Question 1

The area above the supply curve and below the market price represents:

Accepted Answer

A) the consumer surplus 
B) the producer surplus. 
C) the deadweight loss of the producer. 
D) the deadweight loss of the consumer. 
A) the consumer surplus 
B) the producer surplus. 
C) the deadweight loss of the producer. 
D) the deadweight loss of the consumer.

Question 2

Why is a futures contract considered valuable by both producers and consumers?

Accepted Answer

The futures contract is valuab

Question 3

What is the Law of One Price?

Accepted Answer

Buying and selling a good simultaneously

Question 4

An increase in the price of Kellogg's breakfast cereal is likely to shift the demand curve for cereal manufactured by Malt-O-Meal to the right.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following will result from an epizootic affecting sheep reared for wool?

Accepted Answer

A) The epizootic would lower people's preference for woolen clothes. 
B) The price of new woolen clothes would rise. 
C) The epizootic would lower people's preference for synthetic coats. 
D) The production of new woolen clothes would rise. 
A) The epizootic would lower people's preference for woolen clothes. 
B) The price of new woolen clothes would rise. 
C) The epizootic would lower people's preference for synthetic coats. 
D) The production of new woolen clothes would rise.

Question 6

The demand for a commodity is said to perfectly inelastic when:

Accepted Answer

A) a prominent change in the price level leaves the quantity demanded totally unchanged. 
B) a small change in the price level affects the quantity demanded to a large extent. 
C) a change in the price level has an equal impact on the quantity demanded. 
D) a change in the price level has a negative impact on the quantity demanded. 
A) a prominent change in the price level leaves the quantity demanded totally unchanged. 
B) a small change in the price level affects the quantity demanded to a large extent. 
C) a change in the price level has an equal impact on the quantity demanded. 
D) a change in the price level has a negative impact on the quantity demanded.

Question 7

What is the impact of an interest ceiling on bank deposits but not on loans?

Accepted Answer

An interest ceiling on bank deposits low

Question 8

Which of the following is a property of a forward contract?

Accepted Answer

A) In a forward contract cash is traded for immediate delivery. 
B) The buyer of a forward contract is "short" while the seller of the contract is "long". 
C) In a forward contract, the seller must own the commodity which is being traded. 
D) The value of future delivery depends on the market price of the commodity. 
A) In a forward contract cash is traded for immediate delivery. 
B) The buyer of a forward contract is "short" while the seller of the contract is "long". 
C) In a forward contract, the seller must own the commodity which is being traded. 
D) The value of future delivery depends on the market price of the commodity.

Question 9

A perfectly elastic demand curve will:

Accepted Answer

A) be a vertical straight line. 
B) be a downward sloping straight line. 
C) be a horizontal straight line. 
D) be an upward sloping straight line. 
A) be a vertical straight line. 
B) be a downward sloping straight line. 
C) be a horizontal straight line. 
D) be an upward sloping straight line.

Question 10

Assume that the demand curve for a commodity is represented by the equation Q = 25 - 1.3P.Calculate the change in total spending for this commodity when price falls from $4.50 to $4.20.

Accepted Answer

A) Total spending rises by $4.11. 
B) Total spending declines by $4.11. 
C) Total spending declines by $8.20. 
D) Total spending rises by $8.20. 
A) Total spending rises by $4.11. 
B) Total spending declines by $4.11. 
C) Total spending declines by $8.20. 
D) Total spending rises by $8.20.

Question 11

In a "pure exchange" market:

Accepted Answer

A) resources are owned only by the government. 
B) resources are owned by few people. 
C) people trade money for goods that are produced in the domestic economy. 
D) there is no production and people trade money for goods that already exist. 
A) resources are owned only by the government. 
B) resources are owned by few people. 
C) people trade money for goods that are produced in the domestic economy. 
D) there is no production and people trade money for goods that already exist.

Question 12

Marginal valuation is:

Accepted Answer

A) the maximum a person is willing to pay for an additional unit of a good or service. 
B) the maximum amount of a good or service a person is willing to consume. 
C) the difference between the price an individual is willing to pay for a good or service and its actual price. 
D) the difference between the amount of a good or service demanded and that which is available. 
A) the maximum a person is willing to pay for an additional unit of a good or service. 
B) the maximum amount of a good or service a person is willing to consume. 
C) the difference between the price an individual is willing to pay for a good or service and its actual price. 
D) the difference between the amount of a good or service demanded and that which is available.

Question 13

It is difficult to practice arbitrage for untradable services or for goods which have a few knowledgeable traders.

Accepted Answer

A) True 
 B)False

Question 14

Why does the elasticity of demand for a commodity change over time?

Accepted Answer

Elasticity of demand for a goo

Question 15

How do speculators provide a more rational guide to production and consumption decisions compared to markets?

Accepted Answer

The price level which results from specu

Question 16

A tradesman who purchases diamonds in a country where the price is low and sells them in another country where the price is high, can be said to be practicing:

Accepted Answer

A) arbitrage. 
B) speculation. 
C) derivatives trading. 
D) forecasting. 
A) arbitrage. 
B) speculation. 
C) derivatives trading. 
D) forecasting.

Question 17

When the demand curve is vertical and the supply curve is upward sloping,:

Accepted Answer

A) a rise in the input price that increases marginal cost by $1, decreases the firm's profit by $1. 
B) a drop in the input price that lowers the marginal cost by $1, doubles the firm's profit. 
C) a drop in the input price that lowers the marginal cost by $1, decreases the output price by $1. 
D) a rise in the input price that increases the marginal cost by $1, doubles the output price. 
A) a rise in the input price that increases marginal cost by $1, decreases the firm's profit by $1. 
B) a drop in the input price that lowers the marginal cost by $1, doubles the firm's profit. 
C) a drop in the input price that lowers the marginal cost by $1, decreases the output price by $1. 
D) a rise in the input price that increases the marginal cost by $1, doubles the output price.

Question 18

Why is a forward contract also known as a derivative asset?

Accepted Answer

The value of future delivery i

Question 19

At a given demand, if the supply of a commodity declines, the equilibrium price level falls.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements about elasticity of supply is true?

Accepted Answer

A) Elasticity of supply is always unity. 
B) Elasticity of supply is always zero. 
C) Elasticity of supply is always negative. 
D) Elasticity of supply is always positive. 
A) Elasticity of supply is always unity. 
B) Elasticity of supply is always zero. 
C) Elasticity of supply is always negative. 
D) Elasticity of supply is always positive.

The area above the supply curve and below the market price represents:

Why is a futures contract considered valuable by both producers and consumers?

What is the Law of One Price?

An increase in the price of Kellogg's breakfast cereal is likely to shift the demand curve for cereal manufactured by Malt-O-Meal to the right.

Which of the following will result from an epizootic affecting sheep reared for wool?

The demand for a commodity is said to perfectly inelastic when:

What is the impact of an interest ceiling on bank deposits but not on loans?

Which of the following is a property of a forward contract?

A perfectly elastic demand curve will:

Assume that the demand curve for a commodity is represented by the equation Q = 25 - 1.3P.Calculate the change in total spending for this commodity when price falls from $4.50 to $4.20.

In a "pure exchange" market:

Marginal valuation is:

It is difficult to practice arbitrage for untradable services or for goods which have a few knowledgeable traders.

Why does the elasticity of demand for a commodity change over time?

How do speculators provide a more rational guide to production and consumption decisions compared to markets?

A tradesman who purchases diamonds in a country where the price is low and sells them in another country where the price is high, can be said to be practicing:

When the demand curve is vertical and the supply curve is upward sloping,:

Why is a forward contract also known as a derivative asset?

At a given demand, if the supply of a commodity declines, the equilibrium price level falls.

Which of the following statements about elasticity of supply is true?

Reasoning With Economics: Models and Information

Transactions and Institutions: the Building Blocks

Cost and Production

Extreme Markets I: Perfect Competition

Extreme Markets II: Monopoly

Between the Extremes: Interaction and Strategy

Competition and Strategy

Beyond Markets; Property and Contracts

The Economics of Contracts

Risk and Information in Contracts

Organizations in Concept and Practice

Organizational Design

Vertical Relationships

Employment Relationships

Time, Risk and Options

Conflict, Negotiation and Group Choice

Filters

Exam 3: Markets

The area above the supply curve and below the market price represents:

Why is a futures contract considered valuable by both producers and consumers?

What is the Law of One Price?

An increase in the price of Kellogg's breakfast cereal is likely to shift the demand curve for cereal manufactured by Malt-O-Meal to the right.

Which of the following will result from an epizootic affecting sheep reared for wool?

The demand for a commodity is said to perfectly inelastic when:

What is the impact of an interest ceiling on bank deposits but not on loans?

Which of the following is a property of a forward contract?

A perfectly elastic demand curve will:

Assume that the demand curve for a commodity is represented by the equation Q = 25 - 1.3P.Calculate the change in total spending for this commodity when price falls from $4.50 to $4.20.

In a "pure exchange" market:

Marginal valuation is:

It is difficult to practice arbitrage for untradable services or for goods which have a few knowledgeable traders.

Why does the elasticity of demand for a commodity change over time?

How do speculators provide a more rational guide to production and consumption decisions compared to markets?

A tradesman who purchases diamonds in a country where the price is low and sells them in another country where the price is high, can be said to be practicing:

When the demand curve is vertical and the supply curve is upward sloping,:

Why is a forward contract also known as a derivative asset?

At a given demand, if the supply of a commodity declines, the equilibrium price level falls.

Which of the following statements about elasticity of supply is true?

Reasoning With Economics: Models and Information

Transactions and Institutions: the Building Blocks

Cost and Production

Extreme Markets I: Perfect Competition

Extreme Markets II: Monopoly

Between the Extremes: Interaction and Strategy

Competition and Strategy

Beyond Markets; Property and Contracts

The Economics of Contracts

Risk and Information in Contracts

Organizations in Concept and Practice

Organizational Design

Vertical Relationships

Employment Relationships

Time, Risk and Options

Conflict, Negotiation and Group Choice

Filters