Question 1

Which of the following is true?

Accepted Answer

A) The height of the demand curve for a product at a given quantity represents the marginal value derived by the consumption of that unit. 
B) The height of the demand curve for a product at a given quantity reflects the total value consumers derive from all units of the good consumed. 
C) The total area above the demand curve for a product is equal to consumer surplus. 
D) At every quantity, the height of the demand curve for a product represents the cost of producing that unit. 
A) The height of the demand curve for a product at a given quantity represents the marginal value derived by the consumption of that unit. 
B) The height of the demand curve for a product at a given quantity reflects the total value consumers derive from all units of the good consumed. 
C) The total area above the demand curve for a product is equal to consumer surplus. 
D) At every quantity, the height of the demand curve for a product represents the cost of producing that unit.

Question 2

When economists say the demand for a product has decreased, they mean

Accepted Answer

A) the demand curve has shifted to the left. 
B) the product price has increased, and as a consequence, consumers are buying less of the product. 
C) consumers are now willing and able to buy more of this product at each possible price. 
D) the demand curve has shifted to the right. 
A) the demand curve has shifted to the left. 
B) the product price has increased, and as a consequence, consumers are buying less of the product. 
C) consumers are now willing and able to buy more of this product at each possible price. 
D) the demand curve has shifted to the right.

Question 3

The price of chicken increases as the result of higher beef prices. This indicates that

Accepted Answer

A) chicken and beef are substitutes. 
B) chicken and beef are complements. 
C) the market demand for beef is inelastic. 
D) the market demand for chicken is elastic. 
A) chicken and beef are substitutes. 
B) chicken and beef are complements. 
C) the market demand for beef is inelastic. 
D) the market demand for chicken is elastic.

Question 4

Which of the following best explains the source of consumer surplus for good A?

Accepted Answer

A) Many consumers pay prices that are greater than the equilibrium price of good A. 
B) Many consumers would be willing to pay more than the market price for good A. 
C) Many consumers think the market price of good A is greater than its cost. 
D) Many consumers think the demand for good A is elastic. 
A) Many consumers pay prices that are greater than the equilibrium price of good A. 
B) Many consumers would be willing to pay more than the market price for good A. 
C) Many consumers think the market price of good A is greater than its cost. 
D) Many consumers think the demand for good A is elastic.

Question 5

A decrease in the price of a good would

Accepted Answer

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

Question 6

Which of the following occurs when a shortage occurs in the market for a good?

Accepted Answer

A) Quantity demanded exceeds quantity supplied and the market mechanism pushes the price up, which in turn encourages more production and less consumption. 
B) Quantity supplied exceeds quantity demanded and the price falls, which encourages more production and less consumption. 
C) Quantity demanded exceeds quantity supplied and the market mechanism pushes the price down, which encourages more production and less consumption. 
D) Quantity supplied exceeds quantity demanded and the price rises, which encourages more production and less consumption. 
A) Quantity demanded exceeds quantity supplied and the market mechanism pushes the price up, which in turn encourages more production and less consumption. 
B) Quantity supplied exceeds quantity demanded and the price falls, which encourages more production and less consumption. 
C) Quantity demanded exceeds quantity supplied and the market mechanism pushes the price down, which encourages more production and less consumption. 
D) Quantity supplied exceeds quantity demanded and the price rises, which encourages more production and less consumption.

Question 7

Which of the following best represents the effects of a decrease in the price of tomato juice, other things being equal?

Accepted Answer

A) An upward movement along the demand curve for tomato juice. 
B) A downward movement along the demand curve for tomato juice. 
C) A rightward shift in the demand curve for tomato juice. 
D) A leftward shift in the demand curve for tomato juice. 
A) An upward movement along the demand curve for tomato juice. 
B) A downward movement along the demand curve for tomato juice. 
C) A rightward shift in the demand curve for tomato juice. 
D) A leftward shift in the demand curve for tomato juice.

Question 8

Two studies published in the New England Journal of Medicine link the risk of breast cancer to alcohol consumption. Young women who have nine drinks per week were reportedly 150 percent more likely to develop breast cancer. According to economic analysis, how would this information affect the market for alcohol?

Accepted Answer

A) Demand will increase, placing upward pressure on price. 
B) Supply will decrease, placing downward pressure on price. 
C) Demand will decrease, placing downward pressure on price. 
D) Supply will increase, placing upward pressure on price. 
A) Demand will increase, placing upward pressure on price. 
B) Supply will decrease, placing downward pressure on price. 
C) Demand will decrease, placing downward pressure on price. 
D) Supply will increase, placing upward pressure on price.

Question 9

The forces of supply and demand assure that

Accepted Answer

A) demand curves and supply curves tend to shift to the right as time goes by. 
B) the price of a good will eventually rise in response to an excess demand for that good. 
C) when the supply curve for a good shifts, the demand curve for that good shifts in response. 
D) the equilibrium price of a good will be rising more often than it will be falling. 
A) demand curves and supply curves tend to shift to the right as time goes by. 
B) the price of a good will eventually rise in response to an excess demand for that good. 
C) when the supply curve for a good shifts, the demand curve for that good shifts in response. 
D) the equilibrium price of a good will be rising more often than it will be falling.

Question 10

When economists say the demand for a product has increased, they mean the

Accepted Answer

A) demand curve has shifted to the right. 
B) price of the product has fallen, and consequently, consumers are buying more of it. 
C) cost of producing the product has risen. 
D) amount of the product that consumers are willing to purchase at various prices has decreased. 
A) demand curve has shifted to the right. 
B) price of the product has fallen, and consequently, consumers are buying more of it. 
C) cost of producing the product has risen. 
D) amount of the product that consumers are willing to purchase at various prices has decreased.

Question 11

Refer to Table 3-1. If the table represents the willingness to pay of four buyers and the price of the product is $30, then their total consumer surplus is

Accepted Answer

A) $-10. 
B) $-6. 
C) $20. 
D) $30. 
A) $-10. 
B) $-6. 
C) $20. 
D) $30.

Question 12

Consumer surplus

Accepted Answer

A) is the difference between total willingness to pay and the total amount actually paid. 
B) guarantees that the market value of a good in money is equal to the total economic value of the good. 
C) is always negative because of diminishing marginal utility. 
D) is the total area under a consumer's demand curve. 
A) is the difference between total willingness to pay and the total amount actually paid. 
B) guarantees that the market value of a good in money is equal to the total economic value of the good. 
C) is always negative because of diminishing marginal utility. 
D) is the total area under a consumer's demand curve.

Question 13

In which statement(s) is "demand" used correctly? (I) "An increase in the price of hot dogs will reduce the demand for hot dogs."
(II) "An increase in the price of hot dogs will reduce the demand for hot dog buns."

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 14

If Harry only pays $25,000 to purchase a new car even though he would have been willing to pay as much as $35,000 for the car, this indicates that

Accepted Answer

A) Harry is an irrational consumer. 
B) The seller earned a $10,000 profit on the sale of the car. 
C) Harry reaped $10,000 of consumer surplus from the transaction. 
D) The seller received $10,000 worth of producer surplus on the transaction. 
A) Harry is an irrational consumer. 
B) The seller earned a $10,000 profit on the sale of the car. 
C) Harry reaped $10,000 of consumer surplus from the transaction. 
D) The seller received $10,000 worth of producer surplus on the transaction.

Question 15

Each point on the demand curve indicates

Accepted Answer

A) the demand for the product. 
B) the quantity demanded at that price. 
C) the amount that people need. 
D) the amount people want to buy at different income levels. 
A) the demand for the product. 
B) the quantity demanded at that price. 
C) the amount that people need. 
D) the amount people want to buy at different income levels.

Question 16

A technological breakthrough lowers the cost of manufacturing VCRs. As a result, the market changes to a new equilibrium because of

Accepted Answer

A) an upward movement along the demand curve for VCRs. 
B) a rightward shift in the demand curve for VCRs. 
C) a rightward shift in the supply curve for VCRs. 
D) a shortage of VCRs. 
A) an upward movement along the demand curve for VCRs. 
B) a rightward shift in the demand curve for VCRs. 
C) a rightward shift in the supply curve for VCRs. 
D) a shortage of VCRs.

Question 17

If consumer purchases of a good are 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 18

A decrease in supply will cause

Accepted Answer

A) an increase in demand. 
B) a decrease in demand. 
C) an increase in quantity demanded. 
D) a decrease in quantity demanded. 
E) a decrease in equilibrium price. 
A) an increase in demand. 
B) a decrease in demand. 
C) an increase in quantity demanded. 
D) a decrease in quantity demanded. 
E) a decrease in equilibrium price.

Question 19

The number of people willing to buy tickets to the Super Bowl is invariably greater than the number of tickets (and seats) available. This is evidence that the price of the tickets is

Accepted Answer

A) higher than the equilibrium price. 
B) equal to the equilibrium price since the number of tickets bought equals the number sold. 
C) lower than the equilibrium price. 
D) higher than the equilibrium price when the demand is inelastic but lower when the demand is elastic. 
A) higher than the equilibrium price. 
B) equal to the equilibrium price since the number of tickets bought equals the number sold. 
C) lower than the equilibrium price. 
D) higher than the equilibrium price when the demand is inelastic but lower when the demand is elastic.

Question 20

Suppose a major civil war broke out in an important oil-producing nation. What impact would this have on the market for oil?

Accepted Answer

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

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

Which of the following is true?

When economists say the demand for a product has decreased, they mean

The price of chicken increases as the result of higher beef prices. This indicates that

Which of the following best explains the source of consumer surplus for good A?

A decrease in the price of a good would

Which of the following occurs when a shortage occurs in the market for a good?

Which of the following best represents the effects of a decrease in the price of tomato juice, other things being equal?

The forces of supply and demand assure that

When economists say the demand for a product has increased, they mean the

Refer to Table 3-1. If the table represents the willingness to pay of four buyers and the price of the product is $30, then their total consumer surplus is

Consumer surplus

In which statement(s) is "demand" used correctly? (I) "An increase in the price of hot dogs will reduce the demand for hot dogs." (II) "An increase in the price of hot dogs will reduce the demand for hot dog buns."

If Harry only pays $25,000 to purchase a new car even though he would have been willing to pay as much as $35,000 for the car, this indicates that

Each point on the demand curve indicates

A technological breakthrough lowers the cost of manufacturing VCRs. As a result, the market changes to a new equilibrium because of

If consumer purchases of a good are not very sensitive to the price of the good, this is illustrated by a

A decrease in supply will cause

The number of people willing to buy tickets to the Super Bowl is invariably greater than the number of tickets (and seats) available. This is evidence that the price of the tickets is

Suppose a major civil war broke out in an important oil-producing nation. What impact would this have on the market for oil?

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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