Question 1

Graphically, the area that represents the difference between the maximum price consumers were willing to pay for a good and the market price is called

Accepted Answer

A) consumer surplus. 
B) producer surplus. 
C) marginal cost. 
D) triangular arbitrage. 
A) consumer surplus. 
B) producer surplus. 
C) marginal cost. 
D) triangular arbitrage.

Question 2

If coffee and cream are complements, an increase in the price of coffee will cause

Accepted Answer

A) the demand for cream to increase. 
B) the demand for cream to fall. 
C) the demand for coffee to fall. 
D) no change in the demand for cream; only quantity demanded would be affected. 
A) the demand for cream to increase. 
B) the demand for cream to fall. 
C) the demand for coffee to fall. 
D) no change in the demand for cream; only quantity demanded would be affected.

Question 3

A shortage occurs whenever

Accepted Answer

A) quantity demanded exceeds quantity supplied at the equilibrium price. 
B) price is less than equilibrium price. 
C) quantity demanded is less than quantity supplied. 
D) goods are scarce. 
E) some of the people who need the product are not willing and able to buy it at the equilibrium price. 
A) quantity demanded exceeds quantity supplied at the equilibrium price. 
B) price is less than equilibrium price. 
C) quantity demanded is less than quantity supplied. 
D) goods are scarce. 
E) some of the people who need the product are not willing and able to buy it at the equilibrium price.

Question 4

An important assumption that is made when constructing a supply schedule is

Accepted Answer

A) only price and quantity matter in determining supply. 
B) firms always want to sell a certain amount of a product. 
C) supply is too important to be left to the marketplace. 
D) all other determinants of supply are held constant. 
E) demand has a positive slope. 
A) only price and quantity matter in determining supply. 
B) firms always want to sell a certain amount of a product. 
C) supply is too important to be left to the marketplace. 
D) all other determinants of supply are held constant. 
E) demand has a positive slope.

Question 5

In which statement(s) are "supply" and "quantity supplied" used correctly? (I) "An increase in the price of computers will increase the quantity supplied of computers."
(II) "A technological advance that lowers the cost of producing computers will increase the supply of computers."

Accepted Answer

A) in both statements I and II 
B) in statement I only 
C) in statement II only 
D) in neither statements I nor II 
A) in both statements I and II 
B) in statement I only 
C) in statement II only 
D) in neither statements I nor II

Question 6

If consumer purchases of a good are highly 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 7

In San Francisco, tickets for professional and college football games are substitutes. An increase in the ticket price for professional football, other things being equal, will

Accepted Answer

A) increase the demand for college football tickets. 
B) decrease the demand for college football tickets. 
C) not change the demand for college football tickets. 
D) decrease the demand for professional football games. 
A) increase the demand for college football tickets. 
B) decrease the demand for college football tickets. 
C) not change the demand for college football tickets. 
D) decrease the demand for professional football games.

Question 8

Which of the following would most likely cause the current demand for DVD players to rise?

Accepted Answer

A) an increase in consumer income 
B) a decline in the price of VCRs, a substitute for DVD players 
C) a decrease in the price of DVD players 
D) the expectation that the price of DVD players will decline sharply during the next six months 
A) an increase in consumer income 
B) a decline in the price of VCRs, a substitute for DVD players 
C) a decrease in the price of DVD players 
D) the expectation that the price of DVD players will decline sharply during the next six months

Question 9

If the price of a good is below the equilibrium price,

Accepted Answer

A) suppliers will find inventories building; they will cut output and raise prices. 
B) suppliers will find inventories being depleted. They will increase production and raise prices. 
C) the demand curve will shift down until an equilibrium is established at the existing price. 
D) the supply curve will shift up until an equilibrium is established at the existing price. 
A) suppliers will find inventories building; they will cut output and raise prices. 
B) suppliers will find inventories being depleted. They will increase production and raise prices. 
C) the demand curve will shift down until an equilibrium is established at the existing price. 
D) the supply curve will shift up until an equilibrium is established at the existing price.

Question 10

A decrease in the price of milk will

Accepted Answer

A) increase the demand for milk. 
B) reduce the demand for milk. 
C) reduce the demand for orange juice, a substitute for milk. 
D) do both a and c 
A) increase the demand for milk. 
B) reduce the demand for milk. 
C) reduce the demand for orange juice, a substitute for milk. 
D) do both a and c

Question 11

Ceteris paribus, an increase in the price of a good will cause the

Accepted Answer

A) quantity demanded of the good to increase. 
B) quantity supplied of the good to decrease. 
C) producer surplus derived from the good to increase. 
D) supply of the good to decrease. 
A) quantity demanded of the good to increase. 
B) quantity supplied of the good to decrease. 
C) producer surplus derived from the good to increase. 
D) supply of the good to decrease.

