Question 1

If the price of coffee decreases, the demand curve for tea (a substitute good) will

Accepted Answer

A) remain unchanged. 
B) shift to the right. 
C) shift to the left. 
D) do none of the above 
A) remain unchanged. 
B) shift to the right. 
C) shift to the left. 
D) do none of the above

Question 2

What impact would a severe drought that destroys the wheat crop in several areas of the United States have on the market for wheat?

Accepted Answer

A) The supply of wheat would fall. 
B) The supply of wheat would rise. 
C) The demand for wheat would fall. 
D) The demand for wheat would rise. 
A) The supply of wheat would fall. 
B) The supply of wheat would rise. 
C) The demand for wheat would fall. 
D) The demand for wheat would rise.

Question 3

At a price of $5, Sam buys 10 units of a product; when the price increases to $6, Sam buys 8 units. Which of the following is correct about Sam's behavior?

Accepted Answer

A) Sam's demand has decreased. 
B) Sam's demand has increased. 
C) Sam's quantity demanded has decreased, and his demand has not changed. 
D) Sam's quantity demanded has increased, and his demand has increased. 
E) Sam's demand has increased, and his quantity demanded has decreased. 
A) Sam's demand has decreased. 
B) Sam's demand has increased. 
C) Sam's quantity demanded has decreased, and his demand has not changed. 
D) Sam's quantity demanded has increased, and his demand has increased. 
E) Sam's demand has increased, and his quantity demanded has decreased.

Question 4

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 5

A decrease in the expected future price of a good will cause the current demand for the good to

Accepted Answer

A) decrease, which is a shift to the left of the demand curve. 
B) decrease, which is a shift to the right of the demand curve. 
C) increase, which is a shift to the left of the demand curve. 
D) increase, which is a shift to the right of the demand curve. 
A) decrease, which is a shift to the left of the demand curve. 
B) decrease, which is a shift to the right of the demand curve. 
C) increase, which is a shift to the left of the demand curve. 
D) increase, which is a shift to the right of the demand curve.

Question 6

How will a reduction in the price of cotton influence the market for blue jeans?

Accepted Answer

A) The cost of producing blue jeans will fall, and the supply curve for blue jeans will shift to the left. 
B) The cost of producing blue jeans will fall, and the supply curve for blue jeans will shift to the right. 
C) The cost of producing blue jeans will rise, and the supply curve for blue jeans will shift to the left. 
D) The cost of producing blue jeans will rise, and the supply curve for blue jeans will shift to the right. 
A) The cost of producing blue jeans will fall, and the supply curve for blue jeans will shift to the left. 
B) The cost of producing blue jeans will fall, and the supply curve for blue jeans will shift to the right. 
C) The cost of producing blue jeans will rise, and the supply curve for blue jeans will shift to the left. 
D) The cost of producing blue jeans will rise, and the supply curve for blue jeans will shift to the right.

Question 7

If the demand for a good is relatively elastic, 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.

Question 8

The height of the supply curve at a quantity of 100 represents the

Accepted Answer

A) total value of all 100 units to consumers. 
B) minimum price required to induce a producer to supply the hundredth unit. 
C) equilibrium price of the good regardless of the position of the demand curve. 
D) profit derived by producers from the sale of the hundredth unit. 
A) total value of all 100 units to consumers. 
B) minimum price required to induce a producer to supply the hundredth unit. 
C) equilibrium price of the good regardless of the position of the demand curve. 
D) profit derived by producers from the sale of the hundredth unit.

Question 9

If salsa and nacho chips are complements, an increase in the price of nacho chips would

Accepted Answer

A) increase the price of salsa. 
B) decrease the demand for salsa. 
C) increase the demand for salsa. 
D) have no effect on the demand for salsa. 
A) increase the price of salsa. 
B) decrease the demand for salsa. 
C) increase the demand for salsa. 
D) have no effect on the demand for salsa.

Question 10

To be economically successful, the entrepreneur must

Accepted Answer

A) combine resources in a manner that increases their value. 
B) produce a good that consumers value less than the resources used to produce it. 
C) use only personal financial capital to avoid the interest payments that would have to be paid if the money is borrowed from the bank. 
D) transform or rearrange resources to maximize the entrepreneur's cost of production. 
A) combine resources in a manner that increases their value. 
B) produce a good that consumers value less than the resources used to produce it. 
C) use only personal financial capital to avoid the interest payments that would have to be paid if the money is borrowed from the bank. 
D) transform or rearrange resources to maximize the entrepreneur's cost of production.

Question 11

In the textbook market, a rise in consumer income, other things being equal, will cause

Accepted Answer

A) the demand curve for textbooks to shift to the left. 
B) the demand curve for textbooks to shift to the right. 
C) a downward movement along the demand curve for textbooks. 
D) an upward movement along the demand curve for textbooks. 
A) the demand curve for textbooks to shift to the left. 
B) the demand curve for textbooks to shift to the right. 
C) a downward movement along the demand curve for textbooks. 
D) an upward movement along the demand curve for textbooks.

Question 12

Assume that eggnog and cookies are complements. If the price of eggnog goes up, what happens to the demand for cookies?

Accepted Answer

A) demand for cookies increases 
B) demand for cookies decreases 
C) demand for cookies remains unchanged 
D) the shift in demand will depend on the original price of cookies 
A) demand for cookies increases 
B) demand for cookies decreases 
C) demand for cookies remains unchanged 
D) the shift in demand will depend on the original price of cookies

Question 13

If an economic action generates more costs than benefits, the action

Accepted Answer

A) by definition increases the nation's economic welfare. 
B) should not be undertaken from an efficiency standpoint. 
C) should be undertaken from an efficiency standpoint. 
D) is desirable from a public welfare standpoint, even though many individuals will be harmed. 
A) by definition increases the nation's economic welfare. 
B) should not be undertaken from an efficiency standpoint. 
C) should be undertaken from an efficiency standpoint. 
D) is desirable from a public welfare standpoint, even though many individuals will be harmed.

Question 14

An increase in the demand for a good means that

Accepted Answer

A) the demand curve has shifted to the left. 
B) the good's price has fallen and, as a result, consumers are buying more of the good. 
C) the good has become scarce. 
D) consumers are willing to purchase more of the good at each possible price. 
A) the demand curve has shifted to the left. 
B) the good's price has fallen and, as a result, consumers are buying more of the good. 
C) the good has become scarce. 
D) consumers are willing to purchase more of the good at each possible price.

Question 15

Other things constant, an increase in consumer income will

Accepted Answer

A) shift the demand curve for automobiles to the left. 
B) shift the demand curve for automobiles to the right. 
C) cause a movement along the demand curve for automobiles, but it will not shift the demand curve. 
D) lead to a reduction in the supply of automobiles. 
A) shift the demand curve for automobiles to the left. 
B) shift the demand curve for automobiles to the right. 
C) cause a movement along the demand curve for automobiles, but it will not shift the demand curve. 
D) lead to a reduction in the supply of automobiles.

Question 16

For a typical product, an increase in consumer income will cause the market demand for the product to

Accepted Answer

A) decrease, which is a shift to the left of the demand curve. 
B) decrease, which is a shift to the right of the demand curve. 
C) increase, which is a shift to the left of the demand curve. 
D) increase, which is a shift to the right of the demand curve. 
A) decrease, which is a shift to the left of the demand curve. 
B) decrease, which is a shift to the right of the demand curve. 
C) increase, which is a shift to the left of the demand curve. 
D) increase, which is a shift to the right of the demand curve.

Question 17

A decrease in demand will cause

Accepted Answer

A) an increase in supply. 
B) a decrease in supply. 
C) an increase in quantity supplied. 
D) a decrease in quantity supplied. 
E) an increase in equilibrium price. 
A) an increase in supply. 
B) a decrease in supply. 
C) an increase in quantity supplied. 
D) a decrease in quantity supplied. 
E) an increase in equilibrium price.

Question 18

Suppose the demand for nachos increases. What will happen to producer surplus in the market for nachos?

Accepted Answer

A) It increases. 
B) It decreases. 
C) It remains unchanged. 
D) It may increase, decrease, or remain unchanged. 
A) It increases. 
B) It decreases. 
C) It remains unchanged. 
D) It may increase, decrease, or remain unchanged.

Question 19

According to the law of supply,

Accepted Answer

A) producers are willing to supply larger amounts of a good as its price increases. 
B) a direct relationship exists between the price of a good and the amount buyers choose to buy. 
C) an inverse relationship exists between the price of a good and the amount buyers wish to buy. 
D) an inverse relationship exists between the price of a good and the amount producers supply. 
A) producers are willing to supply larger amounts of a good as its price increases. 
B) a direct relationship exists between the price of a good and the amount buyers choose to buy. 
C) an inverse relationship exists between the price of a good and the amount buyers wish to buy. 
D) an inverse relationship exists between the price of a good and the amount producers supply.

Question 20

If price rises, 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.

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

If the price of coffee decreases, the demand curve for tea (a substitute good) will

What impact would a severe drought that destroys the wheat crop in several areas of the United States have on the market for wheat?

At a price of $5, Sam buys 10 units of a product; when the price increases to $6, Sam buys 8 units. Which of the following is correct about Sam's behavior?

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

A decrease in the expected future price of a good will cause the current demand for the good to

How will a reduction in the price of cotton influence the market for blue jeans?

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

The height of the supply curve at a quantity of 100 represents the

If salsa and nacho chips are complements, an increase in the price of nacho chips would

To be economically successful, the entrepreneur must

In the textbook market, a rise in consumer income, other things being equal, will cause

Assume that eggnog and cookies are complements. If the price of eggnog goes up, what happens to the demand for cookies?

If an economic action generates more costs than benefits, the action

An increase in the demand for a good means that

Other things constant, an increase in consumer income will

For a typical product, an increase in consumer income will cause the market demand for the product to

A decrease in demand will cause

Suppose the demand for nachos increases. What will happen to producer surplus in the market for nachos?

According to the law of supply,

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

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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