Question 1

Other things equal,an excise tax on a product will:

Accepted Answer

A)  increase its supply. 
B)  increase its price. 
C)  increase the quantity sold. 
D)  increase its demand. 
A)  increase its supply. 
B)  increase its price. 
C)  increase the quantity sold. 
D)  increase its demand.

Question 2

If the supply and demand curves for a product both decrease,then equilibrium:

Accepted Answer

A)  quantity must fall and equilibrium price must rise. 
B)  price must fall,but equilibrium quantity may rise,fall,or remain unchanged. 
C)  quantity must decline,but equilibrium price may rise,fall,or remain unchanged. 
D)  quantity and equilibrium price must both decline. 
A)  quantity must fall and equilibrium price must rise. 
B)  price must fall,but equilibrium quantity may rise,fall,or remain unchanged. 
C)  quantity must decline,but equilibrium price may rise,fall,or remain unchanged. 
D)  quantity and equilibrium price must both decline.

Question 3

Black markets are associated with:

Accepted Answer

A)  price floors and the resulting product surpluses. 
B)  price floors and the resulting product shortages. 
C)  ceiling prices and the resulting product shortages. 
D)  ceiling prices and the resulting product surpluses. 
A)  price floors and the resulting product surpluses. 
B)  price floors and the resulting product shortages. 
C)  ceiling prices and the resulting product shortages. 
D)  ceiling prices and the resulting product surpluses.

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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. Refer to the given information.An increase in the prices of resources used to produce X will:

Accepted Answer

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

Question 6

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

Accepted Answer

A)  The number of firms producing this good. 
B)  Expectations about the future price of the product. 
C)  Techniques used in producing this product. 
D)  The price of the product for which the supply curve is relevant. 
A)  The number of firms producing this good. 
B)  Expectations about the future price of the product. 
C)  Techniques used in producing this product. 
D)  The price of the product for which the supply curve is relevant.

Question 7

Since their introduction,prices of Blu-ray players have fallen and the quantity purchased has increased.This statement:

Accepted Answer

A)  suggests that the supply of Blu-ray players has increased. 
B)  suggests that the demand for Blu-ray players has increased. 
C)  constitutes an exception to the law of demand in that they suggest an upward-sloping demand curve. 
D)  constitutes an exception to the law of supply in that they suggest a downward-sloping supply curve. 
A)  suggests that the supply of Blu-ray players has increased. 
B)  suggests that the demand for Blu-ray players has increased. 
C)  constitutes an exception to the law of demand in that they suggest an upward-sloping demand curve. 
D)  constitutes an exception to the law of supply in that they suggest a downward-sloping supply curve.

Question 8

Suppose that in 2007,Ford sold 500,000 Mustangs at an average price of $18,800 per car;in 2008,600,000 Mustangs were sold at an average price of $19,500 per car.These statements:

Accepted Answer

A)  suggest that the demand for Mustangs decreased between 2007 and 2008. 
B)  suggest that the supply of Mustangs must have increased between 2007 and 2008. 
C)  suggest that the demand for Mustangs increased between 2007 and 2008. 
D)  constitute an exception to the law of demand in that they suggest an upsloping demand curve. 
A)  suggest that the demand for Mustangs decreased between 2007 and 2008. 
B)  suggest that the supply of Mustangs must have increased between 2007 and 2008. 
C)  suggest that the demand for Mustangs increased between 2007 and 2008. 
D)  constitute an exception to the law of demand in that they suggest an upsloping demand curve.

Question 9

If demand increases and supply simultaneously decreases,equilibrium price will rise.

Accepted Answer

A) True 
 B)False

Question 10

The rationing function of prices refers to the fact that government must distribute any surplus goods that may be left in a competitive market.

Accepted Answer

A) True 
 B)False

Question 11

If there is a shortage of product X,and the price is free to change:

Accepted Answer

A)  fewer resources will be allocated to the production of this good. 
B)  the price of the product will rise. 
C)  the price of the product will decline. 
D)  the supply curve will shift to the left and the demand curve to the right,eliminating the shortage. 
A)  fewer resources will be allocated to the production of this good. 
B)  the price of the product will rise. 
C)  the price of the product will decline. 
D)  the supply curve will shift to the left and the demand curve to the right,eliminating the shortage.

Question 12

Assume in a competitive market that price is initially above the equilibrium level.We can predict that price will:

Accepted Answer

A)  decrease,quantity demanded will decrease,and quantity supplied will increase. 
B)  decrease and quantity demanded and quantity supplied will both decrease. 
C)  decrease,quantity demanded will increase,and quantity supplied will decrease. 
D)  increase,quantity demanded will decrease,and quantity supplied will increase. 
A)  decrease,quantity demanded will decrease,and quantity supplied will increase. 
B)  decrease and quantity demanded and quantity supplied will both decrease. 
C)  decrease,quantity demanded will increase,and quantity supplied will decrease. 
D)  increase,quantity demanded will decrease,and quantity supplied will increase.

Question 13

Increasing marginal cost of production explains:

Accepted Answer

A)  the law of demand. 
B)  the income effect. 
C)  why the supply curve is upsloping. 
D)  why the demand curve is downsloping. 
A)  the law of demand. 
B)  the income effect. 
C)  why the supply curve is upsloping. 
D)  why the demand curve is downsloping.

Question 14

Which of the following is most likely to be an inferior good?

Accepted Answer

A)  Fur coats. 
B)  Ocean cruises. 
C)  Used clothing. 
D)  Steak. 
A)  Fur coats. 
B)  Ocean cruises. 
C)  Used clothing. 
D)  Steak.

Question 15

(Advanced analysis)Answer the question on the basis of the following information.The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. Refer to the given information.The equilibrium price is:

Accepted Answer

A)  $50. 
B)  $70. 
C)  $80. 
D)  $130. 
A)  $50. 
B)  $70. 
C)  $80. 
D)  $130.

Question 16

(Advanced analysis)Answer the question on the basis of the following information.The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. Refer to the given information.If demand changed from P = 10 - .2Q to P = 7 - .3Q,we can conclude that:

Accepted Answer

A)  demand has increased. 
B)  demand has decreased. 
C)  supply will increase. 
D)  supply will decrease. 
A)  demand has increased. 
B)  demand has decreased. 
C)  supply will increase. 
D)  supply will decrease.

Question 17

Answer the question on the basis of the given supply and demand data for wheat: $\begin{array} { c c c } 
\text { Bushels Demanded }&&\text { Bushels Supplied Per }\
\text { Per Month } & \text { Price Per Bushel } & \text { Month } \ 
\hline
45 & \$ 5 & 77 \ 
50 & 4 & 73 \ 
56 & 3 & 68 \ 
61 & 2 & 61 \ 
67 & 1 & 57 
\end{array}$ Refer to the data.If price was initially $4 and free to fluctuate,we would expect the:

Accepted Answer

A)  quantity supplied to continue to exceed the quantity demanded. 
B)  quantity of wheat supplied to decline as a result of the subsequent price change. 
C)  quantity of wheat demanded to fall as a result of the subsequent price change. 
D)  price of wheat to rise. 
A)  quantity supplied to continue to exceed the quantity demanded. 
B)  quantity of wheat supplied to decline as a result of the subsequent price change. 
C)  quantity of wheat demanded to fall as a result of the subsequent price change. 
D)  price of wheat to rise.

Question 18

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 19

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. Refer to the given information.A decrease in the number of consumers of product X will:

Accepted Answer

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

Question 20

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.

Other things equal,an excise tax on a product will:

If the supply and demand curves for a product both decrease,then equilibrium:

Black markets are associated with:

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

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

Since their introduction,prices of Blu-ray players have fallen and the quantity purchased has increased.This statement:

Suppose that in 2007,Ford sold 500,000 Mustangs at an average price of $18,800 per car;in 2008,600,000 Mustangs were sold at an average price of $19,500 per car.These statements:

If demand increases and supply simultaneously decreases,equilibrium price will rise.

The rationing function of prices refers to the fact that government must distribute any surplus goods that may be left in a competitive market.

If there is a shortage of product X,and the price is free to change:

Assume in a competitive market that price is initially above the equilibrium level.We can predict that price will:

Increasing marginal cost of production explains:

Which of the following is most likely to be an inferior good?

(Advanced analysis)Answer the question on the basis of the following information.The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. Refer to the given information.The equilibrium price is:

(Advanced analysis)Answer the question on the basis of the following information.The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. Refer to the given information.If demand changed from P = 10 - .2Q to P = 7 - .3Q,we can conclude that:

Answer the question on the basis of the given supply and demand data for wheat: Bushels Demanded Bushels Supplied Per Per Month Price Per Bushel Month 45 \ 5 77 50 4 73 56 3 68 61 2 61 67 1 57 Refer to the data.If price was initially $4 and free to fluctuate,we would expect the:

The term "quantity demanded":

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

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 Cost of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition and Oligopoly

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

Filters

Exam 3: Demand, Supply, and Market Equilibrium

Other things equal,an excise tax on a product will:

If the supply and demand curves for a product both decrease,then equilibrium:

Black markets are associated with:

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

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

Since their introduction,prices of Blu-ray players have fallen and the quantity purchased has increased.This statement:

Suppose that in 2007,Ford sold 500,000 Mustangs at an average price of $18,800 per car;in 2008,600,000 Mustangs were sold at an average price of $19,500 per car.These statements:

If demand increases and supply simultaneously decreases,equilibrium price will rise.

The rationing function of prices refers to the fact that government must distribute any surplus goods that may be left in a competitive market.

If there is a shortage of product X,and the price is free to change:

Assume in a competitive market that price is initially above the equilibrium level.We can predict that price will:

Increasing marginal cost of production explains:

Which of the following is most likely to be an inferior good?

(Advanced analysis)Answer the question on the basis of the following information.The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. Refer to the given information.The equilibrium price is:

(Advanced analysis)Answer the question on the basis of the following information.The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. Refer to the given information.If demand changed from P = 10 - .2Q to P = 7 - .3Q,we can conclude that:

Answer the question on the basis of the given supply and demand data for wheat: Bushels Demanded Bushels Supplied Per Per Month Price Per Bushel Month 45 \ 5 77 50 4 73 56 3 68 61 2 61 67 1 57 Refer to the data.If price was initially $4 and free to fluctuate,we would expect the:

The term "quantity demanded":

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

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 Cost of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition and Oligopoly

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

Filters