Question 1

When a market is in surplus,there is pressure for the price to move upward.

Accepted Answer

A) True 
 B)False

Question 2

The demand for luxurious goods are usually unaffected by an increase in income.

Accepted Answer

A) True 
 B)False

Question 3

Other things remaining the same,if a large part of the population decided against having soda for health reasons,this would result in:

Accepted Answer

A) an increase in the quantity of soda supplied. 
B) an increase in the quantity supplied of complements like fries and burgers. 
C) a decrease in the price of soda. 
D) a rightward shift of the demand curve for soda. 
E) a decrease in the quantity demanded of substitutes like mineral water. 
A) an increase in the quantity of soda supplied. 
B) an increase in the quantity supplied of complements like fries and burgers. 
C) a decrease in the price of soda. 
D) a rightward shift of the demand curve for soda. 
E) a decrease in the quantity demanded of substitutes like mineral water.

Question 4

Ceteris paribus,a change in the quantity supplied along the supply curve of Braun coffee makers is:

Accepted Answer

A) directly related to the price of a Morphy Richards coffee maker. 
B) directly related to the price of milk and cream. 
C) directly related to the prices of inputs used in the production of Braun coffee makers. 
D) directly related to changes in the technology used in producing coffee makers. 
E) directly related to the price of a Braun coffee maker. 
A) directly related to the price of a Morphy Richards coffee maker. 
B) directly related to the price of milk and cream. 
C) directly related to the prices of inputs used in the production of Braun coffee makers. 
D) directly related to changes in the technology used in producing coffee makers. 
E) directly related to the price of a Braun coffee maker.

Question 5

Consider a demand curve for peaches.Which of the following movements will be observed if the price of peaches decline at a point in time?

Accepted Answer

A) The demand curve will rotate inward at the given price level. 
B) The will be a movement up along the demand curve. 
C) The demand curve will rotate outward at the given price level. 
D) There will be a movement down along the demand curve. 
E) There will be no change in the demand curve. 
A) The demand curve will rotate inward at the given price level. 
B) The will be a movement up along the demand curve. 
C) The demand curve will rotate outward at the given price level. 
D) There will be a movement down along the demand curve. 
E) There will be no change in the demand curve.

Question 6

Which of the following will cause an increase in the quantity demanded of ice cream at an ice cream store?

Accepted Answer

A) The onset of summer brings about an increase in the temperature. 
B) The price of frozen yogurt that is sold at the store is reduced by 5 percent. 
C) A new ice cream flavor is introduced at the store. 
D) The store introduces a limited period offer of 20 percent off on the price of ice cream. 
E) The income of the store's consumers increases. 
A) The onset of summer brings about an increase in the temperature. 
B) The price of frozen yogurt that is sold at the store is reduced by 5 percent. 
C) A new ice cream flavor is introduced at the store. 
D) The store introduces a limited period offer of 20 percent off on the price of ice cream. 
E) The income of the store's consumers increases.

Question 7

The amount of a product that people are willing and able to purchase at a specific price is referred to as the:

Accepted Answer

A) demand. 
B) quantity demanded. 
C) law of demand. 
D) consumption function. 
E) purchasing power. 
A) demand. 
B) quantity demanded. 
C) law of demand. 
D) consumption function. 
E) purchasing power.

Question 8

Which of the following statements is not true about a market system?

Accepted Answer

A) The market system provides an incentive to consumers to acquire purchasing ability. 
B) The market system magnifies the problem of scarcity of goods and services. 
C) The market system provides an incentive for allocating resources. 
D) The market system provides an incentive to improve the quality of goods produced. 
E) The market system provides everything everyone wants to consume. 
A) The market system provides an incentive to consumers to acquire purchasing ability. 
B) The market system magnifies the problem of scarcity of goods and services. 
C) The market system provides an incentive for allocating resources. 
D) The market system provides an incentive to improve the quality of goods produced. 
E) The market system provides everything everyone wants to consume.

Question 9

When the price ceiling on eggs is lifted,there is a shortage of eggs in the market.

Accepted Answer

A) True 
 B)False

Question 10

According to the law of supply,if the price of calculators decrease,the supply of calculators will decrease,everything else held constant.

Accepted Answer

A) True 
 B)False

Question 11

If more firms enter the telecommunications industry,we can expect the equilibrium price of telecom services to decrease and the equilibrium number of services to increase.

Accepted Answer

A) True 
 B)False

Question 12

The relationship between prices and the corresponding quantities supplied is shown in a:

Accepted Answer

A) supply schedule. 
B) demand schedule. 
C) price-earnings ratio. 
D) demand curve. 
E) production schedule. 
A) supply schedule. 
B) demand schedule. 
C) price-earnings ratio. 
D) demand curve. 
E) production schedule.

Question 13

The below figure shows the demand and supply curves in the market for coffee.SS1U1B11S1U1B0 and DS1U1B11S1U1B0 are the original demand and supply curves. Figure 3.5
 
-Based on Figure 3.5,which of the following conditions would most likely move the point of equilibrium from A to D?

