Question 1

In year 1 the average price of X is $10,and in year 2 the average price of X is $23.If consumers buy more units of X in year 2 than in year 1,it follows that

Accepted Answer

A)  the law of supply does not hold for good X. 
B)  demand for good X could be higher in year 2 than in year 1. 
C)  supply of good X could be less in year 2 than in year 1. 
D)  good X buyers have received an increase in income between year 1 and year 2,and good X is a normal good. 
E)  b and d 
A)  the law of supply does not hold for good X. 
B)  demand for good X could be higher in year 2 than in year 1. 
C)  supply of good X could be less in year 2 than in year 1. 
D)  good X buyers have received an increase in income between year 1 and year 2,and good X is a normal good. 
E)  b and d

Question 2

If consumers' surplus is $30 and the price paid for the good is $50,then the maximum price a buyer is willing and able to pay for the good is

Accepted Answer

A)  $80. 
B)  $30. 
C)  $50. 
D)  $20. 
E)  There is not enough information to answer the question. 
A)  $80. 
B)  $30. 
C)  $50. 
D)  $20. 
E)  There is not enough information to answer the question.

Question 3

A(n)_______________ good is one in which as income rises or falls,there is no change in the demand for the good.

Accepted Answer

A)  normal 
B)  inferior 
C)  neutral 
D)  substitute 
E)  complementary 
A)  normal 
B)  inferior 
C)  neutral 
D)  substitute 
E)  complementary

Question 4

-Refer to Exhibit 3-14.At a price of $12,there is a ____________ unit ____________ of good X.

Accepted Answer

A)  195; shortage 
B)  230; shortage 
C)  195; surplus 
D)  230; surplus 
E)  180; shortage 
A)  195; shortage 
B)  230; shortage 
C)  195; surplus 
D)  230; surplus 
E)  180; shortage

Question 5

Resource X is necessary to the production of good Y.If the price of resource X rises,the _____________ curve for good Y will shift ____________ resulting in a(n)_____________ in the equilibrium price of Y and a(n)____________ in the equilibrium quantity of Y.

Accepted Answer

A)  supply; rightward; decrease; increase. 
B)  demand; leftward; decrease; decrease 
C)  demand; rightward; increase; increase 
D)  supply; leftward; increase; decrease 
E)  supply; leftward; increase; increase 
A)  supply; rightward; decrease; increase. 
B)  demand; leftward; decrease; decrease 
C)  demand; rightward; increase; increase 
D)  supply; leftward; increase; decrease 
E)  supply; leftward; increase; increase

Question 6

-Refer to Exhibit 3-5.In the market shown,a rightward shift in supply from S1 to S2 could have been caused by

Accepted Answer

A)  a decline in the number of buyers in the market. 
B)  a decline in the price of a substitute good. 
C)  a decrease in income (assuming the good is a normal good). 
D)  the granting of a subsidy to the producer. 
E)  none of the above 
A)  a decline in the number of buyers in the market. 
B)  a decline in the price of a substitute good. 
C)  a decrease in income (assuming the good is a normal good). 
D)  the granting of a subsidy to the producer. 
E)  none of the above

Question 7

Resource X is necessary to the production of good Y.If the price of resource X rises,

Accepted Answer

A)  the supply curve of Y shifts leftward. 
B)  the supply curve of Y shifts rightward. 
C)  the supply curve of Y is unaffected. 
D)  there is a movement down the supply curve of Y. 
E)  there is a movement up the supply curve of Y. 
A)  the supply curve of Y shifts leftward. 
B)  the supply curve of Y shifts rightward. 
C)  the supply curve of Y is unaffected. 
D)  there is a movement down the supply curve of Y. 
E)  there is a movement up the supply curve of Y.

Question 8

If price is on the vertical axis and quantity demanded is on the horizontal axis,why is a demand curve downward sloping (left to right)?

