Question 1

A and B are substitute goods, but A and C are complementary goods. If the costs of producing A decreases, then the demand for:

Accepted Answer

A)  Both B and C will decrease 
B)  Both B and C will increase 
C)  B will increase and the demand for C will decrease 
D)  B will decrease and the demand for C will increase 
A)  Both B and C will decrease 
B)  Both B and C will increase 
C)  B will increase and the demand for C will decrease 
D)  B will decrease and the demand for C will increase D

Question 2

A headline reads "Perfect Weather Brings Record-High Coffee Harvest." This situation would lead to a(n):

Accepted Answer

A)  Increase in the price and in the quantity purchased of coffee 
B)  Decrease in the price and in the quantity purchased of coffee 
C)  Increase in the price and a decrease in the quantity purchased of coffee 
D)  Decrease in the price and an increase in quantity purchased of coffee 
A)  Increase in the price and in the quantity purchased of coffee 
B)  Decrease in the price and in the quantity purchased of coffee 
C)  Increase in the price and a decrease in the quantity purchased of coffee 
D)  Decrease in the price and an increase in quantity purchased of coffee D

Question 3

When economists say that the demand for a product has decreased, they mean that:

Accepted Answer

A)  The demand curve has shifted to the right 
B)  The product has become particularly scarce for some reason 
C)  The product has become more expensive and thus consumers are buying less of it 
D)  Consumers are now willing and able to buy less of this product at each possible price 
A)  The demand curve has shifted to the right 
B)  The product has become particularly scarce for some reason 
C)  The product has become more expensive and thus consumers are buying less of it 
D)  Consumers are now willing and able to buy less of this product at each possible price D

Question 4

Refer to the above graph, which shows the market for beef where demand shifted from D1 and D2. The change in equilibrium from E1 to E2 is most likely to result from:

Accepted Answer

A)  A decrease in consumer incomes 
B)  An increase in the cost of cattle feed 
C)  An increase in the price of pork 
D)  A decrease in the tax on beef products 
A)  A decrease in consumer incomes 
B)  An increase in the cost of cattle feed 
C)  An increase in the price of pork 
D)  A decrease in the tax on beef products

Question 5

When economists speak of "demand" in a particular market, they refer to:

Accepted Answer

A)  The whole demand curve or schedule 
B)  One point on the demand curve 
C)  One price-quantity combination on the demand schedule 
D)  How much of an item buyers want to buy at a given price 
A)  The whole demand curve or schedule 
B)  One point on the demand curve 
C)  One price-quantity combination on the demand schedule 
D)  How much of an item buyers want to buy at a given price

Question 6

Refer to the above graph showing the market for a product. Which of the following would best explain why the shift in demand from D1 to D2 would cause price to rise from P1 to P2?

Accepted Answer

A)  Because after the shift in the demand, there would be a surplus at price P2 
B)  Because after the shift in the demand, there would be a shortage at price P2 
C)  Because after the shift in the demand, there would be a shortage at price P1 
D)  Because after the shift in the demand, there would be a surplus at price P1 
A)  Because after the shift in the demand, there would be a surplus at price P2 
B)  Because after the shift in the demand, there would be a shortage at price P2 
C)  Because after the shift in the demand, there would be a shortage at price P1 
D)  Because after the shift in the demand, there would be a surplus at price P1

Question 7

The presence of ticket scalpers in popular events like concerts will hurt consumers who buy from the scalpers.

Accepted Answer

A) True 
 B)False

Question 8

An increase in the demand for MP3 music indicates that more are:

Accepted Answer

A)  Purchased even if prices of MP3 music stayed the same 
B)  Demanded because MP3 music prices decreased 
C)  Demanded because sellers are selling more MP3 music 
D)  Purchased because sellers are putting MP3 music on sale 
A)  Purchased even if prices of MP3 music stayed the same 
B)  Demanded because MP3 music prices decreased 
C)  Demanded because sellers are selling more MP3 music 
D)  Purchased because sellers are putting MP3 music on sale

Question 9

The graph above represents a competitive market for a product where the government has set a price ceiling of 0A. What quantity will buyers be able to buy after the imposition of the price ceiling?

Accepted Answer

A)  0J 
B)  0L 
C)  JL 
D)  KL 
A)  0J 
B)  0L 
C)  JL 
D)  KL

Question 10

Refer to the above diagram for the milk market. If the price were $2 per gallon, then there would be a:

Accepted Answer

A)  Shortage of 20 million gallons 
B)  Shortage of 10 million gallons 
C)  Surplus of 10 million gallons 
D)  Surplus of 30 million gallons 
A)  Shortage of 20 million gallons 
B)  Shortage of 10 million gallons 
C)  Surplus of 10 million gallons 
D)  Surplus of 30 million gallons

Question 11

An increase in both supply and demand will lead to an increase in the equilibrium price and an indeterminate change in the equilibrium quantity.

Accepted Answer

A) True 
 B)False

Question 12

If we observe that the price of gold is rising and the quantity of gold traded in the market is falling, then this must be the result of an increase in the supply of gold.

Accepted Answer

A) True 
 B)False

Question 13

The supply curve in a market is vertical instead of upsloping whenever:

Accepted Answer

A)  All buyers are willing to pay only one price for the item 
B)  Sellers have no flexibility in setting the price of the item 
C)  Buyers want to buy a fixed quantity regardless of price 
D)  Sellers have a fixed quantity of the item for sale 
A)  All buyers are willing to pay only one price for the item 
B)  Sellers have no flexibility in setting the price of the item 
C)  Buyers want to buy a fixed quantity regardless of price 
D)  Sellers have a fixed quantity of the item for sale

Question 14

In the foreign exchange market, if Americans significantly increase their investments in securities in British financial markets, one effect is that the dollar will tend to depreciate against the pound.

Accepted Answer

A) True 
 B)False

Question 15

Consider the supply and demand curves depicted in the diagram above. If the government imposed a price ceiling of $15, then sellers will be willing to sell ___, and a black market could develop where the price would be:

Accepted Answer

A)  24 units; below $15 
B)  36 units; above $15 
C)  24 units; above $15 
D)  36 units; below $15 
A)  24 units; below $15 
B)  36 units; above $15 
C)  24 units; above $15 
D)  36 units; below $15

Question 16

A price ceiling imposed by the government is intended to benefit the sellers of the product.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is not a determinant of demand for laptop computers?

Accepted Answer

A)  Income of buyers of laptop computers 
B)  The cost of inputs for producing laptop computers 
C)  The prices of related goods such as software and iPads 
D)  Expectations about the future price of laptop computers 
A)  Income of buyers of laptop computers 
B)  The cost of inputs for producing laptop computers 
C)  The prices of related goods such as software and iPads 
D)  Expectations about the future price of laptop computers

Question 18

When economists describe "a market," they mean:

Accepted Answer

A)  A place where stocks and bonds are traded 
B)  A communication network that allow individuals to keep in touch with each other 
C)  A hypothetical place where the production of goods and services takes place 
D)  A system that allows buyers and sellers to interact with one another 
A)  A place where stocks and bonds are traded 
B)  A communication network that allow individuals to keep in touch with each other 
C)  A hypothetical place where the production of goods and services takes place 
D)  A system that allows buyers and sellers to interact with one another

Question 19

When tickets are "scalped," then in this market transaction:

Accepted Answer

A)  The buyer benefits, but the seller does not 
B)  The seller benefits, but the buyer does not 
C)  Both the buyer and seller benefit 
D)  Neither the buyer nor seller benefit because it is illegal 
A)  The buyer benefits, but the seller does not 
B)  The seller benefits, but the buyer does not 
C)  Both the buyer and seller benefit 
D)  Neither the buyer nor seller benefit because it is illegal

Question 20

Refer to the above diagram for the milk market. In this market, the equilibrium price is ____ and equilibrium quantity is ___.

Accepted Answer

A)  $1.50 per gallon; 28 million gallons 
B)  $1.50 per gallon; 30 million gallons 
C)  $28 per gallon; 150 million gallons 
D)  $1.00 per gallon; 35 million gallons 
A)  $1.50 per gallon; 28 million gallons 
B)  $1.50 per gallon; 30 million gallons 
C)  $28 per gallon; 150 million gallons 
D)  $1.00 per gallon; 35 million gallons

Exam 3: Demand, Supply, and Market Equilibrium

A and B are substitute goods, but A and C are complementary goods. If the costs of producing A decreases, then the demand for:

A headline reads "Perfect Weather Brings Record-High Coffee Harvest." This situation would lead to a(n):

When economists say that the demand for a product has decreased, they mean that:

Refer to the above graph, which shows the market for beef where demand shifted from D1 and D2. The change in equilibrium from E1 to E2 is most likely to result from:

When economists speak of "demand" in a particular market, they refer to:

Refer to the above graph showing the market for a product. Which of the following would best explain why the shift in demand from D1 to D2 would cause price to rise from P1 to P2?

The presence of ticket scalpers in popular events like concerts will hurt consumers who buy from the scalpers.

An increase in the demand for MP3 music indicates that more are:

The graph above represents a competitive market for a product where the government has set a price ceiling of 0A. What quantity will buyers be able to buy after the imposition of the price ceiling?

Refer to the above diagram for the milk market. If the price were $2 per gallon, then there would be a:

An increase in both supply and demand will lead to an increase in the equilibrium price and an indeterminate change in the equilibrium quantity.

If we observe that the price of gold is rising and the quantity of gold traded in the market is falling, then this must be the result of an increase in the supply of gold.

The supply curve in a market is vertical instead of upsloping whenever:

In the foreign exchange market, if Americans significantly increase their investments in securities in British financial markets, one effect is that the dollar will tend to depreciate against the pound.

Consider the supply and demand curves depicted in the diagram above. If the government imposed a price ceiling of $15, then sellers will be willing to sell ___, and a black market could develop where the price would be:

A price ceiling imposed by the government is intended to benefit the sellers of the product.

Which of the following is not a determinant of demand for laptop computers?

When economists describe "a market," they mean:

When tickets are "scalped," then in this market transaction:

Refer to the above diagram for the milk market. In this market, the equilibrium price is ____ and equilibrium quantity is ___.

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters

Refer to the above graph, which shows the market for beef where demand shifted from D₁ and D₂. The change in equilibrium from E₁ to E₂ is most likely to result from:

Refer to the above graph showing the market for a product. Which of the following would best explain why the shift in demand from D₁ to D₂ would cause price to rise from P₁ to P₂?

Refer to the above diagram for the milk market. In this market, the equilibrium price is __ and equilibrium quantity is _.