Question 1

Figure 3-17
  
-Refer to Figure 3-17. When the price is P₁, consumer surplus is

Accepted Answer

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

Question 2

Figure 3-4
  
-Figure 3-4 shows conditions in the market for beef. A reduction in the price of the grain used to feed cattle results in

Accepted Answer

A) the supply curve for beef shifting to the left resulting in higher beef prices and a lower quantity sold. 
B) the supply curve for beef shifting to the right resulting in lower beef prices and a higher quantity sold. 
C) the demand curve for beef shifting to the left resulting in lower beef prices and a lower quantity sold. 
D) the demand curve for beef shifting to the right resulting in higher beef prices and a higher quantity sold. 
A) the supply curve for beef shifting to the left resulting in higher beef prices and a lower quantity sold. 
B) the supply curve for beef shifting to the right resulting in lower beef prices and a higher quantity sold. 
C) the demand curve for beef shifting to the left resulting in lower beef prices and a lower quantity sold. 
D) the demand curve for beef shifting to the right resulting in higher beef prices and a higher quantity sold.

Question 3

If the demand for 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 4

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 $1 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 fall. 
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 fall.

Question 5

Figure 3-19
  
-Refer to Figure 3-19. If the government mandated a price increase from Pₑ to a higher price, then

Accepted Answer

A) total surplus would decrease. 
B) consumer surplus would increase. 
C) total surplus would increase, since producer surplus would increase. 
D) total surplus would remain unchanged. 
A) total surplus would decrease. 
B) consumer surplus would increase. 
C) total surplus would increase, since producer surplus would increase. 
D) total surplus would remain unchanged.

Question 6

A freeze in Florida devastates the orange crop at the same time a new study is released showing the health benefits of vitamin C (leading consumers to want to buy more orange juice). How will the equilibrium price and quantity of orange juice change in response to the combination of these two events?

Accepted Answer

A) Equilibrium quantity will decrease, equilibrium price will increase. 
B) Equilibrium price will decrease, the effect on quantity is ambiguous. 
C) Equilibrium price will increase, the effect on quantity is ambiguous. 
D) Equilibrium quantity will increase, the effect on price is ambiguous. 
A) Equilibrium quantity will decrease, equilibrium price will increase. 
B) Equilibrium price will decrease, the effect on quantity is ambiguous. 
C) Equilibrium price will increase, the effect on quantity is ambiguous. 
D) Equilibrium quantity will increase, the effect on price is ambiguous.

Question 7

Use the figure below to answer the following question(s).
Figure 3-8
  
-In Figure 3-8, if the initial demand and supply for soybeans were D₁ and S₁, how would a decrease in the cost of producing soybeans affect the market for soybeans?

Accepted Answer

A) Demand would increase to D₂, price would increase to P₂, and the quantity would increase to S. 
B) Supply would increase to S₂, price would decrease to P0, and the quantity would increase to S. 
C) Both demand and supply would increase so the price would remain at P₁, but the quantity would increase to T. 
D) None of the above would occur. 
A) Demand would increase to D₂, price would increase to P₂, and the quantity would increase to S. 
B) Supply would increase to S₂, price would decrease to P0, and the quantity would increase to S. 
C) Both demand and supply would increase so the price would remain at P₁, but the quantity would increase to T. 
D) None of the above would occur.

Question 8

A decrease in the supply of a good will

Accepted Answer

A) decrease the demand for the good. 
B) cause the price of the good to fall. 
C) lead to an increase in the price of the good. 
D) increase the quantity of the good bought and sold. 
A) decrease the demand for the good. 
B) cause the price of the good to fall. 
C) lead to an increase in the price of the good. 
D) increase the quantity of the good bought and sold.

Question 9

A question on an economics exam asks, "What happens in the market for jelly when the price of peanut butter increases?" Allison, an excellent student, shows the demand for jelly increasing. Is she necessarily wrong? Why or why not?

Accepted Answer

If we consider Allison's answer wrong, w

Question 10

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 11

When the "invisible hand" guides economic activity, prices of products reflect

Accepted Answer

A) only the values that society places on those products. 
B) only the costs to society of producing those products. 
C) both the values that society places on those products and the costs to society of producing those products. 
D) none of the above; when the "invisible hand" guides economic activity, prices of products are set by the government in a manner that is thought to be "fair." 
A) only the values that society places on those products. 
B) only the costs to society of producing those products. 
C) both the values that society places on those products and the costs to society of producing those products. 
D) none of the above; when the "invisible hand" guides economic activity, prices of products are set by the government in a manner that is thought to be "fair."

Question 12

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 13

Assume that supply decreases greatly and demand decreases slightly. 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 14

The Invisible Hand Principle suggests that

Accepted Answer

A) market prices direct individuals to produce more goods. 
B) individuals pursuing their own interests detract from the economic well-being of society. 
C) there should be stronger governmental initiatives to ensure cooperation for the betterment of society. 
D) market forces tend to channel the actions of self-interested individuals into activities that promote the general betterment of society. 
A) market prices direct individuals to produce more goods. 
B) individuals pursuing their own interests detract from the economic well-being of society. 
C) there should be stronger governmental initiatives to ensure cooperation for the betterment of society. 
D) market forces tend to channel the actions of self-interested individuals into activities that promote the general betterment of society.

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

Which of the following is the most likely effect of higher chicken prices on the price and quantity purchased of beef, a substitute product?

Accepted Answer

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

Question 17

If we observe an increase in the price of a good and an increase in the amount of the good bought and sold, this could be explained by

Accepted Answer

A) an increase in the supply of the good. 
B) an increase in the demand for the good. 
C) a decrease in the demand for the good. 
D) a decrease in the supply of the good. 
A) an increase in the supply of the good. 
B) an increase in the demand for the good. 
C) a decrease in the demand for the good. 
D) a decrease in the supply of the good.

Question 18

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 19

Figure 3-15
  
-Refer to Figure 3-15. Which area represents producer surplus when the price is P₁?

Accepted Answer

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

Question 20

Figure 3-17
  
-Refer to Figure 3-17. When the price is P₂, consumer surplus is

Accepted Answer

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

Exam 3: B: Supply, Demand, and the Market Process

Figure 3-17 -Refer to Figure 3-17. When the price is P₁, consumer surplus is

Figure 3-4 -Figure 3-4 shows conditions in the market for beef. A reduction in the price of the grain used to feed cattle results in

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

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 $1 per gallon,

Figure 3-19 -Refer to Figure 3-19. If the government mandated a price increase from Pₑ to a higher price, then

Use the figure below to answer the following question(s). Figure 3-8 -In Figure 3-8, if the initial demand and supply for soybeans were D₁ and S₁, how would a decrease in the cost of producing soybeans affect the market for soybeans?

A decrease in the supply of a good will

A question on an economics exam asks, "What happens in the market for jelly when the price of peanut butter increases?" Allison, an excellent student, shows the demand for jelly increasing. Is she necessarily wrong? Why or why not?

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 the "invisible hand" guides economic activity, prices of products reflect

Economists would say that the demand for tacos is

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

The Invisible Hand Principle suggests that

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

Which of the following is the most likely effect of higher chicken prices on the price and quantity purchased of beef, a substitute product?

If we observe an increase in the price of a good and an increase in the amount of the good bought and sold, this could be explained by

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

Figure 3-15 -Refer to Figure 3-15. Which area represents producer surplus when the price is P₁?

Figure 3-17 -Refer to Figure 3-17. When the price is P₂, consumer surplus is

The Economic Approach

A: Some Tools of the Economist

B: Some Tools of the Economist

A: Supply, Demand, and the Market Process

A: Supply and Demand: Applications and Extensions

B: Supply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Consumer Choice and Elasticity

A: Costs and the Supply of Goods

B: Costs and the Supply of Goods

A: Price Takers and the Competitive Process

B: Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

A: Price-Searcher Markets With High Entry Barriers

B: Price-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

Appendix: Government Spending and Taxation

Appendix: the Economics of Social Security

Appendix: the Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Appendix: Great Debates in Economics: Keynes Versus Hayek

Appendix: the Crisis of 2008: Causes and Lessons for the Future

Appendix: Lessons From the Great Depression

Appendix: the Economics of Healthcare

Appendix:education: Problems and Performance

Appendix: Earnings Differences Between Men and Women

Appendix: the Question of Resource Exhaustion

Appendix: Do Labor Unions Increase the Wages of Workers

Appendix: Difficult Environmental Cases and the Role of Government

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