Question 1

If consumer purchases of a good are not very sensitive to the price of the good,economists say the demand for the good is relatively

Accepted Answer

A) inelastic. 
B) elastic. 
C) robust. 
D) inverse. 
A) inelastic. 
B) elastic. 
C) robust. 
D) inverse.

Question 2

A decrease in the expected future price of a good will cause the current demand for the good 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 3

The maximum price that consumers are willing to pay for the hundredth unit of a good can be found as

Accepted Answer

A) the height of the supply curve at a quantity of 100. 
B) the height of the demand curve at a quantity of 100. 
C) the difference between the height of the supply and demand curves at a quantity of 100. 
D) none of the above. 
A) the height of the supply curve at a quantity of 100. 
B) the height of the demand curve at a quantity of 100. 
C) the difference between the height of the supply and demand curves at a quantity of 100. 
D) none of the above.

Question 4

Figure 3-22

-Refer to Figure 3-22.Which of the four graphs represents the market for pizza delivery in a college town as we go from summer to the beginning of the fall semester?

Accepted Answer

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

Question 5

The price of a good will tend to fall when

Accepted Answer

A) there is excess demand for the good. 
B) there is excess supply of the good. 
C) demand for the good increases. 
D) the supply of the good decreases. 
A) there is excess demand for the good. 
B) there is excess supply of the good. 
C) demand for the good increases. 
D) the supply of the good decreases.

Question 6

Which of the following is true of profits and losses?

Accepted Answer

A) Profits direct entrepreneurs toward production of goods that are highly valued relative to their cost,while losses direct them away from wealth-reducing activities. 
B) Profits indicate that the firm is charging prices that are too high,while losses indicate that the firm needs to raise its prices. 
C) Profits indicate that the consumer is getting a bad deal,while losses indicate that the consumer values the product highly relative to its cost. 
D) Profits indicate that the suppliers of resources are underpaid,while losses indicate they are overpaid. 
A) Profits direct entrepreneurs toward production of goods that are highly valued relative to their cost,while losses direct them away from wealth-reducing activities. 
B) Profits indicate that the firm is charging prices that are too high,while losses indicate that the firm needs to raise its prices. 
C) Profits indicate that the consumer is getting a bad deal,while losses indicate that the consumer values the product highly relative to its cost. 
D) Profits indicate that the suppliers of resources are underpaid,while losses indicate they are overpaid.

Question 7

Which of the following is the most likely effect of lower apple juice prices on the price and quantity purchased of orange juice,a substitute product?

Accepted Answer

A) The price of orange juice will increase,and the quantity purchased will fall. 
B) The price of orange juice will fall,and the quantity purchased will increase. 
C) The price of orange juice will increase,and the quantity purchased will increase. 
D) The price of orange juice will fall,and the quantity purchased will fall. 
A) The price of orange juice will increase,and the quantity purchased will fall. 
B) The price of orange juice will fall,and the quantity purchased will increase. 
C) The price of orange juice will increase,and the quantity purchased will increase. 
D) The price of orange juice will fall,and the quantity purchased will fall.

Question 8

If there is an increase 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 9

Suppose a person defects from Cuba (a country that generally disregards the use of markets)to the United States and asks to see a market in action.Where would you take her? Did you give her a complete showing of this market?

Accepted Answer

Most students will provide answers such

Question 10

Suppose demand increases 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.

Question 11

The price elasticity of demand for a commodity is determined primarily by the

Accepted Answer

A) size of the consumer surplus. 
B) availability of good substitutes for the good. 
C) incomes of consumers. 
D) availability of complementary goods. 
A) size of the consumer surplus. 
B) availability of good substitutes for the good. 
C) incomes of consumers. 
D) availability of complementary goods.

Question 12

Susan says,"If the price of wool coats goes up,suppliers will offer more of the coats for sale." Brad replies,"It takes three months to harvest wool and employ all the steps necessary to produce a wool coat.Quantity supplied cannot possibly increase for three months." Is Brad correct? Why or why not?

Accepted Answer

Brad is correct in noting the supply of

Question 13

Over the past 20 years both the quantity of health care provided and health care prices have been rising rapidly.Economic theory would suggest that the observed data could best be explained as

Accepted Answer

A) an increase in supply,while demand remained relatively constant. 
B) a decrease in both supply and demand. 
C) an increase in demand,while supply remained relatively constant. 
D) a sharp increase in both supply and demand. 
A) an increase in supply,while demand remained relatively constant. 
B) a decrease in both supply and demand. 
C) an increase in demand,while supply remained relatively constant. 
D) a sharp increase in both supply and demand.

Question 14

When economists say the demand for a product has decreased,they mean

Accepted Answer

A) the demand curve has shifted to the left. 
B) the product price has increased,and as a consequence,consumers are buying less of the product. 
C) consumers are now willing and able to buy more of this product at each possible price. 
D) the demand curve has shifted to the right. 
A) the demand curve has shifted to the left. 
B) the product price has increased,and as a consequence,consumers are buying less of the product. 
C) consumers are now willing and able to buy more of this product at each possible price. 
D) the demand curve has shifted to the right.

Question 15

Andrew decides that he would pay as much as $3,000 for a new laptop computer.He buys the computer and realizes consumer surplus of $700.How much did Andrew pay for his computer?

Accepted Answer

A) $700 
B) $2,300 
C) $3,000 
D) $3,700 
A) $700 
B) $2,300 
C) $3,000 
D) $3,700

Question 16

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 new buyers entering the market?

Accepted Answer

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

Question 17

Which of the following would most likely cause the price of wheat to decline?

Accepted Answer

A) an increase in the production costs of corn,a substitute for wheat 
B) a decrease in the price of soybeans,a substitute for wheat 
C) an increase in the price of fertilizer,a resource used to produce wheat 
D) a sandwich craze among Americans,causing increased demand for whole-wheat bread 
A) an increase in the production costs of corn,a substitute for wheat 
B) a decrease in the price of soybeans,a substitute for wheat 
C) an increase in the price of fertilizer,a resource used to produce wheat 
D) a sandwich craze among Americans,causing increased demand for whole-wheat bread

Question 18

Figure 3-18
  
-Refer to Figure 3-18.Which area represents consumer surplus at a price of P₂?

Accepted Answer

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

Question 19

Figure 3-22

-Refer to Figure 3-22.Graph C shows which of the following?

Accepted Answer

A) An increase in demand and an increase in quantity supplied. 
B) An increase in demand and an increase in supply. 
C) An increase in quantity demanded and an increase in quantity supplied. 
D) An increase in supply and an increase in quantity demanded. 
A) An increase in demand and an increase in quantity supplied. 
B) An increase in demand and an increase in supply. 
C) An increase in quantity demanded and an increase in quantity supplied. 
D) An increase in supply and an increase in quantity demanded.

Question 20

Assuming Chinese food and Thai food are substitutes,if Lucy Ho's Chinese restaurant reduces its prices,

Accepted Answer

A) the demand for food at Lucy Ho's will increase. 
B) the quantity demanded for food at Lucy Ho's will increase. 
C) the demand facing the nearby Bahn Thai restaurant will decrease. 
D) both b and c will happen. 
A) the demand for food at Lucy Ho's will increase. 
B) the quantity demanded for food at Lucy Ho's will increase. 
C) the demand facing the nearby Bahn Thai restaurant will decrease. 
D) both b and c will happen.

Exam 3: Asupply,demand,and the Market Process

If consumer purchases of a good are not very sensitive to the price of the good,economists say the demand for the good is relatively

A decrease in the expected future price of a good will cause the current demand for the good to

The maximum price that consumers are willing to pay for the hundredth unit of a good can be found as

Figure 3-22 -Refer to Figure 3-22.Which of the four graphs represents the market for pizza delivery in a college town as we go from summer to the beginning of the fall semester?

The price of a good will tend to fall when

Which of the following is true of profits and losses?

Which of the following is the most likely effect of lower apple juice prices on the price and quantity purchased of orange juice,a substitute product?

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

Suppose a person defects from Cuba (a country that generally disregards the use of markets)to the United States and asks to see a market in action.Where would you take her? Did you give her a complete showing of this market?

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

The price elasticity of demand for a commodity is determined primarily by the

Over the past 20 years both the quantity of health care provided and health care prices have been rising rapidly.Economic theory would suggest that the observed data could best be explained as

When economists say the demand for a product has decreased,they mean

Andrew decides that he would pay as much as $3,000 for a new laptop computer.He buys the computer and realizes consumer surplus of $700.How much did Andrew pay for his computer?

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 new buyers entering the market?

Which of the following would most likely cause the price of wheat to decline?

Figure 3-18 -Refer to Figure 3-18.Which area represents consumer surplus at a price of P₂?

Figure 3-22 -Refer to Figure 3-22.Graph C shows which of the following?

Assuming Chinese food and Thai food are substitutes,if Lucy Ho's Chinese restaurant reduces its prices,

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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