Question 1

A decrease in production costs at any given quantity ______ supply.

Accepted Answer

A)  increases 
B)  decreases 
C)  does not change 
D)  may increase or decrease 
A)  increases 
B)  decreases 
C)  does not change 
D)  may increase or decrease

Question 2

The supply curve for oil shows:

Accepted Answer

A)  the quantity of oil supplied at different income levels. 
B)  the quantity of oil supplied at different prices of oil. 
C)  the supply of oil at different prices of other goods. 
D)  the supply of oil when there is a surplus or shortage. 
A)  the quantity of oil supplied at different income levels. 
B)  the quantity of oil supplied at different prices of oil. 
C)  the supply of oil at different prices of other goods. 
D)  the supply of oil when there is a surplus or shortage.

Question 3

Total consumer surplus is measured by the area beneath the demand curve.

Accepted Answer

A) True 
 B)False

Question 4

If the price of swimming pools decreases, we would expect the demand for:

Accepted Answer

A)  tennis courts, a substitute good, to increase. 
B)  chlorine, a complement good, to increase. 
C)  swimming pools to increase. 
D)  swimming pools to decrease. 
A)  tennis courts, a substitute good, to increase. 
B)  chlorine, a complement good, to increase. 
C)  swimming pools to increase. 
D)  swimming pools to decrease.

Question 5

NAFTA made it ______ for Canadian lumber producers to sell lumber in the United States, shifting the supply curve of lumber to the ______.

Accepted Answer

A)  easier; right 
B)  difficult; left 
C)  difficult; right 
D)  easier; left 
A)  easier; right 
B)  difficult; left 
C)  difficult; right 
D)  easier; left

Question 6

It is widely known that the rapidly expanding corn-ethanol industry is quickly increasing the price of corn on world markets. Given this, many farmers have begun to grow corn more intensively. For instance, some producers who currently pursue a corn-soybean rotation (planting corn one year and soybeans the next) might shift to a corn-corn-soybean rotation (planting corn two years in a row and then planting soybeans in the third). Continuous production of corn (planting corn every year on the same plot of land) is another possibility. Explain what impact this explosion in the market for corn may have on the market for soybeans. In particular, will those who produce soybeans exclusively be better off, worse off, or unaffected as a result of the increase in corn prices?

Accepted Answer

Given the now relatively high price of c

Question 7

Which statement about consumer surplus is correct?

Accepted Answer

A)  Consumer surplus is the gross benefit to consumers from the exchange that occurs in a market. 
B)  Consumer surplus is the gains from trade on the part of the consumer that result from a market transaction. 
C)  Total consumer surplus is equal to the price the consumers paid multiplied by the quantity they purchased. 
D)  Consumer surplus is the difference between the minimum price the consumer is willing to pay and the market price. 
A)  Consumer surplus is the gross benefit to consumers from the exchange that occurs in a market. 
B)  Consumer surplus is the gains from trade on the part of the consumer that result from a market transaction. 
C)  Total consumer surplus is equal to the price the consumers paid multiplied by the quantity they purchased. 
D)  Consumer surplus is the difference between the minimum price the consumer is willing to pay and the market price.

Question 8

Use the following to answer questions:
Figure: Good X  
-(Figure: Good X) From the figure, the maximum price that consumers are willing to pay for _____ units of Good X is _____ per unit.

Accepted Answer

A)  36; $4 
B)  11; $4 
C)  36; $12 
D)  26; $4 
A)  36; $4 
B)  11; $4 
C)  36; $12 
D)  26; $4

Question 9

If the price of shotguns ______, the demand for shotgun shells will _______.

Accepted Answer

A)  increases; decrease 
B)  increases; increase 
C)  decreases; decrease 
D)  decreases; stay the same 
A)  increases; decrease 
B)  increases; increase 
C)  decreases; decrease 
D)  decreases; stay the same

Question 10

Alex and Tyler enjoy the food at a restaurant named China Star. Alex values a meal there at $15 and Tyler values it at $26. If the restaurant charges only $10 a meal, what is Alex and Tyler's joint consumer surplus from a meal at China Star?

Accepted Answer

A)  $41 
B)  $31 
C)  $21 
D)  $16 
A)  $41 
B)  $31 
C)  $21 
D)  $16

Question 11

A decrease in the price of one substitute good causes:

Accepted Answer

A)  an upward movement along the demand curve for the other substitute good. 
B)  a downward movement along the demand curve for the other substitute good. 
C)  a rightward shift in the demand curve for the other substitute good. 
D)  a leftward shift in the demand curve for the other substitute good. 
A)  an upward movement along the demand curve for the other substitute good. 
B)  a downward movement along the demand curve for the other substitute good. 
C)  a rightward shift in the demand curve for the other substitute good. 
D)  a leftward shift in the demand curve for the other substitute good.

Question 12

In 2011, revolutions and uprisings spread across North Africa and the Middle East, where a lot of oil is pumped. How did this affect the oil market?

Accepted Answer

A)  the supply curve for oil shifted to the left 
B)  the minimum price producers were willing to sell oil for decreased 
C)  the quantity of oil firms were willing and able to produce increased 
D)  the supply curve for oil shifted to the right 
A)  the supply curve for oil shifted to the left 
B)  the minimum price producers were willing to sell oil for decreased 
C)  the quantity of oil firms were willing and able to produce increased 
D)  the supply curve for oil shifted to the right

Question 13

Demand for a good or service increases when the consumer's income rises, regardless of whether the good is a normal good or inferior good.

Accepted Answer

A) True 
 B)False

Question 14

When you are willing to pay $5 for a hamburger but you pay $4 for it, your consumer surplus for the hamburger is:

Accepted Answer

A)  -$1. 
B)  $1. 
C)  -$9. 
D)  $9. 
A)  -$1. 
B)  $1. 
C)  -$9. 
D)  $9.

Question 15

The difference between the maximum price a consumer is willing to pay for a given quantity of a good and its market price is:

Accepted Answer

A)  producer shortage. 
B)  consumer shortage. 
C)  producer surplus. 
D)  consumer surplus. 
A)  producer shortage. 
B)  consumer shortage. 
C)  producer surplus. 
D)  consumer surplus.

Question 16

Use the following to answer questions:
Figure: Quantity of Good X  
-(Figure: Quantity of Good X) Refer to the figure. As the price falls from $200 to $100, consumer surplus changes by:

Accepted Answer

A)  $5,000. 
B)  $10,000. 
C)  $12,500. 
D)  -$25,000. 
A)  $5,000. 
B)  $10,000. 
C)  $12,500. 
D)  -$25,000.

Question 17

A subsidy is a:

Accepted Answer

A)  reverse tax. 
B)  means of shifting the supply curve left. 
C)  form of tax increase. 
D)  movement along the supply curve. 
A)  reverse tax. 
B)  means of shifting the supply curve left. 
C)  form of tax increase. 
D)  movement along the supply curve.

Question 18

Assume that spaghetti is an inferior good for most people. As their incomes increase, all other things held constant, the demand for spaghetti will:

Accepted Answer

A)  decrease, shifting the demand curve to the left. 
B)  decrease, shifting the demand curve to the right. 
C)  increase, shifting the demand curve to the left. 
D)  increase, shifting the demand curve to the right. 
A)  decrease, shifting the demand curve to the left. 
B)  decrease, shifting the demand curve to the right. 
C)  increase, shifting the demand curve to the left. 
D)  increase, shifting the demand curve to the right.

Question 19

Figure: Consumer Surplus   Refer to the figure. Calculate the dollar amount of consumer surplus being earned in this market when the price is $30 and there are 300 units consumed.

Accepted Answer

A)  $4,500 
B)  $9,000 
C)  $18,000 
D)  $450 
A)  $4,500 
B)  $9,000 
C)  $18,000 
D)  $450

Question 20

In 2011, the United States Senate voted to end ethanol subsidies. What will be the effect of this bill in the market for ethanol?

Accepted Answer

A)  Demand will increase 
B)  Demand will decrease 
C)  Supply will decrease 
D)  Supply will increase 
A)  Demand will increase 
B)  Demand will decrease 
C)  Supply will decrease 
D)  Supply will increase

Exam 3: Supply and Demand

A decrease in production costs at any given quantity ______ supply.

The supply curve for oil shows:

Total consumer surplus is measured by the area beneath the demand curve.

If the price of swimming pools decreases, we would expect the demand for:

NAFTA made it ______ for Canadian lumber producers to sell lumber in the United States, shifting the supply curve of lumber to the ______.

Which statement about consumer surplus is correct?

Use the following to answer questions: Figure: Good X -(Figure: Good X) From the figure, the maximum price that consumers are willing to pay for _____ units of Good X is _____ per unit.

If the price of shotguns ______, the demand for shotgun shells will _______.

Alex and Tyler enjoy the food at a restaurant named China Star. Alex values a meal there at $15 and Tyler values it at $26. If the restaurant charges only $10 a meal, what is Alex and Tyler's joint consumer surplus from a meal at China Star?

A decrease in the price of one substitute good causes:

In 2011, revolutions and uprisings spread across North Africa and the Middle East, where a lot of oil is pumped. How did this affect the oil market?

Demand for a good or service increases when the consumer's income rises, regardless of whether the good is a normal good or inferior good.

When you are willing to pay $5 for a hamburger but you pay $4 for it, your consumer surplus for the hamburger is:

The difference between the maximum price a consumer is willing to pay for a given quantity of a good and its market price is:

Use the following to answer questions: Figure: Quantity of Good X -(Figure: Quantity of Good X) Refer to the figure. As the price falls from $200 to $100, consumer surplus changes by:

A subsidy is a:

Assume that spaghetti is an inferior good for most people. As their incomes increase, all other things held constant, the demand for spaghetti will:

Figure: Consumer Surplus Refer to the figure. Calculate the dollar amount of consumer surplus being earned in this market when the price is $30 and there are 300 units consumed.

In 2011, the United States Senate voted to end ethanol subsidies. What will be the effect of this bill in the market for ethanol?

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

NAFTA made it for Canadian lumber producers to sell lumber in the United States, shifting the supply curve of lumber to the .

Use the following to answer questions: Figure: Good X -(Figure: Good X) From the figure, the maximum price that consumers are willing to pay for _ units of Good X is _ per unit.

If the price of shotguns , the demand for shotgun shells will _.