Question 1

Ceteris paribus,a decrease in the price of a good will cause the

Accepted Answer

A) quantity demanded of the good to decrease. 
B) quantity supplied of the good to increase. 
C) producer surplus derived from the good to decrease. 
D) supply of the good to decrease. 
A) quantity demanded of the good to decrease. 
B) quantity supplied of the good to increase. 
C) producer surplus derived from the good to decrease. 
D) supply of the good to decrease. C

Question 2

Suppose demand decreases and supply decreases.Which of the following will happen?

Accepted Answer

A) Equilibrium price will rise,fall,or stay the same while equilibrium quantity will decrease. 
B) Equilibrium price will rise,fall,or stay the same while equilibrium quantity will increase 
C) Equilibrium quantity will rise,fall,or stay the same and equilibrium price will increase. 
D) Equilibrium quantity will rise,fall,or stay the same while equilibrium price will decrease. 
E) The change in equilibrium price and quantity cannot be determined. 
A) Equilibrium price will rise,fall,or stay the same while equilibrium quantity will decrease. 
B) Equilibrium price will rise,fall,or stay the same while equilibrium quantity will increase 
C) Equilibrium quantity will rise,fall,or stay the same and equilibrium price will increase. 
D) Equilibrium quantity will rise,fall,or stay the same while equilibrium price will decrease. 
E) The change in equilibrium price and quantity cannot be determined. A

Question 3

The law of demand indicates that

Accepted Answer

A) every physical good has a use. 
B) when people want a good badly enough,they will find a way to pay for it. 
C) the desire for a good is unrelated to its price. 
D) the quantity of a good that people will buy is inversely related to the price of the good. 
A) every physical good has a use. 
B) when people want a good badly enough,they will find a way to pay for it. 
C) the desire for a good is unrelated to its price. 
D) the quantity of a good that people will buy is inversely related to the price of the good. D

Question 4

When economists say the quantity supplied of a product has increased,they mean the

Accepted Answer

A) supply curve has shifted to the left. 
B) supply curve has shifted to the right. 
C) price of the product has risen,and consequently,suppliers are producing more of it. 
D) price of the product has fallen,and consequently,suppliers are producing less of it. 
A) supply curve has shifted to the left. 
B) supply curve has shifted to the right. 
C) price of the product has risen,and consequently,suppliers are producing more of it. 
D) price of the product has fallen,and consequently,suppliers are producing less of it.

Question 5

If the price of coffee decreases,the demand curve for tea (a substitute good)will

Accepted Answer

A) remain unchanged. 
B) shift to the right. 
C) shift to the left. 
D) do none of the above 
A) remain unchanged. 
B) shift to the right. 
C) shift to the left. 
D) do none of the above

Question 6

According to the law of supply,as the price of a good increases,

Accepted Answer

A) buyers will buy more of the good. 
B) buyers will buy less of the good. 
C) sellers will produce more of the good. 
D) sellers will produce less of the good. 
A) buyers will buy more of the good. 
B) buyers will buy less of the good. 
C) sellers will produce more of the good. 
D) sellers will produce less of the good.

Question 7

If a firm is not covering the cost of all resources employed by the firm (including the opportunity cost of resources owned by the firm),it will generally

Accepted Answer

A) go out of business in the long run. 
B) remain in business as long as the current conditions are unchanged. 
C) experience an increase in its stock price because investors will be attracted to it. 
D) attempt to expand the size of its operation. 
A) go out of business in the long run. 
B) remain in business as long as the current conditions are unchanged. 
C) experience an increase in its stock price because investors will be attracted to it. 
D) attempt to expand the size of its operation.

Question 8

If the supply of a good is relatively inelastic,this means that the quantity supplied of the good is

Accepted Answer

A) not very sensitive to the price of the good. 
B) highly sensitive to the price of the good. 
C) unrelated to the price of the good. 
D) none of the above. 
A) not very sensitive to the price of the good. 
B) highly sensitive to the price of the good. 
C) unrelated to the price of the good. 
D) none of the above.

Question 9

Which of the following will most likely result from a destruction of half of the Florida orange crop due to a hard freeze?

Accepted Answer

A) a decrease in the demand for oranges 
B) an increase in the supply of oranges 
C) an increase in the quantity of oranges bought and sold 
D) an increase in the price of oranges 
A) a decrease in the demand for oranges 
B) an increase in the supply of oranges 
C) an increase in the quantity of oranges bought and sold 
D) an increase in the price of oranges

Question 10

Ceteris paribus,an increase in the price of a good will cause the

Accepted Answer

A) quantity demanded of the good to increase. 
B) quantity supplied of the good to decrease. 
C) producer surplus derived from the good to increase. 
D) supply of the good to decrease. 
A) quantity demanded of the good to increase. 
B) quantity supplied of the good to decrease. 
C) producer surplus derived from the good to increase. 
D) supply of the good to decrease.

Question 11

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 12

In which statement(s)are "demand" and "quantity demanded" used correctly?
(I)"An increase in the price of coffee will reduce the quantity demanded of coffee."
(II)"An increase in the price of coffee will reduce the demand for cream used in coffee."

Accepted Answer

A) in both statements I and II 
B) in statement I only 
C) in statement II only 
D) in neither statements I nor II 
A) in both statements I and II 
B) in statement I only 
C) in statement II only 
D) in neither statements I nor II

Question 13

Which of the following would cause the price of automobiles to rise?

Accepted Answer

A) a decrease in the wages of autoworkers 
B) a reduction in the price of bus travel 
C) an increase in the price of gasoline 
D) an increase in consumer income 
A) a decrease in the wages of autoworkers 
B) a reduction in the price of bus travel 
C) an increase in the price of gasoline 
D) an increase in consumer income

Question 14

Figure 3-7
  
-In Figure 3-7,suppose D₁ and S₁ indicate the initial conditions in the market for ice cream.Which of the following changes would tend to cause the shift from D₁ to D₂ in the market for ice cream?

Accepted Answer

A) a decrease in the price of sugar,an ingredient used to produce ice cream 
B) an increase in the price of frozen yogurt,a substitute for ice cream 
C) abnormally cold weather that decreased consumer desire for ice cream 
D) an increase in the price of milk,an ingredient used to produce ice cream 
A) a decrease in the price of sugar,an ingredient used to produce ice cream 
B) an increase in the price of frozen yogurt,a substitute for ice cream 
C) abnormally cold weather that decreased consumer desire for ice cream 
D) an increase in the price of milk,an ingredient used to produce ice cream

Question 15

Figure 3-22

-Refer to Figure 3-22.Which of the four graphs represents the market for cars as a result of the adoption of new technology on assembly lines?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 16

"He [the producer] intends only his gain,and he is in this,as in many other cases,led by an invisible hand to promote an end which was no part of his intention." What famous economist made this statement?

Accepted Answer

A) Alfred Marshall 
B) Friedrich Hayek 
C) Adam Smith 
D) David Ricardo 
A) Alfred Marshall 
B) Friedrich Hayek 
C) Adam Smith 
D) David Ricardo

Question 17

If the demand for a good decreased,what would be the effect on the equilibrium price and quantity?

Accepted Answer

A) Price would increase,and quantity would decrease. 
B) Price would decrease,and quantity would decrease. 
C) Price would increase,and quantity would increase. 
D) Price would decrease,and quantity would increase. 
A) Price would increase,and quantity would decrease. 
B) Price would decrease,and quantity would decrease. 
C) Price would increase,and quantity would increase. 
D) Price would decrease,and quantity would increase.

Question 18

Figure 3-17
  
-Refer to Figure 3-17.When the price rises from P₁ to P₂,consumer surplus

Accepted Answer

A) increases by an amount equal to A. 
B) decreases by an amount equal to B + C. 
C) increases by an amount equal to B + C. 
D) decreases by an amount equal to C. 
A) increases by an amount equal to A. 
B) decreases by an amount equal to B + C. 
C) increases by an amount equal to B + C. 
D) decreases by an amount equal to C.

