Question 1

Which of following is NOT true of the equilibrium price?

Accepted Answer

A) Buyers who are willing to pay the equilibrium price can acquire the good. 
B) It measures the value of the last unit sold to consumers. 
C) It is fair in the sense that everyone can afford basic goods and services. 
D) Sellers who are willing to accept the equilibrium price can sell what they produce. 
A) Buyers who are willing to pay the equilibrium price can acquire the good. 
B) It measures the value of the last unit sold to consumers. 
C) It is fair in the sense that everyone can afford basic goods and services. 
D) Sellers who are willing to accept the equilibrium price can sell what they produce.

Question 2

If the price of rubber (an input to the production of tires)increases:

Accepted Answer

A) the supply of tires will increase. 
B) the supply of tires will decrease. 
C) the demand for tires will increase. 
D) the demand for tires will decrease. 
A) the supply of tires will increase. 
B) the supply of tires will decrease. 
C) the demand for tires will increase. 
D) the demand for tires will decrease.

Question 3

If the demand curve for bologna shifts to the right as income falls then bologna is a(n):

Accepted Answer

A) normal good. 
B) complementary good. 
C) substitute good. 
D) inferior good. 
A) normal good. 
B) complementary good. 
C) substitute good. 
D) inferior good.

Question 4

A seller's reservation price is generally equal to:

Accepted Answer

A) the buyer's reservation price. 
B) the seller's average cost. 
C) the seller's marginal cost. 
D) the market price. 
A) the buyer's reservation price. 
B) the seller's average cost. 
C) the seller's marginal cost. 
D) the market price.

Question 5

Gertie saw a pair of jeans that she was willing to buy for $35. The price tag, though, said they were $29.99. Therefore:

Accepted Answer

A) Gertie should not buy the jeans because they will be of lower quality than she expected. 
B) Gertie should not buy the jeans because the price is not equal to her reservation price. 
C) Gertie should buy the jeans because the price is less than her reservation price. 
D) Gertie should buy the jeans because the price is more than her reservation price. 
A) Gertie should not buy the jeans because they will be of lower quality than she expected. 
B) Gertie should not buy the jeans because the price is not equal to her reservation price. 
C) Gertie should buy the jeans because the price is less than her reservation price. 
D) Gertie should buy the jeans because the price is more than her reservation price.

Question 6

Refer to the accompanying figure. If the price is $4 today and there is no change in either supply or demand, one would expect the price in the future to be:

Accepted Answer

A) $4. 
B) less than $4. 
C) greater than $6. 
D) greater than $4. 
A) $4. 
B) less than $4. 
C) greater than $6. 
D) greater than $4.

Question 7

A good example of central planning at work in the U.S. is:

Accepted Answer

A) car manufacturers establishing suggested retail prices. 
B) McDonald's fries being the same everywhere. 
C) unions working with businesses to establish wages. 
D) New York City's rent control program. 
A) car manufacturers establishing suggested retail prices. 
B) McDonald's fries being the same everywhere. 
C) unions working with businesses to establish wages. 
D) New York City's rent control program.

Question 8

Refer to the accompanying figure. Suppose the solid line shows the demand for coffee. If coffee and tea are substitutes, and the price of tea falls, then you would expect:

Accepted Answer

A) a decrease in the quantity of coffee demanded, but no shift in the demand curve. 
B) an increase in the quantity of coffee demanded, but no shift in the demand curve. 
C) the demand curve to shift to D(
A) . 
D) the demand curve to shift to D(
B)  
A) a decrease in the quantity of coffee demanded, but no shift in the demand curve. 
B) an increase in the quantity of coffee demanded, but no shift in the demand curve. 
C) the demand curve to shift to D(
A) . 
D) the demand curve to shift to D(
B)

Question 9

According to the textbook, government price controls fail because:

Accepted Answer

A) they are not enforced by government. 
B) legislation cannot alter basic economic incentives. 
C) bureaucrats lack accurate market data. 
D) firms ignore the price controls. 
A) they are not enforced by government. 
B) legislation cannot alter basic economic incentives. 
C) bureaucrats lack accurate market data. 
D) firms ignore the price controls.