Accepted Answer

A)  Because a demand curve is the graphical representation of the law of demand,which specifies an inverse relationship between price and supply,ceteris paribus. 
B)  Because a demand curve is the graphical representation of the law of demand,which specifies a direct relationship between price and quantity supplied,ceteris paribus. 
C)  Because a demand curve is the graphical representation of the law of demand,which specifies an inverse relationship between price and demand,ceteris paribus. 
D)  Because a demand curve is the graphical representation of the law of demand,which specifies a direct relationship between price and demand,ceteris paribus. 
E)  Because a demand curve is the graphical representation of the law of demand,which specifies an inverse relationship between price and quantity demanded,ceteris paribus. 
A)  Because a demand curve is the graphical representation of the law of demand,which specifies an inverse relationship between price and supply,ceteris paribus. 
B)  Because a demand curve is the graphical representation of the law of demand,which specifies a direct relationship between price and quantity supplied,ceteris paribus. 
C)  Because a demand curve is the graphical representation of the law of demand,which specifies an inverse relationship between price and demand,ceteris paribus. 
D)  Because a demand curve is the graphical representation of the law of demand,which specifies a direct relationship between price and demand,ceteris paribus. 
E)  Because a demand curve is the graphical representation of the law of demand,which specifies an inverse relationship between price and quantity demanded,ceteris paribus.

Question 9

-Refer to Exhibit 3-8.A surplus exists at any price above

Accepted Answer

A)  $2.00. 
B)  $4.50. 
C)  $4.00. 
D)  $3.50. 
E)  $3.00. 
A)  $2.00. 
B)  $4.50. 
C)  $4.00. 
D)  $3.50. 
E)  $3.00.

Question 10

If rice is an inferior good,a decrease in income will cause the equilibrium price of rice to rise.

Accepted Answer

A) True 
 B)False

Question 11

If a demand curve shifts rightward,this means

Accepted Answer

A)  quantity demanded is greater only at one particular price. 
B)  quantity demanded is greater at every price. 
C)  buyers are willing and able to purchase more of the good at every price. 
D)  buyers are willing and able to purchase less of the good at every price. 
E)  b and c 
A)  quantity demanded is greater only at one particular price. 
B)  quantity demanded is greater at every price. 
C)  buyers are willing and able to purchase more of the good at every price. 
D)  buyers are willing and able to purchase less of the good at every price. 
E)  b and c

Question 12

The market demand curve for a given product may be downward sloping even if no person in that market has a downward sloping demand curve.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements is false?

Accepted Answer

A)  An upward-sloping supply curve graphically represents the law of supply. 
B)  A vertical supply curve graphically represents the law of supply. 
C)  If income rises and good X is a normal good,then the demand for good X will rise. 
D)  If income falls and good Y is an inferior good,then the demand for good Y will rise. 
A)  An upward-sloping supply curve graphically represents the law of supply. 
B)  A vertical supply curve graphically represents the law of supply. 
C)  If income rises and good X is a normal good,then the demand for good X will rise. 
D)  If income falls and good Y is an inferior good,then the demand for good Y will rise.

Question 14

The law of diminishing marginal utility helps to explain the direct relationship between price and quantity supplied.

Accepted Answer

A) True 
 B)False

Question 15

Suppose that good X is one of the more heavily subsidized industries in the United States.Suppose further that as a result of intense lobbying from health-related concerns,Congress repeals the subsidies on good X.Which of the following scenarios would likely occur?

Accepted Answer

A)  The supply curve for good X would shift rightward,as it would now be cheaper to produce each level of output. 
B)  The supply curve for good X would shift leftward,since it would now cost more to produce each level of output. 
C)  There would be no shift in the supply curve for good X; subsidies don't affect output. 
D)  There would be a movement along the supply curve for good X,but the supply curve would not shift. 
A)  The supply curve for good X would shift rightward,as it would now be cheaper to produce each level of output. 
B)  The supply curve for good X would shift leftward,since it would now cost more to produce each level of output. 
C)  There would be no shift in the supply curve for good X; subsidies don't affect output. 
D)  There would be a movement along the supply curve for good X,but the supply curve would not shift.

Question 16

Explain what it means to say that "the market" feeds Cleveland.Give an example using a specific food item to help support your answer.

Accepted Answer

People in Cleveland have a demand for fo

Question 17

What is the definition of producers' surplus?

Accepted Answer

A)  price received minus maximum selling price 
B)  maximum selling price minus price received 
C)  price received minus minimum selling price 
D)  highest price minus lowest price 
E)  none of the above 
A)  price received minus maximum selling price 
B)  maximum selling price minus price received 
C)  price received minus minimum selling price 
D)  highest price minus lowest price 
E)  none of the above

Question 18

At a price for which quantity demanded exceeds quantity supplied,a __________ is experienced,which pushes the price __________ toward its equilibrium value.

Accepted Answer

A)  surplus; downward 
B)  surplus; upward 
C)  shortage; downward 
D)  shortage; upward 
A)  surplus; downward 
B)  surplus; upward 
C)  shortage; downward 
D)  shortage; upward

Question 19

-Refer to Exhibit 3-10.$20 is the

Accepted Answer

A)  equilibrium price. 
B)  market-clearing price. 
C)  price at which there is neither a surplus nor a shortage. 
D)  all of the above 
A)  equilibrium price. 
B)  market-clearing price. 
C)  price at which there is neither a surplus nor a shortage. 
D)  all of the above

Question 20

One can determine the consumers' surplus if the _______________ are known.

Accepted Answer

A)  tax paid 
B)  maximum buying price 
C)  price paid 
D)  maximum buying price and price paid 
E)  maximum buying price and tax paid 
A)  tax paid 
B)  maximum buying price 
C)  price paid 
D)  maximum buying price and price paid 
E)  maximum buying price and tax paid

Exam 3: Supply and Demand: Theory

In year 1 the average price of X is $10,and in year 2 the average price of X is $23.If consumers buy more units of X in year 2 than in year 1,it follows that

If consumers' surplus is $30 and the price paid for the good is $50,then the maximum price a buyer is willing and able to pay for the good is

A(n)_______________ good is one in which as income rises or falls,there is no change in the demand for the good.

-Refer to Exhibit 3-14.At a price of $12,there is a ____________ unit ____________ of good X.

Resource X is necessary to the production of good Y.If the price of resource X rises,the _____________ curve for good Y will shift ____________ resulting in a(n)_____________ in the equilibrium price of Y and a(n)____________ in the equilibrium quantity of Y.

-Refer to Exhibit 3-5.In the market shown,a rightward shift in supply from S1 to S2 could have been caused by

Resource X is necessary to the production of good Y.If the price of resource X rises,

If price is on the vertical axis and quantity demanded is on the horizontal axis,why is a demand curve downward sloping (left to right)?

-Refer to Exhibit 3-8.A surplus exists at any price above

If rice is an inferior good,a decrease in income will cause the equilibrium price of rice to rise.

If a demand curve shifts rightward,this means

The market demand curve for a given product may be downward sloping even if no person in that market has a downward sloping demand curve.

Which of the following statements is false?

The law of diminishing marginal utility helps to explain the direct relationship between price and quantity supplied.

Suppose that good X is one of the more heavily subsidized industries in the United States.Suppose further that as a result of intense lobbying from health-related concerns,Congress repeals the subsidies on good X.Which of the following scenarios would likely occur?

Explain what it means to say that "the market" feeds Cleveland.Give an example using a specific food item to help support your answer.

What is the definition of producers' surplus?

At a price for which quantity demanded exceeds quantity supplied,a __________ is experienced,which pushes the price __________ toward its equilibrium value.

-Refer to Exhibit 3-10.$20 is the

One can determine the consumers' surplus if the _______________ are known.

What Economics Is About

Production Possibilities Frontier Framework

Prices: Free,controlled,and Relative

Supply,demand,and Price: Applications

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,union,and Labor

The Distribution of Income and Poverty

Interest,rent,and Profit

Market Failure: Externalities, public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government: Five Topics Considered

Stocks,bonds,futures,and Options

Stocks,bonds,futures,and Options

Filters

-Refer to Exhibit 3-14.At a price of $12,there is a unit of good X.

Resource X is necessary to the production of good Y.If the price of resource X rises,the _______ curve for good Y will shift resulting in a(n)_ in the equilibrium price of Y and a(n)______ in the equilibrium quantity of Y.

-Refer to Exhibit 3-5.In the market shown,a rightward shift in supply from S₁ to S₂ could have been caused by

At a price for which quantity demanded exceeds quantity supplied,a is experienced,which pushes the price toward its equilibrium value.