Question 1

Producer surplus can be defined as the revenue producers make from selling goods in a market.

Accepted Answer

A) True 
 B)False

Question 2

The quantity demanded of a good or service is the amount that:

Accepted Answer

A)  consumers are willing and able to buy at a given price. 
B)  firms are willing to sell during a given time period at a given price. 
C)  a consumer would like to buy but might not be able to afford. 
D)  a consumer needs to consume during a given time period. 
A)  consumers are willing and able to buy at a given price. 
B)  firms are willing to sell during a given time period at a given price. 
C)  a consumer would like to buy but might not be able to afford. 
D)  a consumer needs to consume during a given time period.

Question 3

If the demand for good A increases when the price of good B increases, then good A and good B are:

Accepted Answer

A)  not related. 
B)  both inferior goods. 
C)  substitutes for each other. 
D)  complements to each other. 
A)  not related. 
B)  both inferior goods. 
C)  substitutes for each other. 
D)  complements to each other.

Question 4

The quantity demanded is the quantity that buyers can afford to buy at a particular income level.

Accepted Answer

A) True 
 B)False

Question 5

An increase in the population will lead to an increase in demand. Give three other examples that lead to an increase in demand.

Accepted Answer

An increase in the price of a substitute

Question 6

Suppose that the market price for MP3 players is $90 and MP3 players can be produced by firm X for $40 each. Producer surplus for this firm is $50 per MP3 player.

Accepted Answer

A) True 
 B)False

Question 7

Cell phone data plans are most useful when used with a smartphone, and smartphones are most useful when used with a data plan. As the price of data plans falls, the demand for smartphones will:

Accepted Answer

A)  decrease, because smartphones and data plans are substitutes. 
B)  increase, because smartphones and data plans are complements. 
C)  decrease, because smartphones and data plans are complements. 
D)  increase, because smartphones and data plans are substitutes. 
A)  decrease, because smartphones and data plans are substitutes. 
B)  increase, because smartphones and data plans are complements. 
C)  decrease, because smartphones and data plans are complements. 
D)  increase, because smartphones and data plans are substitutes.

Question 8

Consider the (world) market supply curve for oil. Saudi oil production inhabits the _____ part of the curve, and Canadian oil production inhabits the _____ part of the curve.

Accepted Answer

A)  upper; upper 
B)  lower; lower 
C)  upper; lower 
D)  lower; upper 
A)  upper; upper 
B)  lower; lower 
C)  upper; lower 
D)  lower; upper

Question 9

Anonymity on the Internet has lowered the cost of rudely confronting people. What has happened to the supply of rude confrontations?

Accepted Answer

A)  The supply has increased, shifting up and to the left. 
B)  The supply has increased, shifting down and to the right. 
C)  The supply has decreased, shifting up and to the left. 
D)  The supply has decreased, shifting down and to the right. 
A)  The supply has increased, shifting up and to the left. 
B)  The supply has increased, shifting down and to the right. 
C)  The supply has decreased, shifting up and to the left. 
D)  The supply has decreased, shifting down and to the right.

Question 10

The demand curve shows the relationship between:

Accepted Answer

A)  demand and supply. 
B)  quantity demanded and quantity supplied. 
C)  price and quantity supplied. 
D)  price and quantity demanded. 
A)  demand and supply. 
B)  quantity demanded and quantity supplied. 
C)  price and quantity supplied. 
D)  price and quantity demanded.

Question 11

As the population of elderly in the United States increases, which service will likely see the biggest increase in demand?

Accepted Answer

A)  skateboard repair 
B)  home medical care 
C)  career training 
D)  child day care 
A)  skateboard repair 
B)  home medical care 
C)  career training 
D)  child day care

Question 12

When the price of wood is high:

Accepted Answer

A)  consumers will be more likely to use wood in its least valuable uses. 
B)  consumers will be more likely to use wood in its most valuable uses. 
C)  the quantity demanded of wood will also rise. 
D)  the quantity demanded of wood will be unaffected. 
A)  consumers will be more likely to use wood in its least valuable uses. 
B)  consumers will be more likely to use wood in its most valuable uses. 
C)  the quantity demanded of wood will also rise. 
D)  the quantity demanded of wood will be unaffected.

Question 13

An increase in a per unit production subsidy ______ supply.