Question 19

If consumer incomes go up and you are analyzing the market for Harley Davidson motorcycles,the effect on the demand for motorcycles,ceteris paribus,will be

Accepted Answer

A) an upward movement along the demand curve for motorcycles. 
B) a downward movement along the demand curve for motorcycles. 
C) a rightward shift in the demand curve for motorcycles. 
D) a leftward shift in the demand curve for motorcycles. 
A) an upward movement along the demand curve for motorcycles. 
B) a downward movement along the demand curve for motorcycles. 
C) a rightward shift in the demand curve for motorcycles. 
D) a leftward shift in the demand curve for motorcycles.

Question 20

(I)The height of the demand curve for a commodity indicates the maximum amount the consumer would be willing to pay for each unit of the good. (II)The height of the supply curve for a commodity indicates the minimum price the seller would accept for each unit of the good.

Accepted Answer

A) I is true;II is false. 
B) I is false;II is true. 
C) Both I and II are false. 
D) Both I and II are true. 
A) I is true;II is false. 
B) I is false;II is true. 
C) Both I and II are false. 
D) Both I and II are true.

Exam 3: Asupply,demand,and the Market Process

Ceteris paribus,a decrease in the price of a good will cause the

Suppose demand decreases and supply decreases.Which of the following will happen?

The law of demand indicates that

When economists say the quantity supplied of a product has increased,they mean the

If the price of coffee decreases,the demand curve for tea (a substitute good)will

According to the law of supply,as the price of a good increases,

If a firm is not covering the cost of all resources employed by the firm (including the opportunity cost of resources owned by the firm),it will generally

If the supply of a good is relatively inelastic,this means that the quantity supplied of the good is

Which of the following will most likely result from a destruction of half of the Florida orange crop due to a hard freeze?

Ceteris paribus,an increase in the price of a good will cause the

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

In which statement(s)are "demand" and "quantity demanded" used correctly? (I)"An increase in the price of coffee will reduce the quantity demanded of coffee." (II)"An increase in the price of coffee will reduce the demand for cream used in coffee."

Which of the following would cause the price of automobiles to rise?

Figure 3-7 -In Figure 3-7,suppose D₁ and S₁ indicate the initial conditions in the market for ice cream.Which of the following changes would tend to cause the shift from D₁ to D₂ in the market for ice cream?

Figure 3-22 -Refer to Figure 3-22.Which of the four graphs represents the market for cars as a result of the adoption of new technology on assembly lines?

"He [the producer] intends only his gain,and he is in this,as in many other cases,led by an invisible hand to promote an end which was no part of his intention." What famous economist made this statement?

If the demand for a good decreased,what would be the effect on the equilibrium price and quantity?

Figure 3-17 -Refer to Figure 3-17.When the price rises from P₁ to P₂,consumer surplus

If consumer incomes go up and you are analyzing the market for Harley Davidson motorcycles,the effect on the demand for motorcycles,ceteris paribus,will be

(I)The height of the demand curve for a commodity indicates the maximum amount the consumer would be willing to pay for each unit of the good. (II)The height of the supply curve for a commodity indicates the minimum price the seller would accept for each unit of the good.

The Economic Approach

Asome Tools of the Economist

Asupply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Ataking the Nations Economic Pulse

Economic Fluctuations, unemployment, and Inflation

Aan Introduction to Basic Macroeconomic Markets

Dynamic Change, economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, output, and Employment

Creating an Environment for Growth and Prosperity

Institutions,policies,and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Aprice-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Government Spending and Taxation

The Economics of Social Security

The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Great Debates in Economics: Keynes Versus Hayek

The Crisis of 2008: Causes and Lessons for the Future

Lessons From the Great Depression

Lessons From Japan and Canada

The Federal Budget and the National Debt

The Economics of Healthcare

Education: Problems and Performance

Earnings Differences Between Men and Women

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

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