Question 1

In general,the purpose of markets is to facilitate the exchange of goods and services between buyers and sellers.

Accepted Answer

A) True 
 B)False  True

Question 2

Every Friday night Elizabeth either goes bowling or goes to the movies.Because the price of bowling went up,Elizabeth now sees more movies.Elizabeth's behavior would be best described as a change in which determinant of demand?

Accepted Answer

A) Price of complementary goods 
B) Expectations 
C) Income 
D) Number of buyers 
E) Price of substitute goods 
A) Price of complementary goods 
B) Expectations 
C) Income 
D) Number of buyers 
E) Price of substitute goods E

Question 3

The table given below reports the quantity of bread loaves demanded and supplied at different per unit prices. 
Table 3.3
 
-Refer to Table 3.3.Which of the following would occur in the market for bread if the market price exceeded the equilibrium price by $1?

Accepted Answer

A) The quantity of bread demanded in the market would increase 
B) The bread market would face a surplus of 36 loaves of bread 
C) The supply of bread in the market would increase 
D) The bread market would face a shortage of 72 loaves of bread 
E) The demand for bread in the market would decrease 
A) The quantity of bread demanded in the market would increase 
B) The bread market would face a surplus of 36 loaves of bread 
C) The supply of bread in the market would increase 
D) The bread market would face a shortage of 72 loaves of bread 
E) The demand for bread in the market would decrease B

Question 4

When a freely functioning market is in disequilibrium:

Accepted Answer

A) the government must set a price ceiling. 
B) the government must set a price floor. 
C) the price and quantities demanded and/or supplied change until equilibrium is established 
D) it will continue to remain in disequilibrium. 
E) it will reach equilibrium at a very high/low price. 
A) the government must set a price ceiling. 
B) the government must set a price floor. 
C) the price and quantities demanded and/or supplied change until equilibrium is established 
D) it will continue to remain in disequilibrium. 
E) it will reach equilibrium at a very high/low price.

Question 5

Which of the following will cause an inward shift in the demand for steaks at a restaurant?

Accepted Answer

A) A report by the American Medical Association states that the consumption of steak reduces the risk of cardiovascular disease 
B) A 50 percent reduction in the price of steaks 
C) A double-digit increase in the price of chicken 
D) A recession leading to a significant fall in the income levels of consumers 
E) The expectation that the price of steaks will double within two months 
A) A report by the American Medical Association states that the consumption of steak reduces the risk of cardiovascular disease 
B) A 50 percent reduction in the price of steaks 
C) A double-digit increase in the price of chicken 
D) A recession leading to a significant fall in the income levels of consumers 
E) The expectation that the price of steaks will double within two months

Question 6

The demand schedule is a price list for a fixed basket of consumer goods following a particular format.

Accepted Answer

A) True 
 B)False

Question 7

If both supply and demand for a good increase,which of the following will definitely happen?

Accepted Answer

A) Equilibrium price will remain the same 
B) Equilibrium price will increase 
C) Equilibrium price will decrease 
D) Equilibrium quantity will increase 
E) Equilibrium quantity will decrease 
A) Equilibrium price will remain the same 
B) Equilibrium price will increase 
C) Equilibrium price will decrease 
D) Equilibrium quantity will increase 
E) Equilibrium quantity will decrease

Question 8

Assume that a hurricane in Brazil destroys half of the coffee crop.Considering that Brazil is a major coffee producing country,consumers expect the price of coffee to increase in the near future.How does this reflect on the demand for coffee?

Accepted Answer

A) There is a movement upward along the demand curve for coffee. 
B) The demand curve for coffee shifts inward. 
C) The demand curve for coffee shifts outward. 
D) There is a movement downward along the demand curve for coffee. 
E) The demand for coffee declines. 
A) There is a movement upward along the demand curve for coffee. 
B) The demand curve for coffee shifts inward. 
C) The demand curve for coffee shifts outward. 
D) There is a movement downward along the demand curve for coffee. 
E) The demand for coffee declines.

Question 9

A supply curve slopes downward because of the law of supply.

Accepted Answer

A) True 
 B)False

Question 10

A rent control law,where tenants pay below-market rents,is a market restriction that may induce a decrease in the supply of rented apartments.

Accepted Answer

A) True 
 B)False

Question 11

Other things remaining the same,when a fall in the price of one good is followed by an increase in the demand for another good,both goods are said to be:

Accepted Answer

A) inferior goods. 
B) substitute goods. 
C) Giffen goods. 
D) public goods. 
E) complementary goods. 
A) inferior goods. 
B) substitute goods. 
C) Giffen goods. 
D) public goods. 
E) complementary goods.

Question 12

The table given below reports the quantity demanded and supplied of a commodity at different prices in a market. Table 3.5

-Refer to Table 3.5.
If government imposes a price ceiling of $2:

Accepted Answer

A) the price will be above equilibrium. 
B) the price will fall to $1 because producers will be forced to incur losses. 
C) demand will increase. 
D) a surplus will result equal to 20 units. 
E) a shortage will result equal to 20 units. 
A) the price will be above equilibrium. 
B) the price will fall to $1 because producers will be forced to incur losses. 
C) demand will increase. 
D) a surplus will result equal to 20 units. 
E) a shortage will result equal to 20 units.

