Question 1

When property rights are well defined and markets are competitive,

Accepted Answer

A) the total gains from trade (the combined area of producer and consumer surplus) are maximized at the market equilibrium. 
B) the market equilibrium is consistent with economic efficiency in that all units creating more benefit than cost have been produced. 
C) the market will automatically move toward the price and quantity where the quantity supplied and the quantity demanded are in balance. 
D) all of the above are true. 
A) the total gains from trade (the combined area of producer and consumer surplus) are maximized at the market equilibrium. 
B) the market equilibrium is consistent with economic efficiency in that all units creating more benefit than cost have been produced. 
C) the market will automatically move toward the price and quantity where the quantity supplied and the quantity demanded are in balance. 
D) all of the above are true.

Question 2

If the quantity of a good supplied is 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 3

When the market for a good is in equilibrium,

Accepted Answer

A) consumer surplus will equal producer surplus. 
B) the total value created for consumers will equal the total cost of production for business firms. 
C) all units valued more highly than the opportunity cost of production will be supplied. 
D) all units that have value will be produced, regardless of their cost of production. 
A) consumer surplus will equal producer surplus. 
B) the total value created for consumers will equal the total cost of production for business firms. 
C) all units valued more highly than the opportunity cost of production will be supplied. 
D) all units that have value will be produced, regardless of their cost of production.

Question 4

The law of demand refers to the

Accepted Answer

A) decrease in price that can be expected as more units of a product are demanded. 
B) increase in price that results from an increase in demand for a good of limited supply. 
C) inverse relationship between the price of a good and the quantity demanded. 
D) increase in the quantity of a good available when its price increases. 
A) decrease in price that can be expected as more units of a product are demanded. 
B) increase in price that results from an increase in demand for a good of limited supply. 
C) inverse relationship between the price of a good and the quantity demanded. 
D) increase in the quantity of a good available when its price increases.

Question 5

An increase in the price of a good would

Accepted Answer

A) decrease the demand for the good. 
B) decrease the quantity demanded for the good. 
C) increase the demand for the good. 
D) decrease the quantity supplied of the good. 
A) decrease the demand for the good. 
B) decrease the quantity demanded for the good. 
C) increase the demand for the good. 
D) decrease the quantity supplied of the good.

Question 6

If price falls, what happens to the demand for a product?

Accepted Answer

A) It increases. 
B) It decreases. 
C) It does not change. 
D) Uncertain--economic theory has no answer to this question. 
A) It increases. 
B) It decreases. 
C) It does not change. 
D) Uncertain--economic theory has no answer to this question.

Question 7

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 8

The current demand for automobiles would decrease if

Accepted Answer

A) the price of gasoline fell. 
B) consumer income rose. 
C) consumers suddenly believed the price of automobiles would be sharply lower in the near future. 
D) consumers suddenly believed the price of automobiles would be sharply higher in the near future. 
A) the price of gasoline fell. 
B) consumer income rose. 
C) consumers suddenly believed the price of automobiles would be sharply lower in the near future. 
D) consumers suddenly believed the price of automobiles would be sharply higher in the near future.

Question 9

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

Accepted Answer

A) demand curve has shifted to the left. 
B) demand curve has shifted to the right. 
C) price of the product has fallen, and consequently, consumers are buying more of it. 
D) price of the product has risen, and consequently, consumers are buying less of it. 
A) demand curve has shifted to the left. 
B) demand curve has shifted to the right. 
C) price of the product has fallen, and consequently, consumers are buying more of it. 
D) price of the product has risen, and consequently, consumers are buying less of it.

Question 10

Which of the following factors would cause the demand curve for a good to increase (shift to the right)?

Accepted Answer

A) a decrease in the price of the good 
B) an increase in the price of the good 
C) an increase in the price of a substitute good 
D) an increase in the price of a complementary good 
A) a decrease in the price of the good 
B) an increase in the price of the good 
C) an increase in the price of a substitute good 
D) an increase in the price of a complementary good

Question 11

Kristen decides that she would pay as much as $400 for a new camera. She buys the camera and realizes consumer surplus of $75. How much did Kristen pay for her camera?

Accepted Answer

A) $75 
B) $325 
C) $400 
D) $475 
A) $75 
B) $325 
C) $400 
D) $475

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

Assume that black beans and rice are consistently in the diet of one particular family. How could you tell if these goods were complements, substitutes, or unrelated goods?

