Question 1

If the price of ski lift tickets increases, the demand for ski lift tickets will increase.

Accepted Answer

A) True 
 B)False

Question 2

Advances in technology such as personal computers and cellular telecommunications are indicated in the supply graph by a movement along the supply curve.

Accepted Answer

A) True 
 B)False

Question 3

Use the following to answer questions:
Figure: Potatoes  
-(Figure: Potatoes) Refer to the figure. If the price of potatoes is $8 a pound, what is the consumer surplus received?

Accepted Answer

A)  $30,000 
B)  $60,000 
C)  $240,000 
D)  $360,000 
A)  $30,000 
B)  $60,000 
C)  $240,000 
D)  $360,000

Question 4

A firm produces volleyballs and soccer balls. What happens to the supply of soccer balls if the market price of volleyballs increases?

Accepted Answer

A)  The opportunity cost of producing soccer balls rises, so the supply curve of soccer balls increases. 
B)  The opportunity cost of producing soccer balls falls, so the supply curve of soccer balls decreases. 
C)  The opportunity cost of producing soccer balls rises, so the supply curve of soccer balls decreases. 
D)  The opportunity cost of producing soccer balls falls, so the supply curve of soccer balls increases. 
A)  The opportunity cost of producing soccer balls rises, so the supply curve of soccer balls increases. 
B)  The opportunity cost of producing soccer balls falls, so the supply curve of soccer balls decreases. 
C)  The opportunity cost of producing soccer balls rises, so the supply curve of soccer balls decreases. 
D)  The opportunity cost of producing soccer balls falls, so the supply curve of soccer balls increases.

Question 5

The demand curve:

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 6

For each of the following changes, determine whether there will be a change in supply (that is, a shift of the supply curve) or a change in quantity supplied (that is, no shift of the supply curve).
I. change in the resource cost
II. change in producer expectations
III. change in the price of the good
IV. change in technology
V. the number of sellers

Accepted Answer

I, II, IV, and V are all suppl

Question 7

Consumer surplus is a gain from exchange, but producer surplus is a loss from exchange.

Accepted Answer

A) True 
 B)False

Question 8

When the price of inputs increase:

Accepted Answer

A)  the supply curve shifts down and to the right. 
B)  the supply curve shifts up and to the left. 
C)  there is an upward movement along the supply curve. 
D)  there is a downward movement along the supply curve. 
A)  the supply curve shifts down and to the right. 
B)  the supply curve shifts up and to the left. 
C)  there is an upward movement along the supply curve. 
D)  there is a downward movement along the supply curve.

Question 9

The main difference between Saudi Arabian oil production and United States oil production is the:

Accepted Answer

A)  quantity of production. 
B)  cost of production. 
C)  quality of product. 
D)  price of product. 
A)  quantity of production. 
B)  cost of production. 
C)  quality of product. 
D)  price of product.

Question 10

Recall the discussion about the demand for oil in your textbook. Which of the following correctly explains why the demand curve for oil is negatively sloped? As the price of oil rises:

Accepted Answer

A)  consumers use oil for more and varied purposes. 
B)  consumers increasingly use oil only for those purposes without good substitutes. 
C)  consumers have an incentive to use oil more freely. 
D)  more producers are more willing and able to produce oil. 
A)  consumers use oil for more and varied purposes. 
B)  consumers increasingly use oil only for those purposes without good substitutes. 
C)  consumers have an incentive to use oil more freely. 
D)  more producers are more willing and able to produce oil.

Question 11

Which variable is NOT a demand shifter?

Accepted Answer

A)  price of complements 
B)  price of substitutes 
C)  price of raw materials 
D)  tastes and preferences 
A)  price of complements 
B)  price of substitutes 
C)  price of raw materials 
D)  tastes and preferences

Question 12

Consumer surplus is the amount that consumers:

Accepted Answer

A)  are willing to pay for a good minus what they actually pay for it. 
B)  are willing to pay for a good. 
C)  actually pay for a good. 
D)  are willing to pay for a good plus the amount that they actually pay for it. 
A)  are willing to pay for a good minus what they actually pay for it. 
B)  are willing to pay for a good. 
C)  actually pay for a good. 
D)  are willing to pay for a good plus the amount that they actually pay for it.

Question 13

Figure: Generic Market Producer Surplus   Refer to the figure. Calculate the total dollar amount of producer surplus earned in this market if the market price is $60.

Accepted Answer

A)  $800 
B)  $1,600 
C)  $2,400 
D)  $1,200 
A)  $800 
B)  $1,600 
C)  $2,400 
D)  $1,200

Question 14

Table: Maximum Willingness to Pay
  The table shows four individuals' maximum willingness to pay for one pound of bananas. If the market price of bananas is $0.50/lb, what is the total consumer surplus in the market?

Accepted Answer

A)  $4.00 
B)  $2.50 
C)  $2.75 
D)  $4.25 
A)  $4.00 
B)  $2.50 
C)  $2.75 
D)  $4.25

Question 15

Use the following to answer questions:
Figure: Potatoes  
-(Figure: Potatoes) Refer to the figure. According to the demand curve, if the price of potatoes is $8 a pound, how many pounds are demanded?

Accepted Answer

A)  5 
B)  50 
C)  60,000 
D)  80,000 
A)  5 
B)  50 
C)  60,000 
D)  80,000

Question 16

In the early 1980s, movie rentals averaged $5 a night; by the early 1990s that average was $1 per night. This is an example of a supply curve shifter based on:

Accepted Answer

A)  a change in tastes and preferences. 
B)  a decrease in the wages of workers in the video rental stores. 
C)  an increase in the number of VCRs owned by consumers. 
D)  the entry of new suppliers into the market. 
A)  a change in tastes and preferences. 
B)  a decrease in the wages of workers in the video rental stores. 
C)  an increase in the number of VCRs owned by consumers. 
D)  the entry of new suppliers into the market.

Question 17

What is the difference between a change in quantity demanded (Qd) and a change in demand? Explain what causes a change in Qd and what causes a change in demand, and illustrate using graphs.

Accepted Answer

A change in quantity demanded (Q_d) result

Question 18

The demand curve for oil has a _____ slope because a _____ price of oil signals consumers to use oil in _____ valuable uses.

Accepted Answer

A)  negative; higher; less 
B)  negative; lower; more 
C)  positive; higher; more 
D)  negative; lower; less 
A)  negative; higher; less 
B)  negative; lower; more 
C)  positive; higher; more 
D)  negative; lower; less

Question 19

New research suggests that cholesterol may not be as unhealthy as previously thought. If so, what will happen to the demand for eggs, a high-cholesterol food?

Accepted Answer

A)  It will decrease because eggs and cholesterol are substitutes. 
B)  It will increase because of consumers' taste for food that is perceived to be healthier. 
C)  It will increase since eggs are an inferior good. 
D)  It will decrease because there will be fewer chickens to lay eggs. 
A)  It will decrease because eggs and cholesterol are substitutes. 
B)  It will increase because of consumers' taste for food that is perceived to be healthier. 
C)  It will increase since eggs are an inferior good. 
D)  It will decrease because there will be fewer chickens to lay eggs.

Question 20

When the price of oil used for generating electricity increases, the demand for nuclear power will increase.

Accepted Answer

A) True 
 B)False

Exam 3: Supply and Demand

If the price of ski lift tickets increases, the demand for ski lift tickets will increase.

Advances in technology such as personal computers and cellular telecommunications are indicated in the supply graph by a movement along the supply curve.

Use the following to answer questions: Figure: Potatoes -(Figure: Potatoes) Refer to the figure. If the price of potatoes is $8 a pound, what is the consumer surplus received?

A firm produces volleyballs and soccer balls. What happens to the supply of soccer balls if the market price of volleyballs increases?

The demand curve:

Consumer surplus is a gain from exchange, but producer surplus is a loss from exchange.

When the price of inputs increase:

The main difference between Saudi Arabian oil production and United States oil production is the:

Recall the discussion about the demand for oil in your textbook. Which of the following correctly explains why the demand curve for oil is negatively sloped? As the price of oil rises:

Which variable is NOT a demand shifter?

Consumer surplus is the amount that consumers:

Figure: Generic Market Producer Surplus Refer to the figure. Calculate the total dollar amount of producer surplus earned in this market if the market price is $60.

Table: Maximum Willingness to Pay The table shows four individuals' maximum willingness to pay for one pound of bananas. If the market price of bananas is $0.50/lb, what is the total consumer surplus in the market?

Use the following to answer questions: Figure: Potatoes -(Figure: Potatoes) Refer to the figure. According to the demand curve, if the price of potatoes is $8 a pound, how many pounds are demanded?

In the early 1980s, movie rentals averaged $5 a night; by the early 1990s that average was $1 per night. This is an example of a supply curve shifter based on:

What is the difference between a change in quantity demanded (Qd) and a change in demand? Explain what causes a change in Qd and what causes a change in demand, and illustrate using graphs.

The demand curve for oil has a _____ slope because a _____ price of oil signals consumers to use oil in _____ valuable uses.

New research suggests that cholesterol may not be as unhealthy as previously thought. If so, what will happen to the demand for eggs, a high-cholesterol food?

When the price of oil used for generating electricity increases, the demand for nuclear power will increase.

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

What is the difference between a change in quantity demanded (Q_d) and a change in demand? Explain what causes a change in Q_dand what causes a change in demand, and illustrate using graphs.

The demand curve for oil has a ___ slope because a _ price of oil signals consumers to use oil in ___ valuable uses.