Question 13

The market demand curve is derived by:

Accepted Answer

A) studying an individual's demand for a product over a year. 
B) comparing the monthly consumption of a group of people. 
C) surveying a set of consumers and ascertaining their preferences. 
D) adding up the quantities that consumers in a market are willing and able to purchase at each price. 
E) calculating the average price a random sample of consumers are willing to pay for a product. 
A) studying an individual's demand for a product over a year. 
B) comparing the monthly consumption of a group of people. 
C) surveying a set of consumers and ascertaining their preferences. 
D) adding up the quantities that consumers in a market are willing and able to purchase at each price. 
E) calculating the average price a random sample of consumers are willing to pay for a product.

Question 14

The below figure shows the demand and supply of DVD rentals in a city.SS1U1B11S1U1B0 and DS1U1B11S1U1B0 are the
Original supply and demand curves.The demand curve shifts from DS1U1B11 S1U1B0to DS1U1B12S1U1B0.
Figure 3.4
 
-Refer to Figure 3.4 and identify the true statement.

Accepted Answer

A) The supply of DVD rentals has decreased. 
B) The original equilibrium quantity was 57. 
C) The new equilibrium price is $3. 
D) The demand for DVD rentals has decreased. 
E) The new equilibrium quantity is 48. 
A) The supply of DVD rentals has decreased. 
B) The original equilibrium quantity was 57. 
C) The new equilibrium price is $3. 
D) The demand for DVD rentals has decreased. 
E) The new equilibrium quantity is 48.

Question 15

Barter requires a double coincidence of wants.This means that:

Accepted Answer

A) at least two traders must demand a commodity. 
B) any two traders involved in a transaction must have money. 
C) each trader must demand at least two commodities. 
D) either of the two trades involved in a transaction must have money. 
E) when two traders are involved in a transaction each trader must want what the other has to offer. 
A) at least two traders must demand a commodity. 
B) any two traders involved in a transaction must have money. 
C) each trader must demand at least two commodities. 
D) either of the two trades involved in a transaction must have money. 
E) when two traders are involved in a transaction each trader must want what the other has to offer.

Question 16

A price floor is the minimum price that consumers have to pay.

Accepted Answer

A) True 
 B)False

Question 17

The term barter refers to exchanges made:

Accepted Answer

A) only with the use of money. 
B) without the use of money. 
C) outside the U.S.economy. 
D) only in underdeveloped countries. 
E) within countries in a monetary union. 
A) only with the use of money. 
B) without the use of money. 
C) outside the U.S.economy. 
D) only in underdeveloped countries. 
E) within countries in a monetary union.

Question 18

The figure given below represents the equilibrium in the market for bicycles under different demand and supply situations.The vertical axis in each panel shows the price of bikes. Figure 3.2
 
-Refer to Figure 3.2.Which of the following panels represents the equilibrium situation in the bicycle market,if there were an increase in the price of metal used in the production of bicycles?

Accepted Answer

A) Panel A 
B) Panel B 
C) Panel C 
D) Panel D 
E) Panel E 
A) Panel A 
B) Panel B 
C) Panel C 
D) Panel D 
E) Panel E

Question 19

An example of barter is voluntary work at an old-age home.

Accepted Answer

A) True 
 B)False

Question 20

Without money,no transaction can occur.

Accepted Answer

A) True 
 B)False

Exam 3: Markets, Demand and Supply, and the Price System

In general,the purpose of markets is to facilitate the exchange of goods and services between buyers and sellers.

Every Friday night Elizabeth either goes bowling or goes to the movies.Because the price of bowling went up,Elizabeth now sees more movies.Elizabeth's behavior would be best described as a change in which determinant of demand?

The table given below reports the quantity of bread loaves demanded and supplied at different per unit prices. Table 3.3 -Refer to Table 3.3.Which of the following would occur in the market for bread if the market price exceeded the equilibrium price by $1?

When a freely functioning market is in disequilibrium:

Which of the following will cause an inward shift in the demand for steaks at a restaurant?

The demand schedule is a price list for a fixed basket of consumer goods following a particular format.

If both supply and demand for a good increase,which of the following will definitely happen?

Assume that a hurricane in Brazil destroys half of the coffee crop.Considering that Brazil is a major coffee producing country,consumers expect the price of coffee to increase in the near future.How does this reflect on the demand for coffee?

A supply curve slopes downward because of the law of supply.

A rent control law,where tenants pay below-market rents,is a market restriction that may induce a decrease in the supply of rented apartments.

Other things remaining the same,when a fall in the price of one good is followed by an increase in the demand for another good,both goods are said to be:

The table given below reports the quantity demanded and supplied of a commodity at different prices in a market. Table 3.5 -Refer to Table 3.5. If government imposes a price ceiling of $2:

The market demand curve is derived by:

The below figure shows the demand and supply of DVD rentals in a city.S1 and D1 are the Original supply and demand curves.The demand curve shifts from D1 to D2. Figure 3.4 -Refer to Figure 3.4 and identify the true statement.

Barter requires a double coincidence of wants.This means that:

A price floor is the minimum price that consumers have to pay.

The term barter refers to exchanges made:

An example of barter is voluntary work at an old-age home.

Without money,no transaction can occur.

Economics: The World Around You

Choice, opportunity Costs, and Specialization

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

The below figure shows the demand and supply of DVD rentals in a city.S₁ and D₁ are the Original supply and demand curves.The demand curve shifts from D₁to D₂. Figure 3.4 -Refer to Figure 3.4 and identify the true statement.