Question 1

There is a shortage in a market for a product when

Accepted Answer

A)  the current price is higher than the equilibrium price. 
B)  supply is less than demand. 
C)  quantity demanded is less than quantity supplied. 
D)  quantity demanded is greater than quantity supplied. 
A)  the current price is higher than the equilibrium price. 
B)  supply is less than demand. 
C)  quantity demanded is less than quantity supplied. 
D)  quantity demanded is greater than quantity supplied.

Question 2

Which of the following is an example of a price ceiling?

Accepted Answer

A)  limits on interest rates charged by credit card companies 
B)  subsidies for apartment rent in major cities 
C)  minimum-wage laws for unskilled workers 
D)  price supports for agricultural products 
A)  limits on interest rates charged by credit card companies 
B)  subsidies for apartment rent in major cities 
C)  minimum-wage laws for unskilled workers 
D)  price supports for agricultural products

Question 3

Given a downsloping demand curve and an upsloping supply curve for a product, an increase in the price of a substitute good (from the buyer's perspective) will

Accepted Answer

A)  increase equilibrium price and quantity. 
B)  decrease equilibrium price and quantity. 
C)  increase equilibrium price and decrease equilibrium quantity. 
D)  decrease equilibrium price and increase equilibrium quantity. 
A)  increase equilibrium price and quantity. 
B)  decrease equilibrium price and quantity. 
C)  increase equilibrium price and decrease equilibrium quantity. 
D)  decrease equilibrium price and increase equilibrium quantity.

Question 4

A large increase in the supply of HD-TV sets occurs simultaneously with a smaller decrease in its demand. 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 5

In the foreign exchange market, if Americans significantly increase their investments in securities in British financial markets, one effect is that the dollar will tend to depreciate against the pound.

Accepted Answer

A) True 
 B)False

Question 6

In the market for sushi, an increase in the price of fish along with an increase in the popularity of sushi among consumers will cause the equilibrium quantity to increase, but the effect on the equilibrium price is indeterminate.

Accepted Answer

A) True 
 B)False

Question 7

The scalping of tickets for an event is a sign that the stated price on the ticket is

Accepted Answer

A)  equal to the quantity demanded. 
B)  equal to the market clearing price. 
C)  below the market clearing price. 
D)  above the market clearing price. 
A)  equal to the quantity demanded. 
B)  equal to the market clearing price. 
C)  below the market clearing price. 
D)  above the market clearing price.

Question 8

If market demand increases and market supply decreases, the change in equilibrium price is unpredictable without first knowing the exact magnitudes of the demand and supply changes.

Accepted Answer

A) True 
 B)False

Question 9

(Advanced analysis) The equation for the demand curve in the below diagram

Accepted Answer

A)  is P = 70 - Q. 
B)  is P = 35 - 2Q. 
C)  is P = 35 - .5Q. 
D)  cannot be determined from the information given. 
A)  is P = 70 - Q. 
B)  is P = 35 - 2Q. 
C)  is P = 35 - .5Q. 
D)  cannot be determined from the information given.

Question 10

An increase in the quantity demanded means that

Accepted Answer

A)  given supply, the price of the product can be expected to decline. 
B)  price has declined and consumers therefore want to purchase more of the product. 
C)  the demand curve has shifted to the right. 
D)  the demand curve has shifted to the left. 
A)  given supply, the price of the product can be expected to decline. 
B)  price has declined and consumers therefore want to purchase more of the product. 
C)  the demand curve has shifted to the right. 
D)  the demand curve has shifted to the left.

Question 11

An effective price ceiling will

Accepted Answer

A)  induce new firms to enter the industry. 
B)  result in a product surplus. 
C)  result in a product shortage. 
D)  clear the market. 
A)  induce new firms to enter the industry. 
B)  result in a product surplus. 
C)  result in a product shortage. 
D)  clear the market.

Question 12

(Last Word) Based on economic theory and research on tuition costs and student borrowing, the best way to reduce tuition costs for students would be to

Accepted Answer

A)  increase subsidies for student loans. 
B)  impose price floors on tuition. 
C)  subsidize higher education to increase the supply. 
D)  increase grants to students (such as Pell Grants) that do not need to be repaid. 
A)  increase subsidies for student loans. 
B)  impose price floors on tuition. 
C)  subsidize higher education to increase the supply. 
D)  increase grants to students (such as Pell Grants) that do not need to be repaid.

Question 13

When the government pushes for expanded use of corn, such as requiring ethanol from corn to be used as an additive to gasoline, the impact in the market is that the supply of corn decreases.

Accepted Answer

A) True 
 B)False

Question 14

Data from the registrar's office at Gigantic State University indicate that over the past 20 years tuition and enrollment have both increased. From this information we can conclude that

Accepted Answer

A)  higher education is an exception to the law of demand. 
B)  the supply of education provided by GSU has also increased over the 20-year period. 
C)  factors such as school-age population, incomes, and preferences for education have increased over the 20-year period. 
D)  GSU's supply curve of education is downsloping. 
A)  higher education is an exception to the law of demand. 
B)  the supply of education provided by GSU has also increased over the 20-year period. 
C)  factors such as school-age population, incomes, and preferences for education have increased over the 20-year period. 
D)  GSU's supply curve of education is downsloping.

