Question 1

Economists would say that the demand for tacos is

Accepted Answer

A) relatively inelastic because there are very few close substitutes available. 
B) relatively elastic because there are many substitutes for tacos. 
C) increasing because of reports of Mad Cow Disease. 
D) relatively inelastic because its demand curve is flatter. 
A) relatively inelastic because there are very few close substitutes available. 
B) relatively elastic because there are many substitutes for tacos. 
C) increasing because of reports of Mad Cow Disease. 
D) relatively inelastic because its demand curve is flatter.

Question 2

The current demand for a good would decrease if

Accepted Answer

A) the price of a complementary good rose. 
B) the price of a substitute good rose. 
C) consumers suddenly believed the price of the good would be sharply higher in the future. 
D) consumer income increased. 
A) the price of a complementary good rose. 
B) the price of a substitute good rose. 
C) consumers suddenly believed the price of the good would be sharply higher in the future. 
D) consumer income increased.

Question 3

The height of the demand curve for a product indicates the

Accepted Answer

A) minimum price consumers are willing to pay for an additional unit of it. 
B) minimum quantity consumers are willing to purchase at the current price. 
C) maximum price consumers are willing to pay for an additional unit of it. 
D) minimum price required to induce suppliers to produce an additional unit of it. 
A) minimum price consumers are willing to pay for an additional unit of it. 
B) minimum quantity consumers are willing to purchase at the current price. 
C) maximum price consumers are willing to pay for an additional unit of it. 
D) minimum price required to induce suppliers to produce an additional unit of it.

Question 4

Noah drinks Dr.Pepper.He can buy as many cans of Dr.Pepper as he wishes at a price of $0.50 per can.On a particular day,he is willing to pay $0.95 for the first can,$0.80 for the second can,$0.60 for the third can,and $0.40 for the fourth can.Assume Noah is rational in deciding how many cans to buy.His consumer surplus is

Accepted Answer

A) $0.50. 
B) $0.85. 
C) $1.05. 
D) $1.20. 
A) $0.50. 
B) $0.85. 
C) $1.05. 
D) $1.20.

Question 5

Table 3-1
  
-Refer to Table 3-1.If the table represents the willingness to pay of four buyers and the price of the product is $30,then their total consumer surplus is

Accepted Answer

A) $-10. 
B) $-6. 
C) $20. 
D) $30. 
A) $-10. 
B) $-6. 
C) $20. 
D) $30.

Question 6

Table 3-2
  
-Refer to Table 3-2.Suppose each of the five sellers can supply at most one unit of the good;then the market quantity supplied is exactly 3 if the price is

Accepted Answer

A) $670. 
B) $770. 
C) $970. 
D) $1,170. 
A) $670. 
B) $770. 
C) $970. 
D) $1,170.

Question 7

When a conflict arises in a major oil-exporting area of the world,such as the Middle East,the price of gasoline already in the storage tanks at local gas stations usually increases.Which of the following best explains this occurrence?

Accepted Answer

A) Gas station owners anticipate consumers will buy more gasoline as gasoline prices increase. 
B) Gas station owners are attempting to repeal the laws of supply and demand. 
C) Gas station owners anticipate higher replacement costs for their supply of gasoline and,therefore,raise their prices in response to this higher expected cost. 
D) A decline in consumer demand generally causes gas station owners to raise their prices. 
A) Gas station owners anticipate consumers will buy more gasoline as gasoline prices increase. 
B) Gas station owners are attempting to repeal the laws of supply and demand. 
C) Gas station owners anticipate higher replacement costs for their supply of gasoline and,therefore,raise their prices in response to this higher expected cost. 
D) A decline in consumer demand generally causes gas station owners to raise their prices.

Question 8

According to the law of supply,as the price of a good falls,

Accepted Answer

A) buyers will buy more of the good. 
B) buyers will buy less of the good. 
C) sellers will produce more of the good. 
D) sellers will produce less of the good. 
A) buyers will buy more of the good. 
B) buyers will buy less of the good. 
C) sellers will produce more of the good. 
D) sellers will produce less of the good.

Question 9

After a hurricane in Florida knocked out the regional water supply for several days,the demand for bottled water increased sharply.In a market economy,how will this increase in demand affect the equilibrium price and quantity of bottled water?

Accepted Answer

A) Price will increase,and quantity will decrease. 
B) Price will decrease,and quantity will decrease. 
C) Price will decrease,and quantity will increase. 
D) Price will increase,and quantity will increase. 
A) Price will increase,and quantity will decrease. 
B) Price will decrease,and quantity will decrease. 
C) Price will decrease,and quantity will increase. 
D) Price will increase,and quantity will increase.

Question 10

Which of the following would most likely increase the supply of beef?

Accepted Answer

A) lower prices of grains used to feed cattle 
B) lower prices for chicken,a substitute for beef 
C) new medical research suggesting that beef causes more serious health problems than was previously thought 
D) an increase in the cost of transporting beef products to the consumer market 
A) lower prices of grains used to feed cattle 
B) lower prices for chicken,a substitute for beef 
C) new medical research suggesting that beef causes more serious health problems than was previously thought 
D) an increase in the cost of transporting beef products to the consumer market

Question 11

Which of the following is necessary for the invisible hand of market prices to work properly?

Accepted Answer

A) buyers and sellers who generally tend to disregard their own self-interest 
B) democratic political procedures and highly regulated markets 
C) price controls that restrict the movement of market prices 
D) competition and property rights that are well-defined and enforced 
A) buyers and sellers who generally tend to disregard their own self-interest 
B) democratic political procedures and highly regulated markets 
C) price controls that restrict the movement of market prices 
D) competition and property rights that are well-defined and enforced

Question 12

Figure 3-18
  
-Refer to Figure 3-18.Which area represents consumer surplus at a price of P₁?

