Question 1

With a downsloping demand curve and an upsloping supply curve for a product, an increase in consumer income will

Accepted Answer

A)  increase equilibrium price and quantity if the product is a normal good. 
B)  decrease equilibrium price and quantity if the product is a normal good. 
C)  have no effect on equilibrium price and quantity. 
D)  reduce the quantity demanded but not shift the demand curve. 
A)  increase equilibrium price and quantity if the product is a normal good. 
B)  decrease equilibrium price and quantity if the product is a normal good. 
C)  have no effect on equilibrium price and quantity. 
D)  reduce the quantity demanded but not shift the demand curve.

Question 2

Which of the following goods would most probably be an inferior good?

Accepted Answer

A)  French wines 
B)  generic beer 
C)  theater tickets 
D)  steak 
A)  French wines 
B)  generic beer 
C)  theater tickets 
D)  steak

Question 3

When the price of a product rises, consumers with a given money income shift their purchases to other products whose prices are now relatively lower. This statement describes

Accepted Answer

A)  an inferior good. 
B)  the rationing function of prices. 
C)  the substitution effect. 
D)  the income effect. 
A)  an inferior good. 
B)  the rationing function of prices. 
C)  the substitution effect. 
D)  the income effect.

Question 4

Which statement best illustrates the concept of diminishing marginal utility?

Accepted Answer

A)  As one consumes more hamburgers per week, one would be willing to pay a higher price for additional hamburgers. 
B)  Some consumers will receive less satisfaction from consuming hamburgers than from consuming fried chicken. 
C)  A typical consumer will receive less satisfaction from consuming the fourth hamburger than from the third hamburger in a week. 
D)  A decrease in the price of hamburgers will cause consumers to buy more hamburgers because they can afford to buy more. 
A)  As one consumes more hamburgers per week, one would be willing to pay a higher price for additional hamburgers. 
B)  Some consumers will receive less satisfaction from consuming hamburgers than from consuming fried chicken. 
C)  A typical consumer will receive less satisfaction from consuming the fourth hamburger than from the third hamburger in a week. 
D)  A decrease in the price of hamburgers will cause consumers to buy more hamburgers because they can afford to buy more.

Question 5

A government tax per unit of output reduces supply.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements about ticket scalping is correct?

Accepted Answer

A)  Scalping tends to be prevalent when there is a surplus of tickets. 
B)  Scalping tends to be prevalent when there is a shortage of tickets. 
C)  Scalping benefits only one party-the sellers-but not the buyers. 
D)  Scalping benefits only one party-the buyers-but not the sellers. 
A)  Scalping tends to be prevalent when there is a surplus of tickets. 
B)  Scalping tends to be prevalent when there is a shortage of tickets. 
C)  Scalping benefits only one party-the sellers-but not the buyers. 
D)  Scalping benefits only one party-the buyers-but not the sellers.

Question 7

Which would cause an increase in the supply curve of cell-phone services?

Accepted Answer

A)  a decrease in the wages of cell-phone company workers 
B)  an increase in the price of cell-phone services 
C)  an increase in the taxes paid by cell-phone service providers 
D)  a decrease in a subsidy given to cell-phone service providers 
A)  a decrease in the wages of cell-phone company workers 
B)  an increase in the price of cell-phone services 
C)  an increase in the taxes paid by cell-phone service providers 
D)  a decrease in a subsidy given to cell-phone service providers

Question 8

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. If X is an inferior good, a decrease in income will

Accepted Answer

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

Question 9

In order to derive the market supply curve from individual supply curves, we add up the

Accepted Answer

A)  various prices that individual sellers are charging for the product. 
B)  various quantities that individual sellers want to sell at specific price levels. 
C)  total number of sellers in the market at a given time. 
D)  costs that all individual sellers incur in producing the product. 
A)  various prices that individual sellers are charging for the product. 
B)  various quantities that individual sellers want to sell at specific price levels. 
C)  total number of sellers in the market at a given time. 
D)  costs that all individual sellers incur in producing the product.

Question 10

If the demand and supply curves for product X are stable, a government-mandated increase in the price of X will

Accepted Answer

A)  increase the supply of X and decrease the demand for X. 
B)  increase the demand for X and decrease the supply of X. 
C)  increase the quantity supplied of X and decrease the quantity demanded of X. 
D)  decrease the quantity supplied of X and increase the quantity demanded of X. 
A)  increase the supply of X and decrease the demand for X. 
B)  increase the demand for X and decrease the supply of X. 
C)  increase the quantity supplied of X and decrease the quantity demanded of X. 
D)  decrease the quantity supplied of X and increase the quantity demanded of X.

Question 11

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. If X is a normal good, an increase in income will

Accepted Answer

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

Question 12

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. If demand changes from P = 10 - .2Q to P = 7 - .3Q, the new equilibrium quantity is

Accepted Answer

A)  10. 
B)  20. 
C)  15. 
D)  30. 
A)  10. 
B)  20. 
C)  15. 
D)  30.

Question 13

The term "quantity demanded"

Accepted Answer

A)  refers to the entire series of prices and quantities that comprise the demand schedule. 
B)  refers to a situation in which the income and substitution effects do not apply. 
C)  refers to the amount of a product that will be purchased at some specific price. 
D)  means the same thing as demand. 
A)  refers to the entire series of prices and quantities that comprise the demand schedule. 
B)  refers to a situation in which the income and substitution effects do not apply. 
C)  refers to the amount of a product that will be purchased at some specific price. 
D)  means the same thing as demand.

Question 14

The figure below shows three demand curves for coffee.   Which of the following would cause a shift in coffee demand from D1 to D2?

Accepted Answer

A)  a decrease in the price of tea 
B)  an increase in consumer incomes 
C)  an increase in the prices of cream and sugar 
D)  a decrease in the price of coffee 
A)  a decrease in the price of tea 
B)  an increase in consumer incomes 
C)  an increase in the prices of cream and sugar 
D)  a decrease in the price of coffee

Question 15

In understanding and analyzing "demand," we focus on how much of a product the buyers are

Accepted Answer

A)  willing and wanting to buy. 
B)  actually buying now and in the recent past. 
C)  able to buy with their given income. 
D)  willing and able to buy. 
A)  willing and wanting to buy. 
B)  actually buying now and in the recent past. 
C)  able to buy with their given income. 
D)  willing and able to buy.

Question 16

(Consider This) Surge prices

Accepted Answer

A)  create shortages of rides during peak demand times. 
B)  increase both the demand for and supply of rides. 
C)  result in surpluses in the ride market by generating too much supply. 
D)  reflect greater anticipated demand and elicit greater quantity supplied of drivers. 
A)  create shortages of rides during peak demand times. 
B)  increase both the demand for and supply of rides. 
C)  result in surpluses in the ride market by generating too much supply. 
D)  reflect greater anticipated demand and elicit greater quantity supplied of drivers.

Question 17

Which of the following is consistent with the law of demand?

Accepted Answer

A)  A decrease in the price of tacos causes sellers to want to sell less. 
B)  An increase in the people's craving for pizza causes buyers to buy more pizza. 
C)  An increase in the price of hamburgers causes buyers to buy fewer hamburgers. 
D)  A decrease in the price of egg rolls causes a decrease in the quantity of egg rolls demanded. 
A)  A decrease in the price of tacos causes sellers to want to sell less. 
B)  An increase in the people's craving for pizza causes buyers to buy more pizza. 
C)  An increase in the price of hamburgers causes buyers to buy fewer hamburgers. 
D)  A decrease in the price of egg rolls causes a decrease in the quantity of egg rolls demanded.

Question 18

A demand curve

Accepted Answer

A)  shows the relationship between price and quantity supplied. 
B)  indicates the quantity demanded at each price in a series of prices. 
C)  graphs as an upsloping line. 
D)  shows the relationship between income and spending. 
A)  shows the relationship between price and quantity supplied. 
B)  indicates the quantity demanded at each price in a series of prices. 
C)  graphs as an upsloping line. 
D)  shows the relationship between income and spending.

Question 19

A newspaper reports that the average price of new homes in a certain city had decreased, and the number of new homes sold had also decreased. This situation is probably caused by

Accepted Answer

A)  declining costs of construction materials and services in that city. 
B)  declining incomes of people in that city. 
C)  higher government subsidies to new homebuyers in that city. 
D)  a rising population in that city. 
A)  declining costs of construction materials and services in that city. 
B)  declining incomes of people in that city. 
C)  higher government subsidies to new homebuyers in that city. 
D)  a rising population in that city.

Question 20

(Advanced analysis) The equation for the supply curve in the below diagram is approximately

Accepted Answer

A)  P = 4 + 0.3Q. 
B)  P = 4 + 2Q. 
C)  P = 4 + 0.5Q. 
D)  P = 4 - 3Q. 
A)  P = 4 + 0.3Q. 
B)  P = 4 + 2Q. 
C)  P = 4 + 0.5Q. 
D)  P = 4 - 3Q.

Exam 3: Demand, Supply, and Market Equilibrium

With a downsloping demand curve and an upsloping supply curve for a product, an increase in consumer income will

Which of the following goods would most probably be an inferior good?

When the price of a product rises, consumers with a given money income shift their purchases to other products whose prices are now relatively lower. This statement describes

Which statement best illustrates the concept of diminishing marginal utility?

A government tax per unit of output reduces supply.

Which of the following statements about ticket scalping is correct?

Which would cause an increase in the supply curve of cell-phone services?

In order to derive the market supply curve from individual supply curves, we add up the

If the demand and supply curves for product X are stable, a government-mandated increase in the price of X will

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. If demand changes from P = 10 - .2Q to P = 7 - .3Q, the new equilibrium quantity is

The term "quantity demanded"

The figure below shows three demand curves for coffee. Which of the following would cause a shift in coffee demand from D1 to D2?

In understanding and analyzing "demand," we focus on how much of a product the buyers are

(Consider This) Surge prices

Which of the following is consistent with the law of demand?

A demand curve

A newspaper reports that the average price of new homes in a certain city had decreased, and the number of new homes sold had also decreased. This situation is probably caused by

(Advanced analysis) The equation for the supply curve in the below diagram is approximately

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

Filters

The figure below shows three demand curves for coffee. Which of the following would cause a shift in coffee demand from D₁to D₂?