Question 1

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 2

Last year, 1,000 cases of bottled water were sold at $5; this year, 1,200 cases were sold at $7. These data could be explained by the

Accepted Answer

A) supply and demand curves shifting to the right. 
B) supply and demand curves shifting to the left. 
C) supply curve shifting to the left, with no change in demand. 
D) demand curve shifting to the right, with no change in supply. 
A) supply and demand curves shifting to the right. 
B) supply and demand curves shifting to the left. 
C) supply curve shifting to the left, with no change in demand. 
D) demand curve shifting to the right, with no change in supply.

Question 3

If the demand for bicycles increases,

Accepted Answer

A) the quantity demanded will decrease. 
B) equilibrium price will increase and equilibrium quantity will decrease. 
C) equilibrium price will decrease and equilibrium quantity will increase. 
D) quantity supplied will increase. 
E) quantity supplied will decrease. 
A) the quantity demanded will decrease. 
B) equilibrium price will increase and equilibrium quantity will decrease. 
C) equilibrium price will decrease and equilibrium quantity will increase. 
D) quantity supplied will increase. 
E) quantity supplied will decrease.

Question 4

If the supply of a good is relatively elastic, this means that the quantity supplied of the good is

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) none of the above. 
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) none of the above.

Question 5

If people expect the price of coffee to rise next month, the demand for coffee will

Accepted Answer

A) decrease now. 
B) increase now. 
C) stay the same now and increase next month. 
D) stay the same now and decrease next month. 
E) stay the same now and next month. 
A) decrease now. 
B) increase now. 
C) stay the same now and increase next month. 
D) stay the same now and decrease next month. 
E) stay the same now and next month.

Question 6

If you were a government official that wanted to raise the equilibrium price of milk, which of the following actions would you take?

Accepted Answer

A) Take milk from government storage and sell it. 
B) Encourage farmers to produce more milk. 
C) Subsidize purchases of dairy equipment. 
D) Encourage farmers to produce less milk. 
A) Take milk from government storage and sell it. 
B) Encourage farmers to produce more milk. 
C) Subsidize purchases of dairy equipment. 
D) Encourage farmers to produce less milk.

Question 7

Dallas buys strawberries, and he would be willing to pay more than he now pays. Suppose that Dallas has a change in his tastes such that he values strawberries more than before. If the market price is the same as before, then

Accepted Answer

A) Dallas's consumer surplus would be unaffected. 
B) Dallas's consumer surplus would increase. 
C) Dallas's consumer surplus would decrease. 
D) Dallas would be wise to buy fewer strawberries than before. 
A) Dallas's consumer surplus would be unaffected. 
B) Dallas's consumer surplus would increase. 
C) Dallas's consumer surplus would decrease. 
D) Dallas would be wise to buy fewer strawberries than before.

Question 8

When a firm is earning economic profit, this indicates the firm is

Accepted Answer

A) increasing the value of the resources that it is using. 
B) reducing the value of the resources that it is using. 
C) supplying the market with a low quality product. 
D) creating less value for consumers than another firm that is currently earning losses. 
A) increasing the value of the resources that it is using. 
B) reducing the value of the resources that it is using. 
C) supplying the market with a low quality product. 
D) creating less value for consumers than another firm that is currently earning losses.

Question 9

If the supply of a good is relatively inelastic, this means that the quantity supplied of the good is

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) none of the above. 
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) none of the above.

Question 10

Which one of the following factors would increase the demand for oranges?

Accepted Answer

A) an increase in the price of grapefruit, a substitute product 
B) a reduction in the price of bananas, a substitute product 
C) development of a line of high-yield orange trees that are also more freeze resistant 
D) a decrease in consumer income 
A) an increase in the price of grapefruit, a substitute product 
B) a reduction in the price of bananas, a substitute product 
C) development of a line of high-yield orange trees that are also more freeze resistant 
D) a decrease in consumer income

Question 11

Jeff buys a new shirt for $50. If his willingness to pay is ____, he receives consumer surplus of $15 on his purchase

Accepted Answer

A) $15. 
B) $35. 
C) $50. 
D) $65. 
A) $15. 
B) $35. 
C) $50. 
D) $65.

Question 12

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 13

The Red Jacket Mountain View Inn in New Hampshire charges $150 per room in the winter ski season and $90 during the summer months. The number of rooms and operating costs are constant year round. These prices indicate

Accepted Answer

A) a rightward shift in the demand in the summer. 
B) a rightward shift in demand in the winter. 
C) a leftward shift in the supply curve in the summer. 
D) a leftward shift in demand in the winter. 
A) a rightward shift in the demand in the summer. 
B) a rightward shift in demand in the winter. 
C) a leftward shift in the supply curve in the summer. 
D) a leftward shift in demand in the winter.

