Question 1

Pork from pigs can be used to produce bacon or sausage, but not both. If the price of bacon falls for some reason, then, everything else equal:

Accepted Answer

A) ​the price of sausage will rise. 
B) ​the price of sausage will fall. 
C) ​the resources used to raise pigs will become more expensive. 
D) ​the demand for bacon will increase. 
A) ​the price of sausage will rise. 
B) ​the price of sausage will fall. 
C) ​the resources used to raise pigs will become more expensive. 
D) ​the demand for bacon will increase.

Question 2

If the price of ice cream increases substantially (ceteris paribus), the equilibrium quantity of hot fudge sauce, a complement, is likely to:

Accepted Answer

A) ​increase, and the equilibrium price of hot fudge is likely to decrease. 
B) ​increase, and the equilibrium price of hot fudge is likely to increase. 
C) ​decrease, and the equilibrium price of hot fudge is likely to decrease. 
D) ​decrease, and the equilibrium price of hot fudge is likely to increase. 
A) ​increase, and the equilibrium price of hot fudge is likely to decrease. 
B) ​increase, and the equilibrium price of hot fudge is likely to increase. 
C) ​decrease, and the equilibrium price of hot fudge is likely to decrease. 
D) ​decrease, and the equilibrium price of hot fudge is likely to increase.

Question 3

Exhibit 5-1
​   ​
​
-Refer to Exhibit 5-1. A price floor set at $40 would create a surplus of 40 units.

Accepted Answer

A) True 
 B)False

Question 4

The major drawback of a binding price ceiling is:

Accepted Answer

A) ​it causes a surplus. 
B) ​government regulations of this kind are difficult to enforce 
C) ​it causes a shortage. 
D) ​none of the above; there is no drawback. 
A) ​it causes a surplus. 
B) ​government regulations of this kind are difficult to enforce 
C) ​it causes a shortage. 
D) ​none of the above; there is no drawback.

Question 5

Ceteris paribus, if the market supply of a product decreases, then equilibrium quantity will (be) ____ and equilibrium price will (be) ____.

Accepted Answer

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

Question 6

Serious natural disasters like hurricanes and tornadoes cause widespread and extensive damage to buildings. As a result of a natural disaster, what would you expect to happen in the market for building supplies?

Accepted Answer

​As homes and buildings are being recons

Question 7

Ceteris paribus, if the market demand for a product decreases, then equilibrium quantity will (be) ____ and equilibrium price will (be) ____.

Accepted Answer

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

Question 8

Assume there is a price ceiling imposed on a good which is below 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) ​None of the above; there is no surplus. 
A) ​An increase in demand. 
B) ​A decrease in demand. 
C) ​An increase in supply. 
D) ​None of the above; there is no surplus.

Question 9

Exhibit 5-2
​
The diagram below represents the market for butter.  
-Refer to Exhibit 5-2. If a price ceiling of $4 is imposed, we would expect that ____ units of butter will be purchased.

Accepted Answer

A) ​7,000 
B) ​5,000 
C) ​4,000 
D) ​3,000 
A) ​7,000 
B) ​5,000 
C) ​4,000 
D) ​3,000

Question 10

You notice that the price of orange juice at your local grocery store has increased. Which of the following statements is not a possible explanation for the rise in the price of orange juice?

Accepted Answer

A) ​Frosty weather destroys oranges causing the price of oranges to increase. 
B) ​As a result of an increase in income, consumers wish to purchase more orange juice at every price level. 
C) ​A recent scientific study is reported in the press that suggests that apple juice may be contaminated with pesticides. 
D) ​Due to the bioengineering of orange trees, the domestic supply of oranges increases. 
A) ​Frosty weather destroys oranges causing the price of oranges to increase. 
B) ​As a result of an increase in income, consumers wish to purchase more orange juice at every price level. 
C) ​A recent scientific study is reported in the press that suggests that apple juice may be contaminated with pesticides. 
D) ​Due to the bioengineering of orange trees, the domestic supply of oranges increases.

Question 11

Pork from pigs can be used to produce bacon or sausage, but not both. If the price of bacon rises for some reason, then, everything else equal:

Accepted Answer

A) ​the price of sausage will rise. 
B) ​the price of sausage will fall. 
C) ​the resources used to raise pigs will become less expensive. 
D) ​the demand for bacon will decrease. 
A) ​the price of sausage will rise. 
B) ​the price of sausage will fall. 
C) ​the resources used to raise pigs will become less expensive. 
D) ​the demand for bacon will decrease.

Question 12

Assuming that the demand for a good has increased and the supply of a good has decreased by the same amount, then:

Accepted Answer

A) ​The change in price is determinate but the change in quantity is indeterminate. 
B) ​The change in quantity is determinate but the change in price is indeterminate. 
C) ​Both the change in price and the change in quantity will be indeterminate. 
D) ​Neither the change in price nor the change in quantity will be indeterminate. 
A) ​The change in price is determinate but the change in quantity is indeterminate. 
B) ​The change in quantity is determinate but the change in price is indeterminate. 
C) ​Both the change in price and the change in quantity will be indeterminate. 
D) ​Neither the change in price nor the change in quantity will be indeterminate.

Question 13

Assuming that the demand and supply of a good have moved in the same direction, and by the same amount, the new equilibrium would represent: no change in price and an increase in quantity exchanged.

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) ​no change in price, and an indeterminate 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) ​no change in price, and an indeterminate change in quantity exchanged.

Question 14

To the extent that a governmental price control succeeds in affecting price, it can be expected to lead to a corresponding:

Accepted Answer

A) ​reduction in the volume of sales only if the price is forced down. 
B) ​reduction in the volume of sales if the price is forced down and an increase in the volume of sales if the price is forced up. 
C) ​decrease in the volume of sales whether the price is forced up or down. 
D) ​increase in the volume of sales whether the price is forced up or down. 
A) ​reduction in the volume of sales only if the price is forced down. 
B) ​reduction in the volume of sales if the price is forced down and an increase in the volume of sales if the price is forced up. 
C) ​decrease in the volume of sales whether the price is forced up or down. 
D) ​increase in the volume of sales whether the price is forced up or down.

Question 15

If incomes are rising, in the market for a normal good,

Accepted Answer

A) ​its price will rise and the quantity exchanged will rise. 
B) ​its price will rise and the quantity exchanged will fall. 
C) ​its price will fall and the quantity exchanged will rise. 
D) ​its price will fall and the quantity exchanged will fall. 
A) ​its price will rise and the quantity exchanged will rise. 
B) ​its price will rise and the quantity exchanged will fall. 
C) ​its price will fall and the quantity exchanged will rise. 
D) ​its price will fall and the quantity exchanged will fall.

Question 16

American consumers decide to boycott soccer balls made by Nike in support of a ban on child labor. Everything else being equal, the:

Accepted Answer

A) ​price of Nike soccer balls will rise. 
B) ​supply of Nike soccer balls will fall. 
C) ​quantity of Nike soccer balls supplied will fall. 
D) ​demand curve for Nike soccer balls shifts to the right. 
A) ​price of Nike soccer balls will rise. 
B) ​supply of Nike soccer balls will fall. 
C) ​quantity of Nike soccer balls supplied will fall. 
D) ​demand curve for Nike soccer balls shifts to the right.

Question 17

A shift in the supply curve of bicycles resulting from higher steel prices will lead to:

Accepted Answer

A) ​higher prices of bicycles. 
B) ​lower prices of bicycles. 
C) ​a shift in the demand curve for bicycles. 
D) ​a larger output of bicycles. 
A) ​higher prices of bicycles. 
B) ​lower prices of bicycles. 
C) ​a shift in the demand curve for bicycles. 
D) ​a larger output of bicycles.

Question 18

Nick is delighted to see that the price of his favorite food, black olives, has fallen. Which of the following could be responsible?

Accepted Answer

A) ​an increase in the demand for black olives 
B) ​a decrease in the supply of black olives 
C) ​a simultaneous increase in demand and decrease in supply of black olives 
D) ​a simultaneous decrease in demand and increase in supply of black olives 
A) ​an increase in the demand for black olives 
B) ​a decrease in the supply of black olives 
C) ​a simultaneous increase in demand and decrease in supply of black olives 
D) ​a simultaneous decrease in demand and increase in supply of black olives

Question 19

There is an increase in both consumer income and in the price of jet fuel, an important resource used to produce air travel. If air travel is a normal good, how will these changes influence the price and quantity purchased of air travel? The change in the price of air travel will (be) ____ and the change in the quantity purchased will (be) ____.

Accepted Answer

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

Question 20

Exhibit 5-7   ​
-Refer to Exhibit 5-7. The movement from ____ to ____ is consistent with a successful advertising campaign that claims wool keeps you warm.

Accepted Answer

A) ​Point A; Point B 
B) ​Point A; Point F 
C) ​Point A; Point D 
D) ​Point A; Point H 
A) ​Point A; Point B 
B) ​Point A; Point F 
C) ​Point A; Point D 
D) ​Point A; Point H

Pork from pigs can be used to produce bacon or sausage, but not both. If the price of bacon falls for some reason, then, everything else equal:

If the price of ice cream increases substantially (ceteris paribus), the equilibrium quantity of hot fudge sauce, a complement, is likely to:

Exhibit 5-1 -Refer to Exhibit 5-1. A price floor set at $40 would create a surplus of 40 units.