Accepted Answer

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

Question 13

Figure 3-20
  
-Refer to Figure 3-20.If 110 units of the good are being bought and sold,then

Accepted Answer

A) the cost to sellers is equal to the value to buyers. 
B) the value to buyers is greater than the cost to sellers. 
C) the cost to sellers is greater than the value to buyers. 
D) producer surplus is greater than consumer surplus. 
A) the cost to sellers is equal to the value to buyers. 
B) the value to buyers is greater than the cost to sellers. 
C) the cost to sellers is greater than the value to buyers. 
D) producer surplus is greater than consumer surplus.

Question 14

If an economic action generates more costs than benefits,the action

Accepted Answer

A) by definition increases the nation's economic welfare. 
B) should not be undertaken from an efficiency standpoint. 
C) should be undertaken from an efficiency standpoint. 
D) is desirable from a public welfare standpoint,even though many individuals will be harmed. 
A) by definition increases the nation's economic welfare. 
B) should not be undertaken from an efficiency standpoint. 
C) should be undertaken from an efficiency standpoint. 
D) is desirable from a public welfare standpoint,even though many individuals will be harmed.

Question 15

Which of the following would lead to an increase in the demand for designer blue jeans?

Accepted Answer

A) a decrease in the price of designer blue jeans 
B) a reduction in the price of the cotton used to produce the jeans 
C) an increase in the income of youthful Americans 
D) an increase in the price of the cotton used to produce the jeans 
A) a decrease in the price of designer blue jeans 
B) a reduction in the price of the cotton used to produce the jeans 
C) an increase in the income of youthful Americans 
D) an increase in the price of the cotton used to produce the jeans

Question 16

Assume that supply increases slightly and demand increases greatly.Which of the following will happen?

Accepted Answer

A) Equilibrium price will fall and equilibrium quantity will rise. 
B) Equilibrium price will rise and equilibrium quantity will fall. 
C) Equilibrium price will rise and equilibrium quantity will rise. 
D) Equilibrium price will fall and equilibrium quantity will fall. 
E) Neither equilibrium price nor equilibrium quantity will change. 
A) Equilibrium price will fall and equilibrium quantity will rise. 
B) Equilibrium price will rise and equilibrium quantity will fall. 
C) Equilibrium price will rise and equilibrium quantity will rise. 
D) Equilibrium price will fall and equilibrium quantity will fall. 
E) Neither equilibrium price nor equilibrium quantity will change.

Question 17

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

Accepted Answer

A) $6 per pound. 
B) $8 per pound. 
C) $10 per pound. 
D) $12 per pound. 
A) $6 per pound. 
B) $8 per pound. 
C) $10 per pound. 
D) $12 per pound.

Question 18

According to Adam Smith,what is the primary source of a nation's wealth?

Accepted Answer

A) The amount of gold and silver in the government's possession. 
B) A spirit of cooperation in which people share according to their means. 
C) Strong central planning authorities. 
D) The people's ability to produce products and trade in free markets. 
A) The amount of gold and silver in the government's possession. 
B) A spirit of cooperation in which people share according to their means. 
C) Strong central planning authorities. 
D) The people's ability to produce products and trade in free markets.

Question 19

If consumer purchases of a good are 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 20

Under competitive conditions,market prices

Accepted Answer

A) generally convey little information about the value and cost of goods. 
B) do not usually have much of an effect on the decisions of individuals. 
C) are incapable of coordinating the actions of buyers and sellers. 
D) generally bring the self-interest of individuals into harmony with the general welfare. 
A) generally convey little information about the value and cost of goods. 
B) do not usually have much of an effect on the decisions of individuals. 
C) are incapable of coordinating the actions of buyers and sellers. 
D) generally bring the self-interest of individuals into harmony with the general welfare.

Exam 3: Asupply,demand,and the Market Process

Economists would say that the demand for tacos is

The current demand for a good would decrease if

The height of the demand curve for a product indicates the

Table 3-1 -Refer to Table 3-1.If the table represents the willingness to pay of four buyers and the price of the product is $30,then their total consumer surplus is

Table 3-2 -Refer to Table 3-2.Suppose each of the five sellers can supply at most one unit of the good;then the market quantity supplied is exactly 3 if the price is

When a conflict arises in a major oil-exporting area of the world,such as the Middle East,the price of gasoline already in the storage tanks at local gas stations usually increases.Which of the following best explains this occurrence?

According to the law of supply,as the price of a good falls,

After a hurricane in Florida knocked out the regional water supply for several days,the demand for bottled water increased sharply.In a market economy,how will this increase in demand affect the equilibrium price and quantity of bottled water?

Which of the following would most likely increase the supply of beef?

Which of the following is necessary for the invisible hand of market prices to work properly?

Figure 3-18 -Refer to Figure 3-18.Which area represents consumer surplus at a price of P₁?

Figure 3-20 -Refer to Figure 3-20.If 110 units of the good are being bought and sold,then

If an economic action generates more costs than benefits,the action

Which of the following would lead to an increase in the demand for designer blue jeans?

Assume that supply increases slightly and demand increases greatly.Which of the following will happen?

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

According to Adam Smith,what is the primary source of a nation's wealth?

If consumer purchases of a good are highly sensitive to the price of the good,this is illustrated by a

Under competitive conditions,market 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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