Question 1

Which would be a likely cause of an increase in the demand for pizza?

Accepted Answer

A)  A reduced desire for take-out and fast-food dining 
B)  A decrease in the price of hamburger sandwiches 
C)  A decrease in the prices of cheese, pepperoni, and mushrooms 
D)  A health report showing eating pizza reduces stress 
A)  A reduced desire for take-out and fast-food dining 
B)  A decrease in the price of hamburger sandwiches 
C)  A decrease in the prices of cheese, pepperoni, and mushrooms 
D)  A health report showing eating pizza reduces stress

Question 2

Assume that the graphs show a competitive market for the product stated in the question.     Select the graph above that best shows the change in the market specified in the following situation: In the market for houses, when consumers experience a substantial fall in income due to a serious economic recession.

Accepted Answer

A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D 
A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D

Question 3

A large increase in the supply of HD-TV sets occurs simultaneously with a smaller decrease in its demand. As a result the equilibrium price will:

Accepted Answer

A)  Increase and the equilibrium quantity will decrease 
B)  Increase and the equilibrium quantity will increase 
C)  Decrease and the equilibrium quantity will decrease 
D)  Decrease and the equilibrium quantity will increase 
A)  Increase and the equilibrium quantity will decrease 
B)  Increase and the equilibrium quantity will increase 
C)  Decrease and the equilibrium quantity will decrease 
D)  Decrease and the equilibrium quantity will increase

Question 4

In the diagrams below, the subscript "1" refers to the initial position of the curve, while the subscript "2" refers to the final position after the curve shifts.   Refer to the diagrams above. In which of them would we see a shortage at the initial price after the indicated curve has shifted?

Accepted Answer

A)  A and D 
B)  B and D 
C)  B and C 
D)  A and C 
A)  A and D 
B)  B and D 
C)  B and C 
D)  A and C

Question 5

Refer to the above table. If demand decreased by 4 units at each price and supply decreased by 2 units at each price, what would the new equilibrium price and quantity be?

Accepted Answer

A)  $3 and 5 units 
B)  $4 and 4 units 
C)  $5 and 5 units 
D)  $6 and 6 units 
A)  $3 and 5 units 
B)  $4 and 4 units 
C)  $5 and 5 units 
D)  $6 and 6 units

Question 6

Which of the following is an example of a price ceiling?

Accepted Answer

A)  Limits on interest rates charged by credit card companies 
B)  Subsidies for apartment rent in major cities 
C)  Minimum-wage laws for unskilled workers 
D)  Price supports for agricultural products 
A)  Limits on interest rates charged by credit card companies 
B)  Subsidies for apartment rent in major cities 
C)  Minimum-wage laws for unskilled workers 
D)  Price supports for agricultural products

Question 7

Sometimes, we observe cases where the price of a product rose and the quantity bought by buyers also increased. Such cases occur due to a violation of the:

Accepted Answer

A)  Law of Demand 
B)  Law of Supply 
C)  Allocative efficiency rule 
D)  Ceteris paribus assumption 
A)  Law of Demand 
B)  Law of Supply 
C)  Allocative efficiency rule 
D)  Ceteris paribus assumption

Question 8

Which of the following is consistent with the law of demand?

Accepted Answer

A)  A decrease in the price of tacos causes sellers to want to sell less 
B)  An increase in the people's craving for pizza causes buyers to buy more pizza 
C)  An increase in the price of hamburgers causes buyers to buy fewer hamburgers 
D)  A decrease in the price of egg rolls causes a decrease in the quantity of egg rolls demanded 
A)  A decrease in the price of tacos causes sellers to want to sell less 
B)  An increase in the people's craving for pizza causes buyers to buy more pizza 
C)  An increase in the price of hamburgers causes buyers to buy fewer hamburgers 
D)  A decrease in the price of egg rolls causes a decrease in the quantity of egg rolls demanded

Question 9

In order to derive a market demand curve from individuals' demand curves, we add up the:

Accepted Answer

A)  Various individuals' quantities demanded at each price level 
B)  Various prices that each buyer is willing and able to pay 
C)  Incomes of all buyers, assuming that their tastes remain constant 
D)  Total number of buyers in the market at each time period 
A)  Various individuals' quantities demanded at each price level 
B)  Various prices that each buyer is willing and able to pay 
C)  Incomes of all buyers, assuming that their tastes remain constant 
D)  Total number of buyers in the market at each time period

Question 10

If the market price is above the equilibrium price:

Accepted Answer

A)  A shortage will occur and producers will produce more and lower prices 
B)  A surplus will occur and producers will produce less and lower prices 
C)  A surplus will result and consumers will bid prices up 
D)  Producers will make extremely high profits 
A)  A shortage will occur and producers will produce more and lower prices 
B)  A surplus will occur and producers will produce less and lower prices 
C)  A surplus will result and consumers will bid prices up 
D)  Producers will make extremely high profits

Question 11

Which of the following is a determinant of supply?

Accepted Answer

A)  Tastes and preferences 
B)  Price of a complementary good 
C)  Consumer income 
D)  Product taxes and subsidies 
A)  Tastes and preferences 
B)  Price of a complementary good 
C)  Consumer income 
D)  Product taxes and subsidies

Question 12

As a result of a decrease in the price of online streaming movies, consumers download more movies online and buy fewer DVDs. This is an illustration of:

Accepted Answer

A)  Consumer sovereignty 
B)  The income effect 
C)  The substitution effect 
D)  Diminishing marginal utility 
A)  Consumer sovereignty 
B)  The income effect 
C)  The substitution effect 
D)  Diminishing marginal utility

Question 13

Assume that the graphs show a competitive market for the product stated in the question.     Select the graph above that best shows the change in the market specified in the following situation: In the market for digital cameras, when the productivity of workers in the digital camera industry increases.

Accepted Answer

A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D 
A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D

Question 14

Suppose that goods A and B are close substitutes. If the price of good A falls, then we would expect an:

Accepted Answer

A)  Increase in the demand for A and an increase in the quantity of B demanded 
B)  Increase in the demand for A and a decrease in the quantity of B demanded 
C)  Increase in the quantity of A demanded and a decrease in the demand for B 
D)  Increase in the demand for good A as well as for good B 
A)  Increase in the demand for A and an increase in the quantity of B demanded 
B)  Increase in the demand for A and a decrease in the quantity of B demanded 
C)  Increase in the quantity of A demanded and a decrease in the demand for B 
D)  Increase in the demand for good A as well as for good B

Question 15

If there is a surplus in a market, competition among the sellers will drive price down.

Accepted Answer

A) True 
 B)False

Question 16

Refer to the four graphs above. In which graph would the indicated shifts cause equilibrium quantity to definitely rise, but the effect on price is indeterminate?

Accepted Answer

A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D 
A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D

Question 17

Which of the following factors is a "demand shifter" for new houses?

Accepted Answer

A)  The price of lumber 
B)  Wages for construction workers 
C)  The price of new houses 
D)  The interest rates on mortgage loans 
A)  The price of lumber 
B)  Wages for construction workers 
C)  The price of new houses 
D)  The interest rates on mortgage loans

Question 18

Refer to the above diagram of the market for corn. If the price in this market is at $4 per bushel, then there will be a:

Accepted Answer

A)  Surplus and the price will tend to rise 
B)  Shortage and the price will tend to rise 
C)  Surplus and the price will tend to fall 
D)  Shortage and the price will tend to fall 
A)  Surplus and the price will tend to rise 
B)  Shortage and the price will tend to rise 
C)  Surplus and the price will tend to fall 
D)  Shortage and the price will tend to fall

Question 19

The price of pork may increase as a result of:

Accepted Answer

A)  A decrease in the cost of feed for pigs 
B)  Decreased advertising of pork 
C)  An increase in the cost of producing beef 
D)  A subsidy to pork producers 
A)  A decrease in the cost of feed for pigs 
B)  Decreased advertising of pork 
C)  An increase in the cost of producing beef 
D)  A subsidy to pork producers

Question 20

A government will create a surplus in a market when it:

Accepted Answer

A)  Sets a price ceiling above the equilibrium price 
B)  Sets a price floor above the equilibrium price 
C)  Sets a price floor below the equilibrium price 
D)  Sets a price ceiling below the equilibrium price 
A)  Sets a price ceiling above the equilibrium price 
B)  Sets a price floor above the equilibrium price 
C)  Sets a price floor below the equilibrium price 
D)  Sets a price ceiling below the equilibrium price

Exam 3: Demand, Supply, and Market Equilibrium

Which would be a likely cause of an increase in the demand for pizza?

A large increase in the supply of HD-TV sets occurs simultaneously with a smaller decrease in its demand. As a result the equilibrium price will:

In the diagrams below, the subscript "1" refers to the initial position of the curve, while the subscript "2" refers to the final position after the curve shifts. Refer to the diagrams above. In which of them would we see a shortage at the initial price after the indicated curve has shifted?

Refer to the above table. If demand decreased by 4 units at each price and supply decreased by 2 units at each price, what would the new equilibrium price and quantity be?

Which of the following is an example of a price ceiling?

Sometimes, we observe cases where the price of a product rose and the quantity bought by buyers also increased. Such cases occur due to a violation of the:

Which of the following is consistent with the law of demand?

In order to derive a market demand curve from individuals' demand curves, we add up the:

If the market price is above the equilibrium price:

Which of the following is a determinant of supply?

As a result of a decrease in the price of online streaming movies, consumers download more movies online and buy fewer DVDs. This is an illustration of:

Suppose that goods A and B are close substitutes. If the price of good A falls, then we would expect an:

If there is a surplus in a market, competition among the sellers will drive price down.

Refer to the four graphs above. In which graph would the indicated shifts cause equilibrium quantity to definitely rise, but the effect on price is indeterminate?

Which of the following factors is a "demand shifter" for new houses?

Refer to the above diagram of the market for corn. If the price in this market is at $4 per bushel, then there will be a:

The price of pork may increase as a result of:

A government will create a surplus in a market when it:

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