Question 14

If Susan receives $3,000 of value from a computer that she was able to purchase from Joe's Computer Shop for $1,800, this indicates that

Accepted Answer

A) Susan's opportunity cost of purchasing the computer was $3,000. 
B) Joe earned a $1,200 profit on the sale of the computer. 
C) Susan reaped a consumer surplus of $1,200 from the purchase of the computer. 
D) Joe incurred a loss a $1,200 on the sale of the computer. 
A) Susan's opportunity cost of purchasing the computer was $3,000. 
B) Joe earned a $1,200 profit on the sale of the computer. 
C) Susan reaped a consumer surplus of $1,200 from the purchase of the computer. 
D) Joe incurred a loss a $1,200 on the sale of the computer.

Question 15

If a large percentage increase in the price of a good results in a small percentage reduction in the quantity demanded of the good, demand is said to be

Accepted Answer

A) horizontal. 
B) relatively inelastic. 
C) relatively elastic. 
D) income proof. 
A) horizontal. 
B) relatively inelastic. 
C) relatively elastic. 
D) income proof.

Question 16

If cable TV service and satellite TV service are substitutes,

Accepted Answer

A) a decrease in the price of cable will decrease the demand for satellite TV. 
B) an increase in the price of cable will decrease the demand for satellite TV. 
C) an increase in the price of cable will generally have no effect on the demand for satellite TV. 
D) an increase in the price of cable will shift the demand curve for satellite TV to the left. 
A) a decrease in the price of cable will decrease the demand for satellite TV. 
B) an increase in the price of cable will decrease the demand for satellite TV. 
C) an increase in the price of cable will generally have no effect on the demand for satellite TV. 
D) an increase in the price of cable will shift the demand curve for satellite TV to the left.

Question 17

Table 3-2
  
-Refer to Table 3-2. If the market price is $1,100, the combined total cost of all participating sellers is

Accepted Answer

A) $3,700. 
B) $2,700. 
C) $2,250. 
D) $1,500. 
A) $3,700. 
B) $2,700. 
C) $2,250. 
D) $1,500.

Question 18

A cold spell in Florida extensively reduced the orange crop, and as a result, California oranges commanded a higher price. Which of the following statements best explains the situation?

Accepted Answer

A) The supply of Florida oranges fell, causing the supply of California oranges to increase as well as their price. 
B) The supply of Florida oranges fell, causing the supply of California oranges to decrease and their price to increase. 
C) The supply of Florida oranges fell, causing their price to increase and the demand for California oranges to increase. 
D) The demand for Florida oranges was reduced by the freeze, causing an increase in the price of California oranges and a greater demand for them. 
A) The supply of Florida oranges fell, causing the supply of California oranges to increase as well as their price. 
B) The supply of Florida oranges fell, causing the supply of California oranges to decrease and their price to increase. 
C) The supply of Florida oranges fell, causing their price to increase and the demand for California oranges to increase. 
D) The demand for Florida oranges was reduced by the freeze, causing an increase in the price of California oranges and a greater demand for them.

Question 19

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 20

Which of the following would most likely decrease the current demand for DVD players?

Accepted Answer

A) an increase in consumer income 
B) an increase in the prices of television sets, a complement for DVD players 
C) an expectation that the price of DVD players would rise sharply in the near future 
D) an increase in the price of VCRs, a substitute for DVD players 
A) an increase in consumer income 
B) an increase in the prices of television sets, a complement for DVD players 
C) an expectation that the price of DVD players would rise sharply in the near future 
D) an increase in the price of VCRs, a substitute for DVD players

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

The current demand for a good would decrease if

Last year, 1,000 cases of bottled water were sold at $5; this year, 1,200 cases were sold at $7. These data could be explained by the

If the demand for bicycles increases,

If the supply of a good is relatively elastic, this means that the quantity supplied of the good is

If people expect the price of coffee to rise next month, the demand for coffee will

If you were a government official that wanted to raise the equilibrium price of milk, which of the following actions would you take?

Dallas buys strawberries, and he would be willing to pay more than he now pays. Suppose that Dallas has a change in his tastes such that he values strawberries more than before. If the market price is the same as before, then

When a firm is earning economic profit, this indicates the firm is

If the supply of a good is relatively inelastic, this means that the quantity supplied of the good is

Which one of the following factors would increase the demand for oranges?

Jeff buys a new shirt for $50. If his willingness to pay is ____, he receives consumer surplus of $15 on his purchase

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

The Red Jacket Mountain View Inn in New Hampshire charges $150 per room in the winter ski season and $90 during the summer months. The number of rooms and operating costs are constant year round. These prices indicate

If Susan receives $3,000 of value from a computer that she was able to purchase from Joe's Computer Shop for $1,800, this indicates that

If a large percentage increase in the price of a good results in a small percentage reduction in the quantity demanded of the good, demand is said to be

If cable TV service and satellite TV service are substitutes,

Table 3-2 -Refer to Table 3-2. If the market price is $1,100, the combined total cost of all participating sellers is

A cold spell in Florida extensively reduced the orange crop, and as a result, California oranges commanded a higher price. Which of the following statements best explains the situation?

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

Which of the following would most likely decrease the current demand for DVD players?

The Economic Approach

A: Some Tools of the Economist

B: Some Tools of the Economist

B: 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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