Question 1

Refer to the accompanying figure. If the current market price were $20:

Accepted Answer

A) the market would be in equilibrium. 
B) there would be an excess supply of 25 units. 
C) there would be an excess demand of 25 units. 
D) there would be an excess demand of 35 units. 
A) the market would be in equilibrium. 
B) there would be an excess supply of 25 units. 
C) there would be an excess demand of 25 units. 
D) there would be an excess demand of 35 units.

Question 2

Suppose that both the supply of iPads and the demand for iPads decrease. One can predict that the:

Accepted Answer

A) equilibrium price will rise, but the change in equilibrium quantity is uncertain. 
B) equilibrium price and quantity will fall. 
C) equilibrium price and quantity will rise. 
D) equilibrium quantity will fall, but the change in equilibrium price is uncertain. 
A) equilibrium price will rise, but the change in equilibrium quantity is uncertain. 
B) equilibrium price and quantity will fall. 
C) equilibrium price and quantity will rise. 
D) equilibrium quantity will fall, but the change in equilibrium price is uncertain.

Question 3

If a country's economic decisions are made by an individual or small number of individuals, then it has a:

Accepted Answer

A) centralized economy. 
B) free-market economy. 
C) capitalist economy. 
D) open economy. 
A) centralized economy. 
B) free-market economy. 
C) capitalist economy. 
D) open economy.

Question 4

Suppose that as the price of apples rises, people switch from eating apples to eating oranges. This is known as:

Accepted Answer

A) the normal effect of a price change. 
B) the income effect of a price change. 
C) a decrease in the demand for apples. 
D) the substitution effect of a price change. 
A) the normal effect of a price change. 
B) the income effect of a price change. 
C) a decrease in the demand for apples. 
D) the substitution effect of a price change.

Question 5

Refer to the accompanying figure. At a price of $9, there will be:

Accepted Answer

A) an excess demand of 5 units. 
B) an excess supply of 6 units. 
C) an excess demand of 1 unit. 
D) an excess supply of 5 units. 
A) an excess demand of 5 units. 
B) an excess supply of 6 units. 
C) an excess demand of 1 unit. 
D) an excess supply of 5 units.

Question 6

If the equilibrium quantity of a good is also the socially optimal quantity, then:

Accepted Answer

A) total economic surplus has been maximized. 
B) the marginal benefit to consumers of another unit of the good is zero. 
C) the marginal cost to producers of another unit of the good is zero. 
D) it's possible to make at least one person better off without hurting anyone else. 
A) total economic surplus has been maximized. 
B) the marginal benefit to consumers of another unit of the good is zero. 
C) the marginal cost to producers of another unit of the good is zero. 
D) it's possible to make at least one person better off without hurting anyone else.

Question 7

Which of the following is NOT a determinant of the demand for gasoline?

Accepted Answer

A) Consumers' incomes 
B) The price of diesel 
C) The price of automobiles 
D) The supply of gasoline 
A) Consumers' incomes 
B) The price of diesel 
C) The price of automobiles 
D) The supply of gasoline

Question 8

Suppose sport utility vehicles get poor gas mileage compared to other available cars. If the price of gasoline increases, then one would expect:

Accepted Answer

A) the demand for gasoline to decrease. 
B) the demand for sport utility vehicles to decrease. 
C) the demand for sport utility vehicles to increase. 
D) the quantity demanded of sport utility vehicles to decrease. 
A) the demand for gasoline to decrease. 
B) the demand for sport utility vehicles to decrease. 
C) the demand for sport utility vehicles to increase. 
D) the quantity demanded of sport utility vehicles to decrease.

Question 9

When a market is not in equilibrium:

Accepted Answer

A) government intervention is required to achieve equilibrium. 
B) there is neither excess supply nor excess demand. 
C) the economic motives of sellers and buyers will move the market to its equilibrium. 
D) a change in either supply or demand is required to reestablish equilibrium. 
A) government intervention is required to achieve equilibrium. 
B) there is neither excess supply nor excess demand. 
C) the economic motives of sellers and buyers will move the market to its equilibrium. 
D) a change in either supply or demand is required to reestablish equilibrium.

Question 10

Equilibrium price and quantity are determined by:

Accepted Answer

A) demand. 
B) supply. 
C) government regulations. 
D) both supply and demand. 
A) demand. 
B) supply. 
C) government regulations. 
D) both supply and demand.

Question 11

An outcome is socially optimal if it:

Accepted Answer

A) is an equilibrium outcome. 
B) leaves no unexploited opportunities for individuals. 
C) is determined by the government. 
D) maximizes total economic surplus. 
A) is an equilibrium outcome. 
B) leaves no unexploited opportunities for individuals. 
C) is determined by the government. 
D) maximizes total economic surplus.

Question 12

Suppose that recent studies conclude that high-fiber diets do not reduce the risk of developing colon cancer as was previously thought. The likely result will be that the:

Accepted Answer

A) quantity demanded of high-fiber foods will fall. 
B) demand for high-fiber foods will decrease. 
C) supply of high-fiber foods will increase. 
D) price of high-fiber foods will rise. 
A) quantity demanded of high-fiber foods will fall. 
B) demand for high-fiber foods will decrease. 
C) supply of high-fiber foods will increase. 
D) price of high-fiber foods will rise.

Question 13

If the demand for olives falls when the price of cheese falls, then we know that cheese and olives are:

Accepted Answer

A) normal goods. 
B) complements. 
C) substitutes. 
D) inferior goods. 
A) normal goods. 
B) complements. 
C) substitutes. 
D) inferior goods.

Question 14

Suppose rice is a normal good. If consumers' incomes fall, and a new technology is introduced that lowers the marginal cost of producing rice, then the equilibrium:

Accepted Answer

A) price of rice will increase, but we cannot say for sure what will happen to the equilibrium quantity. 
B) price of rice will fall, but we cannot say for sure what will happen to the equilibrium quantity. 
C) quantity of rice will increase, but we cannot say for sure what will happen to the equilibrium price. 
D) quantity of rice will decrease, but we cannot say for sure what will happen to the equilibrium price. 
A) price of rice will increase, but we cannot say for sure what will happen to the equilibrium quantity. 
B) price of rice will fall, but we cannot say for sure what will happen to the equilibrium quantity. 
C) quantity of rice will increase, but we cannot say for sure what will happen to the equilibrium price. 
D) quantity of rice will decrease, but we cannot say for sure what will happen to the equilibrium price.

Question 15

Suppose that the equilibrium price of french fries rises while the equilibrium quantity falls. The most likely explanation for these changes is:

Accepted Answer

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

Question 16

Suppose you drive a car that gets good gas mileage, and you notice that more and more people are driving gas-guzzling cars. Their increased demand for gas:

Accepted Answer

A) does not affect you. 
B) is likely to cause the price you pay for gas to decrease. 
C) is likely to cause the price you pay for gas to increase. 
D) does not change the price you pay, but it reduces the quantity of gas supplied. 
A) does not affect you. 
B) is likely to cause the price you pay for gas to decrease. 
C) is likely to cause the price you pay for gas to increase. 
D) does not change the price you pay, but it reduces the quantity of gas supplied.

Question 17

Suppose demand decreases, but there is no change in supply. As the market reaches its new equilibrium:

Accepted Answer

A) excess demand will lead the price to rise. 
B) excess supply will lead the price to rise. 
C) excess demand will lead the price to fall. 
D) excess supply will lead the price to fall. 
A) excess demand will lead the price to rise. 
B) excess supply will lead the price to rise. 
C) excess demand will lead the price to fall. 
D) excess supply will lead the price to fall.

Question 18

When the supply of a good decreases, there will be a(n):

Accepted Answer

A) decrease in demand. 
B) decrease in buyers' reservation prices for the good. 
C) decrease in the quantity demanded. 
D) increase in the quantity demanded. 
A) decrease in demand. 
B) decrease in buyers' reservation prices for the good. 
C) decrease in the quantity demanded. 
D) increase in the quantity demanded.

Question 19

In a market in which the government has set a price ceiling below the equilibrium price:

Accepted Answer

A) the quantity demanded will equal quantity supplied. 
B) there will be excess supply. 
C) a black market might develop. 
D) quantity supplied will exceed quantity demanded. 
A) the quantity demanded will equal quantity supplied. 
B) there will be excess supply. 
C) a black market might develop. 
D) quantity supplied will exceed quantity demanded.

Question 20

Refer to the accompanying figure. If demand shifts from D1 to D2, and at the same time, supply shifts from S1 to S2, then according to the figure:

Accepted Answer

A) the equilibrium quantity will increase and the equilibrium price will decrease. 
B) the equilibrium quantity will increase and the equilibrium price will increase. 
C) the equilibrium quantity will decrease and the equilibrium price will increase. 
D) the equilibrium quantity will decrease and the equilibrium price will decrease. 
A) the equilibrium quantity will increase and the equilibrium price will decrease. 
B) the equilibrium quantity will increase and the equilibrium price will increase. 
C) the equilibrium quantity will decrease and the equilibrium price will increase. 
D) the equilibrium quantity will decrease and the equilibrium price will decrease.

Exam 3: Supply and Demand

Refer to the accompanying figure. If the current market price were $20:

Suppose that both the supply of iPads and the demand for iPads decrease. One can predict that the:

If a country's economic decisions are made by an individual or small number of individuals, then it has a:

Suppose that as the price of apples rises, people switch from eating apples to eating oranges. This is known as:

Refer to the accompanying figure. At a price of $9, there will be:

If the equilibrium quantity of a good is also the socially optimal quantity, then:

Which of the following is NOT a determinant of the demand for gasoline?

Suppose sport utility vehicles get poor gas mileage compared to other available cars. If the price of gasoline increases, then one would expect:

When a market is not in equilibrium:

Equilibrium price and quantity are determined by:

An outcome is socially optimal if it:

Suppose that recent studies conclude that high-fiber diets do not reduce the risk of developing colon cancer as was previously thought. The likely result will be that the:

If the demand for olives falls when the price of cheese falls, then we know that cheese and olives are:

Suppose rice is a normal good. If consumers' incomes fall, and a new technology is introduced that lowers the marginal cost of producing rice, then the equilibrium:

Suppose that the equilibrium price of french fries rises while the equilibrium quantity falls. The most likely explanation for these changes is:

Suppose you drive a car that gets good gas mileage, and you notice that more and more people are driving gas-guzzling cars. Their increased demand for gas:

Suppose demand decreases, but there is no change in supply. As the market reaches its new equilibrium:

When the supply of a good decreases, there will be a(n):

In a market in which the government has set a price ceiling below the equilibrium price:

Refer to the accompanying figure. If demand shifts from D1 to D2, and at the same time, supply shifts from S1 to S2, then according to the figure:

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