The major drawback of a binding price ceiling is:

Ceteris paribus, if the market supply of a product decreases, then equilibrium quantity will (be) and equilibrium price will (be) .

Serious natural disasters like hurricanes and tornadoes cause widespread and extensive damage to buildings. As a result of a natural disaster, what would you expect to happen in the market for building supplies?

Ceteris paribus, if the market demand for a product decreases, then equilibrium quantity will (be) and equilibrium price will (be) .

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

Exhibit 5-2 The diagram below represents the market for butter. -Refer to Exhibit 5-2. If a price ceiling of $4 is imposed, we would expect that ____ units of butter will be purchased.

You notice that the price of orange juice at your local grocery store has increased. Which of the following statements is not a possible explanation for the rise in the price of orange juice?

Pork from pigs can be used to produce bacon or sausage, but not both. If the price of bacon rises for some reason, then, everything else equal:

Assuming that the demand for a good has increased and the supply of a good has decreased by the same amount, then:

Assuming that the demand and supply of a good have moved in the same direction, and by the same amount, the new equilibrium would represent: no change in price and an increase in quantity exchanged.

To the extent that a governmental price control succeeds in affecting price, it can be expected to lead to a corresponding:

If incomes are rising, in the market for a normal good,

American consumers decide to boycott soccer balls made by Nike in support of a ban on child labor. Everything else being equal, the:

A shift in the supply curve of bicycles resulting from higher steel prices will lead to:

Nick is delighted to see that the price of his favorite food, black olives, has fallen. Which of the following could be responsible?

Exhibit 5-7 -Refer to Exhibit 5-7. The movement from to is consistent with a successful advertising campaign that claims wool keeps you warm.

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

Exam 5: Market in Motion and Price Controls

Pork from pigs can be used to produce bacon or sausage, but not both. If the price of bacon falls for some reason, then, everything else equal:

If the price of ice cream increases substantially (ceteris paribus), the equilibrium quantity of hot fudge sauce, a complement, is likely to:

Exhibit 5-1 ​ ​ ​ -Refer to Exhibit 5-1. A price floor set at $40 would create a surplus of 40 units.

The major drawback of a binding price ceiling is:

Ceteris paribus, if the market supply of a product decreases, then equilibrium quantity will (be) ____ and equilibrium price will (be) ____.

Serious natural disasters like hurricanes and tornadoes cause widespread and extensive damage to buildings. As a result of a natural disaster, what would you expect to happen in the market for building supplies?

Ceteris paribus, if the market demand for a product decreases, then equilibrium quantity will (be) ____ and equilibrium price will (be) ____.

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

Exhibit 5-2 ​ The diagram below represents the market for butter. -Refer to Exhibit 5-2. If a price ceiling of $4 is imposed, we would expect that ____ units of butter will be purchased.

You notice that the price of orange juice at your local grocery store has increased. Which of the following statements is not a possible explanation for the rise in the price of orange juice?

Pork from pigs can be used to produce bacon or sausage, but not both. If the price of bacon rises for some reason, then, everything else equal:

Assuming that the demand for a good has increased and the supply of a good has decreased by the same amount, then:

Assuming that the demand and supply of a good have moved in the same direction, and by the same amount, the new equilibrium would represent: no change in price and an increase in quantity exchanged.

To the extent that a governmental price control succeeds in affecting price, it can be expected to lead to a corresponding:

If incomes are rising, in the market for a normal good,

American consumers decide to boycott soccer balls made by Nike in support of a ban on child labor. Everything else being equal, the:

A shift in the supply curve of bicycles resulting from higher steel prices will lead to:

Nick is delighted to see that the price of his favorite food, black olives, has fallen. Which of the following could be responsible?

Exhibit 5-7 ​ -Refer to Exhibit 5-7. The movement from ____ to ____ is consistent with a successful advertising campaign that claims wool keeps you warm.

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

Exhibit 5-1 -Refer to Exhibit 5-1. A price floor set at $40 would create a surplus of 40 units.

Ceteris paribus, if the market supply of a product decreases, then equilibrium quantity will (be) and equilibrium price will (be) .

Ceteris paribus, if the market demand for a product decreases, then equilibrium quantity will (be) and equilibrium price will (be) .

Exhibit 5-2 The diagram below represents the market for butter. -Refer to Exhibit 5-2. If a price ceiling of $4 is imposed, we would expect that ____ units of butter will be purchased.

Exhibit 5-7 -Refer to Exhibit 5-7. The movement from to is consistent with a successful advertising campaign that claims wool keeps you warm.