Question 1

If income of an individual increases from $20,000 to $30,000 and the quantity of X demanded _____,then X is a(n)_____

Accepted Answer

A) increases;normal good 
B) increases;inferior good 
C) decreases;normal good 
D) decreases;luxury good 
A) increases;normal good 
B) increases;inferior good 
C) decreases;normal good 
D) decreases;luxury good

Question 2

All of the following are common responses to a price ceiling,except:

Accepted Answer

A) an excess supply. 
B) nonprice rationing. 
C) quality deterioration. 
D) black markets. 
A) an excess supply. 
B) nonprice rationing. 
C) quality deterioration. 
D) black markets.

Question 3

Refer to Figure 2-1.Assume that an effective price ceiling of $2 is imposed in this market.What is the maximum cost that consumers will be willing to bear to be able to consume the good or service?

Accepted Answer

A) $2 
B) $4 
C) $6 
D) $8 
A) $2 
B) $4 
C) $6 
D) $8

Question 4

Consider two goods,X and Y.If the price of Y increases and,as a consequence,the demand curve for X shifts to the left,then:

Accepted Answer

A) X and Y are substitutes. 
B) X and Y are complements. 
C) X and Y are unrelated. 
D) X and Y are inferior goods. 
A) X and Y are substitutes. 
B) X and Y are complements. 
C) X and Y are unrelated. 
D) X and Y are inferior goods.

Question 5

If the cross-price elasticity of demand between two goods is 1.75,then the two goods are:

Accepted Answer

A) complements. 
B) substitutes. 
C) luxury goods. 
D) inferior goods. 
A) complements. 
B) substitutes. 
C) luxury goods. 
D) inferior goods.

Question 6

Which of the following would result in a higher equilibrium quantity and an ambiguous change in equilibrium price?

Accepted Answer

A) An increase in supply and demand 
B) An increase in supply and a decrease in demand 
C) A decrease in supply and demand 
D) A decrease in supply and an increase in demand 
A) An increase in supply and demand 
B) An increase in supply and a decrease in demand 
C) A decrease in supply and demand 
D) A decrease in supply and an increase in demand

Question 7

An increase in the demand for a commodity accompanied by a decrease in its supply will result in a(n):

Accepted Answer

A) decrease in price and an increase in quantity. 
B) increase in both price and quantity. 
C) increase in quantity while the price can increase or decrease. 
D) increase in price while the quantity can increase or decrease. 
A) decrease in price and an increase in quantity. 
B) increase in both price and quantity. 
C) increase in quantity while the price can increase or decrease. 
D) increase in price while the quantity can increase or decrease.

Question 8

The law of demand states that people:

Accepted Answer

A) prefer high-quality goods to low-quality goods. 
B) buy larger quantities of a good at lower prices. 
C) prefer more to less. 
D) are willing to pay a higher price only for goods they need. 
A) prefer high-quality goods to low-quality goods. 
B) buy larger quantities of a good at lower prices. 
C) prefer more to less. 
D) are willing to pay a higher price only for goods they need.

Question 9

If the price elasticity of demand for a commodity is greater than one,it implies that:

Accepted Answer

A) an increase in supply will increase total revenues. 
B) a decrease in supply will increase total revenues. 
C) a price ceiling that lowers price below the market equilibrium will increase total the total consumer spending on that good. 
D) a price floor that raises price above the equilibrium will increase total the total consumer spending on that good. 
A) an increase in supply will increase total revenues. 
B) a decrease in supply will increase total revenues. 
C) a price ceiling that lowers price below the market equilibrium will increase total the total consumer spending on that good. 
D) a price floor that raises price above the equilibrium will increase total the total consumer spending on that good.

Question 10

As the price of shirts rises,the law of supply would predict a(n):

Accepted Answer

A) increase in the quantity of shirts supplied. 
B) decrease in the quantity of shirts supplied. 
C) increase in the supply of shirts. 
D) decrease in the supply of shirts. 
A) increase in the quantity of shirts supplied. 
B) decrease in the quantity of shirts supplied. 
C) increase in the supply of shirts. 
D) decrease in the supply of shirts.

Question 11

If the average price of an automobile increased from $7,000 to $8,000 from 1979 to 1980,then we know that:

Accepted Answer

A) the real price of automobiles must have increased. 
B) the absolute price of automobiles increased but its real price declined. 
C) the absolute price of automobiles increased but we do not have enough information to say what happened to its real price. 
D) the demand for automobiles increased during that period. 
A) the real price of automobiles must have increased. 
B) the absolute price of automobiles increased but its real price declined. 
C) the absolute price of automobiles increased but we do not have enough information to say what happened to its real price. 
D) the demand for automobiles increased during that period.

Question 12

Which of the following is a valid interpretation of the demand curve?

Accepted Answer

A) The demand curve identifies the quantities purchased at various prices. 
B) The demand curve identifies the taste and preference of the consumers. 
C) The demand curve identifies the consumer's income level. 
D) The demand curve identifies the availability of substitute goods. 
A) The demand curve identifies the quantities purchased at various prices. 
B) The demand curve identifies the taste and preference of the consumers. 
C) The demand curve identifies the consumer's income level. 
D) The demand curve identifies the availability of substitute goods.

Question 13

The market supply curve depicts:

Accepted Answer

A) the negative relationship between the price of the commodity offered for sale and the quantity supplied. 
B) the negative relationship between the price of the commodity offered for sale and the producer surplus. 
C) the positive relationship between the quantity offered for sale by a single firm and the total supply by all firms in an industry. 
D) the positive relationship between market price and the total quantity supplied by all firms in an industry. 
A) the negative relationship between the price of the commodity offered for sale and the quantity supplied. 
B) the negative relationship between the price of the commodity offered for sale and the producer surplus. 
C) the positive relationship between the quantity offered for sale by a single firm and the total supply by all firms in an industry. 
D) the positive relationship between market price and the total quantity supplied by all firms in an industry.

Question 14

Which of the following is true of a linear demand curve?

Accepted Answer

A) The demand curve is less elastic at higher prices. 
B) The demand curve is more elastic at lower prices. 
C) Elasticity changes along the demand curve. 
D) Elasticity is constant along the demand curve. 
A) The demand curve is less elastic at higher prices. 
B) The demand curve is more elastic at lower prices. 
C) Elasticity changes along the demand curve. 
D) Elasticity is constant along the demand curve.

Question 15

Which of the following statements is true of price ceilings?

Accepted Answer

A) The true cost of the good to consumers is usually greater than the money cost. 
B) All consumers benefit from the lower price. 
C) Nonprice rationing associated with price controls is more efficient than rationing by price. 
D) Shortages associated with price ceilings generally do not last any longer than shortages associated with free markets. 
A) The true cost of the good to consumers is usually greater than the money cost. 
B) All consumers benefit from the lower price. 
C) Nonprice rationing associated with price controls is more efficient than rationing by price. 
D) Shortages associated with price ceilings generally do not last any longer than shortages associated with free markets.

Question 16

If the value of price elasticity of demand is 0.2,it implies that a 1 percent increase in price leads to a:

Accepted Answer

A) 2 percent decrease in quantity demanded. 
B) 2 percent increase in quantity demanded. 
C) 0.2 percent decrease in quantity demanded. 
D) 0.2 percent increase in quantity demanded. 
A) 2 percent decrease in quantity demanded. 
B) 2 percent increase in quantity demanded. 
C) 0.2 percent decrease in quantity demanded. 
D) 0.2 percent increase in quantity demanded.

Question 17

When the government establishes a price ceiling below the equilibrium price:

Accepted Answer

A) there will be a temporary shortage that market forces will eventually clear. 
B) a shortage will occur that market forces will not be able to clear. 
C) producers will eliminate the resulting shortage by jointly deciding to increase supply. 
D) the market equilibrium price will prevail. 
A) there will be a temporary shortage that market forces will eventually clear. 
B) a shortage will occur that market forces will not be able to clear. 
C) producers will eliminate the resulting shortage by jointly deciding to increase supply. 
D) the market equilibrium price will prevail.

If income of an individual increases from $20,000 to $30,000 and the quantity of X demanded _,then X is a(n)_

All of the following are common responses to a price ceiling,except:

Refer to Figure 2-1.Assume that an effective price ceiling of $2 is imposed in this market.What is the maximum cost that consumers will be willing to bear to be able to consume the good or service?

Consider two goods,X and Y.If the price of Y increases and,as a consequence,the demand curve for X shifts to the left,then:

If the cross-price elasticity of demand between two goods is 1.75,then the two goods are:

Which of the following would result in a higher equilibrium quantity and an ambiguous change in equilibrium price?

An increase in the demand for a commodity accompanied by a decrease in its supply will result in a(n):

The law of demand states that people:

If the price elasticity of demand for a commodity is greater than one,it implies that:

As the price of shirts rises,the law of supply would predict a(n):

If the average price of an automobile increased from $7,000 to $8,000 from 1979 to 1980,then we know that:

Which of the following is a valid interpretation of the demand curve?

The market supply curve depicts:

Which of the following is true of a linear demand curve?

Which of the following statements is true of price ceilings?

If the value of price elasticity of demand is 0.2,it implies that a 1 percent increase in price leads to a:

When the government establishes a price ceiling below the equilibrium price:

An Introduction to Microeconomics

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

Exam 2: Supply and Demand

If income of an individual increases from $20,000 to $30,000 and the quantity of X demanded _____,then X is a(n)_____

All of the following are common responses to a price ceiling,except:

Refer to Figure 2-1.Assume that an effective price ceiling of $2 is imposed in this market.What is the maximum cost that consumers will be willing to bear to be able to consume the good or service?

Consider two goods,X and Y.If the price of Y increases and,as a consequence,the demand curve for X shifts to the left,then:

If the cross-price elasticity of demand between two goods is 1.75,then the two goods are:

Which of the following would result in a higher equilibrium quantity and an ambiguous change in equilibrium price?

An increase in the demand for a commodity accompanied by a decrease in its supply will result in a(n):

The law of demand states that people:

If the price elasticity of demand for a commodity is greater than one,it implies that:

As the price of shirts rises,the law of supply would predict a(n):

If the average price of an automobile increased from $7,000 to $8,000 from 1979 to 1980,then we know that:

Which of the following is a valid interpretation of the demand curve?

The market supply curve depicts:

Which of the following is true of a linear demand curve?

Which of the following statements is true of price ceilings?

If the value of price elasticity of demand is 0.2,it implies that a 1 percent increase in price leads to a:

When the government establishes a price ceiling below the equilibrium price:

An Introduction to Microeconomics

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

If income of an individual increases from $20,000 to $30,000 and the quantity of X demanded _,then X is a(n)_