Accepted Answer

A) An increase in the income of a coffee buyer. 
B) A decrease in the price of coffee. 
C) A drought in Colombia,a major coffee producer,that affects the coffee harvest. 
D) A decrease in the price of non-dairy creamers that are consumed along with coffee. 
E) An increase in the price of tea,assumed to be a substitute for coffee. 
A) An increase in the income of a coffee buyer. 
B) A decrease in the price of coffee. 
C) A drought in Colombia,a major coffee producer,that affects the coffee harvest. 
D) A decrease in the price of non-dairy creamers that are consumed along with coffee. 
E) An increase in the price of tea,assumed to be a substitute for coffee.

Question 14

Other things remaining unchanged,which of the following is a determinant of the quantity supplied of a good?

Accepted Answer

A) The cost of inputs used in production 
B) The price of the product 
C) The income levels of consumers 
D) The price expectations of producers 
E) The preferences of consumers 
A) The cost of inputs used in production 
B) The price of the product 
C) The income levels of consumers 
D) The price expectations of producers 
E) The preferences of consumers

Question 15

Which of the following determines the quantity demanded of a commodity?

Accepted Answer

A) The income levels of consumers 
B) The price of the commodity 
C) The prices of related commodities 
D) The number of buyers 
E) Consumers' expectations 
A) The income levels of consumers 
B) The price of the commodity 
C) The prices of related commodities 
D) The number of buyers 
E) Consumers' expectations

Question 16

The table given below reports the quantity demanded of a good by individuals 1,2,and 3 at different prices.
 Table 3.1
 
-Refer to Table 3.1.Calculate the market demand at prices $5,$4,$3,$2,and $1 respectively.

Accepted Answer

A) Market demand is 30,40,50,60,and 70 
B) Market demand is 30,60,90,120,and 150 
C) Market demand is 30,50,70,90,and 1,100 
D) Market demand is 10,30,40,50,and 70 
E) Market demand is 10,20,30,40,and 50 
A) Market demand is 30,40,50,60,and 70 
B) Market demand is 30,60,90,120,and 150 
C) Market demand is 30,50,70,90,and 1,100 
D) Market demand is 10,30,40,50,and 70 
E) Market demand is 10,20,30,40,and 50

Question 17

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 floor of $2:

Accepted Answer

A) the price floor will not have an effect. 
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 floor will not have an effect. 
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 18

A price floor does not benefit producers.

Accepted Answer

A) True 
 B)False

Question 19

Most markets involve the use of money for transactions because:

Accepted Answer

A) goods and services can be exchanged more easily with money than without it. 
B) goods and services cannot be exchanged without money. 
C) using money requires a double coincidence of wants. 
D) the transaction costs of using money are very high. 
E) the value of money remains same across countries over time. 
A) goods and services can be exchanged more easily with money than without it. 
B) goods and services cannot be exchanged without money. 
C) using money requires a double coincidence of wants. 
D) the transaction costs of using money are very high. 
E) the value of money remains same across countries over time.

Question 20

Margaret can use her quarterly savings to buy a teakwood study table for her room or spend it on a small Christmas party with her family.The _____ cost of her enjoyment at the Christmas party would then equal the forgone utility of the study table.

Accepted Answer

A) transaction 
B) exchange 
C) opportunity 
D) direct 
E) sunk 
A) transaction 
B) exchange 
C) opportunity 
D) direct 
E) sunk

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

When a market is in surplus,there is pressure for the price to move upward.

The demand for luxurious goods are usually unaffected by an increase in income.

Other things remaining the same,if a large part of the population decided against having soda for health reasons,this would result in:

Ceteris paribus,a change in the quantity supplied along the supply curve of Braun coffee makers is:

Consider a demand curve for peaches.Which of the following movements will be observed if the price of peaches decline at a point in time?

Which of the following will cause an increase in the quantity demanded of ice cream at an ice cream store?

The amount of a product that people are willing and able to purchase at a specific price is referred to as the:

Which of the following statements is not true about a market system?

When the price ceiling on eggs is lifted,there is a shortage of eggs in the market.

According to the law of supply,if the price of calculators decrease,the supply of calculators will decrease,everything else held constant.

If more firms enter the telecommunications industry,we can expect the equilibrium price of telecom services to decrease and the equilibrium number of services to increase.

The relationship between prices and the corresponding quantities supplied is shown in a:

The below figure shows the demand and supply curves in the market for coffee.S1 and D1 are the original demand and supply curves. Figure 3.5 -Based on Figure 3.5,which of the following conditions would most likely move the point of equilibrium from A to D?

Other things remaining unchanged,which of the following is a determinant of the quantity supplied of a good?

Which of the following determines the quantity demanded of a commodity?

The table given below reports the quantity demanded of a good by individuals 1,2,and 3 at different prices. Table 3.1 -Refer to Table 3.1.Calculate the market demand at prices $5,$4,$3,$2,and $1 respectively.

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 floor of $2:

A price floor does not benefit producers.

Most markets involve the use of money for transactions because:

Margaret can use her quarterly savings to buy a teakwood study table for her room or spend it on a small Christmas party with her family.The _____ cost of her enjoyment at the Christmas party would then equal the forgone utility of the study table.

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 curves in the market for coffee.S₁ and D₁ are the original demand and supply curves. Figure 3.5 -Based on Figure 3.5,which of the following conditions would most likely move the point of equilibrium from A to D?