Question 1

An increase in both equilibrium price and quantity is a consequence of a(n):

Accepted Answer

A) ​increase in supply. 
B) ​increase in demand. 
C) ​decrease in demand 
D) ​decrease in supply 
A) ​increase in supply. 
B) ​increase in demand. 
C) ​decrease in demand 
D) ​decrease in supply

Question 2

In 1975 a pocket calculator cost more than $50; in 1990 a calculator of the same quality cost less than $10. Which of the following explanations is most consistent with these facts?

Accepted Answer

A) ​Intense competition in the calculator industry caused the supply curve for calculators to shift to the left, depressing the price. 
B) ​An increase in the demand for calculators led to the price drop. 
C) ​An improvement in technology caused the supply of calculators to increase, depressing their price. 
D) ​As the population grew, fewer expensive calculators were needed, causing prices to fall. 
A) ​Intense competition in the calculator industry caused the supply curve for calculators to shift to the left, depressing the price. 
B) ​An increase in the demand for calculators led to the price drop. 
C) ​An improvement in technology caused the supply of calculators to increase, depressing their price. 
D) ​As the population grew, fewer expensive calculators were needed, causing prices to fall.

Question 3

Assuming that the demand and supply of a good have moved in opposite directions, but by the same amount, the new equilibrium would represent:

Accepted Answer

A) ​an increase in price and an increase in quantity exchanged. 
B) ​no change in price and an increase in quantity exchanged. 
C) ​a decrease in price and a decrease in quantity exchanged. 
D) ​an indeterminate change in price, but no change in quantity exchanged. 
A) ​an increase in price and an increase in quantity exchanged. 
B) ​no change in price and an increase in quantity exchanged. 
C) ​a decrease in price and a decrease in quantity exchanged. 
D) ​an indeterminate change in price, but no change in quantity exchanged.

Question 4

When a binding price floor is imposed on a market to benefit sellers,

Accepted Answer

A) ​no sellers actually benefit. 
B) ​some sellers benefit, but no sellers are harmed. 
C) ​some sellers benefit, and some sellers are harmed. 
D) ​all sellers benefit. 
A) ​no sellers actually benefit. 
B) ​some sellers benefit, but no sellers are harmed. 
C) ​some sellers benefit, and some sellers are harmed. 
D) ​all sellers benefit.

Question 5

Ceteris paribus, the fear among travelers created by the 9-11 attacks would have what impact on the market for air travel?

Accepted Answer

A) ​an increase in equilibrium price and an increase in equilibrium quantity. 
B) ​an increase in equilibrium price and a decrease in equilibrium quantity. 
C) ​a decrease in equilibrium price and an increase in equilibrium quantity. 
D) ​a decrease in equilibrium price and a decrease in equilibrium quantity. 
A) ​an increase in equilibrium price and an increase in equilibrium quantity. 
B) ​an increase in equilibrium price and a decrease in equilibrium quantity. 
C) ​a decrease in equilibrium price and an increase in equilibrium quantity. 
D) ​a decrease in equilibrium price and a decrease in equilibrium quantity.

Question 6

Which of the below is true?

Accepted Answer

A) ​A price ceiling reduces the quantity exchanged on the market, but a price floor increases the quantity exchanged on the market. 
B) ​A price ceiling increases the quantity exchanged on the market, but a price floor decreases the quantity exchanged on the market. 
C) ​Both price floors and price ceilings reduce the quantity exchanged in the market. 
D) ​Both price floors and price ceilings increase the quantity exchanged in the market. 
A) ​A price ceiling reduces the quantity exchanged on the market, but a price floor increases the quantity exchanged on the market. 
B) ​A price ceiling increases the quantity exchanged on the market, but a price floor decreases the quantity exchanged on the market. 
C) ​Both price floors and price ceilings reduce the quantity exchanged in the market. 
D) ​Both price floors and price ceilings increase the quantity exchanged in the market.

Question 7

To say that a price floor is binding is to say that the price floor

Accepted Answer

A) ​results in a shortage. 
B) ​is set below the equilibrium price. 
C) ​causes quantity supplied to exceed quantity demanded. 
D) ​All of the above are correct. 
A) ​results in a shortage. 
B) ​is set below the equilibrium price. 
C) ​causes quantity supplied to exceed quantity demanded. 
D) ​All of the above are correct.

Question 8

Assume there is a price floor imposed on a good which is above the equilibrium price. Which of the following changes would reduce the size of the surplus?

Accepted Answer

A) ​An increase in demand. 
B) ​A decrease in demand. 
C) ​An increase in supply. 
D) ​Any of the above. 
A) ​An increase in demand. 
B) ​A decrease in demand. 
C) ​An increase in supply. 
D) ​Any of the above.

Question 9

If tastes for a good increased and the price of a substitute good decreased at the same time, as a result:

Accepted Answer

A) ​prices would rise. 
B) ​prices would fall. 
C) ​larger quantities to be exchanged. 
D) ​we would not know which direction either prices or quantities exchanged would be altered without more information. 
A) ​prices would rise. 
B) ​prices would fall. 
C) ​larger quantities to be exchanged. 
D) ​we would not know which direction either prices or quantities exchanged would be altered without more information.

Question 10

Medical authorities announced in the late 1980s that an acne medicine named Retin-A also had previously unknown wrinkle-reducing properties. An economist would expect to find that, after this announcement, the price of Retin-A ____ and the quantity sold ____.

Accepted Answer

A) ​rose; fell 
B) ​rose; rose 
C) ​fell; fell 
D) ​fell; rose 
A) ​rose; fell 
B) ​rose; rose 
C) ​fell; fell 
D) ​fell; rose

Question 11

Refer to Exhibit 5-9. If the government intervenes in the market for milk and sets a price ceiling of $2.00 per gallon, the result is:

Accepted Answer

A) ​a shortage of exactly 1,200 gallons of milk. 
B) ​a surplus of exactly 1,000 gallons of milk. 
C) ​that some consumers will not be able to buy milk at that price. 
D) ​that some sellers will not be able to sell available milk at that price. 
A) ​a shortage of exactly 1,200 gallons of milk. 
B) ​a surplus of exactly 1,000 gallons of milk. 
C) ​that some consumers will not be able to buy milk at that price. 
D) ​that some sellers will not be able to sell available milk at that price.

Question 12

Either a price floor or a price ceiling above the equilibrium price would cause a surplus.

Accepted Answer

A) True 
 B)False

Question 13

When supply shifts to the left, it would make the surplus from a price floor smaller, other things equal.

Accepted Answer

A) True 
 B)False

Question 14

For the quantity exchanged in a market to remain the same, while the price increased, both supply and demand would have to shift to the right.

Accepted Answer

A) True 
 B)False

Question 15

An increase in the expected future price of a good may act to increase the present price of the good.

Accepted Answer

A) True 
 B)False

Question 16

If market demand decreases and market supply increases, then equilibrium quantity will (be) ____ and equilibrium price will (be) ____.

Accepted Answer

A) ​indeterminate; decrease 
B) ​indeterminate; increase 
C) ​decrease; indeterminate 
D) ​increase; indeterminate 
A) ​indeterminate; decrease 
B) ​indeterminate; increase 
C) ​decrease; indeterminate 
D) ​increase; indeterminate

Question 17

A price ceiling set below the equilibrium price causes a shortage in the market.

Accepted Answer

A) True 
 B)False

Question 18

Assume that coffee and tea are substitutes for each other. If weather conditions cause a substantial portion of the available coffee crop to be destroyed, then most probably:

Accepted Answer

A) ​the price of tea will decrease. 
B) ​the price of coffee will decrease. 
C) ​the price of tea will increase 
D) ​none of the above 
A) ​the price of tea will decrease. 
B) ​the price of coffee will decrease. 
C) ​the price of tea will increase 
D) ​none of the above

Question 19

If a price ceiling of $4.00 per gallon is imposed on gasoline, and the market equilibrium price is $4.50, then the price ceiling is a binding constraint on the market.
​

Accepted Answer

A) True 
 B)False

Question 20

For quantity exchanged to decrease, but the price to rise, there must have been a(n)

Accepted Answer

A) ​increase in demand. 
B) ​decrease in demand. 
C) ​increase in supply 
D) ​decrease in supply. 
A) ​increase in demand. 
B) ​decrease in demand. 
C) ​increase in supply 
D) ​decrease in supply.

Exam 5: Market in Motion and Price Controls

An increase in both equilibrium price and quantity is a consequence of a(n):

In 1975 a pocket calculator cost more than $50; in 1990 a calculator of the same quality cost less than $10. Which of the following explanations is most consistent with these facts?

Assuming that the demand and supply of a good have moved in opposite directions, but by the same amount, the new equilibrium would represent:

When a binding price floor is imposed on a market to benefit sellers,

Ceteris paribus, the fear among travelers created by the 9-11 attacks would have what impact on the market for air travel?

Which of the below is true?

To say that a price floor is binding is to say that the price floor

Assume there is a price floor imposed on a good which is above the equilibrium price. Which of the following changes would reduce the size of the surplus?

If tastes for a good increased and the price of a substitute good decreased at the same time, as a result:

Medical authorities announced in the late 1980s that an acne medicine named Retin-A also had previously unknown wrinkle-reducing properties. An economist would expect to find that, after this announcement, the price of Retin-A ____ and the quantity sold ____.

Refer to Exhibit 5-9. If the government intervenes in the market for milk and sets a price ceiling of $2.00 per gallon, the result is:

Either a price floor or a price ceiling above the equilibrium price would cause a surplus.

When supply shifts to the left, it would make the surplus from a price floor smaller, other things equal.

For the quantity exchanged in a market to remain the same, while the price increased, both supply and demand would have to shift to the right.

An increase in the expected future price of a good may act to increase the present price of the good.

If market demand decreases and market supply increases, then equilibrium quantity will (be) ____ and equilibrium price will (be) ____.

A price ceiling set below the equilibrium price causes a shortage in the market.

Assume that coffee and tea are substitutes for each other. If weather conditions cause a substantial portion of the available coffee crop to be destroyed, then most probably:

If a price ceiling of $4.00 per gallon is imposed on gasoline, and the market equilibrium price is $4.50, then the price ceiling is a binding constraint on the market. ​

For quantity exchanged to decrease, but the price to rise, there must have been a(n)

The Role and Method of Economics

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

Medical authorities announced in the late 1980s that an acne medicine named Retin-A also had previously unknown wrinkle-reducing properties. An economist would expect to find that, after this announcement, the price of Retin-A and the quantity sold .

If market demand decreases and market supply increases, then equilibrium quantity will (be) and equilibrium price will (be) .

If a price ceiling of $4.00 per gallon is imposed on gasoline, and the market equilibrium price is $4.50, then the price ceiling is a binding constraint on the market.