Question 10

A seller's reservation price is generally equal to:

Accepted Answer

A) the buyer's reservation price. 
B) the seller's opportunity cost of producing an additional unit. 
C) the seller's marginal benefit from producing an additional unit. 
D) the market price. 
A) the buyer's reservation price. 
B) the seller's opportunity cost of producing an additional unit. 
C) the seller's marginal benefit from producing an additional unit. 
D) the market price.

Question 11

Which of the following is NOT true of a demand curve?

Accepted Answer

A) It has negative slope. 
B) It shows the amount consumers want to buy at various prices. 
C) It relates the price of an item to the quantity demanded of that item. 
D) It reflects sellers' reservations prices. 
A) It has negative slope. 
B) It shows the amount consumers want to buy at various prices. 
C) It relates the price of an item to the quantity demanded of that item. 
D) It reflects sellers' reservations prices.

Question 12

Refer to the accompanying figure. Suppose the solid line represents the current supply of Star Wars action figures. If the price of the plastic used to make action figures rises, current supply will:

Accepted Answer

A) shift to S(
B) . 
B) not change because a change in the price of plastic will not affect the demand for action figures. 
C) shift to S(
A) . 
D) not change; only the quantity supplied will change. 
A) shift to S(
B) . 
B) not change because a change in the price of plastic will not affect the demand for action figures. 
C) shift to S(
A) . 
D) not change; only the quantity supplied will change.

Question 13

A demand curve is ________ sloping because ________.

Accepted Answer

A) downward; of increasing opportunity costs 
B) upward; people prefer to purchase high-quality consumer goods 
C) downward; reservation prices tend to fall over time 
D) downward; fewer people are willing to buy an item at higher prices 
A) downward; of increasing opportunity costs 
B) upward; people prefer to purchase high-quality consumer goods 
C) downward; reservation prices tend to fall over time 
D) downward; fewer people are willing to buy an item at higher prices

Question 14

Refer to the accompanying figure. If the government imposed a price ceiling of $40, what would happen in this market?

Accepted Answer

A) There would be excess supply. 
B) There would be excess demand. 
C) The price ceiling would have no effect. 
D) The equilibrium quantity would fall. 
A) There would be excess supply. 
B) There would be excess demand. 
C) The price ceiling would have no effect. 
D) The equilibrium quantity would fall.

Question 15

What might cause a demand curve to shift to the right?

Accepted Answer

A) An increase in the price of a substitute 
B) An increase in the product's own price 
C) An increase in the price of a complement 
D) A decrease in the price of a substitute 
A) An increase in the price of a substitute 
B) An increase in the product's own price 
C) An increase in the price of a complement 
D) A decrease in the price of a substitute

Question 16

Refer to the accompanying figure. Suppose the solid line shows the current demand for coffee. In response to a news story explaining that coffee causes heart disease, you should expect:

Accepted Answer

A) the quantity of coffee demanded to decrease, but no shift in the demand curve. 
B) the demand curve to shift to D(
A) because some people will stop drinking coffee. 
C) the demand curve to shift to D(
B) in anticipation of higher future prices. 
D) neither a change in quantity demanded nor a shift in demand. 
A) the quantity of coffee demanded to decrease, but no shift in the demand curve. 
B) the demand curve to shift to D(
A) because some people will stop drinking coffee. 
C) the demand curve to shift to D(
B) in anticipation of higher future prices. 
D) neither a change in quantity demanded nor a shift in demand.

Question 17

Suppose you observe an increase in the equilibrium price of coffee and a decrease in the equilibrium quantity of coffee. Of the options listed below, this is most consistent with:

Accepted Answer

A) a decrease in consumer income assuming coffee is a normal good. 
B) an increase in the cost of producing coffee. 
C) an increase in consumer income assuming coffee is a normal good. 
D) a decrease in the cost of producing coffee. 
A) a decrease in consumer income assuming coffee is a normal good. 
B) an increase in the cost of producing coffee. 
C) an increase in consumer income assuming coffee is a normal good. 
D) a decrease in the cost of producing coffee.

