Question 1

In presenting the idea of a demand curve,economists presume the most important variable in determining the quantity demanded is:

Accepted Answer

A)  the price of the product itself. 
B)  consumer income. 
C)  the prices of related goods. 
D)  consumer tastes. 
A)  the price of the product itself. 
B)  consumer income. 
C)  the prices of related goods. 
D)  consumer tastes.

Question 2

A market that achieves productive efficiency is producing the quantity of goods most desired by society.

Accepted Answer

A) True 
 B)False

Question 3

A government subsidy per unit of output increases supply.

Accepted Answer

A) True 
 B)False

Question 4

In which of the following statements are the terms "demand" and "quantity demanded" used correctly?

Accepted Answer

A)  When the price of ice cream rose,the demand for both ice cream and ice cream toppings fell. 
B)  When the price of ice cream rose,the quantity demanded of ice cream fell,and the demand for ice cream toppings fell. 
C)  When the price of ice cream rose,the demand for ice cream fell,and the quantity demanded of ice cream toppings fell. 
D)  None of these statements use the terms correctly. 
A)  When the price of ice cream rose,the demand for both ice cream and ice cream toppings fell. 
B)  When the price of ice cream rose,the quantity demanded of ice cream fell,and the demand for ice cream toppings fell. 
C)  When the price of ice cream rose,the demand for ice cream fell,and the quantity demanded of ice cream toppings fell. 
D)  None of these statements use the terms correctly.

Question 5

An effective price floor on wheat will:

Accepted Answer

A)  force otherwise profitable farmers out of business. 
B)  result in a shortage of wheat. 
C)  result in a surplus of wheat. 
D)  clear the market for wheat. 
A)  force otherwise profitable farmers out of business. 
B)  result in a shortage of wheat. 
C)  result in a surplus of wheat. 
D)  clear the market for wheat.

Question 6

(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.The equilibrium quantity is:

Accepted Answer

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

Question 7

One reason that the quantity demanded of a good increases when its price falls is that the:

Accepted Answer

A)  price decline shifts the supply curve to the left. 
B)  lower price shifts the demand curve to the left. 
C)  lower price shifts the demand curve to the right. 
D)  lower price increases the real incomes of buyers,enabling them to buy more. 
A)  price decline shifts the supply curve to the left. 
B)  lower price shifts the demand curve to the left. 
C)  lower price shifts the demand curve to the right. 
D)  lower price increases the real incomes of buyers,enabling them to buy more.

Question 8

Allocative efficiency is concerned with:

Accepted Answer

A)  producing the combination of goods most desired by society. 
B)  achieving the full employment of all available resources. 
C)  producing every good with the least-cost combination of inputs. 
D)  reducing the concavity of the production possibilities curve. 
A)  producing the combination of goods most desired by society. 
B)  achieving the full employment of all available resources. 
C)  producing every good with the least-cost combination of inputs. 
D)  reducing the concavity of the production possibilities curve.

Question 9

At the current price there is a shortage of a product.We would expect price to:

Accepted Answer

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

Question 10

The equilibrium price and quantity in a market usually produce allocative efficiency because:

Accepted Answer

A)  all consumers who want the good are satisfied. 
B)  marginal benefit and marginal cost are equal at that point. 
C)  equilibrium ensures an equitable distribution of output. 
D)  the excess of goods produced at equilibrium guarantees that all will have enough. 
A)  all consumers who want the good are satisfied. 
B)  marginal benefit and marginal cost are equal at that point. 
C)  equilibrium ensures an equitable distribution of output. 
D)  the excess of goods produced at equilibrium guarantees that all will have enough.

Question 11

Surpluses drive market prices up;shortages drive them down.

Accepted Answer

A) True 
 B)False

Question 12

(Last Word)A major objection to creating a legal market for human organs is that such a market would:

Accepted Answer

A)  create a substantial surplus of unused organs. 
B)  increase the present shortage of organs. 
C)  commercialize human body parts and thus diminish the special nature of human life. 
D)  encourage healthier lifestyles to maintain saleable organs. 
A)  create a substantial surplus of unused organs. 
B)  increase the present shortage of organs. 
C)  commercialize human body parts and thus diminish the special nature of human life. 
D)  encourage healthier lifestyles to maintain saleable organs.

Question 13

A price ceiling means that:

Accepted Answer

A)  there is currently a surplus of the relevant product. 
B)  government is imposing a legal price that is typically below the equilibrium price. 
C)  government wants to stop a deflationary spiral. 
D)  government is imposing a legal price that is typically above the equilibrium price. 
A)  there is currently a surplus of the relevant product. 
B)  government is imposing a legal price that is typically below the equilibrium price. 
C)  government wants to stop a deflationary spiral. 
D)  government is imposing a legal price that is typically above the equilibrium price.

