Question 1

Figure 3-17
  
-Refer to Figure 3-17.When the price is P₂,consumer surplus is

Accepted Answer

A) A. 
B) B. 
C) A + B. 
D) A + B + C. 
A) A. 
B) B. 
C) A + B. 
D) A + B + C.

Question 2

Figure 3-20
  
-Refer to Figure 3-20.At the equilibrium price,consumer surplus is

Accepted Answer

A) $480. 
B) $640. 
C) $1,120. 
D) $1,280. 
A) $480. 
B) $640. 
C) $1,120. 
D) $1,280.

Question 3

If price rises,what happens to the quantity demanded for a product?

Accepted Answer

A) It increases. 
B) It decreases. 
C) It does not change. 
D) Uncertain--economic theory has no answer to this question. 
A) It increases. 
B) It decreases. 
C) It does not change. 
D) Uncertain--economic theory has no answer to this question.

Question 4

The current demand for automobiles would decrease if

Accepted Answer

A) the price of gasoline fell. 
B) consumer income rose. 
C) consumers suddenly believed the price of automobiles would be sharply lower in the near future. 
D) consumers suddenly believed the price of automobiles would be sharply higher in the near future. 
A) the price of gasoline fell. 
B) consumer income rose. 
C) consumers suddenly believed the price of automobiles would be sharply lower in the near future. 
D) consumers suddenly believed the price of automobiles would be sharply higher in the near future.

Question 5

Market prices provide information to consumers,helping them coordinate their activities so long as

Accepted Answer

A) competition is present and buyers and sellers are free to choose mutually agreeable prices. 
B) prices are not allowed to rise too high,causing a shortage. 
C) prices are legally kept equal in all markets,preventing unfair price increases in markets with shortages and unfair price decreases when a market surplus is present. 
D) the government carefully screens producers and effectively keeps inefficient producers out of the market. 
A) competition is present and buyers and sellers are free to choose mutually agreeable prices. 
B) prices are not allowed to rise too high,causing a shortage. 
C) prices are legally kept equal in all markets,preventing unfair price increases in markets with shortages and unfair price decreases when a market surplus is present. 
D) the government carefully screens producers and effectively keeps inefficient producers out of the market.

Question 6

When there is excess supply of a product in a market,

Accepted Answer

A) price will tend to rise. 
B) price must be above the equilibrium price. 
C) producers will expand output and sales will rise. 
D) price must be below the equilibrium price. 
A) price will tend to rise. 
B) price must be above the equilibrium price. 
C) producers will expand output and sales will rise. 
D) price must be below the equilibrium price.

Question 7

Which of the following occurs when a shortage occurs in the market for a good?

Accepted Answer

A) Quantity demanded exceeds quantity supplied and the market mechanism pushes the price up,which in turn encourages more production and less consumption. 
B) Quantity supplied exceeds quantity demanded and the price falls,which encourages more production and less consumption. 
C) Quantity demanded exceeds quantity supplied and the market mechanism pushes the price down,which encourages more production and less consumption. 
D) Quantity supplied exceeds quantity demanded and the price rises,which encourages more production and less consumption. 
A) Quantity demanded exceeds quantity supplied and the market mechanism pushes the price up,which in turn encourages more production and less consumption. 
B) Quantity supplied exceeds quantity demanded and the price falls,which encourages more production and less consumption. 
C) Quantity demanded exceeds quantity supplied and the market mechanism pushes the price down,which encourages more production and less consumption. 
D) Quantity supplied exceeds quantity demanded and the price rises,which encourages more production and less consumption.

Question 8

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

Accepted Answer

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

Question 9

Which of the following events would increase producer surplus?

Accepted Answer

A) Sellers' costs stay the same and the price of the good increases. 
B) Sellers' costs increase and the price of the good stays the same. 
C) Sellers' costs increase and the price of the good decreases. 
D) All of the above are correct. 
A) Sellers' costs stay the same and the price of the good increases. 
B) Sellers' costs increase and the price of the good stays the same. 
C) Sellers' costs increase and the price of the good decreases. 
D) All of the above are correct.

Question 10

If a decrease in the price of good Y causes the demand for good Z to decrease,this indicates that

Accepted Answer

A) Y and Z are complements. 
B) Y and Z are substitutes. 
C) Y and Z are unrelated. 
D) the demand for Y is elastic,but the demand for Z is inelastic. 
A) Y and Z are complements. 
B) Y and Z are substitutes. 
C) Y and Z are unrelated. 
D) the demand for Y is elastic,but the demand for Z is inelastic.

Question 11

If Harry is paid $25,000 to sell his crop of tomatoes even though he would have been willing to have sold the crop for as little as $20,000,this indicates that

Accepted Answer

A) Harry received no producer surplus from the transaction. 
B) Harry received $5,000 of producer surplus from the transaction. 
C) Harry received $20,000 of producer surplus from the transaction. 
D) Harry received $25,000 of producer surplus from the transaction. 
A) Harry received no producer surplus from the transaction. 
B) Harry received $5,000 of producer surplus from the transaction. 
C) Harry received $20,000 of producer surplus from the transaction. 
D) Harry received $25,000 of producer surplus from the transaction.

Question 12

An important assumption that is made when constructing a supply schedule is

Accepted Answer

A) only price and quantity matter in determining supply. 
B) firms always want to sell a certain amount of a product. 
C) supply is too important to be left to the marketplace. 
D) all other determinants of supply are held constant. 
E) demand has a positive slope. 
A) only price and quantity matter in determining supply. 
B) firms always want to sell a certain amount of a product. 
C) supply is too important to be left to the marketplace. 
D) all other determinants of supply are held constant. 
E) demand has a positive slope.

Question 13

A technological breakthrough lowers the cost of manufacturing VCRs.As a result,the market changes to a new equilibrium because of

Accepted Answer

A) an upward movement along the demand curve for VCRs. 
B) a rightward shift in the demand curve for VCRs. 
C) a rightward shift in the supply curve for VCRs. 
D) a shortage of VCRs. 
A) an upward movement along the demand curve for VCRs. 
B) a rightward shift in the demand curve for VCRs. 
C) a rightward shift in the supply curve for VCRs. 
D) a shortage of VCRs.

Question 14

Use the figure below to answer the following question(s).
Figure 3-13
  
-Refer to Figure 3-13.The market for margarine was initially in equilibrium at point

Accepted Answer

A) r. 
B) s. 
C) t. 
D) u. 
E) Other things constant,an increase in the price of soybean oil,an important ingredient used to produce margarine,would likely move the equilibrium in this market toward point 
A) r. 
B) s. 
C) t. 
D) u. 
E) Other things constant,an increase in the price of soybean oil,an important ingredient used to produce margarine,would likely move the equilibrium in this market toward point

Question 15

Which of the following would most likely increase demand for tickets to major league baseball games?

Accepted Answer

A) a decrease in consumer income 
B) an increase in the price of tickets to professional football games,a substitute for baseball games 
C) an increase in the price of refreshments sold at the baseball games 
D) none of the above 
A) a decrease in consumer income 
B) an increase in the price of tickets to professional football games,a substitute for baseball games 
C) an increase in the price of refreshments sold at the baseball games 
D) none of the above

Question 16

Assume the demand curve for cookies is downward sloping.If the price of cookies falls from $1.50 to $1.25 per dozen,

Accepted Answer

A) the demand for cookies will fall. 
B) the demand for cookies will rise. 
C) a larger quantity of cookies will be demanded. 
D) a smaller quantity of cookies will be demanded. 
A) the demand for cookies will fall. 
B) the demand for cookies will rise. 
C) a larger quantity of cookies will be demanded. 
D) a smaller quantity of cookies will be demanded.

Question 17

For a typical product,a decrease in consumer income will cause the market demand for the product to

Accepted Answer

A) decrease,which is a shift to the left of the demand curve. 
B) decrease,which is a shift to the right of the demand curve. 
C) increase,which is a shift to the left of the demand curve. 
D) increase,which is a shift to the right of the demand curve. 
A) decrease,which is a shift to the left of the demand curve. 
B) decrease,which is a shift to the right of the demand curve. 
C) increase,which is a shift to the left of the demand curve. 
D) increase,which is a shift to the right of the demand curve.

Question 18

A recent editorial in a local newspaper argues,"Consumers need to know more about products than just their price.They need to know how these prices are determined,who owns the businesses,and the wages of the workers." Is the editorial writer correct? Why or why not?

Accepted Answer

What is missing from the editorial is a

Question 19

The efficiency of market organization is dependent on which of the following?

Accepted Answer

A) well-regulated supply and demand 
B) the availability of low cost resources and high tariffs on foreign imports 
C) competitive markets and well-defined and enforced private property rights 
D) Government establishment of the invisible hand principle and the inelasticity of certain goods. 
A) well-regulated supply and demand 
B) the availability of low cost resources and high tariffs on foreign imports 
C) competitive markets and well-defined and enforced private property rights 
D) Government establishment of the invisible hand principle and the inelasticity of certain goods.

Question 20

Because the height of the demand curve measures the marginal value of the good to consumers,the fact that a demand curve slopes downward to the right illustrates that

Accepted Answer

A) as more of a product is consumed,consumers will value additional units less. 
B) as more of a product is consumed,consumers will value additional units more. 
C) the value of additional units of the good is unrelated to the amount consumed. 
D) the cost of production for a good generally rises as more of it is produced. 
A) as more of a product is consumed,consumers will value additional units less. 
B) as more of a product is consumed,consumers will value additional units more. 
C) the value of additional units of the good is unrelated to the amount consumed. 
D) the cost of production for a good generally rises as more of it is produced.

Exam 3: Asupply,demand,and the Market Process

Figure 3-17 -Refer to Figure 3-17.When the price is P₂,consumer surplus is

Figure 3-20 -Refer to Figure 3-20.At the equilibrium price,consumer surplus is

If price rises,what happens to the quantity demanded for a product?

The current demand for automobiles would decrease if

Market prices provide information to consumers,helping them coordinate their activities so long as

When there is excess supply of a product in a market,

Which of the following occurs when a shortage occurs in the market for a good?

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

Which of the following events would increase producer surplus?

If a decrease in the price of good Y causes the demand for good Z to decrease,this indicates that

If Harry is paid $25,000 to sell his crop of tomatoes even though he would have been willing to have sold the crop for as little as $20,000,this indicates that

An important assumption that is made when constructing a supply schedule is

A technological breakthrough lowers the cost of manufacturing VCRs.As a result,the market changes to a new equilibrium because of

Use the figure below to answer the following question(s). Figure 3-13 -Refer to Figure 3-13.The market for margarine was initially in equilibrium at point

Which of the following would most likely increase demand for tickets to major league baseball games?

Assume the demand curve for cookies is downward sloping.If the price of cookies falls from $1.50 to $1.25 per dozen,

For a typical product,a decrease in consumer income will cause the market demand for the product to

A recent editorial in a local newspaper argues,"Consumers need to know more about products than just their price.They need to know how these prices are determined,who owns the businesses,and the wages of the workers." Is the editorial writer correct? Why or why not?

The efficiency of market organization is dependent on which of the following?

Because the height of the demand curve measures the marginal value of the good to consumers,the fact that a demand curve slopes downward to the right illustrates that

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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