Question 1

Economists use the term "demand" to refer to

Accepted Answer

A)  a particular price-quantity combination on a stable demand curve. 
B)  the total amount spent on a particular commodity over a fixed time period. 
C)  an upsloping line on a graph that relates consumer purchases and product price. 
D)  a schedule of various combinations of market prices and amounts/quantities demanded. 
A)  a particular price-quantity combination on a stable demand curve. 
B)  the total amount spent on a particular commodity over a fixed time period. 
C)  an upsloping line on a graph that relates consumer purchases and product price. 
D)  a schedule of various combinations of market prices and amounts/quantities demanded.

Question 2

Assume a drought in the Great Plains reduces the supply of wheat. Noting that wheat is a basic ingredient in the production of bread, and potatoes are a consumer substitute for bread, we would expect the price of wheat to

Accepted Answer

A)  rise, the supply of bread to increase, and the demand for potatoes to increase. 
B)  rise, the supply of bread to decrease, and the demand for potatoes to increase. 
C)  rise, the supply of bread to decrease, and the demand for potatoes to decrease. 
D)  fall, the supply of bread to increase, and the demand for potatoes to increase. 
A)  rise, the supply of bread to increase, and the demand for potatoes to increase. 
B)  rise, the supply of bread to decrease, and the demand for potatoes to increase. 
C)  rise, the supply of bread to decrease, and the demand for potatoes to decrease. 
D)  fall, the supply of bread to increase, and the demand for potatoes to increase.

Question 3

(Consider This) Uberâ€™s dynamic pricing

Accepted Answer

A)  prevents regulated taxi drivers from changing their fares. 
B)  keeps the market for rides in equilibrium by constantly adjusting fares to supply and demand conditions. 
C)  creates long wait times for consumers wanting rides at peak demand times. 
D)  results in ride pricing that is unfair to consumers. 
A)  prevents regulated taxi drivers from changing their fares. 
B)  keeps the market for rides in equilibrium by constantly adjusting fares to supply and demand conditions. 
C)  creates long wait times for consumers wanting rides at peak demand times. 
D)  results in ride pricing that is unfair to consumers.

Question 4

A market that is achieving allocative efficiency must also be achieving productive efficiency.

Accepted Answer

A) True 
 B)False

Question 5

When economists say that the demand for a product has decreased, they mean that

Accepted Answer

A)  the demand curve has shifted to the right. 
B)  the product has become particularly scarce for some reason. 
C)  the product has become more expensive and thus consumers are buying less of it. 
D)  consumers are now willing and able to buy less of this product at each possible price. 
A)  the demand curve has shifted to the right. 
B)  the product has become particularly scarce for some reason. 
C)  the product has become more expensive and thus consumers are buying less of it. 
D)  consumers are now willing and able to buy less of this product at each possible price.

Question 6

An effective price floor will

Accepted Answer

A)  force some firms in this industry to go out of business. 
B)  result in a product surplus. 
C)  result in a product shortage. 
D)  clear the market. 
A)  force some firms in this industry to go out of business. 
B)  result in a product surplus. 
C)  result in a product shortage. 
D)  clear the market.

Question 7

The figure below shows three demand curves for coffee.   An increase in the price of coffee, other factors constant, would cause a

Accepted Answer

A)  shift from D1 to D3. 
B)  shift from D1 to D2. 
C)  movement from point a to point b. 
D)  movement from point b to point a. 
A)  shift from D1 to D3. 
B)  shift from D1 to D2. 
C)  movement from point a to point b. 
D)  movement from point b to point a.

Question 8

For most products, purchases tend to fall with decreases in buyers' incomes. Such products are known as

Accepted Answer

A)  inferior goods. 
B)  direct goods. 
C)  average goods. 
D)  normal goods. 
A)  inferior goods. 
B)  direct goods. 
C)  average goods. 
D)  normal goods.

Question 9

The table below shows the weekly demand for hamburger in a market where there are just three buyers.   At a price of $6, the weekly market quantity demanded for hamburger is

Accepted Answer

A)  17. 
B)  23. 
C)  18. 
D)  24. 
A)  17. 
B)  23. 
C)  18. 
D)  24.

Question 10

An increase in quantity supplied might be caused by an increase in production costs.

Accepted Answer

A) True 
 B)False

Question 11

(Advanced analysis) The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. If demand changed from P = 100 - 2Q to P = 130 - Q, the new equilibrium price is

Accepted Answer

A)  $90. 
B)  $110. 
C)  $96. 
D)  $106. 
A)  $90. 
B)  $110. 
C)  $96. 
D)  $106.

Question 12

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. An improvement in the technology used to produce X will

Accepted Answer

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

Question 13

Which would be a likely cause of an increase in the demand for pizza?