Question 14

Suppose that in each of four successive years producers sell more of their product and at lower prices.This could be explained:

Accepted Answer

A)  by small annual increases in supply accompanied by large annual increases in demand. 
B)  in terms of a stable supply curve and increasing demand. 
C)  in terms of a stable demand curve and increasing supply. 
D)  as an exception to the law of supply. 
A)  by small annual increases in supply accompanied by large annual increases in demand. 
B)  in terms of a stable supply curve and increasing demand. 
C)  in terms of a stable demand curve and increasing supply. 
D)  as an exception to the law of supply.

Question 15

A decrease in the price of digital cameras will:

Accepted Answer

A)  cause the demand curve for memory cards to become vertical. 
B)  shift the demand curve for memory cards to the right. 
C)  shift the demand curve for memory cards to the left. 
D)  not affect the demand for memory cards. 
A)  cause the demand curve for memory cards to become vertical. 
B)  shift the demand curve for memory cards to the right. 
C)  shift the demand curve for memory cards to the left. 
D)  not affect the demand for memory cards.

Question 16

(Consider This)Suppose that coffee growers sell 200 million pounds of coffee beans at $2 per pound in 2015 and 240 million pounds for $3 per pound in 2016.Based on this information,we can conclude that the:

Accepted Answer

A)  law of supply has been violated. 
B)  law of demand has been violated. 
C)  demand for coffee beans has increased. 
D)  supply of coffee beans has increased. 
A)  law of supply has been violated. 
B)  law of demand has been violated. 
C)  demand for coffee beans has increased. 
D)  supply of coffee beans has increased.

Question 17

Which of the following will not cause the demand for product K to change?

Accepted Answer

A)  A change in the price of close-substitute product J. 
B)  An increase in incomes of buyers of product K. 
C)  A change in the price of product K. 
D)  A change in consumer tastes for product K. 
A)  A change in the price of close-substitute product J. 
B)  An increase in incomes of buyers of product K. 
C)  A change in the price of product K. 
D)  A change in consumer tastes for product K.

Question 18

College students living off-campus frequently consume large amounts of ramen noodles and boxed macaroni and cheese.When they finish school and start careers,their consumption of both goods frequently declines.This suggests that ramen noodles and boxed macaroni and cheese are:

Accepted Answer

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

Question 19

When the price of Nike soccer balls fell,Ronaldo purchased more Nike soccer balls and fewer Adidas soccer balls.Which of the following best explains Ronaldo's decision to buy more Nike soccer balls?

Accepted Answer

A)  The substitution effect. 
B)  The income effect. 
C)  An increase in the demand for Nike soccer balls. 
D)  The price effect. 
A)  The substitution effect. 
B)  The income effect. 
C)  An increase in the demand for Nike soccer balls. 
D)  The price effect.

Question 20

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.

Exam 3: Demand, Supply, and Market Equilibrium

In presenting the idea of a demand curve,economists presume the most important variable in determining the quantity demanded is:

A market that achieves productive efficiency is producing the quantity of goods most desired by society.

A government subsidy per unit of output increases supply.

In which of the following statements are the terms "demand" and "quantity demanded" used correctly?

An effective price floor on wheat will:

(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.The equilibrium quantity is:

One reason that the quantity demanded of a good increases when its price falls is that the:

Allocative efficiency is concerned with:

At the current price there is a shortage of a product.We would expect price to:

The equilibrium price and quantity in a market usually produce allocative efficiency because:

Surpluses drive market prices up;shortages drive them down.

(Last Word)A major objection to creating a legal market for human organs is that such a market would:

A price ceiling means that:

Suppose that in each of four successive years producers sell more of their product and at lower prices.This could be explained:

A decrease in the price of digital cameras will:

(Consider This)Suppose that coffee growers sell 200 million pounds of coffee beans at $2 per pound in 2015 and 240 million pounds for $3 per pound in 2016.Based on this information,we can conclude that the:

Which of the following will not cause the demand for product K to change?

College students living off-campus frequently consume large amounts of ramen noodles and boxed macaroni and cheese.When they finish school and start careers,their consumption of both goods frequently declines.This suggests that ramen noodles and boxed macaroni and cheese are:

When the price of Nike soccer balls fell,Ronaldo purchased more Nike soccer balls and fewer Adidas soccer balls.Which of the following best explains Ronaldo's decision to buy more Nike soccer balls?

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:

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

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