Question 1

Refer to the figure above, which shows three supply curves for corn. Which of the following would cause the supply of corn to shift from S1 to S2?

Accepted Answer

A)  An increase in the price of fertilizer 
B)  A change in consumer tastes away from cornbread 
C)  A decrease in consumer incomes, assuming corn is a normal good 
D)  The development of a more effective insecticide against corn rootworm 
A)  An increase in the price of fertilizer 
B)  A change in consumer tastes away from cornbread 
C)  A decrease in consumer incomes, assuming corn is a normal good 
D)  The development of a more effective insecticide against corn rootworm

Question 2

A surplus indicates that the quantity demanded is greater than the quantity supplied at that price.

Accepted Answer

A) True 
 B)False

Question 3

Refer to the above diagram illustrating the market for corn. If the price in this market is fixed at $2 per bushel, then:

Accepted Answer

A)  Sellers will not be able to sell all the corn that they intended to sell 
B)  Sellers will quickly run out of corn that they bring to market 
C)  Buyers will find too much corn in the market 
D)  Buyers will be able to get as much corn as they wish to buy 
A)  Sellers will not be able to sell all the corn that they intended to sell 
B)  Sellers will quickly run out of corn that they bring to market 
C)  Buyers will find too much corn in the market 
D)  Buyers will be able to get as much corn as they wish to buy

Question 4

Refer to the above graph, which shows the market for bicycles. S1 and D1 are the original supply and demand curves. D2 and D3 and S2 and S3 are possible new demand and supply curves. Starting from the initial equilibrium (point 1), which point on the graph is most likely to be the new equilibrium after an increase in wages of bicycle workers, and a significant increase in the price of gasoline?

Accepted Answer

A)  6 
B)  3 
C)  4 
D)  5 
A)  6 
B)  3 
C)  4 
D)  5

Question 5

All of the following would affect the position of the supply curve for cranberries, except the:

Accepted Answer

A)  Popularity of cranberry drinks 
B)  Price of agricultural land for cranberries 
C)  Cost of fertilizers for cranberry production 
D)  Development of a new pest control for cranberries 
A)  Popularity of cranberry drinks 
B)  Price of agricultural land for cranberries 
C)  Cost of fertilizers for cranberry production 
D)  Development of a new pest control for cranberries

Question 6

A result of a fall in the price of gasoline, consumers can afford to buy more gasoline for more driving trips. This is an illustration of:

Accepted Answer

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

Question 7

A decrease in the price of digital cameras would lead to a(n):

Accepted Answer

A)  Increase in the price and quantity sold of memory cards 
B)  Decrease in the price and quantity sold of memory cards 
C)  Increase in the price and a decrease in quantity sold of memory cards 
D)  Decrease in the price and an increase in quantity sold of memory cards 
A)  Increase in the price and quantity sold of memory cards 
B)  Decrease in the price and quantity sold of memory cards 
C)  Increase in the price and a decrease in quantity sold of memory cards 
D)  Decrease in the price and an increase in quantity sold of memory cards

Question 8

If there's a huge increase in the number of Americans travelling to Europe (say, for the Olympics), then the effect on the foreign exchange market is that the:

Accepted Answer

A)  Demand for euros would increase 
B)  Supply of euros would increase 
C)  Demand for euros would decrease 
D)  Supply of euros would decrease 
A)  Demand for euros would increase 
B)  Supply of euros would increase 
C)  Demand for euros would decrease 
D)  Supply of euros would decrease

Question 9

Last year the price of corn was $3 a bushel and the quantity of corn demanded was 10 million bushels. This year the price of corn was $4.00 a bushel and the quantity demanded was 9 million bushels. Is this evidence that law of demand does not apply to corn?

Accepted Answer

A)  Yes, because there is a direct relationship between the price of corn and the quantity supplied 
B)  Yes, because there is an inverse relationship between the price of corn and the quantity demanded 
C)  No, because the other-things-equal assumption was violated over the two year period 
D)  No, because the evidence indicates that there is a shortage of corn 
A)  Yes, because there is a direct relationship between the price of corn and the quantity supplied 
B)  Yes, because there is an inverse relationship between the price of corn and the quantity demanded 
C)  No, because the other-things-equal assumption was violated over the two year period 
D)  No, because the evidence indicates that there is a shortage of corn

Question 10

Refer to the four graphs above. Select the graph above that best shows the changes in demand and supply in the market specified in the following situation: In the market for corn, if gasoline producers use more ethanol from corn, and good weather during the growing season yields a bumper harvest.

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 11

In competitive markets, a surplus or shortage will:

Accepted Answer

A)  Never exist because the markets are always at equilibrium 
B)  Cause changes in the quantities demanded and supplied that tend to eliminate the surplus or shortage 
C)  Cause shifts in the demand and supply curves that tend to eliminate the surplus or shortage 
D)  Cause changes in the quantities demanded and supplied that tend to intensify the surplus or shortage 
A)  Never exist because the markets are always at equilibrium 
B)  Cause changes in the quantities demanded and supplied that tend to eliminate the surplus or shortage 
C)  Cause shifts in the demand and supply curves that tend to eliminate the surplus or shortage 
D)  Cause changes in the quantities demanded and supplied that tend to intensify the surplus or shortage

Question 12

Refer to the diagram above, which shows three supply curves for corn. Which of the following would cause the supply of corn to shift from S1 to S3?

Accepted Answer

A)  A decrease in the cost of equipment used in corn farming 
B)  An increase in the price of soybeans 
C)  A decrease in the price of corn 
D)  An increase in the number of acres of farmland allocated to corn 
A)  A decrease in the cost of equipment used in corn farming 
B)  An increase in the price of soybeans 
C)  A decrease in the price of corn 
D)  An increase in the number of acres of farmland allocated to corn

Question 13

The table below shows the weekly demand for hamburger in a market where there are just three buyers.   Refer to the above table. If the price of hamburger falls from $5 to $3, then the weekly market quantity demanded will:

Accepted Answer

A)  Increase from 24 to 52 
B)  Decrease from 52 to 24 
C)  Increase from 120 to 156 
D)  Increase from 29 to 55 
A)  Increase from 24 to 52 
B)  Decrease from 52 to 24 
C)  Increase from 120 to 156 
D)  Increase from 29 to 55

Question 14

If the organizers of a major sports event set the ticket price above the equilibrium level, then scalping will develop in a secondary market for tickets.

Accepted Answer

A) True 
 B)False

Question 15

What is the likely effect on the market for wine of a simultaneous increase in both consumer incomes and producer taxes on wine?

Accepted Answer

A)  An increase in both price and quantity 
B)  An increase in price and a decrease in output 
C)  A decrease in price and an indeterminate effect on quantity 
D)  An increase in price and an indeterminate effect on quantity 
A)  An increase in both price and quantity 
B)  An increase in price and a decrease in output 
C)  A decrease in price and an indeterminate effect on quantity 
D)  An increase in price and an indeterminate effect on quantity

Question 16

The graph above represents a competitive market for a product where the government now has introduced a price floor of 0C. Which area in the graph represents the producers' sales revenue after the imposition of the price floor?

Accepted Answer

A)  0CFL 
B)  0CEJ 
C)  0BGK 
D)  0BHL 
A)  0CFL 
B)  0CEJ 
C)  0BGK 
D)  0BHL

Question 17

There is a shortage in a market for a product when:

Accepted Answer

A)  The current price is higher than the equilibrium price 
B)  Supply is less than demand 
C)  Quantity demanded is less than quantity supplied 
D)  Quantity demanded is greater than quantity supplied 
A)  The current price is higher than the equilibrium price 
B)  Supply is less than demand 
C)  Quantity demanded is less than quantity supplied 
D)  Quantity demanded is greater than quantity supplied

Question 18

Why is there a shortage of donated human organs available for transplant?

Accepted Answer

A)  The supply curve for human organs is horizontal at the current zero price 
B)  The demand curve for organs is vertical at the current zero price 
C)  The quantity supplied is greater than the quantity demanded at the current zero price 
D)  The quantity demanded is greater than the quantity supplied at the current zero price 
A)  The supply curve for human organs is horizontal at the current zero price 
B)  The demand curve for organs is vertical at the current zero price 
C)  The quantity supplied is greater than the quantity demanded at the current zero price 
D)  The quantity demanded is greater than the quantity supplied at the current zero price

Question 19

Two goods are considered to be related goods by many buyers: if the price of one increases, buyers buy more of the other. This indicates that the two goods are complements.

Accepted Answer

A) True 
 B)False

Question 20

Other things being equal, the law of demand suggests that as:

Accepted Answer

A)  The demand for iPads increases, this will cause the price to increase 
B)  Income increases, the quantity of iPads demanded will increase 
C)  The price of iPads decreases, the quantity demanded will increase 
D)  The price of iPads decreases, the quantity demanded will decrease 
A)  The demand for iPads increases, this will cause the price to increase 
B)  Income increases, the quantity of iPads demanded will increase 
C)  The price of iPads decreases, the quantity demanded will increase 
D)  The price of iPads decreases, the quantity demanded will decrease

Exam 3: Demand, Supply, and Market Equilibrium

Refer to the figure above, which shows three supply curves for corn. Which of the following would cause the supply of corn to shift from S1 to S2?

A surplus indicates that the quantity demanded is greater than the quantity supplied at that price.

Refer to the above diagram illustrating the market for corn. If the price in this market is fixed at $2 per bushel, then:

All of the following would affect the position of the supply curve for cranberries, except the:

A result of a fall in the price of gasoline, consumers can afford to buy more gasoline for more driving trips. This is an illustration of:

A decrease in the price of digital cameras would lead to a(n):

If there's a huge increase in the number of Americans travelling to Europe (say, for the Olympics), then the effect on the foreign exchange market is that the:

Last year the price of corn was $3 a bushel and the quantity of corn demanded was 10 million bushels. This year the price of corn was $4.00 a bushel and the quantity demanded was 9 million bushels. Is this evidence that law of demand does not apply to corn?

Refer to the four graphs above. Select the graph above that best shows the changes in demand and supply in the market specified in the following situation: In the market for corn, if gasoline producers use more ethanol from corn, and good weather during the growing season yields a bumper harvest.

In competitive markets, a surplus or shortage will:

Refer to the diagram above, which shows three supply curves for corn. Which of the following would cause the supply of corn to shift from S1 to S3?

The table below shows the weekly demand for hamburger in a market where there are just three buyers. Refer to the above table. If the price of hamburger falls from $5 to $3, then the weekly market quantity demanded will:

If the organizers of a major sports event set the ticket price above the equilibrium level, then scalping will develop in a secondary market for tickets.

What is the likely effect on the market for wine of a simultaneous increase in both consumer incomes and producer taxes on wine?

The graph above represents a competitive market for a product where the government now has introduced a price floor of 0C. Which area in the graph represents the producers' sales revenue after the imposition of the price floor?

There is a shortage in a market for a product when:

Why is there a shortage of donated human organs available for transplant?

Two goods are considered to be related goods by many buyers: if the price of one increases, buyers buy more of the other. This indicates that the two goods are complements.

Other things being equal, the law of demand suggests that as:

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 figure above, which shows three supply curves for corn. Which of the following would cause the supply of corn to shift from S₁ to S₂?

Refer to the diagram above, which shows three supply curves for corn. Which of the following would cause the supply of corn to shift from S₁ to S₃?