Question 15

The graph below shows the market for tickets to a "Final Four" sports event. Assume that there is only one kind of ticket to the event.   A scalpers' market will exist if the event organizers set the official ticket price at

Accepted Answer

A)  $50. 
B)  $20. 
C)  $40. 
D)  $60. 
A)  $50. 
B)  $20. 
C)  $40. 
D)  $60.

Question 16

Which of the following would cause a leftward shift in the supply curve for car washes?

Accepted Answer

A)  an increase in the number of cars in the city 
B)  a decrease in taxes on car washes 
C)  an increase in the price of car washing equipment 
D)  a decrease in the price of water 
A)  an increase in the number of cars in the city 
B)  a decrease in taxes on car washes 
C)  an increase in the price of car washing equipment 
D)  a decrease in the price of water

Question 17

Government-subsidized student loans tend to

Accepted Answer

A)  increase demand for higher education, causing the price of education to rise. 
B)  reduce the price of higher education, because supply increases. 
C)  raise the price of higher education, because supply decreases. 
D)  reduce demand for higher education, causing the price of education to fall. 
A)  increase demand for higher education, causing the price of education to rise. 
B)  reduce the price of higher education, because supply increases. 
C)  raise the price of higher education, because supply decreases. 
D)  reduce demand for higher education, causing the price of education to fall.

Question 18

The upward slope of the supply curve reflects the

Accepted Answer

A)  principle of specialization in production. 
B)  law of supply. 
C)  fact that price and quantity supplied are inversely related. 
D)  law of diminishing marginal utility. 
A)  principle of specialization in production. 
B)  law of supply. 
C)  fact that price and quantity supplied are inversely related. 
D)  law of diminishing marginal utility.

Question 19

An increase in the demand for online streaming music indicates that more is

Accepted Answer

A)  purchased even if prices of online streaming music stayed the same. 
B)  demanded because online streaming music prices decreased. 
C)  demanded because sellers are selling more online streaming music. 
D)  purchased because sellers are putting online streaming music on sale. 
A)  purchased even if prices of online streaming music stayed the same. 
B)  demanded because online streaming music prices decreased. 
C)  demanded because sellers are selling more online streaming music. 
D)  purchased because sellers are putting online streaming music on sale.

Question 20

(Last Word) In examining the relationship between student loans and college tuition, the New York Federal Reserve Bank found that

Accepted Answer

A)  increases in tuition costs caused an increase in student borrowing. 
B)  increases in student borrowing caused tuition costs to rise. 
C)  while student borrowing and tuition costs have both risen over time, there is no causal relationship between the two. 
D)  subsidizing the supply of higher education has increased both tuition costs and student borrowing. 
A)  increases in tuition costs caused an increase in student borrowing. 
B)  increases in student borrowing caused tuition costs to rise. 
C)  while student borrowing and tuition costs have both risen over time, there is no causal relationship between the two. 
D)  subsidizing the supply of higher education has increased both tuition costs and student borrowing.

Exam 3: Demand, Supply, and Market Equilibrium

There is a shortage in a market for a product when

Which of the following is an example of a price ceiling?

Given a downsloping demand curve and an upsloping supply curve for a product, an increase in the price of a substitute good (from the buyer's perspective) will

A large increase in the supply of HD-TV sets occurs simultaneously with a smaller decrease in its demand. As a result, the equilibrium price will

In the foreign exchange market, if Americans significantly increase their investments in securities in British financial markets, one effect is that the dollar will tend to depreciate against the pound.

In the market for sushi, an increase in the price of fish along with an increase in the popularity of sushi among consumers will cause the equilibrium quantity to increase, but the effect on the equilibrium price is indeterminate.

The scalping of tickets for an event is a sign that the stated price on the ticket is

If market demand increases and market supply decreases, the change in equilibrium price is unpredictable without first knowing the exact magnitudes of the demand and supply changes.

(Advanced analysis) The equation for the demand curve in the below diagram

An increase in the quantity demanded means that

An effective price ceiling will

(Last Word) Based on economic theory and research on tuition costs and student borrowing, the best way to reduce tuition costs for students would be to

When the government pushes for expanded use of corn, such as requiring ethanol from corn to be used as an additive to gasoline, the impact in the market is that the supply of corn decreases.

Data from the registrar's office at Gigantic State University indicate that over the past 20 years tuition and enrollment have both increased. From this information we can conclude that

The graph below shows the market for tickets to a "Final Four" sports event. Assume that there is only one kind of ticket to the event. A scalpers' market will exist if the event organizers set the official ticket price at

Which of the following would cause a leftward shift in the supply curve for car washes?

Government-subsidized student loans tend to

The upward slope of the supply curve reflects the

An increase in the demand for online streaming music indicates that more is

(Last Word) In examining the relationship between student loans and college tuition, the New York Federal Reserve Bank found that

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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