Accepted Answer

A)  a reduced desire for take-out and fast-food dining 
B)  a decrease in the price of hamburger sandwiches 
C)  a decrease in the prices of cheese, pepperoni, and mushrooms 
D)  a health report stating that eating pizza reduces stress 
A)  a reduced desire for take-out and fast-food dining 
B)  a decrease in the price of hamburger sandwiches 
C)  a decrease in the prices of cheese, pepperoni, and mushrooms 
D)  a health report stating that eating pizza reduces stress

Question 14

If products A and B are complements and the price of B decreases, the

Accepted Answer

A)  demand curves for both A and B will shift to the left. 
B)  amount of B purchased will increase, but the demand curve for A will not shift. 
C)  demand for A will increase and the quantity of B demanded will increase. 
D)  demand for A will decline and the demand for B will increase. 
A)  demand curves for both A and B will shift to the left. 
B)  amount of B purchased will increase, but the demand curve for A will not shift. 
C)  demand for A will increase and the quantity of B demanded will increase. 
D)  demand for A will decline and the demand for B will increase.

Question 15

In the market for sushi, an increase in supply and a greater decrease in demand will cause both the equilibrium price and quantity to decrease.

Accepted Answer

A) True 
 B)False

Question 16

Last year the price of corn was $3 a bushel and the quantity of corn demanded was 10 million bushels. This year the price of corn was $4.00 a bushel and the quantity demanded was 9 million bushels. Is this evidence that the law of demand does not apply to corn?

Accepted Answer

A)  Yes, because there is a direct relationship between the price of corn and the quantity supplied. 
B)  Yes, because there is an inverse relationship between the price of corn and the quantity demanded. 
C)  No, because the other-things-equal assumption was violated over the two-year period. 
D)  No, because the evidence indicates that there is a shortage of corn. 
A)  Yes, because there is a direct relationship between the price of corn and the quantity supplied. 
B)  Yes, because there is an inverse relationship between the price of corn and the quantity demanded. 
C)  No, because the other-things-equal assumption was violated over the two-year period. 
D)  No, because the evidence indicates that there is a shortage of corn.

Question 17

Toothpaste and toothbrushes are substitute goods.

Accepted Answer

A) True 
 B)False

Question 18

An increase in demand coupled with a simultaneous and bigger decrease in supply will cause equilibrium

Accepted Answer

A)  price to go up and quantity to go down. 
B)  price to go up and quantity to go up. 
C)  price to go down and quantity to go down. 
D)  price to go down and quantity to go up. 
A)  price to go up and quantity to go down. 
B)  price to go up and quantity to go up. 
C)  price to go down and quantity to go down. 
D)  price to go down and quantity to go up.

Question 19

The relationship between quantity supplied and price is , and the relationship between quantity demanded and price is .

Accepted Answer

A)  direct; inverse 
B)  inverse; direct 
C)  inverse; inverse 
D)  direct; direct 
A)  direct; inverse 
B)  inverse; direct 
C)  inverse; inverse 
D)  direct; direct

Question 20

Markets, viewed from the perspective of the supply and demand model,

Accepted Answer

A)  assume many buyers and many sellers of a standardized product. 
B)  assume market power so that buyers and sellers bargain with one another. 
C)  do not exist in the real-world economy. 
D)  are approximated by markets in which a single seller determines price. 
A)  assume many buyers and many sellers of a standardized product. 
B)  assume market power so that buyers and sellers bargain with one another. 
C)  do not exist in the real-world economy. 
D)  are approximated by markets in which a single seller determines price.

Exam 3: Demand, Supply, and Market Equilibrium

Economists use the term "demand" to refer to

Assume a drought in the Great Plains reduces the supply of wheat. Noting that wheat is a basic ingredient in the production of bread, and potatoes are a consumer substitute for bread, we would expect the price of wheat to

(Consider This) Uberâ€™s dynamic pricing

A market that is achieving allocative efficiency must also be achieving productive efficiency.

When economists say that the demand for a product has decreased, they mean that

An effective price floor will

The figure below shows three demand curves for coffee. An increase in the price of coffee, other factors constant, would cause a

For most products, purchases tend to fall with decreases in buyers' incomes. Such products are known as

The table below shows the weekly demand for hamburger in a market where there are just three buyers. At a price of $6, the weekly market quantity demanded for hamburger is

An increase in quantity supplied might be caused by an increase in production costs.

(Advanced analysis) The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. If demand changed from P = 100 - 2Q to P = 130 - Q, the new equilibrium price is

Which would be a likely cause of an increase in the demand for pizza?

If products A and B are complements and the price of B decreases, the

In the market for sushi, an increase in supply and a greater decrease in demand will cause both the equilibrium price and quantity to decrease.

Last year the price of corn was $3 a bushel and the quantity of corn demanded was 10 million bushels. This year the price of corn was $4.00 a bushel and the quantity demanded was 9 million bushels. Is this evidence that the law of demand does not apply to corn?

Toothpaste and toothbrushes are substitute goods.

An increase in demand coupled with a simultaneous and bigger decrease in supply will cause equilibrium

The relationship between quantity supplied and price is , and the relationship between quantity demanded and price is .

Markets, viewed from the perspective of the supply and demand model,

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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