Accepted Answer

A)  increases 
B)  decreases 
C)  does not change 
D)  changes in an indeterminate direction 
A)  increases 
B)  decreases 
C)  does not change 
D)  changes in an indeterminate direction

Question 14

An increase in demand shifts the demand curve:

Accepted Answer

A)  up and to the right. 
B)  down and to the right. 
C)  up and to the left. 
D)  down and to the left. 
A)  up and to the right. 
B)  down and to the right. 
C)  up and to the left. 
D)  down and to the left.

Question 15

The demand curve for an inferior good reacts inversely to changes in income, while the demand curve for a normal good has a positive relationship with changes in income.

Accepted Answer

A) True 
 B)False

Question 16

A decrease in expected future supply of a good will lead to:

Accepted Answer

A)  a change in the demand for the good, but not until the supply actually goes down. 
B)  a change in the price of the good, but not until the supply actually goes down. 
C)  a change in the demand for the good even before the supply actually decreases. 
D)  no change in the demand for the good. 
A)  a change in the demand for the good, but not until the supply actually goes down. 
B)  a change in the price of the good, but not until the supply actually goes down. 
C)  a change in the demand for the good even before the supply actually decreases. 
D)  no change in the demand for the good.

Question 17

Nigeria receives $53 of producer surplus from each barrel of oil sold at $60. At that level of production, Nigeria's cost to produce a barrel of oil is:

Accepted Answer

A)  $1.13. 
B)  $7. 
C)  $53. 
D)  $113. 
A)  $1.13. 
B)  $7. 
C)  $53. 
D)  $113.

Question 18

Figure: Demand Shift   Which of the following could explain the figure?

Accepted Answer

A)  Consumer income increases in the market for a normal good. 
B)  Consumer income falls in the market for a normal good. 
C)  Consumer income rises in the market for an inferior good. 
D)  Consumer income remains the same and the price of the good falls. 
A)  Consumer income increases in the market for a normal good. 
B)  Consumer income falls in the market for a normal good. 
C)  Consumer income rises in the market for an inferior good. 
D)  Consumer income remains the same and the price of the good falls.

Question 19

An increase in supply refers to:

Accepted Answer

A)  a rightward shift of the supply curve. 
B)  a leftward shift of the supply curve. 
C)  an upward movement along the supply curve. 
D)  a downward movement along the supply curve. 
A)  a rightward shift of the supply curve. 
B)  a leftward shift of the supply curve. 
C)  an upward movement along the supply curve. 
D)  a downward movement along the supply curve.

Question 20

There is no relationship between present prices and future prices.

Accepted Answer

A) True 
 B)False

Exam 3: Supply and Demand

Producer surplus can be defined as the revenue producers make from selling goods in a market.

The quantity demanded of a good or service is the amount that:

If the demand for good A increases when the price of good B increases, then good A and good B are:

The quantity demanded is the quantity that buyers can afford to buy at a particular income level.

An increase in the population will lead to an increase in demand. Give three other examples that lead to an increase in demand.

Suppose that the market price for MP3 players is $90 and MP3 players can be produced by firm X for $40 each. Producer surplus for this firm is $50 per MP3 player.

Cell phone data plans are most useful when used with a smartphone, and smartphones are most useful when used with a data plan. As the price of data plans falls, the demand for smartphones will:

Consider the (world) market supply curve for oil. Saudi oil production inhabits the _____ part of the curve, and Canadian oil production inhabits the _____ part of the curve.

Anonymity on the Internet has lowered the cost of rudely confronting people. What has happened to the supply of rude confrontations?

The demand curve shows the relationship between:

As the population of elderly in the United States increases, which service will likely see the biggest increase in demand?

When the price of wood is high:

An increase in a per unit production subsidy ______ supply.

An increase in demand shifts the demand curve:

The demand curve for an inferior good reacts inversely to changes in income, while the demand curve for a normal good has a positive relationship with changes in income.

A decrease in expected future supply of a good will lead to:

Nigeria receives $53 of producer surplus from each barrel of oil sold at $60. At that level of production, Nigeria's cost to produce a barrel of oil is:

Figure: Demand Shift Which of the following could explain the figure?

An increase in supply refers to:

There is no relationship between present prices and future prices.

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

Consider the (world) market supply curve for oil. Saudi oil production inhabits the _ part of the curve, and Canadian oil production inhabits the _ part of the curve.