Question 1

If we expect the current poor weather conditions to lead to higher cotton prices in the future, the:

Accepted Answer

A)  current demand for cotton will decrease. 
B)  future demand for cotton will increase. 
C)  current demand for cotton be unchanged. 
D)  current demand for cotton will increase. 
A)  current demand for cotton will decrease. 
B)  future demand for cotton will increase. 
C)  current demand for cotton be unchanged. 
D)  current demand for cotton will increase. D

Question 2

In the oil market, an increase in the wage of oil workers will shift the:

Accepted Answer

A)  supply curve of oil to the right. 
B)  supply curve of oil to the left. 
C)  demand curve for oil to the left. 
D)  demand curve for oil to the right. 
A)  supply curve of oil to the right. 
B)  supply curve of oil to the left. 
C)  demand curve for oil to the left. 
D)  demand curve for oil to the right. B

Question 3

Figure: Lobster Market   In the figure, a $10 tax is imposed on the market for lobsters. What is the market price that lobster producers would need to receive to induce them to produce 5,000 bushels of lobster per day?

Accepted Answer

A)  $10 
B)  $40 
C)  $50 
D)  $60 
A)  $10 
B)  $40 
C)  $50 
D)  $60 D

Question 4

Figure: Chicken Legs   In the diagram, the current demand curve for chicken legs is represented by D1. If the price of chicken thighs, a substitute for chicken legs, decreases, the demand curve for chicken legs will:

Accepted Answer

A)  shift to D2. 
B)  shift to D3. 
C)  remain at D1. 
D)  shift to D2 and then back to D1. 
A)  shift to D2. 
B)  shift to D3. 
C)  remain at D1. 
D)  shift to D2 and then back to D1.

Question 5

A market has a demand equation as follows: Qd = 100 - 2P. The market price for the product is $20. Calculate the dollar amount of consumer surplus in this market and illustrate your answer graphically.

Accepted Answer

The first step is to calculate the inter

Question 6

Use the following to answer questions:
Figure: Oil  
-(Figure: Oil) Compared with producing the 20 millionth barrel of oil, the cost of producing the 40 millionth barrel of oil is:

Accepted Answer

A)  $40 lower. 
B)  $40 higher. 
C)  approximately the same. 
D)  $80 higher. 
A)  $40 lower. 
B)  $40 higher. 
C)  approximately the same. 
D)  $80 higher.

Question 7

Which of the following could cause an increase in the demand for gasoline?

Accepted Answer

A)  the resolution of a civil war in one of the world's biggest oil-producing nations 
B)  the expectation that the price of gasoline will decrease in the future 
C)  a new technology that makes the production of gasoline significantly less expensive 
D)  an approaching hurricane that threatens a major oil refinery in Texas 
A)  the resolution of a civil war in one of the world's biggest oil-producing nations 
B)  the expectation that the price of gasoline will decrease in the future 
C)  a new technology that makes the production of gasoline significantly less expensive 
D)  an approaching hurricane that threatens a major oil refinery in Texas

Question 8

If producers form expectations that copper prices will be higher in the future, then this will shift the:

Accepted Answer

A)  demand curve for copper to the left. 
B)  supply curve of copper to the right. 
C)  demand curve for copper to the right. 
D)  supply curve of copper to the left. 
A)  demand curve for copper to the left. 
B)  supply curve of copper to the right. 
C)  demand curve for copper to the right. 
D)  supply curve of copper to the left.

Question 9

Coke and Pepsi are substitute soft drinks. Which of the following would cause the demand curve for Pepsi to shift to the left?

Accepted Answer

A)  a new Pepsi ad campaign that increases the popularity of Pepsi 
B)  the price of Coke decreases 
C)  the price of Pepsi decreases 
D)  the cost of making Pepsi rises 
A)  a new Pepsi ad campaign that increases the popularity of Pepsi 
B)  the price of Coke decreases 
C)  the price of Pepsi decreases 
D)  the cost of making Pepsi rises

Question 10

An inferior good is one of poor quality.

Accepted Answer

A) True 
 B)False

Question 11

A decrease in income causes demand for a normal good to ________, and an increase in income causes demand for an inferior good to ________.

Accepted Answer

A)  decrease; decrease 
B)  increase; increase 
C)  decrease; increase 
D)  increase; decrease 
A)  decrease; decrease 
B)  increase; increase 
C)  decrease; increase 
D)  increase; decrease

Question 12

A supply and/or demand graph typically shows:

Accepted Answer

A)  the price of the good on the horizontal axis and the quantity of the good on the vertical axis. 
B)  the quantity of the good on the horizontal axis and the price of the good on the vertical axis. 
C)  supply or demand of the good on the horizontal axis and price of the good on the vertical axis. 
D)  price of the good on the horizontal axis and supply or demand of the good on the vertical axis. 
A)  the price of the good on the horizontal axis and the quantity of the good on the vertical axis. 
B)  the quantity of the good on the horizontal axis and the price of the good on the vertical axis. 
C)  supply or demand of the good on the horizontal axis and price of the good on the vertical axis. 
D)  price of the good on the horizontal axis and supply or demand of the good on the vertical axis.

Question 13

The quantity supplied:

Accepted Answer

A)  shows how much buyers are willing and able to buy at different prices. 
B)  is the amount that buyers are willing and able to buy at a particular price. 
C)  shows how much sellers are willing and able to sell at different prices. 
D)  is the amount that sellers are willing and able to sell at a particular price. 
A)  shows how much buyers are willing and able to buy at different prices. 
B)  is the amount that buyers are willing and able to buy at a particular price. 
C)  shows how much sellers are willing and able to sell at different prices. 
D)  is the amount that sellers are willing and able to sell at a particular price.

Question 14

The supply curve for oil slopes upward because:

Accepted Answer

A)  oil will only be extracted from more costly sources when the price of oil is lower. 
B)  oil will only be extracted from more costly sources when the price of oil is higher. 
C)  no oil producer is willing to extract oil when the price of oil decreases. 
D)  oil producers do not react to any change in the price of oil. 
A)  oil will only be extracted from more costly sources when the price of oil is lower. 
B)  oil will only be extracted from more costly sources when the price of oil is higher. 
C)  no oil producer is willing to extract oil when the price of oil decreases. 
D)  oil producers do not react to any change in the price of oil.

Question 15

Use the following to answer questions:
Figure: Supply Shift  
-(Figure: Supply Shift) What would cause the supply curve to shift from S2 to S1 as shown in the diagram?

Accepted Answer

A)  a decrease in the opportunity costs of producing the good 
B)  a decrease in the costs of production 
C)  an increase in the prices of inputs used in production 
D)  an expected decrease in the future price of the good 
A)  a decrease in the opportunity costs of producing the good 
B)  a decrease in the costs of production 
C)  an increase in the prices of inputs used in production 
D)  an expected decrease in the future price of the good

Question 16

A market has a demand equation as follows: Qd = 60 - 4P. The market price of the product is $5. Calculate the dollar amount of consumer surplus in this market, and illustrate your answer graphically.

Accepted Answer

The first step is to calculate the inter

Question 17

Peoples' expectation of the price of gasoline going up tomorrow may increase the demand for gasoline today. If so, what does this imply about the relationship between gasoline tomorrow and gasoline today?

Accepted Answer

A)  They are complements. 
B)  They are substitutes. 
C)  They are unrelated. 
D)  Although related, they are neither substitutes nor complements. 
A)  They are complements. 
B)  They are substitutes. 
C)  They are unrelated. 
D)  Although related, they are neither substitutes nor complements.

Question 18

Which of the following is TRUE about demand curves?

Accepted Answer

A)  Demand curves are negatively sloped. 
B)  Demand curves are U-shaped. 
C)  Demand curves are positively sloped. 
D)  Demand curves are vertical. 
A)  Demand curves are negatively sloped. 
B)  Demand curves are U-shaped. 
C)  Demand curves are positively sloped. 
D)  Demand curves are vertical.

Question 19

Which of the following statements is TRUE?

Accepted Answer

A)  Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good or service and its market price. 
B)  Bill is willing to pay $10 for a pound of clay. If he buys a pound of clay at a market price per pound of $5, his consumer surplus is $2. 
C)  Total consumer surplus is represented graphically by the area beneath the demand curve. 
D)  Total consumer surplus is represented graphically by the area above the demand curve. 
A)  Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good or service and its market price. 
B)  Bill is willing to pay $10 for a pound of clay. If he buys a pound of clay at a market price per pound of $5, his consumer surplus is $2. 
C)  Total consumer surplus is represented graphically by the area beneath the demand curve. 
D)  Total consumer surplus is represented graphically by the area above the demand curve.

Question 20

Mark considers 3-D archery and shooting trap substitute activities for each other. As the price of shooting trap increases, Mark's demand to participate in:

Accepted Answer

A)  3-D archery decreases. 
B)  3-D archery increases. 
C)  shooting trap increases. 
D)  both activities decrease. 
A)  3-D archery decreases. 
B)  3-D archery increases. 
C)  shooting trap increases. 
D)  both activities decrease.

Exam 3: Supply and Demand

If we expect the current poor weather conditions to lead to higher cotton prices in the future, the:

In the oil market, an increase in the wage of oil workers will shift the:

Figure: Lobster Market In the figure, a $10 tax is imposed on the market for lobsters. What is the market price that lobster producers would need to receive to induce them to produce 5,000 bushels of lobster per day?

Figure: Chicken Legs In the diagram, the current demand curve for chicken legs is represented by D1. If the price of chicken thighs, a substitute for chicken legs, decreases, the demand curve for chicken legs will:

A market has a demand equation as follows: Qd = 100 - 2P. The market price for the product is $20. Calculate the dollar amount of consumer surplus in this market and illustrate your answer graphically.

Use the following to answer questions: Figure: Oil -(Figure: Oil) Compared with producing the 20 millionth barrel of oil, the cost of producing the 40 millionth barrel of oil is:

Which of the following could cause an increase in the demand for gasoline?

If producers form expectations that copper prices will be higher in the future, then this will shift the:

Coke and Pepsi are substitute soft drinks. Which of the following would cause the demand curve for Pepsi to shift to the left?

An inferior good is one of poor quality.

A decrease in income causes demand for a normal good to ________, and an increase in income causes demand for an inferior good to ________.

A supply and/or demand graph typically shows:

The quantity supplied:

The supply curve for oil slopes upward because:

Use the following to answer questions: Figure: Supply Shift -(Figure: Supply Shift) What would cause the supply curve to shift from S2 to S1 as shown in the diagram?

A market has a demand equation as follows: Qd = 60 - 4P. The market price of the product is $5. Calculate the dollar amount of consumer surplus in this market, and illustrate your answer graphically.

Peoples' expectation of the price of gasoline going up tomorrow may increase the demand for gasoline today. If so, what does this imply about the relationship between gasoline tomorrow and gasoline today?

Which of the following is TRUE about demand curves?

Which of the following statements is TRUE?

Mark considers 3-D archery and shooting trap substitute activities for each other. As the price of shooting trap increases, Mark's demand to participate in:

The Big Ideas

The Power of Trade and Comparative

Equilibrium

Elasticity and Its Applications

Taxes and Subsidies

The Price System

Price Ceilings and Floors

International Trade

Externalities- When the Price Is Not Right

Costs and Profit Maximization Under Competition

Competition and the Invisible Hand

Monopoly

Price Discrimination

Oligopoly and Game Theory

Competing for Monopoly

Monopolistic Competition and Advertising

Labor Markets

Public Goods and the Tragedy of the Commons

Political Economy and Public Choice

Economics, Ethics, and Public Policy

Managing Incentives

Stock Markets and Personal Finance

Price Discrimination

Consumer Choice

Filters

Figure: Chicken Legs In the diagram, the current demand curve for chicken legs is represented by D₁. If the price of chicken thighs, a substitute for chicken legs, decreases, the demand curve for chicken legs will:

A market has a demand equation as follows: Q_d= 100 - 2P. The market price for the product is $20. Calculate the dollar amount of consumer surplus in this market and illustrate your answer graphically.

A decrease in income causes demand for a normal good to , and an increase in income causes demand for an inferior good to .

Use the following to answer questions: Figure: Supply Shift -(Figure: Supply Shift) What would cause the supply curve to shift from S₂ to S₁ as shown in the diagram?

A market has a demand equation as follows: Q_d= 60 - 4P. The market price of the product is $5. Calculate the dollar amount of consumer surplus in this market, and illustrate your answer graphically.