Question 1

According to economic theory,which of the following would most likely cause the demand curve for hamburgers to decrease?

Accepted Answer

A) a drop in the price of hot dogs 
B) an increase in the price of hamburgers 
C) a drop in the price of hamburgers 
D) a technological advance that reduces the cost of making frozen hamburger patties. 
A) a drop in the price of hot dogs 
B) an increase in the price of hamburgers 
C) a drop in the price of hamburgers 
D) a technological advance that reduces the cost of making frozen hamburger patties.

Question 2

The total economic cost of producing a good or service is called the

Accepted Answer

A) comparative value of construction. 
B) social consequence of resources. 
C) marginal valuation of output. 
D) opportunity cost of production. 
A) comparative value of construction. 
B) social consequence of resources. 
C) marginal valuation of output. 
D) opportunity cost of production.

Question 3

A freeze in Florida devastates the orange crop at the same time a new study is released showing the health benefits of vitamin C (leading consumers to want to buy more orange juice).How will the equilibrium price and quantity of orange juice change in response to the combination of these two events?

Accepted Answer

A) Equilibrium quantity will decrease,equilibrium price will increase. 
B) Equilibrium price will decrease,the effect on quantity is ambiguous. 
C) Equilibrium price will increase,the effect on quantity is ambiguous. 
D) Equilibrium quantity will increase,the effect on price is ambiguous. 
A) Equilibrium quantity will decrease,equilibrium price will increase. 
B) Equilibrium price will decrease,the effect on quantity is ambiguous. 
C) Equilibrium price will increase,the effect on quantity is ambiguous. 
D) Equilibrium quantity will increase,the effect on price is ambiguous.

Question 4

A decrease in the price of leather used to make shoes would cause the

Accepted Answer

A) demand for shoes to decrease. 
B) demand for shoes to increase. 
C) supply of shoes to decrease. 
D) supply of shoes to increase. 
A) demand for shoes to decrease. 
B) demand for shoes to increase. 
C) supply of shoes to decrease. 
D) supply of shoes to increase.

Question 5

If the quantity of a good supplied is highly sensitive to the price of the good,this is illustrated by a

Accepted Answer

A) demand curve that is relatively flat (more horizontal). 
B) demand curve that is relatively steep (more vertical). 
C) supply curve that is relatively flat (more horizontal). 
D) supply curve that is relatively steep (more vertical). 
A) demand curve that is relatively flat (more horizontal). 
B) demand curve that is relatively steep (more vertical). 
C) supply curve that is relatively flat (more horizontal). 
D) supply curve that is relatively steep (more vertical).

Question 6

Last year,1,000 cases of bottled water were sold at $5;this year,1,200 cases were sold at $7.These data could be explained by the

Accepted Answer

A) supply and demand curves shifting to the right. 
B) supply and demand curves shifting to the left. 
C) supply curve shifting to the left,with no change in demand. 
D) demand curve shifting to the right,with no change in supply. 
A) supply and demand curves shifting to the right. 
B) supply and demand curves shifting to the left. 
C) supply curve shifting to the left,with no change in demand. 
D) demand curve shifting to the right,with no change in supply.

Question 7

Which of the following is most likely to lead to an increase in the rental price of apartments near your campus?

Accepted Answer

A) lower property taxes on apartment buildings 
B) an unexpected increase in enrollment at your college 
C) lower prices for the bricks used in the construction of apartments 
D) the building of a new large dormitory on the college campus 
A) lower property taxes on apartment buildings 
B) an unexpected increase in enrollment at your college 
C) lower prices for the bricks used in the construction of apartments 
D) the building of a new large dormitory on the college campus

Question 8

How will an increase in lumber prices influence the home construction market?

Accepted Answer

A) The demand for newly constructed homes will increase. 
B) The demand for newly constructed homes will decrease. 
C) The supply of newly constructed homes will increase. 
D) The supply of newly constructed homes will decrease. 
A) The demand for newly constructed homes will increase. 
B) The demand for newly constructed homes will decrease. 
C) The supply of newly constructed homes will increase. 
D) The supply of newly constructed homes will decrease.

Question 9

Figure 3-22

-Refer to Figure 3-22.Which of the four graphs represents the market for peanut butter after a major hurricane hits the peanut-growing south?

Accepted Answer

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

Question 10

Which of the following will lead to a decrease in supply of a good?

Accepted Answer

A) an increase in the price of the good 
B) an increase in consumer incomes 
C) an increase in the price of an important resource used to produce the good 
D) a technological advance that lowers the cost of producing the good 
A) an increase in the price of the good 
B) an increase in consumer incomes 
C) an increase in the price of an important resource used to produce the good 
D) a technological advance that lowers the cost of producing the good

Question 11

When economists say the quantity supplied of a product has decreased,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 12

Figure 3-21
  
-Refer to Figure 3-21.At the quantity Q₃,

Accepted Answer

A) the market is in equilibrium. 
B) consumer surplus is maximized. 
C) the sum of consumer surplus and producer surplus is maximized. 
D) the value to buyers is less than the cost to sellers. 
A) the market is in equilibrium. 
B) consumer surplus is maximized. 
C) the sum of consumer surplus and producer surplus is maximized. 
D) the value to buyers is less than the cost to sellers.

Question 13

Consumer surplus

Accepted Answer

A) is the difference between total willingness to pay and the total amount actually paid. 
B) guarantees that the market value of a good in money is equal to the total economic value of the good. 
C) is always negative because of diminishing marginal utility. 
D) is the total area under a consumer's demand curve. 
A) is the difference between total willingness to pay and the total amount actually paid. 
B) guarantees that the market value of a good in money is equal to the total economic value of the good. 
C) is always negative because of diminishing marginal utility. 
D) is the total area under a consumer's demand curve.

Question 14

If a major hurricane were to destroy the sugarcane crop in Louisiana,there would be

Accepted Answer

A) a decrease in the supply of sugarcane. 
B) an increase in the supply of sugarcane. 
C) a decrease in the demand for sugarcane. 
D) an increase in the demand for sugarcane. 
A) a decrease in the supply of sugarcane. 
B) an increase in the supply of sugarcane. 
C) a decrease in the demand for sugarcane. 
D) an increase in the demand for sugarcane.

Question 15

According to the invisible hand principle,competitive markets generally

Accepted Answer

A) bring the self-interest of individuals into harmony with the efficient allocation of resources,even though centralized planning of economic activities is absent. 
B) bring the self-interest of individuals into harmony with the efficient allocation of resources when the behavior of individuals is directed by democratic centralized planning. 
C) require central direction;otherwise,the actions of self-interested individuals will conflict with the general interests of society. 
D) promote the economic welfare of self-interested producers at the expense of unorganized groups such as consumers and taxpayers. 
A) bring the self-interest of individuals into harmony with the efficient allocation of resources,even though centralized planning of economic activities is absent. 
B) bring the self-interest of individuals into harmony with the efficient allocation of resources when the behavior of individuals is directed by democratic centralized planning. 
C) require central direction;otherwise,the actions of self-interested individuals will conflict with the general interests of society. 
D) promote the economic welfare of self-interested producers at the expense of unorganized groups such as consumers and taxpayers.

Question 16

Suppose the prices of petroleum products,including gasoline and fuel oil,fell sharply.Which of the following would most likely occur as the result of the lower prices of petroleum products?

Accepted Answer

A) a reduction in the consumption of gasoline 
B) an increase in demand for solar heating systems 
C) an increase in demand for smaller,more efficient automobiles 
D) a reduction in the demand for home insulation products 
A) a reduction in the consumption of gasoline 
B) an increase in demand for solar heating systems 
C) an increase in demand for smaller,more efficient automobiles 
D) a reduction in the demand for home insulation products

Question 17

The invisible hand principle,as developed by Adam Smith in The Wealth of Nations,states that

Accepted Answer

A) government control over economic activity is essential for the talents of individuals to be directed toward their highest valued use. 
B) the economic wealth of a nation is determined by a nation's holdings of precious metals,such as gold and silver. 
C) public policy should prohibit domestic producers from selling their goods to foreigners. 
D) competitive markets will bring individual self-interest and the public interest into harmony. 
A) government control over economic activity is essential for the talents of individuals to be directed toward their highest valued use. 
B) the economic wealth of a nation is determined by a nation's holdings of precious metals,such as gold and silver. 
C) public policy should prohibit domestic producers from selling their goods to foreigners. 
D) competitive markets will bring individual self-interest and the public interest into harmony.

Question 18

What impact would a severe drought that destroys the wheat crop in several areas of the United States have on the market for wheat?

Accepted Answer

A) The supply of wheat would fall. 
B) The supply of wheat would rise. 
C) The demand for wheat would fall. 
D) The demand for wheat would rise. 
A) The supply of wheat would fall. 
B) The supply of wheat would rise. 
C) The demand for wheat would fall. 
D) The demand for wheat would rise.

Question 19

Use the figure below to answer the following question(s).
Figure 3-14
  
-Refer to Figure 3-14.The gasoline market was initially in equilibrium at point

Accepted Answer

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

Question 20

Use the table below to choose the correct answer.The table is a schedule of the supply and demand for ground hamburger meat (both given in thousands of pounds per month).
 
The equilibrium market price of ground hamburger meat would be

Accepted Answer

A) $1 per pound. 
B) $2 per pound. 
C) $2.50 per pound. 
D) $3 per pound. 
A) $1 per pound. 
B) $2 per pound. 
C) $2.50 per pound. 
D) $3 per pound.

Exam 3: Asupply,demand,and the Market Process

According to economic theory,which of the following would most likely cause the demand curve for hamburgers to decrease?

The total economic cost of producing a good or service is called the

A decrease in the price of leather used to make shoes would cause the

If the quantity of a good supplied is highly sensitive to the price of the good,this is illustrated by a

Last year,1,000 cases of bottled water were sold at $5;this year,1,200 cases were sold at $7.These data could be explained by the

Which of the following is most likely to lead to an increase in the rental price of apartments near your campus?

How will an increase in lumber prices influence the home construction market?

Figure 3-22 -Refer to Figure 3-22.Which of the four graphs represents the market for peanut butter after a major hurricane hits the peanut-growing south?

Which of the following will lead to a decrease in supply of a good?

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

Figure 3-21 -Refer to Figure 3-21.At the quantity Q₃,

Consumer surplus

If a major hurricane were to destroy the sugarcane crop in Louisiana,there would be

According to the invisible hand principle,competitive markets generally

Suppose the prices of petroleum products,including gasoline and fuel oil,fell sharply.Which of the following would most likely occur as the result of the lower prices of petroleum products?

The invisible hand principle,as developed by Adam Smith in The Wealth of Nations,states that

What impact would a severe drought that destroys the wheat crop in several areas of the United States have on the market for wheat?

Use the figure below to answer the following question(s). Figure 3-14 -Refer to Figure 3-14.The gasoline market was initially in equilibrium at point

Use the table below to choose the correct answer.The table is a schedule of the supply and demand for ground hamburger meat (both given in thousands of pounds per month). The equilibrium market price of ground hamburger meat would be

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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