Question 1

The change in the quantity demanded of any good is always caused by:

Accepted Answer

A) a change in consumers' preferences for that good. 
B) a change in the general income levels of the consumers who buy that good. 
C) an increase or decrease in the population. 
D) a change in the price of that good. 
E) a change in the price of substitute goods. 
A) a change in consumers' preferences for that good. 
B) a change in the general income levels of the consumers who buy that good. 
C) an increase or decrease in the population. 
D) a change in the price of that good. 
E) a change in the price of substitute goods. D

Question 2

The below figure shows the demand and supply curves in the market for gasoline.The price and quantity at the point of intersection of the demand and supply curves is $30 and 300 gallons respectively. Figure 3.6   Assume that the market for gasoline in Figure 3.6 is in equilibrium.What is the most likely consequence of a government-imposed price ceiling at $10 per unit?

Accepted Answer

A) The profit made by gasoline producers will increase. 
B) The demand for gasoline will decrease. 
C) The quantity of gasoline supplied to the market will decrease. 
D) There will be a surplus of gasoline in the market. 
E) The demand curve for gasoline will shift to the right. 
A) The profit made by gasoline producers will increase. 
B) The demand for gasoline will decrease. 
C) The quantity of gasoline supplied to the market will decrease. 
D) There will be a surplus of gasoline in the market. 
E) The demand curve for gasoline will shift to the right. C

Question 3

The table given below reports the quantity of bread loaves demanded and supplied at different per unit prices. Table 3.3
  Refer to Table 3.3.Which of the following would occur in the market for bread if the market price exceeded the equilibrium price by $1?

Accepted Answer

A) The quantity of bread demanded in the market would increase 
B) The bread market would face a surplus of 36 loaves of bread 
C) The supply of bread in the market would increase 
D) The bread market would face a shortage of 72 loaves of bread 
E) The demand for bread in the market would decrease 
A) The quantity of bread demanded in the market would increase 
B) The bread market would face a surplus of 36 loaves of bread 
C) The supply of bread in the market would increase 
D) The bread market would face a shortage of 72 loaves of bread 
E) The demand for bread in the market would decrease B

Question 4

In the figure given below D1 and S1 are the original demand and supply curves. Figure 3.1   Refer to Figure 3.1.If demand shifts from D1 to D2 and supply shifts from S1 toS2:

Accepted Answer

A) equilibrium price will rise to F, but equilibrium quantity will remain at B 
B) equilibrium price will move to C and equilibrium quantity to G 
C) demand will decrease and supply will increase. 
D) equilibrium price will rise to G, and equilibrium quantity will remain at B 
E) both equilibrium price and equilibrium quantity will decrease. 
A) equilibrium price will rise to F, but equilibrium quantity will remain at B 
B) equilibrium price will move to C and equilibrium quantity to G 
C) demand will decrease and supply will increase. 
D) equilibrium price will rise to G, and equilibrium quantity will remain at B 
E) both equilibrium price and equilibrium quantity will decrease.

Question 5

Consider a demand curve for peaches.Which of the following movements will be observed if the price of peaches decline at a point in time?

Accepted Answer

A) The demand curve will rotate inward at the given price level. 
B) The will be a movement up along the demand curve. 
C) The demand curve will rotate outward at the given price level. 
D) There will be a movement down along the demand curve. 
E) There will be no change in the demand curve. 
A) The demand curve will rotate inward at the given price level. 
B) The will be a movement up along the demand curve. 
C) The demand curve will rotate outward at the given price level. 
D) There will be a movement down along the demand curve. 
E) There will be no change in the demand curve.

Question 6

A rightward shift of a market supply curve might be caused by:

Accepted Answer

A) the entry of new firms in the industry. 
B) an increase in the wages of labor employed in the industry. 
C) an increase in the price of the final product. 
D) a decrease in the income of consumers. 
E) an increase in the price of a substitute good. 
A) the entry of new firms in the industry. 
B) an increase in the wages of labor employed in the industry. 
C) an increase in the price of the final product. 
D) a decrease in the income of consumers. 
E) an increase in the price of a substitute good.

Question 7

According to the law of demand, when the price of a BMW or a Gucci purse increases, the quantity demanded of these goods will also increase because consumers consider them prestigious.

Accepted Answer

A) True 
 B)False

Question 8

In the market for eggs, a removal of the price ceiling on eggs results in:

Accepted Answer

A) an increase in the demand for eggs. 
B) farmers supplying more eggs to the market. 
C) consumers demanding a larger quantity of eggs. 
D) farmers supplying more Eggs to the market. 
E) consumers demanding a smaller quantity of eggs. 
A) an increase in the demand for eggs. 
B) farmers supplying more eggs to the market. 
C) consumers demanding a larger quantity of eggs. 
D) farmers supplying more Eggs to the market. 
E) consumers demanding a smaller quantity of eggs.

Question 9

The table given below reports the quantity demanded and supplied of a commodity in a market at different price levels. Table 3.4
  Refer to Table 3.4.In the market represented by this table, at equilibrium:

Accepted Answer

A) the market price is $5 per unit. 
B) there is a surplus of 900 units. 
C) there is a shortage of 900 units. 
D) 900 units are traded at a price of $3 per unit. 
E) the market price is $1 per unit and the quantity traded is 500 units. 
A) the market price is $5 per unit. 
B) there is a surplus of 900 units. 
C) there is a shortage of 900 units. 
D) 900 units are traded at a price of $3 per unit. 
E) the market price is $1 per unit and the quantity traded is 500 units.

Question 10

_______ ensure that resources are allocated to where they are most highly valued.

Accepted Answer

A) Communist governments 
B) Consumers 
C) Suppliers 
D) Non-governmental organizations 
E) Markets 
A) Communist governments 
B) Consumers 
C) Suppliers 
D) Non-governmental organizations 
E) Markets

Question 11

Which of the following is not an example of a price ceiling?

Accepted Answer

A) The Chinese government sets the price of housing in China below equilibrium. 
B) The government of the former Soviet Union set prices on food below those prevailing in the free market. 
C) In the 1970s, the Nixon administration imposed wage and price controls, thereby keeping wages and prices from rising. 
D) In the late 1970s, the U.S.government required gasoline to be sold at a price per gallon that was below what would have prevailed in a free market. 
E) The U.S.government requires that sugar be sold at a price that exceeds the world price of sugar. 
A) The Chinese government sets the price of housing in China below equilibrium. 
B) The government of the former Soviet Union set prices on food below those prevailing in the free market. 
C) In the 1970s, the Nixon administration imposed wage and price controls, thereby keeping wages and prices from rising. 
D) In the late 1970s, the U.S.government required gasoline to be sold at a price per gallon that was below what would have prevailed in a free market. 
E) The U.S.government requires that sugar be sold at a price that exceeds the world price of sugar.

Question 12

In a market where the price is restricted by price floors or price ceilings,

Accepted Answer

A) all sellers will be able to sell everything they produce. 
B) surpluses and shortages will exist. 
C) all buyers will get what they want. 
D) disequilibrium will automatically correct itself. 
E) surpluses and shortages will put pressure on the price to move to its equilibrium. 
A) all sellers will be able to sell everything they produce. 
B) surpluses and shortages will exist. 
C) all buyers will get what they want. 
D) disequilibrium will automatically correct itself. 
E) surpluses and shortages will put pressure on the price to move to its equilibrium.

Question 13

In the figure given below D1 and S1 are the initial demand and supply curves for a commodity in the market. Figure 3.3   Refer to Figure 3.3.If the change in the demand in this market occurred before the change in supply, then starting from the initial equilibrium:

Accepted Answer

A) firms would experience a fall in profits and then a gradual increase in profits after the change in supply occurred. 
B) there would be an immediate shortage, lasting until the price reaches P2. 
C) price would change from P1 to P2 after the change in demand and would change again from P3 to P4 after the change in supply. 
D) there would be a surplus until the price reaches P4. 
E) there would be a surplus even after price reaches P4. 
A) firms would experience a fall in profits and then a gradual increase in profits after the change in supply occurred. 
B) there would be an immediate shortage, lasting until the price reaches P2. 
C) price would change from P1 to P2 after the change in demand and would change again from P3 to P4 after the change in supply. 
D) there would be a surplus until the price reaches P4. 
E) there would be a surplus even after price reaches P4.

Question 14

Which of the following would lead to a rightward shift in the demand curve for golf balls?

Accepted Answer

A) An increase in the price of golf clubs 
B) A decrease in the popularity of golf 
C) An increase in the number of golfers 
D) A decrease in the price of golf balls 
E) An increase in the golf club membership fee 
A) An increase in the price of golf clubs 
B) A decrease in the popularity of golf 
C) An increase in the number of golfers 
D) A decrease in the price of golf balls 
E) An increase in the golf club membership fee

Question 15

The table given below reports the quantity demanded and supplied of a commodity at different prices in a market. Table 3.5
  Refer to Table 3.5.If government imposes a price ceiling of $4:

Accepted Answer

A) the price ceiling will not have an effect. 
B) the price will fall to $1 because producers will be forced to incur losses. 
C) demand will increase. 
D) a surplus will result equal to 20 units. 
E) a shortage will result equal to 20 units. 
A) the price ceiling will not have an effect. 
B) the price will fall to $1 because producers will be forced to incur losses. 
C) demand will increase. 
D) a surplus will result equal to 20 units. 
E) a shortage will result equal to 20 units.

Question 16

Margaret can use her quarterly savings to buy a teakwood study table for her room or spend it on a small Christmas party with her family.The _____ cost of her enjoyment at the Christmas party would then equal the forgone utility of the study table.

Accepted Answer

A) transaction 
B) exchange 
C) opportunity 
D) direct 
E) sunk 
A) transaction 
B) exchange 
C) opportunity 
D) direct 
E) sunk

Question 17

Other things remaining unchanged, which of the following is most likely to cause an increase in the demand for personal computers?

Accepted Answer

A) A reduction in the price of personal computers. 
B) An increase in the supply of personal computers. 
C) An increase in the cost of computer printing ink. 
D) An increase in the number of computer manufacturers. 
E) A requirement by universities that all students buy personal computers 
A) A reduction in the price of personal computers. 
B) An increase in the supply of personal computers. 
C) An increase in the cost of computer printing ink. 
D) An increase in the number of computer manufacturers. 
E) A requirement by universities that all students buy personal computers

Question 18

Which of the following determines the quantity demanded of a commodity?

Accepted Answer

A) The income levels of consumers 
B) The price of the commodity 
C) The prices of related commodities 
D) The number of buyers 
E) Consumers' expectations 
A) The income levels of consumers 
B) The price of the commodity 
C) The prices of related commodities 
D) The number of buyers 
E) Consumers' expectations

Question 19

Assume that Ford Motor Company engineers achieve a revolutionary technological breakthrough in the production process of automobiles.Which of the following is expected to take place?

Accepted Answer

A) A movement up the existing supply curve for Ford automobiles 
B) The supply of Ford automobiles will remain unchanged 
C) An inward shift of the supply curve for Ford automobiles 
D) A movement down along an existing supply curve for Ford automobiles 
E) An outward shift of the supply curve for Ford automobiles 
A) A movement up the existing supply curve for Ford automobiles 
B) The supply of Ford automobiles will remain unchanged 
C) An inward shift of the supply curve for Ford automobiles 
D) A movement down along an existing supply curve for Ford automobiles 
E) An outward shift of the supply curve for Ford automobiles

Question 20

The figure given below represents the equilibrium in the market for bicycles under different demand and supply situations.The vertical axis in each panel shows the price of bikes. Figure 3.2   Refer to Figure 3.2.Which of the following panels represents the equilibrium situation in the bicycle market, if there were an increase in the price of metal used in the production of bicycles?

Accepted Answer

A) Panel A 
B) Panel B 
C) Panel C 
D) Panel D 
E) Panel E 
A) Panel A 
B) Panel B 
C) Panel C 
D) Panel D 
E) Panel E

Exam 3: Markets, Demand and Supply, and the Price System

The change in the quantity demanded of any good is always caused by:

The table given below reports the quantity of bread loaves demanded and supplied at different per unit prices. Table 3.3 Refer to Table 3.3.Which of the following would occur in the market for bread if the market price exceeded the equilibrium price by $1?

In the figure given below D1 and S1 are the original demand and supply curves. Figure 3.1 Refer to Figure 3.1.If demand shifts from D1 to D2 and supply shifts from S1 toS2:

Consider a demand curve for peaches.Which of the following movements will be observed if the price of peaches decline at a point in time?

A rightward shift of a market supply curve might be caused by:

According to the law of demand, when the price of a BMW or a Gucci purse increases, the quantity demanded of these goods will also increase because consumers consider them prestigious.

In the market for eggs, a removal of the price ceiling on eggs results in:

The table given below reports the quantity demanded and supplied of a commodity in a market at different price levels. Table 3.4 Refer to Table 3.4.In the market represented by this table, at equilibrium:

_______ ensure that resources are allocated to where they are most highly valued.

Which of the following is not an example of a price ceiling?

In a market where the price is restricted by price floors or price ceilings,

In the figure given below D1 and S1 are the initial demand and supply curves for a commodity in the market. Figure 3.3 Refer to Figure 3.3.If the change in the demand in this market occurred before the change in supply, then starting from the initial equilibrium:

Which of the following would lead to a rightward shift in the demand curve for golf balls?

The table given below reports the quantity demanded and supplied of a commodity at different prices in a market. Table 3.5 Refer to Table 3.5.If government imposes a price ceiling of $4:

Margaret can use her quarterly savings to buy a teakwood study table for her room or spend it on a small Christmas party with her family.The _____ cost of her enjoyment at the Christmas party would then equal the forgone utility of the study table.

Other things remaining unchanged, which of the following is most likely to cause an increase in the demand for personal computers?

Which of the following determines the quantity demanded of a commodity?

Assume that Ford Motor Company engineers achieve a revolutionary technological breakthrough in the production process of automobiles.Which of the following is expected to take place?

Economics: The World Around You

Choice, Opportunity Costs, and Specialization

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

National Income Accounting

an Introduction to the Foreign Exchange Market and the Balance of Payments

Consumer Choice

Supply: The Costs of Doing Business

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Profit Maximization

Aggregate Expenditures

Perfect Competition

Income and Expenditures Equilibrium

Monopoly

Fiscal Policy

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Money and Banking

Market Failures, Government Failures, and Rent Seeking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Resource Markets

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

The Labor Market

Capital Markets

Economic Growth

Development Economics

the Land Market and Natural Resources

Aging, Social Security and Health Care

Globalization

Elasticity: Demand and Supply

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

Consumer Choice

International Trade Restrictions

World Trade Equilibrium

Exchange Rates and Financial Links Between Countries

International Trade Restrictions

Supply: the Costs of Doing Business

Exchange Rates and Financial Links Between Countries

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

In the figure given below D₁ and S₁ are the original demand and supply curves. Figure 3.1 Refer to Figure 3.1.If demand shifts from D₁ to D₂ and supply shifts from S₁ toS₂:

In the figure given below D₁ and S₁ are the initial demand and supply curves for a commodity in the market. Figure 3.3 Refer to Figure 3.3.If the change in the demand in this market occurred before the change in supply, then starting from the initial equilibrium: