Question 1

If two commodities are complements then:

Accepted Answer

A) the cross-price elasticity will be zero. 
B) the cross-price elasticity will be one. 
C) the cross-price elasticity will be negative. 
D) the cross-price elasticity will be positive. 
A) the cross-price elasticity will be zero. 
B) the cross-price elasticity will be one. 
C) the cross-price elasticity will be negative. 
D) the cross-price elasticity will be positive.

Question 2

Sellers in a geographically centralized market have higher transaction costs compared to those in a decentralized market.

Accepted Answer

A) True 
 B)False

Question 3

In the market for potatoes, where price level reaches its low in October and its peak in June, speculators help to:

Accepted Answer

A) keep the equilibrium price uniform over the year. 
B) lower the level of consumption in June. 
C) lower the level of consumption in October. 
D) keep the equilibrium price level low over the year. 
A) keep the equilibrium price uniform over the year. 
B) lower the level of consumption in June. 
C) lower the level of consumption in October. 
D) keep the equilibrium price level low over the year.

Question 4

A surplus can exist in the market only if there is:

Accepted Answer

A) a non binding price floor. 
B) a binding price floor. 
C) a binding price ceiling. 
D) a non binding price ceiling. 
A) a non binding price floor. 
B) a binding price floor. 
C) a binding price ceiling. 
D) a non binding price ceiling.

Question 5

Assume that excessive lobbying by tea cultivators led to the announcement of a price floor higher than the equilibrium price of tea.This legislation is likely to result in a shortage of tea leaves in the market.

Accepted Answer

A) True 
 B)False

Question 6

A futures contract hedges against the risks associated with the volatility of spot price.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following commodities can be considered as an inferior good?

Accepted Answer

A) Dwelling in a small apartment located in a suburb 
B) Washing clothes in a washer at home 
C) Eating out at an upscale restaurant 
D) Spending vacations at exotic locations 
A) Dwelling in a small apartment located in a suburb 
B) Washing clothes in a washer at home 
C) Eating out at an upscale restaurant 
D) Spending vacations at exotic locations

Question 8

Arbitrage in foreign exchange and gold are both common as buyers can bargain with the sellers on the market price.

Accepted Answer

A) True 
 B)False

Question 9

Substitution of one commodity for another depends on all of the following factors, EXCEPT:

Accepted Answer

A) prices of the goods available to the consumers. 
B) tastes and preferences of the buyers. 
C) the information buyers possess. 
D) market protocols. 
A) prices of the goods available to the consumers. 
B) tastes and preferences of the buyers. 
C) the information buyers possess. 
D) market protocols.

Question 10

The market-clearing price is:

Accepted Answer

A) the price at which the market is in equilibrium. 
B) the price at which mutually beneficial trade take place. 
C) the price at which sellers earn the maximum profit. 
D) the price at which consumer surplus is zero. 
A) the price at which the market is in equilibrium. 
B) the price at which mutually beneficial trade take place. 
C) the price at which sellers earn the maximum profit. 
D) the price at which consumer surplus is zero.

Question 11

Which of the following is an effect of paper recycling on pulpwood?

Accepted Answer

A) Recycling leads to an increase in acreage devoted to pulpwood. 
B) Recycling leads to a decrease in acreage devoted to pulpwood. 
C) Recycling increases the demand for pulpwood. 
D) Recycling increases the market price of pulpwood. 
A) Recycling leads to an increase in acreage devoted to pulpwood. 
B) Recycling leads to a decrease in acreage devoted to pulpwood. 
C) Recycling increases the demand for pulpwood. 
D) Recycling increases the market price of pulpwood.

Question 12

Consumer surplus increases when the market price of a commodity declines.

Accepted Answer

A) True 
 B)False

Question 13

For an inferior good:

Accepted Answer

A) the income elasticity is positive. 
B) the income elasticity if negative. 
C) the income elasticity is zero. 
D) the income elasticity is unity. 
A) the income elasticity is positive. 
B) the income elasticity if negative. 
C) the income elasticity is zero. 
D) the income elasticity is unity.

Question 14

An affordable housing law will affect a city's housing prices only if:

Accepted Answer

A) the demand for houses in the city is downward sloping. 
B) the demand for houses in the city is almost horizontal. 
C) the demand for houses in the city is almost vertical. 
D) the demand for houses in the city is backward bending. 
A) the demand for houses in the city is downward sloping. 
B) the demand for houses in the city is almost horizontal. 
C) the demand for houses in the city is almost vertical. 
D) the demand for houses in the city is backward bending.

Question 15

Which of the following statements about equilibrium is true?

Accepted Answer

A) The positive and the normative attributes of equilibrium are similar. 
B) The equilibrium price fails to redistribute goods in accordance to individual valuations. 
C) Equilibrium refers to a state of complete happiness or fairness. 
D) In equilibrium there are neither surpluses nor shortages. 
A) The positive and the normative attributes of equilibrium are similar. 
B) The equilibrium price fails to redistribute goods in accordance to individual valuations. 
C) Equilibrium refers to a state of complete happiness or fairness. 
D) In equilibrium there are neither surpluses nor shortages.

Question 16

Suppose Betty spends her monthly allowance on buying computer games, watching movies, and parasailing.If an increase in her monthly allowance increases her expenditure on parasailing activities we can say that:

Accepted Answer

A) parasailing is an inferior good. 
B) computer games are inferior goods. 
C) parasailing is a normal good. 
D) computer games are normal goods. 
A) parasailing is an inferior good. 
B) computer games are inferior goods. 
C) parasailing is a normal good. 
D) computer games are normal goods.

If two commodities are complements then:

Sellers in a geographically centralized market have higher transaction costs compared to those in a decentralized market.

In the market for potatoes, where price level reaches its low in October and its peak in June, speculators help to:

A surplus can exist in the market only if there is:

Assume that excessive lobbying by tea cultivators led to the announcement of a price floor higher than the equilibrium price of tea.This legislation is likely to result in a shortage of tea leaves in the market.

A futures contract hedges against the risks associated with the volatility of spot price.

Which of the following commodities can be considered as an inferior good?

Arbitrage in foreign exchange and gold are both common as buyers can bargain with the sellers on the market price.

Substitution of one commodity for another depends on all of the following factors, EXCEPT:

The market-clearing price is:

Which of the following is an effect of paper recycling on pulpwood?

Consumer surplus increases when the market price of a commodity declines.

For an inferior good:

An affordable housing law will affect a city's housing prices only if:

Which of the following statements about equilibrium is true?

Suppose Betty spends her monthly allowance on buying computer games, watching movies, and parasailing.If an increase in her monthly allowance increases her expenditure on parasailing activities we can say that:

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

If two commodities are complements then:

Sellers in a geographically centralized market have higher transaction costs compared to those in a decentralized market.

In the market for potatoes, where price level reaches its low in October and its peak in June, speculators help to:

A surplus can exist in the market only if there is:

Assume that excessive lobbying by tea cultivators led to the announcement of a price floor higher than the equilibrium price of tea.This legislation is likely to result in a shortage of tea leaves in the market.

A futures contract hedges against the risks associated with the volatility of spot price.

Which of the following commodities can be considered as an inferior good?

Arbitrage in foreign exchange and gold are both common as buyers can bargain with the sellers on the market price.

Substitution of one commodity for another depends on all of the following factors, EXCEPT:

The market-clearing price is:

Which of the following is an effect of paper recycling on pulpwood?

Consumer surplus increases when the market price of a commodity declines.

For an inferior good:

An affordable housing law will affect a city's housing prices only if:

Which of the following statements about equilibrium is true?

Suppose Betty spends her monthly allowance on buying computer games, watching movies, and parasailing.If an increase in her monthly allowance increases her expenditure on parasailing activities we can say that:

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