Accepted Answer

A) If the price of black beans rose and the consumption of rice remained the same, they would be substitutes. 
B) If the price of black beans rose and the consumption of rice increased, they would be substitutes. 
C) If the price of black beans rose and the consumption of rice decreased, they would be substitutes. 
D) If the price of black beans rose and the consumption of both goods remained the same, they would be complements. 
A) If the price of black beans rose and the consumption of rice remained the same, they would be substitutes. 
B) If the price of black beans rose and the consumption of rice increased, they would be substitutes. 
C) If the price of black beans rose and the consumption of rice decreased, they would be substitutes. 
D) If the price of black beans rose and the consumption of both goods remained the same, they would be complements.

Question 14

Table 3-2
  
-Refer to Table 3-2. If the price is $1,000,

Accepted Answer

A) Denise is an eager supplier. 
B) Catherine is an eager supplier. 
C) Dale's producer surplus is $500. 
D) All of the above are correct. 
A) Denise is an eager supplier. 
B) Catherine is an eager supplier. 
C) Dale's producer surplus is $500. 
D) All of the above are correct.

Question 15

If a major hurricane were to destroy the sugarcane crop in Louisiana, there would be

Accepted Answer

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

Question 16

Which of the following would most likely increase demand for tickets to major league baseball games?

Accepted Answer

A) a decrease in consumer income 
B) an increase in the price of tickets to professional football games, a substitute for baseball games 
C) an increase in the price of refreshments sold at the baseball games 
D) none of the above 
A) a decrease in consumer income 
B) an increase in the price of tickets to professional football games, a substitute for baseball games 
C) an increase in the price of refreshments sold at the baseball games 
D) none of the above

Question 17

Which of the following will cause a decrease in the demand for peanut butter?

Accepted Answer

A) an increase in the supply of peanut butter 
B) an increase in the price of peanut butter 
C) a doubling of the price of bread 
D) a drought in Georgia that destroyed 30 percent of the peanut crop 
E) an increase in consumer income 
A) an increase in the supply of peanut butter 
B) an increase in the price of peanut butter 
C) a doubling of the price of bread 
D) a drought in Georgia that destroyed 30 percent of the peanut crop 
E) an increase in consumer income

Question 18

Which of the following would increase the supply of laptop computers?

Accepted Answer

A) higher wage rates for the workers that produce laptop computers 
B) a technological improvement that lowers the cost of producing laptop computers 
C) an increase in the price of computer chips used to produce laptop computers 
D) all of the above 
A) higher wage rates for the workers that produce laptop computers 
B) a technological improvement that lowers the cost of producing laptop computers 
C) an increase in the price of computer chips used to produce laptop computers 
D) all of the above

Question 19

If equilibrium is present in a market,

Accepted Answer

A) there is generally either a shortage or a surplus. 
B) quantity demanded equals quantity supplied. 
C) quantity demanded exceeds quantity supplied. 
D) quantity supplied exceeds quantity demanded. 
A) there is generally either a shortage or a surplus. 
B) quantity demanded equals quantity supplied. 
C) quantity demanded exceeds quantity supplied. 
D) quantity supplied exceeds quantity demanded.

Question 20

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.

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

When property rights are well defined and markets are competitive,

If the quantity of a good supplied is highly sensitive to the price of the good, this is illustrated by a

When the market for a good is in equilibrium,

The law of demand refers to the

An increase in the price of a good would

If price falls, what happens to the demand for a product?

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

The current demand for automobiles would decrease if

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

Which of the following factors would cause the demand curve for a good to increase (shift to the right)?

Kristen decides that she would pay as much as $400 for a new camera. She buys the camera and realizes consumer surplus of $75. How much did Kristen pay for her camera?

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

Assume that black beans and rice are consistently in the diet of one particular family. How could you tell if these goods were complements, substitutes, or unrelated goods?

Table 3-2 -Refer to Table 3-2. If the price is $1,000,

If a major hurricane were to destroy the sugarcane crop in Louisiana, there would be

Which of the following would most likely increase demand for tickets to major league baseball games?

Which of the following will cause a decrease in the demand for peanut butter?

Which of the following would increase the supply of laptop computers?

If equilibrium is present in a market,

The term market always refers to

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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