Question 1

The market demand curve is derived by summing individual demand curves horizontally.

Accepted Answer

A) True 
 B)False

Question 2

In the figure given below DS1U1B11S1U1B0 and SS1U1B11S1U1B0 are the initial demand and supply curves for a commodity in the market. Figure 3.3
 
-Refer to Figure 3.3.If the change in the demand in this market occurred before the change in supply,then starting from the initial equilibrium:

Accepted Answer

A) firms would experience a fall in profits and then a gradual increase in profits after the change in supply occurred. 
B) there would be an immediate shortage,lasting until the price reaches P2. 
C) price would change from P1 to P2 after the change in demand and would change again from P3 to P4 after the change in supply. 
D) there would be a surplus until the price reaches P4. 
E) there would be a surplus even after price reaches P4. 
A) firms would experience a fall in profits and then a gradual increase in profits after the change in supply occurred. 
B) there would be an immediate shortage,lasting until the price reaches P2. 
C) price would change from P1 to P2 after the change in demand and would change again from P3 to P4 after the change in supply. 
D) there would be a surplus until the price reaches P4. 
E) there would be a surplus even after price reaches P4.

Question 3

According to the law of demand,if the price of a netbook decreases,ceteris paribus,the demand for netbooks would increase.

Accepted Answer

A) True 
 B)False

Question 4

The table given below reports the quantity demanded and supplied of a commodity in a market at different price levels.
 Table 3.4
 
-Consider the market described by Table 3.4.Identify the correct statement.

Accepted Answer

A) The law of demand is violated 
B) The law of supply is violated 
C) There is no equilibrium 
D) At $5 per unit,people will purchase 400 units 
E) At $2 per unit,people will purchase 900 units 
A) The law of demand is violated 
B) The law of supply is violated 
C) There is no equilibrium 
D) At $5 per unit,people will purchase 400 units 
E) At $2 per unit,people will purchase 900 units

Question 5

In a country that depends on the government to decide the allocation of resources,

Accepted Answer

A) social efficiency is maximized and resources are allocated to where they are most highly-valued. 
B) individuals are incentivized to acquire higher skills and education. 
C) the allocation system is fair in the sense that everyone gets an equal opportunity. 
D) individuals aspire to join the ranks of the government. 
E) there is hardly any shortage or scarcity of goods. 
A) social efficiency is maximized and resources are allocated to where they are most highly-valued. 
B) individuals are incentivized to acquire higher skills and education. 
C) the allocation system is fair in the sense that everyone gets an equal opportunity. 
D) individuals aspire to join the ranks of the government. 
E) there is hardly any shortage or scarcity of goods.

Question 6

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.If Quantity Demanded 1,Quantity Demanded 2,and Quantity Demanded 3 are market demand schedules,then the change from Quantity Demanded 1 to Quantity Demanded 2 may have been due to:

Accepted Answer

A) an increase in price. 
B) a decrease in the number of sellers. 
C) an increase in the number of buyers. 
D) a decrease in price. 
E) an increase in the price of a complementary good. 
A) an increase in price. 
B) a decrease in the number of sellers. 
C) an increase in the number of buyers. 
D) a decrease in price. 
E) an increase in the price of a complementary good.

Question 7

Assume that the supply curve for tomatoes is upward sloping.If the price per pound increases from $0.99 to $1.89,a greater quantity of tomatoes will be supplied to the market.

Accepted Answer

A) True 
 B)False

Question 8

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.If Quantity Demanded 1,Quantity Demanded 2,and Quantity Demanded 3 are market demand schedules,then the change from Quantity Demanded 1 to Quantity Demanded 3 may have been due to:

Accepted Answer

A) an increase in price. 
B) an increase in the number of sellers. 
C) a decrease in price. 
D) a decrease in the number of buyers. 
E) a decrease in the price of a substitute good. 
A) an increase in price. 
B) an increase in the number of sellers. 
C) a decrease in price. 
D) a decrease in the number of buyers. 
E) a decrease in the price of a substitute good.

Question 9

The demand schedule shows that the price of a good and quantity demanded are directly related to each other.

Accepted Answer

A) True 
 B)False

Question 10

If the price of hot dogs were to decrease,which of the following changes would we expect to occur in the hot dog bun market?

Accepted Answer

A) The equilibrium price of hot dog buns would decrease and the quantity of hot dog buns sold would increase. 
B) The equilibrium price of hot dog buns would increase and the quantity of hot dog buns sold would decrease. 
C) The equilibrium price of hot dog buns would increase and the quantity of hot dog buns sold would increase. 
D) The equilibrium price of hot dog buns would decrease and the quantity of hot dog buns sold would decrease. 
E) The equilibrium price of hot dog buns would stay the same and the quantity of hot dog buns sold would increase. 
A) The equilibrium price of hot dog buns would decrease and the quantity of hot dog buns sold would increase. 
B) The equilibrium price of hot dog buns would increase and the quantity of hot dog buns sold would decrease. 
C) The equilibrium price of hot dog buns would increase and the quantity of hot dog buns sold would increase. 
D) The equilibrium price of hot dog buns would decrease and the quantity of hot dog buns sold would decrease. 
E) The equilibrium price of hot dog buns would stay the same and the quantity of hot dog buns sold would increase.

Question 11

Which of the following statements correctly defines the law of demand?

Accepted Answer

A) The lower the price of a commodity,the lower the quantity demanded of that commodity. 
B) As the price of a commodity increases,the quantity demanded of that commodity also increases. 
C) The lower the price of a commodity,the greater the quantity of that commodity that is demanded. 
D) The lower the price of a commodity,the greater the quantity of that commodity that is supplied. 
E) The quantity demanded of a particular good decreases with an increase in the price of a substitute good. 
A) The lower the price of a commodity,the lower the quantity demanded of that commodity. 
B) As the price of a commodity increases,the quantity demanded of that commodity also increases. 
C) The lower the price of a commodity,the greater the quantity of that commodity that is demanded. 
D) The lower the price of a commodity,the greater the quantity of that commodity that is supplied. 
E) The quantity demanded of a particular good decreases with an increase in the price of a substitute good.

Question 12

Which of the following will have no impact on the demand for ice cream?

Accepted Answer

A) A change in population size 
B) A change in the price of ice cream 
C) A change in seasons 
D) A change in consumer preferences 
E) A change in consumer incomes 
A) A change in population size 
B) A change in the price of ice cream 
C) A change in seasons 
D) A change in consumer preferences 
E) A change in consumer incomes

Question 13

Which of the following is not an example of a price ceiling?

Accepted Answer

A) The Chinese government sets the price of housing in China below equilibrium. 
B) The government of the former Soviet Union set prices on food below those prevailing in the free market. 
C) In the 1970s,the Nixon administration imposed wage and price controls,thereby keeping wages and prices from rising. 
D) In the late 1970s,the U.S.government required gasoline to be sold at a price per gallon that was below what would have prevailed in a free market. 
E) The U.S.government requires that sugar be sold at a price that exceeds the world price of sugar. 
A) The Chinese government sets the price of housing in China below equilibrium. 
B) The government of the former Soviet Union set prices on food below those prevailing in the free market. 
C) In the 1970s,the Nixon administration imposed wage and price controls,thereby keeping wages and prices from rising. 
D) In the late 1970s,the U.S.government required gasoline to be sold at a price per gallon that was below what would have prevailed in a free market. 
E) The U.S.government requires that sugar be sold at a price that exceeds the world price of sugar.

Question 14

If demand increases and supply decreases,then equilibrium price must decrease,but equilibrium quantity is indeterminate.

Accepted Answer

A) True 
 B)False

Question 15

Given that resources can be allocated by the government,the market,a random process,or on a first-come first-serve basis,which of the following statements is true?

Accepted Answer

A) The market system is not entirely fair but it creates incentives to increase supplies and improve standards of living. 
B) The random process of allocation allows individuals to acquire purchasing power and enhances the value of the resources that they own. 
C) Since the government system does not distinguish between those who have income and those that do not,government allocation of resources is the most efficient. 
D) There will be no shortages under the first-come first-serve basis of allocation. 
E) A random process of allocation is fair in the sense that everyone gains and there are no losers. 
A) The market system is not entirely fair but it creates incentives to increase supplies and improve standards of living. 
B) The random process of allocation allows individuals to acquire purchasing power and enhances the value of the resources that they own. 
C) Since the government system does not distinguish between those who have income and those that do not,government allocation of resources is the most efficient. 
D) There will be no shortages under the first-come first-serve basis of allocation. 
E) A random process of allocation is fair in the sense that everyone gains and there are no losers.

Question 16

The removal of a price ceiling in a market results in:

Accepted Answer

A) an increase in the market price. 
B) a shortage in the market. 
C) over-production of the commodity and a surplus. 
D) a fall in the market price. 
E) abnormal profits for producers. 
A) an increase in the market price. 
B) a shortage in the market. 
C) over-production of the commodity and a surplus. 
D) a fall in the market price. 
E) abnormal profits for producers.

Question 17

The table given below represents the supply schedules of the only three DVD producers in the market for DVDs. 
Table 3.2
 
-According to Table 3.2,if the supply schedules 1,2,and 3 are the market supply schedules for DVDs in three different time periods,what could explain the change from the Supply 1 schedule to the Supply 2 schedule?

Accepted Answer

A) A decrease in the price of DVDs 
B) A decrease in the cost of DVD players 
C) A change in consumer preferences 
D) A change in the average income of consumers 
E) An increase in the cost of producing DVDs 
A) A decrease in the price of DVDs 
B) A decrease in the cost of DVD players 
C) A change in consumer preferences 
D) A change in the average income of consumers 
E) An increase in the cost of producing DVDs

Question 18

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 $4:

Accepted Answer

A) the price ceiling 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 ceiling 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.

The market demand curve is derived by summing individual demand curves horizontally.

In the figure given below D₁ and S₁ are the initial demand and supply curves for a commodity in the market. Figure 3.3 -Refer to Figure 3.3.If the change in the demand in this market occurred before the change in supply,then starting from the initial equilibrium:

According to the law of demand,if the price of a netbook decreases,ceteris paribus,the demand for netbooks would increase.

The table given below reports the quantity demanded and supplied of a commodity in a market at different price levels. Table 3.4 -Consider the market described by Table 3.4.Identify the correct statement.

In a country that depends on the government to decide the allocation of resources,

Assume that the supply curve for tomatoes is upward sloping.If the price per pound increases from $0.99 to $1.89,a greater quantity of tomatoes will be supplied to the market.

The demand schedule shows that the price of a good and quantity demanded are directly related to each other.

If the price of hot dogs were to decrease,which of the following changes would we expect to occur in the hot dog bun market?

Which of the following statements correctly defines the law of demand?

Which of the following will have no impact on the demand for ice cream?

Which of the following is not an example of a price ceiling?

If demand increases and supply decreases,then equilibrium price must decrease,but equilibrium quantity is indeterminate.

Given that resources can be allocated by the government,the market,a random process,or on a first-come first-serve basis,which of the following statements is true?

The removal of a price ceiling in a market results in:

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 $4:

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

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

The market demand curve is derived by summing individual demand curves horizontally.

In the figure given below D1 and S1 are the initial demand and supply curves for a commodity in the market. Figure 3.3 -Refer to Figure 3.3.If the change in the demand in this market occurred before the change in supply,then starting from the initial equilibrium:

According to the law of demand,if the price of a netbook decreases,ceteris paribus,the demand for netbooks would increase.

The table given below reports the quantity demanded and supplied of a commodity in a market at different price levels. Table 3.4 -Consider the market described by Table 3.4.Identify the correct statement.

In a country that depends on the government to decide the allocation of resources,

Assume that the supply curve for tomatoes is upward sloping.If the price per pound increases from $0.99 to $1.89,a greater quantity of tomatoes will be supplied to the market.

The demand schedule shows that the price of a good and quantity demanded are directly related to each other.

If the price of hot dogs were to decrease,which of the following changes would we expect to occur in the hot dog bun market?

Which of the following statements correctly defines the law of demand?

Which of the following will have no impact on the demand for ice cream?

Which of the following is not an example of a price ceiling?

If demand increases and supply decreases,then equilibrium price must decrease,but equilibrium quantity is indeterminate.

Given that resources can be allocated by the government,the market,a random process,or on a first-come first-serve basis,which of the following statements is true?

The removal of a price ceiling in a market results in:

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 $4:

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

In the figure given below D₁ and S₁ are the initial demand and supply curves for a commodity in the market. Figure 3.3 -Refer to Figure 3.3.If the change in the demand in this market occurred before the change in supply,then starting from the initial equilibrium: