Question 1

Which of the following will reduce the supply of motorcycles?

Accepted Answer

A) an increase in the population age 16 to 35,the primary consumers of motorcycles 
B) an increase in taxes imposed on motorcycle producers 
C) a technological improvement reducing the production costs of motorcycles 
D) a government study that reveals motorcycle riders,on average,live 10 years longer than those who don't ride motorcycles 
A) an increase in the population age 16 to 35,the primary consumers of motorcycles 
B) an increase in taxes imposed on motorcycle producers 
C) a technological improvement reducing the production costs of motorcycles 
D) a government study that reveals motorcycle riders,on average,live 10 years longer than those who don't ride motorcycles

Question 2

An increase in the price of plastic raises the cost of manufacturing VCRs.As a result,the market changes to a new equilibrium because of

Accepted Answer

A) a surplus of VCRs. 
B) an increase in the demand for VCRs. 
C) a leftward shift in the demand curve for VCRs. 
D) a leftward shift in the supply curve for VCRs. 
A) a surplus of VCRs. 
B) an increase in the demand for VCRs. 
C) a leftward shift in the demand curve for VCRs. 
D) a leftward shift in the supply curve for VCRs.

Question 3

Use the figure below to answer the following question(s).
Figure 3-9
  
-Given the demand (D)and supply (S)for gasoline in Figure 3-9,if the price of gasoline were $3 per gallon,

Accepted Answer

A) consumers would wish to purchase more than was being supplied. 
B) producers would be supplying more than consumers wished to purchase. 
C) the quantity consumers wished to purchase would equal the quantity that producers wished to supply. 
D) there would be a tendency for the price of gasoline to rise. 
A) consumers would wish to purchase more than was being supplied. 
B) producers would be supplying more than consumers wished to purchase. 
C) the quantity consumers wished to purchase would equal the quantity that producers wished to supply. 
D) there would be a tendency for the price of gasoline to rise.

Question 4

Saccharin and aspartame are both low-calorie substitutes for sugar.If saccharin is found to cause cancer,

Accepted Answer

A) the price of aspartame will increase. 
B) the price of sugar will decrease. 
C) the price of saccharin will increase. 
D) the demand curves for aspartame and sugar will shift leftward. 
E) aspartame and sugar will be complements. 
A) the price of aspartame will increase. 
B) the price of sugar will decrease. 
C) the price of saccharin will increase. 
D) the demand curves for aspartame and sugar will shift leftward. 
E) aspartame and sugar will be complements.

Question 5

The term market always refers to

Accepted Answer

A) an arrangement in which buyers and sellers meet at a specific time and place. 
B) an arrangement in which an auctioneer plays at least a limited role in setting prices. 
C) a group of buyers and sellers of a particular good or service. 
D) a single buyer and seller of a particular good or service. 
A) an arrangement in which buyers and sellers meet at a specific time and place. 
B) an arrangement in which an auctioneer plays at least a limited role in setting prices. 
C) a group of buyers and sellers of a particular good or service. 
D) a single buyer and seller of a particular good or service.

Question 6

A terrible storm wipes out 70 percent of the peanut crop.Explain and show graphically how this will affect the market for peanut butter and the market for jelly,a complementary good.

Accepted Answer

Higher peanut prices will shift the supp

Question 7

A recent study suggested that moderate wine drinking may actually benefit one's health.If this information leads to an increased demand for wine,we would expect

Accepted Answer

A) both the price and quantity of wine sold to increase. 
B) both the price and quantity of wine sold to decrease. 
C) the price to decrease and the quantity of wine sold to increase. 
D) the price to increase and the quantity of wine sold to decrease. 
A) both the price and quantity of wine sold to increase. 
B) both the price and quantity of wine sold to decrease. 
C) the price to decrease and the quantity of wine sold to increase. 
D) the price to increase and the quantity of wine sold to decrease.

Question 8

In a competitive market economy,a resource in short supply will be allocated

Accepted Answer

A) so that each firm gets enough to keep producing some portion of its output. 
B) according to how much each firm purchased before the shortage. 
C) to those firms that can make the most profitable use of it. 
D) by government regulation. 
A) so that each firm gets enough to keep producing some portion of its output. 
B) according to how much each firm purchased before the shortage. 
C) to those firms that can make the most profitable use of it. 
D) by government regulation.

Question 9

Assume that supply decreases slightly and demand decreases 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 10

Which of the following would be the best example of consumer surplus?

Accepted Answer

A) Jane pays $30 a month for phone service even though it is worth $70 to her. 
B) Sam refuses to pay $10 for a hair cut because it is only worth $8 to him. 
C) Fred buys a car for $4,000,the maximum amount that he would be willing to pay for it. 
D) When Sue purchases a candy bar for $.50,she uses a $20 bill to pay for it. 
A) Jane pays $30 a month for phone service even though it is worth $70 to her. 
B) Sam refuses to pay $10 for a hair cut because it is only worth $8 to him. 
C) Fred buys a car for $4,000,the maximum amount that he would be willing to pay for it. 
D) When Sue purchases a candy bar for $.50,she uses a $20 bill to pay for it.

Question 11

In a typical college town,when students go home for the summer,the demand for many items such as pizza and textbooks

Accepted Answer

A) decreases,which is a shift to the left of the demand curves for these goods. 
B) decreases,which is a shift to the right of the demand curves for these goods. 
C) increases,which is a shift to the left of the demand curves for these goods. 
D) increases,which is a shift to the right of the demand curves for these goods. 
A) decreases,which is a shift to the left of the demand curves for these goods. 
B) decreases,which is a shift to the right of the demand curves for these goods. 
C) increases,which is a shift to the left of the demand curves for these goods. 
D) increases,which is a shift to the right of the demand curves for these goods.

Question 12

If the United Auto Workers union can obtain a substantial wage increase for auto workers,there will be

Accepted Answer

A) a decrease in the supply of automobiles,which is a shift to the right of the supply curve. 
B) a decrease in the supply of automobiles,which is a shift to the left of the supply curve. 
C) an increase in the supply of automobiles,which is a shift to the right of the supply curve. 
D) an increase in the supply of automobiles,which is a shift to the left of the supply curve. 
A) a decrease in the supply of automobiles,which is a shift to the right of the supply curve. 
B) a decrease in the supply of automobiles,which is a shift to the left of the supply curve. 
C) an increase in the supply of automobiles,which is a shift to the right of the supply curve. 
D) an increase in the supply of automobiles,which is a shift to the left of the supply curve.

Question 13

When economists say the supply of a product has increased,they mean the

Accepted Answer

A) supply curve has shifted to the right. 
B) price of the product has risen,and consequently,suppliers are producing more of it. 
C) supply curve has shifted to the left. 
D) amount of the product that consumers are willing to purchase at various prices has increased. 
A) supply curve has shifted to the right. 
B) price of the product has risen,and consequently,suppliers are producing more of it. 
C) supply curve has shifted to the left. 
D) amount of the product that consumers are willing to purchase at various prices has increased.

Question 14

Figure 3-16
  
-Refer to Figure 3-16.When the price is P₂,producer surplus is

Accepted Answer

A) A. 
B) A + C. 
C) A + B + C. 
D) D + E. 
A) A. 
B) A + C. 
C) A + B + C. 
D) D + E.

Question 15

Table 3-2
  
-Refer to Table 3-2.If the market price is $1,000,the producer surplus in the market is

Accepted Answer

A) $700. 
B) $750. 
C) $2,250. 
D) $3,700. 
A) $700. 
B) $750. 
C) $2,250. 
D) $3,700.

Question 16

If you were a government official and wanted to raise the price of wheat,which of the following actions would you take?

Accepted Answer

A) Take wheat from government storage and sell it. 
B) Encourage farmers to use more fertilizer. 
C) Lower the price of rye. 
D) Subsidize purchases of farm equipment. 
E) Encourage farmers to grow less wheat. 
A) Take wheat from government storage and sell it. 
B) Encourage farmers to use more fertilizer. 
C) Lower the price of rye. 
D) Subsidize purchases of farm equipment. 
E) Encourage farmers to grow less wheat.

Question 17

The demand schedule for a good

Accepted Answer

A) indicates the relationship between the price of the good and the price of other goods. 
B) indicates the quantities of the good that people will buy at various prices. 
C) illustrates the quantity producers will provide at alternative prices. 
D) is determined primarily by the cost of producing the good. 
A) indicates the relationship between the price of the good and the price of other goods. 
B) indicates the quantities of the good that people will buy at various prices. 
C) illustrates the quantity producers will provide at alternative prices. 
D) is determined primarily by the cost of producing the good.

Question 18

If the supply of a good decreased,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

In economics,the demand for a good refers to the amount of the good people

Accepted Answer

A) would like to have if the good were free. 
B) are willing to buy at various prices. 
C) need to achieve a minimum standard of living. 
D) will buy at alternative income levels. 
A) would like to have if the good were free. 
B) are willing to buy at various prices. 
C) need to achieve a minimum standard of living. 
D) will buy at alternative income levels.

Question 20

If the demand for a good is relatively inelastic,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.

Exam 3: Asupply,demand,and the Market Process

Which of the following will reduce the supply of motorcycles?

An increase in the price of plastic raises the cost of manufacturing VCRs.As a result,the market changes to a new equilibrium because of

Use the figure below to answer the following question(s). Figure 3-9 -Given the demand (D)and supply (S)for gasoline in Figure 3-9,if the price of gasoline were $3 per gallon,

Saccharin and aspartame are both low-calorie substitutes for sugar.If saccharin is found to cause cancer,

The term market always refers to

A terrible storm wipes out 70 percent of the peanut crop.Explain and show graphically how this will affect the market for peanut butter and the market for jelly,a complementary good.

A recent study suggested that moderate wine drinking may actually benefit one's health.If this information leads to an increased demand for wine,we would expect

In a competitive market economy,a resource in short supply will be allocated

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

Which of the following would be the best example of consumer surplus?

In a typical college town,when students go home for the summer,the demand for many items such as pizza and textbooks

If the United Auto Workers union can obtain a substantial wage increase for auto workers,there will be

When economists say the supply of a product has increased,they mean the

Figure 3-16 -Refer to Figure 3-16.When the price is P₂,producer surplus is

Table 3-2 -Refer to Table 3-2.If the market price is $1,000,the producer surplus in the market is

If you were a government official and wanted to raise the price of wheat,which of the following actions would you take?

The demand schedule for a good

If the supply of a good decreased,what would be the effect on the equilibrium price and quantity?

In economics,the demand for a good refers to the amount of the good people

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

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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