Question 12

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 13

Suppose Katie, Kendra, and Kristen each purchase a particular type of cell phone at a price of $80. Katie's willingness to pay was $100, Kendra's willingness to pay was $95, and Kristen's willingness to pay was $80. Consumer surplus for the three individuals is

Accepted Answer

A) $15. 
B) $20. 
C) $35. 
D) $80. 
A) $15. 
B) $20. 
C) $35. 
D) $80.

Question 14

If the quantity of a good supplied is not very sensitive to the price of the good, economists say the supply of the good is relatively

Accepted Answer

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

Question 15

Shannon buys a new CD player for her car for $135. She receives consumer surplus of $25 on her purchase if her willingness to pay is

Accepted Answer

A) $25. 
B) $110. 
C) $135. 
D) $160. 
A) $25. 
B) $110. 
C) $135. 
D) $160.

Question 16

Corn and soybeans are alternatives that could be grown by most farmers. If government subsidies for ethanol lead to higher corn prices, this will

Accepted Answer

A) increase the supply of corn. 
B) increase the supply of soybeans. 
C) decrease the supply of soybeans. 
D) decrease the supply of corn. 
E) have no effect on the supplies of corn and soybeans. 
A) increase the supply of corn. 
B) increase the supply of soybeans. 
C) decrease the supply of soybeans. 
D) decrease the supply of corn. 
E) have no effect on the supplies of corn and soybeans.

Question 17

If a surplus exists in a market we know that the actual price is

Accepted Answer

A) above equilibrium price and quantity supplied is greater than quantity demanded. 
B) above equilibrium price and quantity demanded is greater than quantity supplied. 
C) below equilibrium price and quantity demanded is greater than quantity supplied. 
D) below equilibrium price and quantity supplied is greater than quantity demanded. 
A) above equilibrium price and quantity supplied is greater than quantity demanded. 
B) above equilibrium price and quantity demanded is greater than quantity supplied. 
C) below equilibrium price and quantity demanded is greater than quantity supplied. 
D) below equilibrium price and quantity supplied is greater than quantity demanded.

Question 18

Other things being equal, the effect of an increase in the price of orange juice would be illustrated by

Accepted Answer

A) an upward movement along the demand curve for orange juice. 
B) a leftward shift in the demand curve for orange juice. 
C) a downward movement along the demand curve for orange juice. 
D) a rightward shift in the demand curve for orange juice. 
A) an upward movement along the demand curve for orange juice. 
B) a leftward shift in the demand curve for orange juice. 
C) a downward movement along the demand curve for orange juice. 
D) a rightward shift in the demand curve for orange juice.

Question 19

Patrice buys a new cell phone for $80. She receives consumer surplus of $35 on her purchase if her willingness to pay is

Accepted Answer

A) $35. 
B) $45. 
C) $80. 
D) $115. 
A) $35. 
B) $45. 
C) $80. 
D) $115.

Question 20

Which of the following is the best description of the effects of an increase in the supply of bread?

Accepted Answer

A) Consumers will pay more for bread. 
B) Bread prices will fall, and bread sales will rise. 
C) A permanent surplus of bread will remain on the market. 
D) Bakers will have higher marginal costs. 
A) Consumers will pay more for bread. 
B) Bread prices will fall, and bread sales will rise. 
C) A permanent surplus of bread will remain on the market. 
D) Bakers will have higher marginal costs.

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

Graphically, the area that represents the difference between the maximum price consumers were willing to pay for a good and the market price is called

If coffee and cream are complements, an increase in the price of coffee will cause

A shortage occurs whenever

An important assumption that is made when constructing a supply schedule is

In which statement(s) are "supply" and "quantity supplied" used correctly? (I) "An increase in the price of computers will increase the quantity supplied of computers." (II) "A technological advance that lowers the cost of producing computers will increase the supply of computers."

If consumer purchases of a good are highly sensitive to the price of the good, economists say the demand for the good is relatively

In San Francisco, tickets for professional and college football games are substitutes. An increase in the ticket price for professional football, other things being equal, will

Which of the following would most likely cause the current demand for DVD players to rise?

If the price of a good is below the equilibrium price,

A decrease in the price of milk will

Ceteris paribus, an increase in the price of a good will cause the

Suppose Katie, Kendra, and Kristen each purchase a particular type of cell phone at a price of $80. Katie's willingness to pay was $100, Kendra's willingness to pay was $95, and Kristen's willingness to pay was $80. Consumer surplus for the three individuals is

If the quantity of a good supplied is not very sensitive to the price of the good, economists say the supply of the good is relatively

Shannon buys a new CD player for her car for $135. She receives consumer surplus of $25 on her purchase if her willingness to pay is

Corn and soybeans are alternatives that could be grown by most farmers. If government subsidies for ethanol lead to higher corn prices, this will

If a surplus exists in a market we know that the actual price is

Other things being equal, the effect of an increase in the price of orange juice would be illustrated by

Patrice buys a new cell phone for $80. She receives consumer surplus of $35 on her purchase if her willingness to pay is

Which of the following is the best description of the effects of an increase in the supply of bread?

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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