Question 1

Refer to the above diagram for the milk market. There would be a shortage of milk whenever the price is:

Accepted Answer

A)  Higher than $1.50 per gallon 
B)  Higher than $2.00 per gallon 
C)  Lower than $1.50 per gallon 
D)  Lower than $2.00 per gallon 
A)  Higher than $1.50 per gallon 
B)  Higher than $2.00 per gallon 
C)  Lower than $1.50 per gallon 
D)  Lower than $2.00 per gallon

Question 2

When a fruit or vegetable (such as strawberries or lentils) is in season, the demand for it will increase as it becomes cheaper.

Accepted Answer

A) True 
 B)False

Question 3

The market system automatically corrects a surplus condition in a competitive market by:

Accepted Answer

A)  Raising the price of the commodity in question while increasing the quantity demanded 
B)  Raising the price of the commodity in question while decreasing the quantity demanded 
C)  Reducing the price of the commodity in question while increasing the quantity demanded 
D)  Reducing the price of the commodity in question while decreasing the quantity demanded 
A)  Raising the price of the commodity in question while increasing the quantity demanded 
B)  Raising the price of the commodity in question while decreasing the quantity demanded 
C)  Reducing the price of the commodity in question while increasing the quantity demanded 
D)  Reducing the price of the commodity in question while decreasing the quantity demanded

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 cannot be a result of:

Accepted Answer

A)  Buyers expectations of lower prices for beef in the very near future 
B)  An increase in the subsidy given to cattle farms 
C)  A widespread concern about mad-cow disease 
D)  A decrease in the productivity of cattle farms 
A)  Buyers expectations of lower prices for beef in the very near future 
B)  An increase in the subsidy given to cattle farms 
C)  A widespread concern about mad-cow disease 
D)  A decrease in the productivity of cattle farms

Question 5

In a competitive market illustrated by the diagram above, for a price floor to be effective and alter the market situation, it must be set:

Accepted Answer

A)  At $15 
B)  Below $15 
C)  Above $15 
D)  At $10 
A)  At $15 
B)  Below $15 
C)  Above $15 
D)  At $10

Question 6

A fall in the price of milk, used in the production of ice cream, will:

Accepted Answer

A)  Decrease the supply of ice cream 
B)  Increase the supply of ice cream 
C)  Cause a movement along the supply curve of ice cream 
D)  Have no effect on the supply of ice cream 
A)  Decrease the supply of ice cream 
B)  Increase the supply of ice cream 
C)  Cause a movement along the supply curve of ice cream 
D)  Have no effect on the supply of ice cream

Question 7

An effective price ceiling will lower the equilibrium price and cause a surplus.

Accepted Answer

A) True 
 B)False

Question 8

The graph below shows the market for tickets to a "Final Four" sports event. Assume that there is only one kind of ticket to the event.   Refer to the above market graph for tickets to a "Final Four" sports event. Given this market, if the event organizers pre-set the price at $20, then this action would result in a:

Accepted Answer

A)  Shortage of 5,000 units 
B)  Shortage of 55,000 units 
C)  Surplus of 5,000 units 
D)  Surplus of 50,000 units 
A)  Shortage of 5,000 units 
B)  Shortage of 55,000 units 
C)  Surplus of 5,000 units 
D)  Surplus of 50,000 units

Question 9

The table below shows the weekly demand for hamburger in a market where there are just three buyers.   Refer to the above table. At a price of $6, the weekly market quantity demanded for hamburger is:

Accepted Answer

A)  17 
B)  23 
C)  18 
D)  24 
A)  17 
B)  23 
C)  18 
D)  24

Question 10

Which of the following pairs are not considered to be complementary goods?

Accepted Answer

A)  Steel and cars 
B)  Digital cameras and memory cards 
C)  Gasoline and motor oil 
D)  Fertilizer and irrigation systems 
A)  Steel and cars 
B)  Digital cameras and memory cards 
C)  Gasoline and motor oil 
D)  Fertilizer and irrigation systems

Question 11

A decrease in demand and an increase in supply will:

Accepted Answer

A)  Affect price in an indeterminate way and decrease the equilibrium quantity 
B)  Increase price and affect the equilibrium quantity in an indeterminate way 
C)  Decrease price and affect the equilibrium quantity in an indeterminate way 
D)  Increase price and increase the equilibrium quantity 
A)  Affect price in an indeterminate way and decrease the equilibrium quantity 
B)  Increase price and affect the equilibrium quantity in an indeterminate way 
C)  Decrease price and affect the equilibrium quantity in an indeterminate way 
D)  Increase price and increase the equilibrium quantity

Question 12

If an economy is being "productively efficient," then that means the economy is:

Accepted Answer

A)  Producing the products most wanted by society 
B)  Fully employing all economic resources 
C)  Maximizing the returns to factors of production 
D)  Using the least costly production techniques 
A)  Producing the products most wanted by society 
B)  Fully employing all economic resources 
C)  Maximizing the returns to factors of production 
D)  Using the least costly production techniques

Question 13

In order to derive the market supply curve from individual supply curves, we add up the:

Accepted Answer

A)  Various prices that individual sellers are charging for the product 
B)  Various quantities that individual sellers want to sell at specific price levels 
C)  Total number of sellers in the market at a given time 
D)  Costs that all individual sellers incur in producing the product 
A)  Various prices that individual sellers are charging for the product 
B)  Various quantities that individual sellers want to sell at specific price levels 
C)  Total number of sellers in the market at a given time 
D)  Costs that all individual sellers incur in producing the product

Question 14

The idea of the Law of Demand, as applied to electric cars, assumes which of the following to be constant?

Accepted Answer

A)  Price of electric cars 
B)  Price of gasoline cars 
C)  Quantity of electric cars demanded by buyers 
D)  How much sellers are charging customers for electric cars 
A)  Price of electric cars 
B)  Price of gasoline cars 
C)  Quantity of electric cars demanded by buyers 
D)  How much sellers are charging customers for electric cars

Question 15

The following are explanations of the Law of Demand, except:

Accepted Answer

A)  Expectations effect 
B)  Diminishing marginal utility 
C)  Income effect 
D)  Substitution effect 
A)  Expectations effect 
B)  Diminishing marginal utility 
C)  Income effect 
D)  Substitution effect

Question 16

Suppose that a more efficient way to produce a good is discovered, thus lowering production costs for the good. This will cause a(n):

Accepted Answer

A)  Increase in supply 
B)  Decrease in supply 
C)  Increase in quantity supplied 
D)  Decrease in quantity supplied 
A)  Increase in supply 
B)  Decrease in supply 
C)  Increase in quantity supplied 
D)  Decrease in quantity supplied

Question 17

The law of supply states that, ceteris paribus, if the price of loans (known as "interest rate") rises then the quantity supplied of loans will decrease.

Accepted Answer

A) True 
 B)False

Question 18

Refer to the market graph shown above. A black market where the price is $2.00 could result from price:

Accepted Answer

A)  Ceiling set at $2.50 
B)  Ceiling set at $1.50 
C)  Floor set at $1.50 
D)  Floor set at $2.00 
A)  Ceiling set at $2.50 
B)  Ceiling set at $1.50 
C)  Floor set at $1.50 
D)  Floor set at $2.00

Question 19

An increase in the price of digital cameras will result in a(n):

Accepted Answer

A)  Shift of the demand curve for digital cameras to the left 
B)  Decrease in the demand for digital cameras 
C)  Shift of the demand curve for digital cameras to the right 
D)  Movement up and to the left along the demand curve for digital cameras 
A)  Shift of the demand curve for digital cameras to the left 
B)  Decrease in the demand for digital cameras 
C)  Shift of the demand curve for digital cameras to the right 
D)  Movement up and to the left along the demand curve for digital cameras

Question 20

If the demand for electronic readers and tablets increases, then their supply will increase as price rises.

Accepted Answer

A) True 
 B)False

Exam 3: Demand, Supply, and Market Equilibrium

Refer to the above diagram for the milk market. There would be a shortage of milk whenever the price is:

When a fruit or vegetable (such as strawberries or lentils) is in season, the demand for it will increase as it becomes cheaper.

The market system automatically corrects a surplus condition in a competitive market by:

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 cannot be a result of:

In a competitive market illustrated by the diagram above, for a price floor to be effective and alter the market situation, it must be set:

A fall in the price of milk, used in the production of ice cream, will:

An effective price ceiling will lower the equilibrium price and cause a surplus.

The table below shows the weekly demand for hamburger in a market where there are just three buyers. Refer to the above table. At a price of $6, the weekly market quantity demanded for hamburger is:

Which of the following pairs are not considered to be complementary goods?

A decrease in demand and an increase in supply will:

If an economy is being "productively efficient," then that means the economy is:

In order to derive the market supply curve from individual supply curves, we add up the:

The idea of the Law of Demand, as applied to electric cars, assumes which of the following to be constant?

The following are explanations of the Law of Demand, except:

Suppose that a more efficient way to produce a good is discovered, thus lowering production costs for the good. This will cause a(n):

The law of supply states that, ceteris paribus, if the price of loans (known as "interest rate") rises then the quantity supplied of loans will decrease.

Refer to the market graph shown above. A black market where the price is $2.00 could result from price:

An increase in the price of digital cameras will result in a(n):

If the demand for electronic readers and tablets increases, then their supply will increase as price rises.

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 cannot be a result of: