Question 1

Which of the following is true of the interaction of supply and demand?

Accepted Answer

A) As the price increases, the quantity demanded and the quantity supplied will increase. 
B) As the price increases, the quantity demanded and the quantity supplied will decrease. 
C) As the price increases, the quantity demanded increases and the quantity supplied will decrease. 
D) As the price increases, the quantity demanded will decrease and the quantity supplied will increase. 
E) As the price increases, neither the quantity demanded nor quantity supplied will change. 
A) As the price increases, the quantity demanded and the quantity supplied will increase. 
B) As the price increases, the quantity demanded and the quantity supplied will decrease. 
C) As the price increases, the quantity demanded increases and the quantity supplied will decrease. 
D) As the price increases, the quantity demanded will decrease and the quantity supplied will increase. 
E) As the price increases, neither the quantity demanded nor quantity supplied will change.

Question 2

Refer to Table 3-1. If the table represents the willingness to pay of four buyers and the price of the product is $18, then their total consumer surplus is

Accepted Answer

A) $38. 
B) $42. 
C) $46. 
D) $72. 
A) $38. 
B) $42. 
C) $46. 
D) $72.

Question 3

If the quantity of a good supplied is not very 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 4

If you were a government official and wanted to raise the price of wheat, which of the following actions would you take?

Accepted Answer

A) Take wheat from government storage and sell it. 
B) Encourage farmers to use more fertilizer. 
C) Lower the price of rye. 
D) Subsidize purchases of farm equipment. 
E) Encourage farmers to grow less wheat. 
A) Take wheat from government storage and sell it. 
B) Encourage farmers to use more fertilizer. 
C) Lower the price of rye. 
D) Subsidize purchases of farm equipment. 
E) Encourage farmers to grow less wheat.

Question 5

Which of the following would lead to an increase in the demand for designer blue jeans?

Accepted Answer

A) a decrease in the price of designer blue jeans 
B) a reduction in the price of the cotton used to produce the jeans 
C) an increase in the income of youthful Americans 
D) an increase in the price of the cotton used to produce the jeans 
A) a decrease in the price of designer blue jeans 
B) a reduction in the price of the cotton used to produce the jeans 
C) an increase in the income of youthful Americans 
D) an increase in the price of the cotton used to produce the jeans

Question 6

The opportunity cost of production differs from an accounting definition of a firm's costs because it includes

Accepted Answer

A) expenditures the firm undertakes for research and development. 
B) the opportunity cost of assets and financial resources owned by the firm. 
C) the direct monetary cost of purchasing resources. 
D) the firm's revenue as a cost. 
A) expenditures the firm undertakes for research and development. 
B) the opportunity cost of assets and financial resources owned by the firm. 
C) the direct monetary cost of purchasing resources. 
D) the firm's revenue as a cost.

Question 7

In a competitive market economy, a resource in short supply will be allocated

Accepted Answer

A) so that each firm gets enough to keep producing some portion of its output. 
B) according to how much each firm purchased before the shortage. 
C) to those firms that can make the most profitable use of it. 
D) by government regulation. 
A) so that each firm gets enough to keep producing some portion of its output. 
B) according to how much each firm purchased before the shortage. 
C) to those firms that can make the most profitable use of it. 
D) by government regulation.

Question 8

The maximum price that consumers are willing to pay for the hundredth unit of a good can be found as

Accepted Answer

A) the height of the supply curve at a quantity of 100. 
B) the height of the demand curve at a quantity of 100. 
C) the difference between the height of the supply and demand curves at a quantity of 100. 
D) none of the above. 
A) the height of the supply curve at a quantity of 100. 
B) the height of the demand curve at a quantity of 100. 
C) the difference between the height of the supply and demand curves at a quantity of 100. 
D) none of the above.

Question 9

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

Accepted Answer

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

Question 10

In a typical college town, when students go home for the summer, the demand for many items such as pizza and textbooks

Accepted Answer

A) decreases, which is a shift to the left of the demand curves for these goods. 
B) decreases, which is a shift to the right of the demand curves for these goods. 
C) increases, which is a shift to the left of the demand curves for these goods. 
D) increases, which is a shift to the right of the demand curves for these goods. 
A) decreases, which is a shift to the left of the demand curves for these goods. 
B) decreases, which is a shift to the right of the demand curves for these goods. 
C) increases, which is a shift to the left of the demand curves for these goods. 
D) increases, which is a shift to the right of the demand curves for these goods.

Question 11

When economists say the quantity demanded of a product has decreased, 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 12

If the number of consumers in a market increases, the market demand curve will

Accepted Answer

A) decrease, which is a shift to the left of the demand curve. 
B) increase, which is a shift to the right of the demand curve. 
C) not shift, but rather this will just cause a movement along the demand curve. 
D) do none of the above. 
A) decrease, which is a shift to the left of the demand curve. 
B) increase, which is a shift to the right of the demand curve. 
C) not shift, but rather this will just cause a movement along the demand curve. 
D) do none of the above.

Question 13

A decrease in the price of leather used to make shoes would cause the

Accepted Answer

A) demand for shoes to decrease. 
B) demand for shoes to increase. 
C) supply of shoes to decrease. 
D) supply of shoes to increase. 
A) demand for shoes to decrease. 
B) demand for shoes to increase. 
C) supply of shoes to decrease. 
D) supply of shoes to increase.

Question 14

When there is excess supply of a product in a market,

Accepted Answer

A) price will tend to rise. 
B) price must be above the equilibrium price. 
C) producers will expand output and sales will rise. 
D) price must be below the equilibrium price. 
A) price will tend to rise. 
B) price must be above the equilibrium price. 
C) producers will expand output and sales will rise. 
D) price must be below the equilibrium price.

Question 15

Table 3-2
  
-Refer to Table 3-2. If the market price is $1,000, the producer surplus in the market is

Accepted Answer

A) $700. 
B) $750. 
C) $2,250. 
D) $3,700. 
A) $700. 
B) $750. 
C) $2,250. 
D) $3,700.

Question 16

If the demand for a good is relatively inelastic, 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 17

Which of the following will lead to a decrease in supply of a good?

Accepted Answer

A) an increase in the price of the good 
B) an increase in consumer incomes 
C) an increase in the price of an important resource used to produce the good 
D) a technological advance that lowers the cost of producing the good 
A) an increase in the price of the good 
B) an increase in consumer incomes 
C) an increase in the price of an important resource used to produce the good 
D) a technological advance that lowers the cost of producing the good

Question 18

In economics, the demand for a good refers to the amount of the good people

Accepted Answer

A) would like to have if the good were free. 
B) are willing to buy at various prices. 
C) need to achieve a minimum standard of living. 
D) will buy at alternative income levels. 
A) would like to have if the good were free. 
B) are willing to buy at various prices. 
C) need to achieve a minimum standard of living. 
D) will buy at alternative income levels.

Question 19

If a decrease in the price of good Y causes the demand for good Z to decrease, this indicates that

Accepted Answer

A) Y and Z are complements. 
B) Y and Z are substitutes. 
C) Y and Z are unrelated. 
D) the demand for Y is elastic, but the demand for Z is inelastic. 
A) Y and Z are complements. 
B) Y and Z are substitutes. 
C) Y and Z are unrelated. 
D) the demand for Y is elastic, but the demand for Z is inelastic.

Question 20

The law of demand refers to the

Accepted Answer

A) inverse relationship between the price of a good and the willingness of consumers to buy it. 
B) price increase 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 offered for sale. 
D) increase in the quantity of a good available when its price increases. 
A) inverse relationship between the price of a good and the willingness of consumers to buy it. 
B) price increase 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 offered for sale. 
D) increase in the quantity of a good available when its price increases.

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

Which of the following is true of the interaction of supply and demand?

Refer to Table 3-1. If the table represents the willingness to pay of four buyers and the price of the product is $18, then their total consumer surplus is

If the quantity of a good supplied is not very sensitive to the price of the good, this is illustrated by a

If you were a government official and wanted to raise the price of wheat, which of the following actions would you take?

Which of the following would lead to an increase in the demand for designer blue jeans?

The opportunity cost of production differs from an accounting definition of a firm's costs because it includes

In a competitive market economy, a resource in short supply will be allocated

The maximum price that consumers are willing to pay for the hundredth unit of a good can be found as

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

In a typical college town, when students go home for the summer, the demand for many items such as pizza and textbooks

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

If the number of consumers in a market increases, the market demand curve will

A decrease in the price of leather used to make shoes would cause the

When there is excess supply of a product in a market,

Table 3-2 -Refer to Table 3-2. If the market price is $1,000, the producer surplus in the market is

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

Which of the following will lead to a decrease in supply of a good?

In economics, the demand for a good refers to the amount of the good people

If a decrease in the price of good Y causes the demand for good Z to decrease, this indicates that

The law of demand refers to the

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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