Question 1

How will a reduction in the price of cotton influence the market for blue jeans?

Accepted Answer

A) The cost of producing blue jeans will fall,and the supply curve for blue jeans will shift to the left. 
B) The cost of producing blue jeans will fall,and the supply curve for blue jeans will shift to the right. 
C) The cost of producing blue jeans will rise,and the supply curve for blue jeans will shift to the left. 
D) The cost of producing blue jeans will rise,and the supply curve for blue jeans will shift to the right. 
A) The cost of producing blue jeans will fall,and the supply curve for blue jeans will shift to the left. 
B) The cost of producing blue jeans will fall,and the supply curve for blue jeans will shift to the right. 
C) The cost of producing blue jeans will rise,and the supply curve for blue jeans will shift to the left. 
D) The cost of producing blue jeans will rise,and the supply curve for blue jeans will shift to the right.

Question 2

A movement along a demand curve

Accepted Answer

A) is called a change in demand. 
B) is the result of a change in the price of the good. 
C) can be caused by many things. 
D) means the product is inelastic. 
A) is called a change in demand. 
B) is the result of a change in the price of the good. 
C) can be caused by many things. 
D) means the product is inelastic.

Question 3

Which of the following would reduce the supply of tennis shoes?

Accepted Answer

A) an increase in the demand for tennis shoes 
B) a new tax imposed on the producers of tennis shoes 
C) a reduction in the price of leather used to make tennis shoes 
D) all of the above 
A) an increase in the demand for tennis shoes 
B) a new tax imposed on the producers of tennis shoes 
C) a reduction in the price of leather used to make tennis shoes 
D) all of the above

Question 4

Figure 3-18
  
-Refer to Figure 3-18.When the price falls from P₁ to P₂,which area represents the increase in consumer surplus to existing buyers?

Accepted Answer

A) ABD 
B) ACF 
C) BCED 
D) DEF 
A) ABD 
B) ACF 
C) BCED 
D) DEF

Question 5

If there is a decrease in both the supply and demand for a good,which of the following will definitely occur?

Accepted Answer

A) The price of the good will increase. 
B) The price of the good will decrease. 
C) The equilibrium quantity will increase. 
D) The equilibrium quantity will decrease. 
A) The price of the good will increase. 
B) The price of the good will decrease. 
C) The equilibrium quantity will increase. 
D) The equilibrium quantity will decrease.

Question 6

Figure 3-18
  
-Refer to Figure 3-18.Which area represents the increase in consumer surplus when the price falls from P₁ to P₂?

Accepted Answer

A) ABD 
B) ACF 
C) DEF 
D) BCFD 
A) ABD 
B) ACF 
C) DEF 
D) BCFD

Question 7

Figure 3-15
  
-Refer to Figure 3-15.When the price rises from P₁ to P₂,which area represents the increase in producer surplus to existing producers?

Accepted Answer

A) BCE 
B) ACF 
C) DEF 
D) ABED 
A) BCE 
B) ACF 
C) DEF 
D) ABED

Question 8

If the demand for a good is relatively elastic,this means that consumer purchases of the good are

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) unaffected by changes in the income level of consumers. 
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) unaffected by changes in the income level of consumers.

Question 9

"If gasoline were taxed,the price of gasoline would rise.Consequently,the demand for gasoline would fall,causing the price to fall to the original level." This statement is

Accepted Answer

A) essentially correct. 
B) incorrect--after the demand falls,the price would fall but to some level higher than the original level. 
C) incorrect--demand and quantity demanded are confused.The price increase would reduce quantity demanded,not demand. 
D) incorrect--after the demand falls,the price would fall but to some level lower than the original level. 
A) essentially correct. 
B) incorrect--after the demand falls,the price would fall but to some level higher than the original level. 
C) incorrect--demand and quantity demanded are confused.The price increase would reduce quantity demanded,not demand. 
D) incorrect--after the demand falls,the price would fall but to some level lower than the original level.

Question 10

A decrease in demand will cause

Accepted Answer

A) an increase in supply. 
B) a decrease in supply. 
C) an increase in quantity supplied. 
D) a decrease in quantity supplied. 
E) an increase in equilibrium price. 
A) an increase in supply. 
B) a decrease in supply. 
C) an increase in quantity supplied. 
D) a decrease in quantity supplied. 
E) an increase in equilibrium price.

Question 11

If equilibrium is present in a market,

Accepted Answer

A) there is generally either a shortage or a surplus. 
B) quantity demanded equals quantity supplied. 
C) quantity demanded exceeds quantity supplied. 
D) quantity supplied exceeds quantity demanded. 
A) there is generally either a shortage or a surplus. 
B) quantity demanded equals quantity supplied. 
C) quantity demanded exceeds quantity supplied. 
D) quantity supplied exceeds quantity demanded.

Question 12

Which of the following would lead to an increase in the demand for rental apartments in your area?

Accepted Answer

A) a reduction in the rental price of apartments 
B) a sharp increase in the number of out-of-town students attending the local college 
C) an increase in the cost of the materials used to construct apartment units. 
D) an increase in unemployment and reduction in the income of people in your area 
A) a reduction in the rental price of apartments 
B) a sharp increase in the number of out-of-town students attending the local college 
C) an increase in the cost of the materials used to construct apartment units. 
D) an increase in unemployment and reduction in the income of people in your area

Question 13

Figure 3-22

-Refer to Figure 3-22.Which of the four graphs represents the market for winter coats as we progress from winter to spring?

Accepted Answer

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

Question 14

Figure 3-21
  
-Refer to Figure 3-21.At the quantity Q₂,

Accepted Answer

A) the value to buyers and the cost to sellers are both P₂. 
B) the value to buyers is P₂ and the cost to sellers is P₃. 
C) the value to buyers and the cost to sellers are both P₃. 
D) the value to buyers is P₃ and the cost to sellers is P₂. 
A) the value to buyers and the cost to sellers are both P₂. 
B) the value to buyers is P₂ and the cost to sellers is P₃. 
C) the value to buyers and the cost to sellers are both P₃. 
D) the value to buyers is P₃ and the cost to sellers is P₂.

Question 15

Which of the following would most likely decrease the price of beef?

Accepted Answer

A) lower prices of grains used to produce cattle feed 
B) higher prices for chicken,a substitute for beef 
C) a cow disease that destroys millions of cattle (and makes their meat unfit for consumption)before they are ready for market 
D) an increase in consumer income 
A) lower prices of grains used to produce cattle feed 
B) higher prices for chicken,a substitute for beef 
C) a cow disease that destroys millions of cattle (and makes their meat unfit for consumption)before they are ready for market 
D) an increase in consumer income

Question 16

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,a decrease in the price of butter,a close substitute for margarine,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 butter,a close substitute for margarine,would likely move the equilibrium in this market toward point

Question 17

Suppose the demand for tacos decreases.What will happen to producer surplus in the market for tacos?

Accepted Answer

A) It increases. 
B) It decreases. 
C) It remains unchanged. 
D) It may increase,decrease,or remain unchanged. 
A) It increases. 
B) It decreases. 
C) It remains unchanged. 
D) It may increase,decrease,or remain unchanged.

Question 18

The number of people willing to buy tickets to the Super Bowl is invariably greater than the number of tickets (and seats)available.This is evidence that the price of the tickets is

Accepted Answer

A) higher than the equilibrium price. 
B) equal to the equilibrium price since the number of tickets bought equals the number sold. 
C) lower than the equilibrium price. 
D) higher than the equilibrium price when the demand is inelastic but lower when the demand is elastic. 
A) higher than the equilibrium price. 
B) equal to the equilibrium price since the number of tickets bought equals the number sold. 
C) lower than the equilibrium price. 
D) higher than the equilibrium price when the demand is inelastic but lower when the demand is elastic.

Question 19

An agricultural economist reports that corn prices are very high this year and that corn growers are earning substantial profits.He concludes that government action is needed to direct more farmers to grow corn.Is such action necessary? Why or why not?

Accepted Answer

No government action is necessary to dir

Question 20

Consumers buy less of a good as its price increases because

Accepted Answer

A) production costs have risen. 
B) substitute goods are now relatively cheaper. 
C) the income of consumers has effectively risen. 
D) the higher price will make the good more valuable to each consumer. 
A) production costs have risen. 
B) substitute goods are now relatively cheaper. 
C) the income of consumers has effectively risen. 
D) the higher price will make the good more valuable to each consumer.

Exam 3: Asupply,demand,and the Market Process

How will a reduction in the price of cotton influence the market for blue jeans?

A movement along a demand curve

Which of the following would reduce the supply of tennis shoes?

Figure 3-18 -Refer to Figure 3-18.When the price falls from P₁ to P₂,which area represents the increase in consumer surplus to existing buyers?

If there is a decrease in both the supply and demand for a good,which of the following will definitely occur?

Figure 3-18 -Refer to Figure 3-18.Which area represents the increase in consumer surplus when the price falls from P₁ to P₂?

Figure 3-15 -Refer to Figure 3-15.When the price rises from P₁ to P₂,which area represents the increase in producer surplus to existing producers?

If the demand for a good is relatively elastic,this means that consumer purchases of the good are

"If gasoline were taxed,the price of gasoline would rise.Consequently,the demand for gasoline would fall,causing the price to fall to the original level." This statement is

A decrease in demand will cause

If equilibrium is present in a market,

Which of the following would lead to an increase in the demand for rental apartments in your area?

Figure 3-22 -Refer to Figure 3-22.Which of the four graphs represents the market for winter coats as we progress from winter to spring?

Figure 3-21 -Refer to Figure 3-21.At the quantity Q₂,

Which of the following would most likely decrease the price of beef?

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

Suppose the demand for tacos decreases.What will happen to producer surplus in the market for tacos?

The number of people willing to buy tickets to the Super Bowl is invariably greater than the number of tickets (and seats)available.This is evidence that the price of the tickets is

An agricultural economist reports that corn prices are very high this year and that corn growers are earning substantial profits.He concludes that government action is needed to direct more farmers to grow corn.Is such action necessary? Why or why not?

Consumers buy less of a good as its price increases because

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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