Question 1

If the newspapers report that there is a shortage of strawberries, it must mean that the current price of strawberries is below the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 2

A ceiling price in a competitive market will result in persistent surpluses of a product.

Accepted Answer

A) True 
 B)False

Question 3

In the dollar-euro foreign exchange market, if many financial investors become worried about the stability of the euro and thus invest in U.S. financial assets instead of in European assets, then the

Accepted Answer

A)  supply of euros will decrease and the euro will appreciate. 
B)  supply of euros will increase and the euro will depreciate. 
C)  demand for euros will increase and the euro will appreciate. 
D)  demand for U.S. dollars will decrease and the dollar will depreciate. 
A)  supply of euros will decrease and the euro will appreciate. 
B)  supply of euros will increase and the euro will depreciate. 
C)  demand for euros will increase and the euro will appreciate. 
D)  demand for U.S. dollars will decrease and the dollar will depreciate.

Question 4

A market for a product reaches equilibrium when

Accepted Answer

A)  the actual quantity bought by buyers equals actual quantity sold by sellers. 
B)  the price rises further after there is a surplus. 
C)  buyers intend to buy a quantity equal to the quantity that sellers intend to sell. 
D)  price falls further after there is a shortage. 
A)  the actual quantity bought by buyers equals actual quantity sold by sellers. 
B)  the price rises further after there is a surplus. 
C)  buyers intend to buy a quantity equal to the quantity that sellers intend to sell. 
D)  price falls further after there is a shortage.

Question 5

An increase in the demand for corn is more than offset by an increase in its supply. As a result, the equilibrium price will

Accepted Answer

A)  increase and the equilibrium quantity will decrease. 
B)  increase and the equilibrium quantity will increase. 
C)  decrease and the equilibrium quantity will decrease. 
D)  decrease and the equilibrium quantity will increase. 
A)  increase and the equilibrium quantity will decrease. 
B)  increase and the equilibrium quantity will increase. 
C)  decrease and the equilibrium quantity will decrease. 
D)  decrease and the equilibrium quantity will increase.

Question 6

A decrease in the price of digital cameras will cause the demand for memory cards to shift to the left.

Accepted Answer

A) True 
 B)False

Question 7

When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes the

Accepted Answer

A)  cost effect. 
B)  inflationary effect. 
C)  income effect. 
D)  substitution effect. 
A)  cost effect. 
B)  inflationary effect. 
C)  income effect. 
D)  substitution effect.

Question 8

The market demand schedule or curve for a product shows the relationship between how much of the product buyers are willing and able to buy and the

Accepted Answer

A)  product's price. 
B)  buyers' incomes. 
C)  cost of producing the product. 
D)  available supply of the product. 
A)  product's price. 
B)  buyers' incomes. 
C)  cost of producing the product. 
D)  available supply of the product.

Question 9

A decrease in the price of digital cameras would lead to a(n)

Accepted Answer

A)  increase in the price and quantity sold of memory cards. 
B)  decrease in the price and quantity sold of memory cards. 
C)  increase in the price and a decrease in quantity sold of memory cards. 
D)  decrease in the price and an increase in quantity sold of memory cards. 
A)  increase in the price and quantity sold of memory cards. 
B)  decrease in the price and quantity sold of memory cards. 
C)  increase in the price and a decrease in quantity sold of memory cards. 
D)  decrease in the price and an increase in quantity sold of memory cards.

Question 10

Blu-ray players and Blu-ray discs are

Accepted Answer

A)  complementary goods. 
B)  substitute goods. 
C)  independent goods. 
D)  inferior goods. 
A)  complementary goods. 
B)  substitute goods. 
C)  independent goods. 
D)  inferior goods.

Question 11

A price ceiling imposed by the government is intended to benefit the sellers of the product.

Accepted Answer

A) True 
 B)False

Question 12

One can say with certainty that equilibrium price will decline when supply

Accepted Answer

A)  and demand both decrease. 
B)  increases and demand decreases. 
C)  decreases and demand increases. 
D)  and demand both increase. 
A)  and demand both decrease. 
B)  increases and demand decreases. 
C)  decreases and demand increases. 
D)  and demand both increase.

Question 13

When a fruit or vegetable (such as strawberries or lentils) is in season, the demand for it will increase as it becomes cheaper.

Accepted Answer

A) True 
 B)False

Question 14

A black market could arise as a result of

Accepted Answer

A)  the imposition of a legal price floor below the equilibrium price. 
B)  the imposition of a legal price ceiling above the equilibrium price. 
C)  the imposition of a legal price floor at the equilibrium price. 
D)  the imposition of a legal price ceiling below the equilibrium price. 
A)  the imposition of a legal price floor below the equilibrium price. 
B)  the imposition of a legal price ceiling above the equilibrium price. 
C)  the imposition of a legal price floor at the equilibrium price. 
D)  the imposition of a legal price ceiling below the equilibrium price.

Question 15

The idea of the Law of Demand, as applied to electric cars, assumes which of the following to be constant?

Accepted Answer

A)  price of electric cars 
B)  price of gasoline cars 
C)  quantity of electric cars demanded by buyers 
D)  how much sellers are charging customers for electric cars 
A)  price of electric cars 
B)  price of gasoline cars 
C)  quantity of electric cars demanded by buyers 
D)  how much sellers are charging customers for electric cars

Question 16

In the diagrams below, the subscript "1" refers to the initial position of the curve, while the subscript "2" refers to the final position after the curve shifts.   Which diagram illustrates the effects on the peanut butter market, if severe flooding destroys a large portion of the peanut crop in the economy?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 17

If we say that a price is too high to clear the market, we mean that

Accepted Answer

A)  quantity demanded exceeds quantity supplied. 
B)  the equilibrium price is above the current price. 
C)  quantity supplied exceeds quantity demanded. 
D)  the price of the good is likely to rise. 
A)  quantity demanded exceeds quantity supplied. 
B)  the equilibrium price is above the current price. 
C)  quantity supplied exceeds quantity demanded. 
D)  the price of the good is likely to rise.

Question 18

A product market is in equilibrium

Accepted Answer

A)  whenever there is no surplus of the product. 
B)  whenever there is no shortage of the product. 
C)  when consumers want to buy more of the product than producers offer for sale. 
D)  where the demand and supply curves intersect. 
A)  whenever there is no surplus of the product. 
B)  whenever there is no shortage of the product. 
C)  when consumers want to buy more of the product than producers offer for sale. 
D)  where the demand and supply curves intersect.

Question 19

"In the corn market, demand often exceeds supply and supply sometimes exceeds demand." "The price of corn rises and falls in response to changes in supply and demand." In which of these two statements are the terms demand and supply being used correctly?

Accepted Answer

A)  In neither statement. 
B)  In the second statement. 
C)  In the first statement. 
D)  In both statements. 
A)  In neither statement. 
B)  In the second statement. 
C)  In the first statement. 
D)  In both statements.

Question 20

Which of the following will cause the demand curve for product A to shift to the left?

Accepted Answer

A)  population growth that causes an expansion in the number of persons consuming A 
B)  an increase in money income if A is a normal good 
C)  a decrease in the price of complementary product C 
D)  an increase in money income if A is an inferior good 
A)  population growth that causes an expansion in the number of persons consuming A 
B)  an increase in money income if A is a normal good 
C)  a decrease in the price of complementary product C 
D)  an increase in money income if A is an inferior good

Exam 3: Demand, Supply, and Market Equilibrium

If the newspapers report that there is a shortage of strawberries, it must mean that the current price of strawberries is below the equilibrium price.

A ceiling price in a competitive market will result in persistent surpluses of a product.

In the dollar-euro foreign exchange market, if many financial investors become worried about the stability of the euro and thus invest in U.S. financial assets instead of in European assets, then the

A market for a product reaches equilibrium when

An increase in the demand for corn is more than offset by an increase in its supply. As a result, the equilibrium price will

A decrease in the price of digital cameras will cause the demand for memory cards to shift to the left.

When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes the

The market demand schedule or curve for a product shows the relationship between how much of the product buyers are willing and able to buy and the

A decrease in the price of digital cameras would lead to a(n)

Blu-ray players and Blu-ray discs are

A price ceiling imposed by the government is intended to benefit the sellers of the product.

One can say with certainty that equilibrium price will decline when supply

When a fruit or vegetable (such as strawberries or lentils) is in season, the demand for it will increase as it becomes cheaper.

A black market could arise as a result of

The idea of the Law of Demand, as applied to electric cars, assumes which of the following to be constant?

If we say that a price is too high to clear the market, we mean that

A product market is in equilibrium

"In the corn market, demand often exceeds supply and supply sometimes exceeds demand." "The price of corn rises and falls in response to changes in supply and demand." In which of these two statements are the terms demand and supply being used correctly?

Which of the following will cause the demand curve for product A to shift to the left?

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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