Question 1

How will an increase in the price of coffee affect the market for cocoa,a substitute good?

Accepted Answer

A) The supply of cocoa will increase,leading to a reduction in the price of cocoa. 
B) The supply of cocoa will decrease,leading to an increase in the price of cocoa. 
C) The demand for cocoa will increase,leading to an increase in the price of cocoa. 
D) The demand for cocoa will decrease,leading to a reduction in the price of cocoa. 
A) The supply of cocoa will increase,leading to a reduction in the price of cocoa. 
B) The supply of cocoa will decrease,leading to an increase in the price of cocoa. 
C) The demand for cocoa will increase,leading to an increase in the price of cocoa. 
D) The demand for cocoa will decrease,leading to a reduction in the price of cocoa.

Question 2

If a large percentage increase in the price of a good results in a small percentage reduction in the quantity demanded of the good,demand is said to be

Accepted Answer

A) horizontal. 
B) relatively inelastic. 
C) relatively elastic. 
D) income proof. 
A) horizontal. 
B) relatively inelastic. 
C) relatively elastic. 
D) income proof.

Question 3

When the quantity demanded and quantity supplied in a market are equal,the market is said to be in

Accepted Answer

A) fixation. 
B) excess supply. 
C) equilibrium. 
D) excess demand. 
A) fixation. 
B) excess supply. 
C) equilibrium. 
D) excess demand.

Question 4

In which statement(s)are "supply" and "quantity supplied" used correctly?
(I)"An increase in the price of computers will increase the quantity supplied of computers."
(II)"A technological advance that lowers the cost of producing computers will increase the supply of computers."

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 5

The law of demand refers to the

Accepted Answer

A) inverse relationship between the price of a good and the willingness of consumers to buy it. 
B) price increase that results from an increase in demand for a good of limited supply. 
C) inverse relationship between the price of a good and the quantity offered for sale. 
D) increase in the quantity of a good available when its price increases. 
A) inverse relationship between the price of a good and the willingness of consumers to buy it. 
B) price increase that results from an increase in demand for a good of limited supply. 
C) inverse relationship between the price of a good and the quantity offered for sale. 
D) increase in the quantity of a good available when its price increases.

Question 6

When competition is present and property rights protected and enforced,market prices will

Accepted Answer

A) discourage profit-seeking business firms from producing efficiently. 
B) direct entrepreneurs toward production of goods that are inferior in quality. 
C) encourage self-interested individuals to develop skills that are expected to be valuable in the future. 
D) always decrease. 
A) discourage profit-seeking business firms from producing efficiently. 
B) direct entrepreneurs toward production of goods that are inferior in quality. 
C) encourage self-interested individuals to develop skills that are expected to be valuable in the future. 
D) always decrease.

Question 7

An increase in the price of a good would

Accepted Answer

A) decrease the demand for the good. 
B) decrease the quantity demanded for the good. 
C) increase the demand for the good. 
D) decrease the quantity supplied of the good. 
A) decrease the demand for the good. 
B) decrease the quantity demanded for the good. 
C) increase the demand for the good. 
D) decrease the quantity supplied of the good.

Question 8

Which of the following will decrease the demand for coffee?

Accepted Answer

A) the discovery that caffeine can cause heart problems 
B) an increase in the price of coffee 
C) an increase in the price of tea,a substitute for coffee 
D) a decrease in the prices of coffee makers and coffee cups,complements to coffee 
A) the discovery that caffeine can cause heart problems 
B) an increase in the price of coffee 
C) an increase in the price of tea,a substitute for coffee 
D) a decrease in the prices of coffee makers and coffee cups,complements to coffee

Question 9

A decrease in the price of milk will

Accepted Answer

A) increase the demand for milk. 
B) reduce the demand for milk. 
C) reduce the demand for orange juice,a substitute for milk. 
D) do both a and c 
A) increase the demand for milk. 
B) reduce the demand for milk. 
C) reduce the demand for orange juice,a substitute for milk. 
D) do both a and c

Question 10

When economists say the quantity demanded of a product has decreased,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 11

Patrice buys a new cell phone for $80.She receives consumer surplus of $35 on her purchase if her willingness to pay is

Accepted Answer

A) $35. 
B) $45. 
C) $80. 
D) $115. 
A) $35. 
B) $45. 
C) $80. 
D) $115.

Question 12

When economists say that market equilibrium is consistent with economic efficiency,they mean

Accepted Answer

A) the total gains from trade (the combined area of producer and consumer surplus)are smaller than potentially could be the case at a different price and quantity. 
B) all units creating more benefit than cost have been produced. 
C) some units have been produced that cost more than the benefits they create. 
D) consumers and producers have made decisions without properly taking into account the market price. 
A) the total gains from trade (the combined area of producer and consumer surplus)are smaller than potentially could be the case at a different price and quantity. 
B) all units creating more benefit than cost have been produced. 
C) some units have been produced that cost more than the benefits they create. 
D) consumers and producers have made decisions without properly taking into account the market price.

Question 13

Which of the following are true?

Accepted Answer

A) Economists use the criterion of economic efficiency to judge the merit of alternative outcomes. 
B) Undertaking an economic action will be efficient if it produces more benefits than costs for the individuals of the economy. 
C) Undertaking an economic action will be inefficient if it produces more costs than benefits to the individuals. 
D) All of the above are true. 
A) Economists use the criterion of economic efficiency to judge the merit of alternative outcomes. 
B) Undertaking an economic action will be efficient if it produces more benefits than costs for the individuals of the economy. 
C) Undertaking an economic action will be inefficient if it produces more costs than benefits to the individuals. 
D) All of the above are true.

Question 14

Other things being equal,the effect of a decrease in the price of orange juice would be illustrated by

Accepted Answer

A) a rightward shift in the demand curve for orange juice. 
B) an increase in the quantity demanded for orange juice. 
C) a leftward shift in the demand curve for orange juice. 
D) a decrease in the quantity demanded orange juice. 
A) a rightward shift in the demand curve for orange juice. 
B) an increase in the quantity demanded for orange juice. 
C) a leftward shift in the demand curve for orange juice. 
D) a decrease in the quantity demanded orange juice.

Question 15

Which of the following would cause an increase in the price of gasoline and an expansion in the equilibrium quantity?

Accepted Answer

A) an increase in the price of crude oil,a key ingredient required for the production of gasoline 
B) the introduction of a miracle carburetor that substantially improves the gas mileage of automobiles 
C) a recession that substantially reduces the income of households 
D) an increase in the popularity and use of Sport Utility Vehicles that consume a lot of gasoline per mile driven 
A) an increase in the price of crude oil,a key ingredient required for the production of gasoline 
B) the introduction of a miracle carburetor that substantially improves the gas mileage of automobiles 
C) a recession that substantially reduces the income of households 
D) an increase in the popularity and use of Sport Utility Vehicles that consume a lot of gasoline per mile driven

Question 16

Figure 3-22

-Refer to Figure 3-22.Which of the four graphs illustrates an increase in quantity supplied?

Accepted Answer

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

Question 17

Which of the following best explains the source of consumer surplus for good A?

Accepted Answer

A) Many consumers pay prices that are greater than the equilibrium price of good A. 
B) Many consumers would be willing to pay more than the market price for good A. 
C) Many consumers think the market price of good A is greater than its cost. 
D) Many consumers think the demand for good A is elastic. 
A) Many consumers pay prices that are greater than the equilibrium price of good A. 
B) Many consumers would be willing to pay more than the market price for good A. 
C) Many consumers think the market price of good A is greater than its cost. 
D) Many consumers think the demand for good A is elastic.

Question 18

If the demand for a good increased,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 19

Figure 3-19
  
-Refer to Figure 3-19.Buyers who value this good more than price are represented by which line segment?

Accepted Answer

A) AC 
B) CE 
C) BC 
D) CD 
A) AC 
B) CE 
C) BC 
D) CD

Question 20

Two goods are considered substitutes only if

Accepted Answer

A) a decrease in the demand for one leads to a decrease in the supply of the other 
B) an increase in the demand for one leads to a decrease in the supply of the other 
C) an increase in the price of one leads to an increase in the demand for the other 
D) a decrease in the price of one leads to an increase in the demand for the other 
E) a decrease in the supply of one leads producers to switch to production of the other 
A) a decrease in the demand for one leads to a decrease in the supply of the other 
B) an increase in the demand for one leads to a decrease in the supply of the other 
C) an increase in the price of one leads to an increase in the demand for the other 
D) a decrease in the price of one leads to an increase in the demand for the other 
E) a decrease in the supply of one leads producers to switch to production of the other

Exam 3: Asupply,demand,and the Market Process

How will an increase in the price of coffee affect the market for cocoa,a substitute good?

If a large percentage increase in the price of a good results in a small percentage reduction in the quantity demanded of the good,demand is said to be

When the quantity demanded and quantity supplied in a market are equal,the market is said to be in

In which statement(s)are "supply" and "quantity supplied" used correctly? (I)"An increase in the price of computers will increase the quantity supplied of computers." (II)"A technological advance that lowers the cost of producing computers will increase the supply of computers."

The law of demand refers to the

When competition is present and property rights protected and enforced,market prices will

An increase in the price of a good would

Which of the following will decrease the demand for coffee?

A decrease in the price of milk will

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

Patrice buys a new cell phone for $80.She receives consumer surplus of $35 on her purchase if her willingness to pay is

When economists say that market equilibrium is consistent with economic efficiency,they mean

Which of the following are true?

Other things being equal,the effect of a decrease in the price of orange juice would be illustrated by

Which of the following would cause an increase in the price of gasoline and an expansion in the equilibrium quantity?

Figure 3-22 -Refer to Figure 3-22.Which of the four graphs illustrates an increase in quantity supplied?

Which of the following best explains the source of consumer surplus for good A?

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

Figure 3-19 -Refer to Figure 3-19.Buyers who value this good more than price are represented by which line segment?

Two goods are considered substitutes only if

The Economic Approach

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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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