Question 1

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 2

The demand curve has a negative slope.

Accepted Answer

A) True 
 B)False

Question 3

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 4

If the government decided to heavily regulate small farmers who grow organic and free-range food,the supply of that food:

Accepted Answer

A)  would increase because the regulations would improve the quality of that food. 
B)  would decrease because the regulations are like a tax on the food;they make it more expensive to produce. 
C)  would have no effect,because none of the shifters of supply are affected. 
D)  would increase because of changing expectations. 
A)  would increase because the regulations would improve the quality of that food. 
B)  would decrease because the regulations are like a tax on the food;they make it more expensive to produce. 
C)  would have no effect,because none of the shifters of supply are affected. 
D)  would increase because of changing expectations.

Question 5

The demand curve for oil slopes downward because:

Accepted Answer

A)  oil will only be used in its higher-valued uses when the price of oil is lower. 
B)  oil will only be used in its higher-valued uses when the price of oil is higher. 
C)  oil has many substitutes so that no buyer is willing to pay when the price of oil rises. 
D)  oil has no substitutes so that buyers do not react to any change in the price of oil. 
A)  oil will only be used in its higher-valued uses when the price of oil is lower. 
B)  oil will only be used in its higher-valued uses when the price of oil is higher. 
C)  oil has many substitutes so that no buyer is willing to pay when the price of oil rises. 
D)  oil has no substitutes so that buyers do not react to any change in the price of oil.

Question 6

As the price of lead falls (a key input in the production of automobile batteries),the costs of producing batteries decreases,shifting the supply curve of batteries:

Accepted Answer

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

Question 7

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 8

A decrease in the opportunity cost of steel production will:

Accepted Answer

A)  increase the price of steel. 
B)  make suppliers more likely to produce steel,thus shifting the supply curve up and to the left. 
C)  make suppliers more likely to produce steel,thus shifting the supply curve down and to the right. 
D)  entice producers to produce more substitute goods. 
A)  increase the price of steel. 
B)  make suppliers more likely to produce steel,thus shifting the supply curve up and to the left. 
C)  make suppliers more likely to produce steel,thus shifting the supply curve down and to the right. 
D)  entice producers to produce more substitute goods.

Question 9

An increase in the price of a good will typically increase demand for that good.

Accepted Answer

A) True 
 B)False

Question 10

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 11

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 12

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 13

The quantity demanded is the quantity that consumers are willing and able to purchase at a given price.

Accepted Answer

A) True 
 B)False

Question 14

Figure: Religion   This graph illustrates the work of psychologists Harvey Whitehouse and Quentin Atkinson,as published in the April 23-29,2011 issue of The Economist.The "unpleasantness" of religious rituals (0 is low,5 is high)is along the x-axis.How often the religion requires the ritual to be performed is along the y-axis.What economic concept does this diagram represent?

Accepted Answer

A)  opportunity cost 
B)  consumer surplus 
C)  a demand curve 
D)  an inferior good 
A)  opportunity cost 
B)  consumer surplus 
C)  a demand curve 
D)  an inferior good

Question 15

The most important concepts in economics,according to the textbook,are supply,demand,and the:

Accepted Answer

A)  idea of equilibrium. 
B)  opportunity to barter. 
C)  quantity of sales. 
D)  the level of prices. 
A)  idea of equilibrium. 
B)  opportunity to barter. 
C)  quantity of sales. 
D)  the level of prices.

Question 16

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

Question 17

Quantity demanded:

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 18

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 19

Joe runs a landscape company and uses one of his home's bedrooms as a home office.This office could be used to earn rental income from college students.If average rental income in Joe's neighborhood were to rise:

Accepted Answer

A)  Joe's opportunity cost of using a bedroom as a home office would decrease. 
B)  Joe's landscape company would experience a decrease in demand for services at all prices. 
C)  Joe should expand his office space in his home. 
D)  Joe's opportunity cost of using a bedroom as a home office would increase. 
A)  Joe's opportunity cost of using a bedroom as a home office would decrease. 
B)  Joe's landscape company would experience a decrease in demand for services at all prices. 
C)  Joe should expand his office space in his home. 
D)  Joe's opportunity cost of using a bedroom as a home office would increase.

Question 20

Which of the following statements is TRUE?

Accepted Answer

A)  When the price of oil is high,consumers will use oil for both valuable and less valuable uses. 
B)  When the price of oil is low,consumers will use oil only for its most valuable uses. 
C)  When the price of oil rises,consumers tend to use oil for uses in which there are few substitutes for it. 
D)  When the price of oil falls,consumers start to conserve oil and only use it when there are no other options. 
A)  When the price of oil is high,consumers will use oil for both valuable and less valuable uses. 
B)  When the price of oil is low,consumers will use oil only for its most valuable uses. 
C)  When the price of oil rises,consumers tend to use oil for uses in which there are few substitutes for it. 
D)  When the price of oil falls,consumers start to conserve oil and only use it when there are no other options.

Which of the following is TRUE about demand curves?

The demand curve has a negative slope.

When the price of wood is high:

If the government decided to heavily regulate small farmers who grow organic and free-range food,the supply of that food:

The demand curve for oil slopes downward because:

As the price of lead falls (a key input in the production of automobile batteries),the costs of producing batteries decreases,shifting the supply curve of batteries:

When the price of inputs increase:

A decrease in the opportunity cost of steel production will:

An increase in the price of a good will typically increase demand for that good.

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?

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 subsidy is a:

The quantity demanded is the quantity that consumers are willing and able to purchase at a given price.

The most important concepts in economics,according to the textbook,are supply,demand,and the:

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

Quantity demanded:

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.

Joe runs a landscape company and uses one of his home's bedrooms as a home office.This office could be used to earn rental income from college students.If average rental income in Joe's neighborhood were to rise:

Which of the following statements is TRUE?

The Big Ideas

The Power of Trade

Equilibrium- How Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Saving,investment,and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

Transmission and Amplification Mechanisms

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters

Exam 3: Supply and Demand

Which of the following is TRUE about demand curves?

The demand curve has a negative slope.

When the price of wood is high:

If the government decided to heavily regulate small farmers who grow organic and free-range food,the supply of that food:

The demand curve for oil slopes downward because:

As the price of lead falls (a key input in the production of automobile batteries),the costs of producing batteries decreases,shifting the supply curve of batteries:

When the price of inputs increase:

A decrease in the opportunity cost of steel production will:

An increase in the price of a good will typically increase demand for that good.

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?

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 subsidy is a:

The quantity demanded is the quantity that consumers are willing and able to purchase at a given price.

The most important concepts in economics,according to the textbook,are supply,demand,and the:

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

Quantity demanded:

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.

Joe runs a landscape company and uses one of his home's bedrooms as a home office.This office could be used to earn rental income from college students.If average rental income in Joe's neighborhood were to rise:

Which of the following statements is TRUE?

The Big Ideas

The Power of Trade

Equilibrium- How Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Saving,investment,and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

Transmission and Amplification Mechanisms

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters

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?