Question 18

Refer to the accompanying figure. A decrease in supply is represented by a shift from:

Accepted Answer

A) curve A to curve B. 
B) curve B to curve A. 
C) curve C to curve D. 
D) curve D to curve C. 
A) curve A to curve B. 
B) curve B to curve A. 
C) curve C to curve D. 
D) curve D to curve C.

Question 19

Suppose that the equilibrium price of apples decreases and the equilibrium quantity of apples increases. This is best explained by:

Accepted Answer

A) an increase in the demand for apples. 
B) a decrease in the supply of apples. 
C) a decrease in the demand for apples. 
D) an increase in the supply of apples. 
A) an increase in the demand for apples. 
B) a decrease in the supply of apples. 
C) a decrease in the demand for apples. 
D) an increase in the supply of apples.

Question 20

Refer to the accompanying figure, which shows the market for cups of coffee. At the original market equilibrium:

Accepted Answer

A) 50 cups are sold per hour at a price of $1.00 each. 
B) 50 cups are sold per hour at a price of $2.50 each. 
C) 40 cups are sold per hour at a price of $2.00 each. 
D) 60 cups are sold per hour at a price of $1.50 each. 
A) 50 cups are sold per hour at a price of $1.00 each. 
B) 50 cups are sold per hour at a price of $2.50 each. 
C) 40 cups are sold per hour at a price of $2.00 each. 
D) 60 cups are sold per hour at a price of $1.50 each.

Exam 3: Supply and Demand

Which of following is NOT true of the equilibrium price?

If the price of rubber (an input to the production of tires)increases:

If the demand curve for bologna shifts to the right as income falls then bologna is a(n):

A seller's reservation price is generally equal to:

Gertie saw a pair of jeans that she was willing to buy for $35. The price tag, though, said they were $29.99. Therefore:

Refer to the accompanying figure. If the price is $4 today and there is no change in either supply or demand, one would expect the price in the future to be:

A good example of central planning at work in the U.S. is:

Refer to the accompanying figure. Suppose the solid line shows the demand for coffee. If coffee and tea are substitutes, and the price of tea falls, then you would expect:

According to the textbook, government price controls fail because:

A seller's reservation price is generally equal to:

Which of the following is NOT true of a demand curve?

Refer to the accompanying figure. Suppose the solid line represents the current supply of Star Wars action figures. If the price of the plastic used to make action figures rises, current supply will:

A demand curve is ________ sloping because ________.

Refer to the accompanying figure. If the government imposed a price ceiling of $40, what would happen in this market?

What might cause a demand curve to shift to the right?

Refer to the accompanying figure. Suppose the solid line shows the current demand for coffee. In response to a news story explaining that coffee causes heart disease, you should expect:

Suppose you observe an increase in the equilibrium price of coffee and a decrease in the equilibrium quantity of coffee. Of the options listed below, this is most consistent with:

Refer to the accompanying figure. A decrease in supply is represented by a shift from:

Suppose that the equilibrium price of apples decreases and the equilibrium quantity of apples increases. This is best explained by:

Refer to the accompanying figure, which shows the market for cups of coffee. At the original market equilibrium:

Thinking Like an Economist

Comparative Advantage

Elasticity

Demand

Perfectly Competitive Supply

Efficiency, Exchange, and the Invisible Hand in Action

Monopoly, Oligopoly, and Monopolistic Competition

Games and Strategic Behavior

An Introduction to Behavioral Economics

Externalities, Property Rights, and the Environment

The Economics of Information

Labor Markets, Poverty, and Income Distribution

Public Goods and Tax Policy

International Trade and Trade Policy

Macroeconomics: The Birds Eye View of the Economy

Measuring Economic Activity: GDP and Unemployment

Measuring the Price Level and Inflation

Economic Growth, Productivity, and Living Standards

The Labor Market: Workers, Wages, and Unemployment

Saving and Capital Formation

Money Prices and the Federal Reserve

Financial Markets and International Capital Flows

Short-Term Economic Fluctuations: An Introduction

Spending and Output in the Short Run

Stabilizing the Economy: The Role of the Fed

Aggregate Demand, Aggregate Supply, and Inflation

Exchange Rates and the Open Economy

Filters

A demand curve is sloping because .