibrium price and lower equilibrium quantity. 
C) Decrease in demand will result in higher equilibrium price and higher equilibrium quantity. 
D) Decrease in demand will result in the same equilibrium price and equilibrium quantity.

Question 19

When there is market failure due to a negative externality:

Accepted Answer

A) there are no way of correcting it. 
B) setting price equal to marginal social cost will solve it. 
C) the free market produces output at a too high price. 
D) externalities have been taken into account. 
E) the best solution eliminates the externality entirely. 
A) there are no way of correcting it. 
B) setting price equal to marginal social cost will solve it. 
C) the free market produces output at a too high price. 
D) externalities have been taken into account. 
E) the best solution eliminates the externality entirely.

Question 20

A vaccination shot provides a/an:

Accepted Answer

A) beneficial opportunity cost. 
B) positive externality. 
C) out-resourcing benefit. 
D) managed-care opportunity benefit. 
A) beneficial opportunity cost. 
B) positive externality. 
C) out-resourcing benefit. 
D) managed-care opportunity benefit.

Exhibit 4-3 Demand and supply curves -If the market demand and supply curves shift as given in Exhibit 4-3,the resulting new equilibrium will show a/an:

Exhibit 4-5 Supply and demand data for cars -In Exhibit 4-5,assume that the government initially sets a price floor of $30 000 for cars,and then removes this price floor.What effect will this price change have?

The shortage occurs because:

Ethical considerations mean that there is a support for a policy of:

Exhibit 4-4 Demand and supply curves -In Exhibit 4-4,a movement from A to B is best explained by:

Consider the market for grapes.An increase in the wage paid to grape pickers will cause the:

An externality is:

An economic justification for government providing public goods and services is that many people can benefit regardless of whether they pay or not.

More information on the benefits of honey will result in more honey bought.

In the case of negative externalities in production,the firm's internal costs:

If the government imposes a price ceiling above the market equilibrium price,then:

If the government imposes a price ceiling below the market equilibrium price,then:

Ceteris paribus,an increase in the supply of a good causes which of the following?

There was an extensive black market (illegal market)for many consumer products in the United States during the Second World War.A likely explanation of the black market is that:

There are apartments in Perth whose rooftops overlook Subiaco Oval.On game day you can find free riders on the roof enjoying _____.

Suppose the government sets a price floor of $10.It means that the government:

Assuming supply is held constant,an increase in demand for a product will cause a decrease in the market price and the amount bought and sold.

What are the effects of shifts in demand on market equilibrium?

When there is market failure due to a negative externality:

A vaccination shot provides a/an:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters

Exam 4: Markets in action

Exhibit 4-3 Demand and supply curves -If the market demand and supply curves shift as given in Exhibit 4-3,the resulting new equilibrium will show a/an:

Exhibit 4-5 Supply and demand data for cars -In Exhibit 4-5,assume that the government initially sets a price floor of $30 000 for cars,and then removes this price floor.What effect will this price change have?

The shortage occurs because:

Ethical considerations mean that there is a support for a policy of:

Exhibit 4-4 Demand and supply curves -In Exhibit 4-4,a movement from A to B is best explained by:

Consider the market for grapes.An increase in the wage paid to grape pickers will cause the:

An externality is:

An economic justification for government providing public goods and services is that many people can benefit regardless of whether they pay or not.

More information on the benefits of honey will result in more honey bought.

In the case of negative externalities in production,the firm's internal costs:

If the government imposes a price ceiling above the market equilibrium price,then:

If the government imposes a price ceiling below the market equilibrium price,then:

Ceteris paribus,an increase in the supply of a good causes which of the following?

There was an extensive black market (illegal market)for many consumer products in the United States during the Second World War.A likely explanation of the black market is that:

There are apartments in Perth whose rooftops overlook Subiaco Oval.On game day you can find free riders on the roof enjoying _____.

Suppose the government sets a price floor of $10.It means that the government:

Assuming supply is held constant,an increase in demand for a product will cause a decrease in the market price and the amount bought and sold.

What are the effects of shifts in demand on market equilibrium?

When there is market failure due to a negative externality:

A vaccination shot provides a/an:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters