Question 1

-Refer to the above figure. The highest price that consumers would be willing to pay for quantity Q2 is

Accepted Answer

A)  P2. 
B)  P0. 
C)  P1. 
D)  cannot be determined from the diagram. 
A)  P2. 
B)  P0. 
C)  P1. 
D)  cannot be determined from the diagram.

Question 2

The market clearing price is

Accepted Answer

A)  the price which eliminates excess quantity supplied or excess quantity demanded. 
B)  the price which leaves an excess quantity demanded. 
C)  the price which leaves an excess quantity supplied. 
D)  the lowest price at which a positive quantity supplied exists. 
A)  the price which eliminates excess quantity supplied or excess quantity demanded. 
B)  the price which leaves an excess quantity demanded. 
C)  the price which leaves an excess quantity supplied. 
D)  the lowest price at which a positive quantity supplied exists.

Question 3

For typical goods, supply curves are

Accepted Answer

A)  downward sloping. 
B)  upward sloping. 
C)  horizontal. 
D)  vertical. 
A)  downward sloping. 
B)  upward sloping. 
C)  horizontal. 
D)  vertical.

Question 4

At a market clearing price,

Accepted Answer

A)  the quantity demanded will just equal the quantity supplied. 
B)  there will be an excess quantity demanded. 
C)  there will be a tendency for price to rise over time. 
D)  the demand function will shift outward. 
A)  the quantity demanded will just equal the quantity supplied. 
B)  there will be an excess quantity demanded. 
C)  there will be a tendency for price to rise over time. 
D)  the demand function will shift outward.

Question 5

A direct or positive relationship between price and quantity supplied is

Accepted Answer

A)  the market clearing price. 
B)  a change in demand. 
C)  a supply curve. 
D)  a demand curve. 
A)  the market clearing price. 
B)  a change in demand. 
C)  a supply curve. 
D)  a demand curve.

Question 6

Suppose a college increases the wages paid to student employees. Which of the following options is the best description of the most likely effect of the increase in wage earnings on the demand curve for school sweatshirts in the bookstore?

Accepted Answer

A)  The demand curve shifts to the right. 
B)  The demand curve shifts to the left. 
C)  A leftward movement along the demand curve. 
D)  A rightward movement along the demand curve. 
A)  The demand curve shifts to the right. 
B)  The demand curve shifts to the left. 
C)  A leftward movement along the demand curve. 
D)  A rightward movement along the demand curve.

Question 7

A decrease in demand would be represented by

Accepted Answer

A)  the price of a good going from $3 to $4. 
B)  an increase in the cost of resources used to produce the good. 
C)  a movement along the demand curve. 
D)  a shift of the demand curve to the left. 
A)  the price of a good going from $3 to $4. 
B)  an increase in the cost of resources used to produce the good. 
C)  a movement along the demand curve. 
D)  a shift of the demand curve to the left.

Question 8

-Refer to the above figure. The equilibrium price and quantity are

Accepted Answer

A)  $2 and 12 units. 
B)  $6 and 9 units. 
C)  $8 and 6 units. 
D)  $10 and 1 unit. 
A)  $2 and 12 units. 
B)  $6 and 9 units. 
C)  $8 and 6 units. 
D)  $10 and 1 unit.

Question 9

In any given market, prices are determined by

Accepted Answer

A)  specialization of labor. 
B)  transactions costs. 
C)  supply and demand. 
D)  comparative advantage. 
A)  specialization of labor. 
B)  transactions costs. 
C)  supply and demand. 
D)  comparative advantage.

Question 10

Which of the following statements is FALSE?

Accepted Answer

A)  An increase in income causes an increase in the demand for a normal good. 
B)  An increase in income causes a decrease in the demand for an inferior good. 
C)  A decrease in income causes the demand curve for a normal good to shift to the left. 
D)  An increase in income causes the demand curve for an inferior good to shift to the right. 
A)  An increase in income causes an increase in the demand for a normal good. 
B)  An increase in income causes a decrease in the demand for an inferior good. 
C)  A decrease in income causes the demand curve for a normal good to shift to the left. 
D)  An increase in income causes the demand curve for an inferior good to shift to the right.

Question 11

Which of the following is an example of the law of demand?

Accepted Answer

A)  A decrease in the price of milk is followed by an increase in milk purchases. 
B)  A decrease in the price of milk is followed by a decrease in milk purchases. 
C)  An increase in the price of milk has no effect on the amount of milk purchased. 
D)  The amount of milk purchased increases when the price is constant. 
A)  A decrease in the price of milk is followed by an increase in milk purchases. 
B)  A decrease in the price of milk is followed by a decrease in milk purchases. 
C)  An increase in the price of milk has no effect on the amount of milk purchased. 
D)  The amount of milk purchased increases when the price is constant.

Question 12

Which of the following statements is FALSE?

Accepted Answer

A)  If there is an increase in the demand for a product, consumers want to buy more of the product at each and every possible price. 
B)  A decrease in demand shifts the demand curve leftward toward the origin, while a decrease in quantity demanded involves a movement upward along a particular demand curve. 
C)  If the price of a good rises, quantity demanded of the good decreases and the demand curve shifts toward the origin as long as supply is static. 
D)  A change in the demand for a product is caused by factors other than changes in the product's price. 
A)  If there is an increase in the demand for a product, consumers want to buy more of the product at each and every possible price. 
B)  A decrease in demand shifts the demand curve leftward toward the origin, while a decrease in quantity demanded involves a movement upward along a particular demand curve. 
C)  If the price of a good rises, quantity demanded of the good decreases and the demand curve shifts toward the origin as long as supply is static. 
D)  A change in the demand for a product is caused by factors other than changes in the product's price.

Question 13

Suppose a shortage for good X exists. Given this information, we know that

Accepted Answer

A)  the price of good X will tend to rise toward the equilibrium level. 
B)  the price of good X will tend to fall toward the equilibrium level. 
C)  a government price floor should be imposed above the current price so that the market can work more effectively. 
D)  a government price ceiling should be imposed above the current price so that the market can work more effectively. 
A)  the price of good X will tend to rise toward the equilibrium level. 
B)  the price of good X will tend to fall toward the equilibrium level. 
C)  a government price floor should be imposed above the current price so that the market can work more effectively. 
D)  a government price ceiling should be imposed above the current price so that the market can work more effectively.

Question 14

Which of the following statements is consistent with a decrease in supply?

Accepted Answer

A)  Prices of raw material inputs have increased. 
B)  There has been an advance in technology. 
C)  Consumers' incomes have increased. 
D)  The market price has decreased. 
A)  Prices of raw material inputs have increased. 
B)  There has been an advance in technology. 
C)  Consumers' incomes have increased. 
D)  The market price has decreased.

Question 15

The absolute price of a good is its

Accepted Answer

A)  relative price. 
B)  money price. 
C)  subjective price. 
D)  projected price. 
A)  relative price. 
B)  money price. 
C)  subjective price. 
D)  projected price.

Question 16

-In the above figure, a surplus exists in the gasoline market when the price is

Accepted Answer

A)  $1/gallon. 
B)  $2/gallon. 
C)  $4/gallon. 
D)  below $2/gallon. 
A)  $1/gallon. 
B)  $2/gallon. 
C)  $4/gallon. 
D)  below $2/gallon.

Question 17

What happens as the result of a surplus?

Accepted Answer

A)  There is downward pressure on prices. 
B)  There is upward pressure on prices. 
C)  Consumers begin to view the good as an inferior good because it is too commonplace. 
D)  Demand for the good increases. 
A)  There is downward pressure on prices. 
B)  There is upward pressure on prices. 
C)  Consumers begin to view the good as an inferior good because it is too commonplace. 
D)  Demand for the good increases.

Question 18

What happens as the result of a shortage?

Accepted Answer

A)  There is downward pressure on prices. 
B)  There is upward pressure on prices. 
C)  Consumers begin to view the good as an inferior good because they have a hard time finding it. 
D)  Supply of the good decreases. 
A)  There is downward pressure on prices. 
B)  There is upward pressure on prices. 
C)  Consumers begin to view the good as an inferior good because they have a hard time finding it. 
D)  Supply of the good decreases.

Question 19

The law of supply includes the statement "other things being equal." These other things include all of the following EXCEPT

Accepted Answer

A)  resource prices. 
B)  technology. 
C)  producers' expectations. 
D)  consumer's income. 
A)  resource prices. 
B)  technology. 
C)  producers' expectations. 
D)  consumer's income.

Question 20

If a demand curve shifts, we know that

Accepted Answer

A)  the price of the good itself is not a factor. 
B)  the price of the good itself is a factor. 
C)  the price of the good and supply are the major factors. 
D)  the price of the good and demand are major factors. 
A)  the price of the good itself is not a factor. 
B)  the price of the good itself is a factor. 
C)  the price of the good and supply are the major factors. 
D)  the price of the good and demand are major factors.

Exam 3: Demand and Supply

-Refer to the above figure. The highest price that consumers would be willing to pay for quantity Q2 is

The market clearing price is

For typical goods, supply curves are

At a market clearing price,

A direct or positive relationship between price and quantity supplied is

Suppose a college increases the wages paid to student employees. Which of the following options is the best description of the most likely effect of the increase in wage earnings on the demand curve for school sweatshirts in the bookstore?

A decrease in demand would be represented by

-Refer to the above figure. The equilibrium price and quantity are

In any given market, prices are determined by

Which of the following statements is FALSE?

Which of the following is an example of the law of demand?

Which of the following statements is FALSE?

Suppose a shortage for good X exists. Given this information, we know that

Which of the following statements is consistent with a decrease in supply?

The absolute price of a good is its

-In the above figure, a surplus exists in the gasoline market when the price is

What happens as the result of a surplus?

What happens as the result of a shortage?

The law of supply includes the statement "other things being equal." These other things include all of the following EXCEPT

If a demand curve shifts, we know that

The Nature of Economics

Scarcity and the World of Trade-Offs

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

-Refer to the above figure. The highest price that consumers would be willing to pay for quantity Q₂ is