Question 1

A price ceiling means that

Accepted Answer

A)  there is currently a surplus of the relevant product. 
B)  government is imposing a legal price that is typically below the equilibrium price. 
C)  government wants to stop a deflationary spiral. 
D)  government is imposing a legal price that is typically above the equilibrium price. 
A)  there is currently a surplus of the relevant product. 
B)  government is imposing a legal price that is typically below the equilibrium price. 
C)  government wants to stop a deflationary spiral. 
D)  government is imposing a legal price that is typically above the equilibrium price.

Question 2

If the market price is above the equilibrium price,

Accepted Answer

A)  a shortage will occur and producers will produce more and lower prices. 
B)  a surplus will occur and producers will produce less and lower prices. 
C)  a surplus will result and consumers will bid prices up. 
D)  producers will make extremely high profits. 
A)  a shortage will occur and producers will produce more and lower prices. 
B)  a surplus will occur and producers will produce less and lower prices. 
C)  a surplus will result and consumers will bid prices up. 
D)  producers will make extremely high profits.

Question 3

In moving along a demand curve, which of the following is not held constant?

Accepted Answer

A)  the price of the product itself. 
B)  price expectations 
C)  consumer incomes 
D)  prices of complementary goods 
A)  the price of the product itself. 
B)  price expectations 
C)  consumer incomes 
D)  prices of complementary goods

Question 4

The supply curve in a market is vertical instead of upsloping whenever

Accepted Answer

A)  all buyers are willing to pay only one price for the item. 
B)  sellers have no flexibility in setting the price of the item. 
C)  buyers want to buy a fixed quantity regardless of price. 
D)  sellers have a fixed quantity of the item for sale. 
A)  all buyers are willing to pay only one price for the item. 
B)  sellers have no flexibility in setting the price of the item. 
C)  buyers want to buy a fixed quantity regardless of price. 
D)  sellers have a fixed quantity of the item for sale.

Question 5

A leftward shift of a product supply curve might be caused by

Accepted Answer

A)  an improvement in the relevant technique of production. 
B)  a decline in the prices of needed inputs. 
C)  an increase in consumer incomes. 
D)  some firms leaving an industry. 
A)  an improvement in the relevant technique of production. 
B)  a decline in the prices of needed inputs. 
C)  an increase in consumer incomes. 
D)  some firms leaving an industry.

Question 6

A government will create a surplus in a market when it

Accepted Answer

A)  sets a price ceiling above the equilibrium price. 
B)  sets a price floor above the equilibrium price. 
C)  sets a price floor below the equilibrium price. 
D)  sets a price ceiling below the equilibrium price. 
A)  sets a price ceiling above the equilibrium price. 
B)  sets a price floor above the equilibrium price. 
C)  sets a price floor below the equilibrium price. 
D)  sets a price ceiling below the equilibrium price.

Question 7

An increase in the equilibrium quantity of hybrid cars would be caused by which of the following?

Accepted Answer

A)  an increase in the demand for hybrid cars 
B)  a decrease in the demand for hybrid cars 
C)  higher prices of car batteries 
D)  lower prices for gasoline 
A)  an increase in the demand for hybrid cars 
B)  a decrease in the demand for hybrid cars 
C)  higher prices of car batteries 
D)  lower prices for gasoline

Question 8

What will happen to the equilibrium quantity and price of salmon in a competitive market when there is an equal decrease in demand and supply?

Accepted Answer

A)  Equilibrium quantity and price will both increase. 
B)  Equilibrium quantity and price will both decrease. 
C)  Equilibrium quantity will decrease and equilibrium price will stay the same. 
D)  Equilibrium quantity will stay the same and equilibrium price will increase. 
A)  Equilibrium quantity and price will both increase. 
B)  Equilibrium quantity and price will both decrease. 
C)  Equilibrium quantity will decrease and equilibrium price will stay the same. 
D)  Equilibrium quantity will stay the same and equilibrium price will increase.

Question 9

What is the likely effect on the market for wine of a simultaneous increase in both consumer incomes and producer taxes on wine?

Accepted Answer

A)  an increase in both price and quantity 
B)  an increase in price and a decrease in output 
C)  a decrease in price and an indeterminate effect on quantity 
D)  an increase in price and an indeterminate effect on quantity 
A)  an increase in both price and quantity 
B)  an increase in price and a decrease in output 
C)  a decrease in price and an indeterminate effect on quantity 
D)  an increase in price and an indeterminate effect on quantity

Question 10

A decrease in supply, holding demand constant, will cause

Accepted Answer

A)  higher prices and a larger quantity sold. 
B)  higher prices and a smaller quantity sold. 
C)  lower prices and a smaller quantity sold. 
D)  lower prices and a larger quantity sold. 
A)  higher prices and a larger quantity sold. 
B)  higher prices and a smaller quantity sold. 
C)  lower prices and a smaller quantity sold. 
D)  lower prices and a larger quantity sold.

Question 11

In the past few years, the demand for donuts has greatly increased. This increase in demand might best be explained by

Accepted Answer

A)  an increase in the cost of making donuts. 
B)  an increase in the price of coffee. 
C)  consumers expecting donut prices to fall. 
D)  a change in buyer tastes. 
A)  an increase in the cost of making donuts. 
B)  an increase in the price of coffee. 
C)  consumers expecting donut prices to fall. 
D)  a change in buyer tastes.

Question 12

A market

Accepted Answer

A)  reflects upsloping demand and downsloping supply curves. 
B)  entails the exchange of goods, but not services. 
C)  is an institution that brings together buyers and sellers. 
D)  always requires face-to-face contact between buyer and seller. 
A)  reflects upsloping demand and downsloping supply curves. 
B)  entails the exchange of goods, but not services. 
C)  is an institution that brings together buyers and sellers. 
D)  always requires face-to-face contact between buyer and seller.

Question 13

A shift to the right in the demand curve for product A can be most reasonably explained by saying that

Accepted Answer

A)  consumer incomes have declined, and consumers now want to buy less of A at each possible price. 
B)  the price of A has increased and, as a result, consumers want to purchase less of it. 
C)  consumer preferences have changed in favor of A so that they now want to buy more at each possible price. 
D)  the price of A has declined and, as a result, consumers want to purchase more of it. 
A)  consumer incomes have declined, and consumers now want to buy less of A at each possible price. 
B)  the price of A has increased and, as a result, consumers want to purchase less of it. 
C)  consumer preferences have changed in favor of A so that they now want to buy more at each possible price. 
D)  the price of A has declined and, as a result, consumers want to purchase more of it.

Question 14

In which of the following statements are the terms "demand" and "quantity demanded" used correctly?

Accepted Answer

A)  When the price of ice cream rose, the demand for both ice cream and ice cream toppings fell. 
B)  When the price of ice cream rose, the quantity demanded of ice cream fell, and the demand for ice cream toppings fell. 
C)  When the price of ice cream rose, the demand for ice cream fell, and the quantity demanded of ice cream toppings fell. 
D)  None of these statements use the terms correctly. 
A)  When the price of ice cream rose, the demand for both ice cream and ice cream toppings fell. 
B)  When the price of ice cream rose, the quantity demanded of ice cream fell, and the demand for ice cream toppings fell. 
C)  When the price of ice cream rose, the demand for ice cream fell, and the quantity demanded of ice cream toppings fell. 
D)  None of these statements use the terms correctly.

Question 15

In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X. A reduction in the number of firms producing X will

Accepted Answer

A)  increase D, increase P, and increase Q. 
B)  increase S, decrease P, and increase Q. 
C)  decrease S, increase P, and decrease Q. 
D)  decrease S, decrease P, and increase Q. 
A)  increase D, increase P, and increase Q. 
B)  increase S, decrease P, and increase Q. 
C)  decrease S, increase P, and decrease Q. 
D)  decrease S, decrease P, and increase Q.

Question 16

If there was initially a shortage in the market for a product, then

Accepted Answer

A)  sellers will drive the price down. 
B)  sellers will drive the price up. 
C)  buyers will drive the price down. 
D)  buyers will drive the price up. 
A)  sellers will drive the price down. 
B)  sellers will drive the price up. 
C)  buyers will drive the price down. 
D)  buyers will drive the price up.

Question 17

In which of the following instances is the effect on equilibrium price (whether it rises, falls, or remains unchanged) dependent on the magnitude of the shifts in supply and demand?

Accepted Answer

A)  demand rises and supply rises 
B)  supply falls and demand remains constant 
C)  demand rises and supply falls 
D)  supply rises and demand falls 
A)  demand rises and supply rises 
B)  supply falls and demand remains constant 
C)  demand rises and supply falls 
D)  supply rises and demand falls

Question 18

Which of the following would not shift the demand curve for beef?

Accepted Answer

A)  a widely publicized study that indicates beef consumption increases one's cholesterol 
B)  a reduction in the price of cattle feed 
C)  an effective advertising campaign by pork producers 
D)  a change in the incomes of beef consumers 
A)  a widely publicized study that indicates beef consumption increases one's cholesterol 
B)  a reduction in the price of cattle feed 
C)  an effective advertising campaign by pork producers 
D)  a change in the incomes of beef consumers

Question 19

Other things being equal, the law of demand suggests that as

Accepted Answer

A)  the demand for iPads increases, this will cause the price to increase. 
B)  income increases, the quantity of iPads demanded will increase. 
C)  the price of iPads decreases, the quantity demanded will increase. 
D)  the price of iPads decreases, the quantity demanded will decrease. 
A)  the demand for iPads increases, this will cause the price to increase. 
B)  income increases, the quantity of iPads demanded will increase. 
C)  the price of iPads decreases, the quantity demanded will increase. 
D)  the price of iPads decreases, the quantity demanded will decrease.

Question 20

As a result of a decrease in the price of online streaming movies, consumers download more movies online and buy fewer DVDs. This is an illustration of

Accepted Answer

A)  consumer sovereignty. 
B)  the income effect. 
C)  the substitution effect. 
D)  diminishing marginal utility. 
A)  consumer sovereignty. 
B)  the income effect. 
C)  the substitution effect. 
D)  diminishing marginal utility.

Exam 3: Demand, Supply, and Market Equilibrium

A price ceiling means that

If the market price is above the equilibrium price,

In moving along a demand curve, which of the following is not held constant?

The supply curve in a market is vertical instead of upsloping whenever

A leftward shift of a product supply curve might be caused by

A government will create a surplus in a market when it

An increase in the equilibrium quantity of hybrid cars would be caused by which of the following?

What will happen to the equilibrium quantity and price of salmon in a competitive market when there is an equal decrease in demand and supply?

What is the likely effect on the market for wine of a simultaneous increase in both consumer incomes and producer taxes on wine?

A decrease in supply, holding demand constant, will cause

In the past few years, the demand for donuts has greatly increased. This increase in demand might best be explained by

A market

A shift to the right in the demand curve for product A can be most reasonably explained by saying that

In which of the following statements are the terms "demand" and "quantity demanded" used correctly?

If there was initially a shortage in the market for a product, then

In which of the following instances is the effect on equilibrium price (whether it rises, falls, or remains unchanged) dependent on the magnitude of the shifts in supply and demand?

Which of the following would not shift the demand curve for beef?

Other things being equal, the law of demand suggests that as

As a result of a decrease in the price of online streaming movies, consumers download more movies online and buy fewer DVDs. This is an illustration of

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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